Vladimir Putin's Life Vladimir Putin was born in Leningrad (now known as St. Petersburg) in October 1952, had a heavy involvement in sports as a young man, and graduated with a law degree from Leningrad University (with honors) in 1975. He worked for the KGB, became involved in government as an aide to the mayor of Leningrad, and eventually became a deputy on President Yeltsin's staff, and from there was groomed as Yeltsin's successor.

Vladimir Putin, His Presidency, and the Russian Economy

When Yeltsin resigned and turned over the reins to Putin December 31, 1999, Putin's "initial act as president" (415) was very controversial in that he agreed to sign "a decree granting retiring President Yeltsin and his family a series of benefits and privileges."

Those privileges included "immunity from criminal investigation or prosecution," according to the book by David MacKenzie and Michael Curran.

In fact, it looked to observers like the free pass for Yeltsin -- protecting him against any possible investigations regarding possible wrongdoing while he was in office -- was part of the deal in which Yeltsin wanted to turn power over to Putin.

When acting president Putin achieved the decisive victory over his communist opponent in March, 2000, to become the next president of Russia, it was the first totally free and democratic election and transfer of power in that nation's history. And among the first things Putin did as president, unfortunately, was launch an aggressive military crack-down on the state of Chechnya.

