Monday, January 16, 2012
Russia muscles up – the challenges we must rise to face
by Vladimir Putin
On March 4, the people of Russia will be going to the polls to elect a president of the country. Extensive discussions are currently underway across society.
I consider it necessary to state my position on a number of issues which seem to be important in this broader debate: the risks and challenges Russia will, inevitably, encounter. The position we must take in global politics and the world economy. Will we follow the course of events or take a role in setting the rules of the game? What resources will help us to strengthen our positions and, I stress, ensure stable development? The kind of development that is a world away from stagnation. Because, in the modern world, stability is an asset that can only be secured and earned through persistent effort, by being open to change and being ready to carry through developed, well thought-out, considered reforms.
A recurring problem in Russian history has been the elites’ desire to achieve sudden change, a revolution rather than sustained development. Meanwhile, both Russian and global experience demonstrates how harmful these sudden historical jolts can be: jumping the gun, destroying – not creating.
This is balanced by a different trend, a diametrically opposed challenge –in the form of a certain inclination to inertia, dependency, the elites’ uncompetitiveness and high levels of corruption. And in every case these “rebels” turn into the “smug upper classes” before our very eyes, resisting any change and fervently protecting their status and privileges. Or we witness the reverse process – as the established elites become rebels.
Consequently, politics and policies are short-termist and limited by issues involving the current preservation or re-division of authority and property.
This situation has historically resulted from weak public control over policymakers in Russia, its underdeveloped civil society. Things are gradually improving there, but only very slowly as yet.
There can be no real democracy until politics is embraced by the majority of the population, until it reflects the interests of this majority. True, it is possible to win over a considerable part of society for a short time with catchy slogans and visions of a brighter future; but if people later simply cannot picture themselves in this future – they will turn away from politics and social challenges for a long time to come. This has happened time and again in our history.
Today people talk about different ways to reinvigorate the political process. But what is up for discussion? How state power should be structured? Handing it to the “better people”? But what next? What then?
I am worried that there is virtually no broader discussion of what should be done beyond the elections, after the elections. To my mind, this is not in the national interests; it is not in the interests of the quality of society’s development, the standard of education and levels of responsibility.
I think Russians should be able to discuss not only the advantages and disadvantages of individual politicians, which is clearly in itself no bad thing, but also the actual content of the policies and programmes which various political leaders intend to implement. The challenges and goals which must be at the forefront of these programmes. How we can improve our life and make our social system more just. What avenues of social and economic development we should favour.
We need a broad dialogue – about the future, about priorities, long-term choices, national development and national prospects. This article is an invitation to join just such a dialogue.
Where we are and where we’re headed
In terms of the basic parameters of social and economic development today’s Russia has emerged from the deep recession which followed the collapse of totalitarian socialism and the ensuing downfall of the Soviet Union. Despite the 2008-2009 crisis, as a result of which we “lost” a whole two years, we have attained and surpassed the living standard indices reported in the best years of the USSR. For example, life expectancy in Russia now is higher than in the Soviet Union in 1990-1991.
Our economy is growing – and this is above all about people, their work, their incomes, their new opportunities. Compared with the 1990s, poverty is down by more than 150%. “Areas of stagnant poverty”, when active and employable people could not find jobs or were not paid for months, are essentially a thing of the past. Independent studies show that four out of five Russians have incomes higher than in 1989 – the “peak” of development of the USSR – which was followed by the decline and imbalance of the country’s entire socio-economic organism. Over 80% of Russian families today consume more than their Soviet counterparts did. The availability of domestic appliances has grown by 50%, reaching the level of developed economies. One in two families has a car – a three-fold rise. Housing conditions have palpably improved. Both the statistical average individual and Russian pensioners now consume more basic foods than they did in 1990.
But what is particularly important is that over the past 10 years Russia has produced a considerable segment of the population – people who in the West are called the middle classes. Their incomes allow them a certain freedom in what they choose to spend and what to save, what to buy and how to spend their holidays. They can afford to be choosy over where they work and have some savings under their belt.
Lastly, the middle classes are people who can choose politics. As a rule, their education is such that they can take a discriminating attitude to candidates rather than “voting with their heart.” In short, the middle classes have begun shaping their real demands in various fields.
In 1998, they made up between 5% and 10% of the population – less than in the late USSR. Now the middle classes are estimated to constitute between 20% and 30% of the population. These are people whose earnings are three times as high as the average wage or salary in 1990.
These middle classes must continue to expand. They must become a social majority in our society; to recruit members from among those who really are the lifeblood of the country – doctors, teachers, engineers, and skilled workers.
Russia’s main hope lies with the high educational standards of the population and above all of its youth. This is the case – despite the obvious problems with and complaints about the quality of the country’s educational system.
As many as 57% of people aged 25 to 35 in Russia have a higher education – a level seen in just three other countries: Japan, South Korea and Canada. This explosive growth in demand for educational requirements is continuing: the next generation (15- to 25-year-olds) will likely be one of universal higher education – as more than 80% of young people will either be in the process of attaining, or will have completed courses of higher education.
We are entering a wholly new social reality. The “educational revolution” is fundamentally altering the key features of Russian society and the Russian economy. Even if our economy does not require that many workers with higher education at the moment – there is no going back. People should not have to adapt themselves to the existing economic and labour market structure – it is the economy that must change so as to enable people with a high educational standards and high requirements to find a worthy occupation.
Russia’s main challenge is learning to exploit the “educational drive” of this younger generation, to mobilise the middle class’s enhanced demands and its readiness to assume responsibility for its own welfare in order to guarantee economic growth and the country’s continued stable development.
Better educated people mean a longer life span, less crime, less antisocial behaviour, and more rational options. All of this – in and of itself – is creating a favourable background for our future.
But this is not enough.
The steady growth in Russia’s wealth in the past decade has largely been due to government policy, including a more rational distribution of the country’s commodity earnings. Oil revenues were used to boost people’s incomes – to pull millions out of poverty. We have also ensured that the country had rainy-day savings to support it through crises or disasters. But the potential of our commodity-based economy is becoming depleted, and what’s more, it has no strategic future.
The goal of diversifying the economy and creating new growth sources has been included in our programmes and policy documents as early as 2008.
An innovation-based economy needs to be built for the sake of all educated and responsible citizens, whether they are professionals, business leaders or consumers.
As many as 10-11 million young people will become economically active over the next decade, about 8-9 million of them with university degrees. Today, some 5 million university graduates are not satisfied with their incomes and jobs, and the lack of career growth prospects. Another 2-3 million people employed by public services and agencies wish to find new jobs. In addition, 10 million people are employed by companies that use obsolete technology and equipment. Older technology should become history, and not just because it is not competitive. In some cases it is simply hazardous for a worker’s health or for the natural environment.
In this context, the talk of 25 million new innovation-based high-tech jobs for educated Russians is not just phrase-mongering. It is a vital necessity, a required minimum that should be achieved. This national priority should become the focus of state policy and of business strategy. The country’s business climate should be improved in this respect.
I am confident that Russia’s current and future workforce potential is high enough to provide strong global competition. Russia’s future economy should also meet society’s needs. It should ensure higher incomes and create broader opportunities for professional growth and social improvement.
All the above should become the key growth criteria in the next few years, and not just figures such as GDP, international reserves, rating agencies’ assessments and Russia’s high rank among the world’s leading economies. It is of primary importance that people feel some positive change, mainly growing opportunities.
At the same time, individual initiatives should be the real drivers of growth. We will fail if we rely exclusively on government decisions and on a limited circle of investors and state companies. We are certain to fail if Russians at large remain passive.
Therefore, strong growth in Russia over the next decade implies greater freedom for each of us. Wealth sourced from others, without conscious decision-making and responsibility is out of the question in the 21st century.
There is one more challenge we are facing. Generalities about the benefits of accord or charity are rhetoric that often disguises a lack of trust among our people, their reluctance to make efforts for the public good, to look out for each other and to sacrifice private interests. This is an old and serious ailment in Russian society.
Russian culture includes a longstanding tradition to respect the state, public interest and the nation’s needs. An absolute majority of Russians wants to see their country strong and powerful and it respects national heroes who have given their lives for the greater good. Unfortunately, their pride in their motherland or their patriotic feelings rarely gets reflected in their daily activities such as participation in local policy-making, legal advocacy or real charity.
As a rule, this behaviour is not due to indifference or selfishness. In fact it reflects a lack of self-confidence or distrust of others.
Still, even that has slowly started changing. People have started to do more than make demands of the authorities, however justified they might be. They are taking on important tasks like neighbourhood improvement, supporting people with disabilities, helping those in need, organising leisure activities for children and so on.
In 2012, the government will begin to support these initiatives. Federal and regional programmes have been adopted to support social NGOs. These programmes will be expanded in the future. However, for these programmes to work, we need to overcome state officials’ die-hard prejudice against public activists. This prejudice in fact reflects the officials’ reluctance to share resources, a desire to avoid competition and responsibility for the outcome.
In fact religion – the widespread faiths such as Orthodox Christianity, Islam, Judaism and Buddhism – plays a valuable role in serving the people, in overcoming discord, in boosting trust and willingness to peacefully resolve conflicts that are bound to arise in a fast growing society. Large and important contributions can and must be made by schools and the media, TV and the internet communities.
A society of independent individuals is not the same as a crowd of lonely mercenary egotists indifferent to the public good. We have never been such a people and never will be. Personal freedom is productive only if one looks out for others. Freedom which is not based on morality turns into anarchy.
Trust among people only develops in a society knitted together by shared values and priorities, one where people have not lost their faith, integrity or sense of what is fair. Respect for the law only emerges where the law applies to all, is observed by all and when it is based on truth.
A social portrait of our future would be incomplete without mentioning one crucial element: 10%-11% of our countrymen are living below the poverty line, for a variety of reasons. We have to solve this problem by the end of the decade. We have to overcome poverty, it is unacceptable for a developed country. We must harness the resources of the state and the efforts of most active, committed part of society. We need to ensure that social assistance reaches those who need it and support charitable movements.
Russia must develop a system of social mobility that allows people to climb out of poverty, a system appropriate to a modern society. We must learn to compensate for the negative social consequences of a market economy and the inequality engendered by it, just like other countries with a long-established tradition of capitalism have learned to do. This assistance includes helping children from poor families receive education, providing social housing to low-income families, ending discrimination against people with disabilities and securing them equal access to life essentials and good jobs. Our society will become successful only when our citizens become convinced that it is a fair society.
New stage of global development
The global crisis that erupted in 2008 has affected everyone and has forced us to reassess many things.
Everyone knows that the economic storm was caused not only by cyclical factors and failures of regulation. The root of the problem lies in the accumulated imbalances, which led to a dead-end development model based on unrestrained borrowing, living on credit, sacrificing the future, and on virtual rather than real, values and assets. What is more, the prosperity generated in this model has been distributed among individual countries and regions extremely unevenly. It also undermines global stability, provokes conflicts and reduces the international community’s ability to come to an agreement on the critical, fundamentally important issues.
Phoney principles are developing not only in the economy, but also in politics and the social sphere. The crisis in the developed countries has exposed a dangerous and, in my opinion, purely political trend: a reckless, populist build-up of state social obligations without any connection to the growth of labour productivity, and the engendering of social irresponsibility in some sections of the population. But it is now becoming clear to many that the age of prosperity created by other people's efforts is coming to an end.
No one will be able to live beyond their means. This requirement fully applies to Russia as well.
We have not made empty promises. Our economic policy was well thought out and prudent. Before the crisis, we grew our economy substantially, repaid our debts, increased people’s real incomes and created reserves that allowed us to survive the crisis with minimal impact on people’s living standards. Moreover, we were even able to increase pensions and other social payments considerably during the height of the crisis. Many, particularly those in the opposition camp, urged us to hurry to spend our oil revenues. What would have happened to pensions had we listened to these populists?
Unfortunately, we heard a lot of populist rhetoric during the recent parliamentary election campaign, and we are likely to hear it again during the presidential campaign, from people who have no hope of winning the elections and are therefore free to make promises they will not have to fulfil. I tell you frankly that we must continue to make aggressive use of all available opportunities for improving people’s lives. But as before, we must not act randomly, so that we will not suddenly be faced with the need to take back from the people much more than we so freely handed out to them in the first place, as has happened in some Western countries.
It should be said that the current global imbalances are on such a large scale that they cannot be dealt with within the framework of the existing system. It is true that market fluctuations can be overcome. Most countries have set out a range of tactical measures to respond to the acute manifestations of the crisis, with varying degrees of success.
But speaking in a deeper, longer-term sense, we must admit that the current problems have nothing to do with market volatility. By and large, what the world is facing today is a systemic crisis, a tectonic process of global transformation. It is a visible manifestation of our transition to a new cultural, economic, technological and geopolitical era. The world is entering a period of turbulence, which will be prolonged and painful. We should not be under any illusions.
The end result of the system that has developed in the 20 years since the collapse of the Soviet Union, including the phenomenon of unilateralism, is also obvious. The former single centre of power can no longer maintain global stability, while the new centres of influence are not yet ready to take over. Global economic processes and the military political situation have become increasingly unpredictable and should be dealt with through the confident and responsible cooperation of states, primarily the permanent members of the UN Security Council and the G8 and G20 countries. We must keep working to overcome mutual suspicion, ideological prejudices and short-sighted self-interest.
Instead of boosting development and stabilising the global economic system, the world’s largest economic centres are creating an increasing number of problems and risks. Social, ethnic and cultural tensions are growing rapidly. Destructive forces have strengthened dramatically and have shown their aggressive nature in some parts of the world, ultimately threatening global security. The countries that are using military force to “export democracy” often become allies of these destructive forces.
Even the noblest of intentions cannot justify the violation of international law and state sovereignty. Moreover, experience shows that, as a rule, the initial objectives are not achieved, and the whole venture proves substantially more costly than anticipated.
Given this environment, Russia can and must play a role predicated upon its civilisation model, its great history, geography and its cultural ‘genome’ that organically combines the fundamental principles of European civilisation and many centuries of cooperation with the East, where new centres of economic and political influence are rapidly emerging.
How does Russia perceive the upcoming age of global transformation?
In the 1990s, the country experienced the profound shocks of collapse and degradation, which cost society dear. Inevitably, given the context - statehood atrophied. Indeed, we came close to breaking point. The very fact that several thousand guerrillas were able to attack a country that boasted a one-million strong army – even if they were supported by certain external powers – demonstrates the tragedy of that situation. Too many people believed we could be completely destroyed.
There was a message the FSB intercepted that I remember very well. It was sent by one of the most heinous and murderous international terrorists responsible for the deaths of our people in the North Caucasus – Khattab – to his foreign accomplices. He wrote, “Russia is weak as never before. Now we have our one and only chance to take the North Caucasus away from the Russians.” But the terrorists miscalculated. Russia’s armed forces, supported by the Chechens and other peoples of the Caucasus, defended the country’s territorial inviolability and the unity of the Russian state.
We needed, however, gargantuan efforts and resources to lift the country out of that hole, to restore Russia’s geopolitical status, to rebuild its social system and revive the economy. We restored basic state governance.
We had to restore the authority and power of the state itself. We had to recreate, despite the absence of deep-rooted democratic traditions, popular political parties and a mature civil society, while at the same time locking horns with regional separatism, the dominant influence of oligarchs, corruption and sometimes government bodies’ overt links with the criminal underworld.
Given those circumstances, restoring national unity, which meant establishing Russian sovereignty rather than the pre-eminence of particular individuals or groups, became the priority.
Few people now remember how difficult it was, and how much effort that decision took. Few now recall that in late 1990s, the most reputable experts and many international leaders foresaw one future for Russia: bankruptcy and breakup. The picture of Russia today – seen through the prism of the 1990s – would seem overoptimistic and even unbelievable.
But in fact this ‘forgetfulness’ and society’s readiness to embrace the highest standards in terms of quality of living and democracy – are the best signs of our success.
The country was able to weather the global crisis precisely because of the fact that, in recent years we all, the people of Russia, went such a long way to solving the most pressing and top priority issues. And now we are even in a position to speak about strategies and prospects.
The recovery period is now over. The post-Soviet phase of Russian and global history has now come to a close.
All the prerequisites for progress are in place, with new foundations and at a qualitatively new level. Incidentally, all this -- in the harsh foreign policy and foreign economic conditions. Nevertheless, the inexorable global transformation offers us a tremendous opportunity.
I would like to repeat, once again, why I agreed to stand for presidential election in 2012. I am not going to belittle anyone’s merits in forming this country anew. Many people were involved. But the fact remains that in 1999, when I became prime minister, and later president, our country was in the grips of a severe systemic crisis. And that team of like-minded individuals that your humble servant, the author of these lines, was to form and lead, enjoying majority public support and confident in national unity around our common objectives, helped deliver Russia from the blind alley of civil war, break the back of terrorism, restore the country’s territorial integrity and constitutional order, and spark economic revival – giving us a decade distinguished by one of the world’s fastest economic growth rates and real income growth for the general public.
Now we can see what was successful, what needs improvement, and even what needs to be dismissed.
I see our goal in years to come as sweeping away all that stands in the way of our national development, completing the establishment in Russia of a political system, a structure of social guarantees and safeguards for the public, and an economic model that together form a single, living, ever-changing organism of state that is, at the same time, resilient, stable and healthy. One that is able to guarantee Russia’s sovereignty, and prosperity for our great nation’s citizens, in the decades to come. To defend justice and the dignity of every single individual. Truth and trust in the relationship between the state and society.
A great many issues remain unresolved. New difficult challenges will continue to arise, but we are in a position to use them for the benefit of Russia.
Russia is not the kind of nation to shirk a challenge. Russia muscles up, gathers its strength and responds appropriately to any challenge. Russia comes through any ordeal and is always victorious. We have a new generation of creative and conscientious people who have a vision of the future. They are already taking the lead in industries and businesses, government bodies, and the country as a whole, and will continue to do so.
How we respond to the challenges of the day, how we use this chance to become stronger and reinforce our status in this rapidly changing world is up to us.
In the coming weeks, I will present more detailed statements on this for public discussion.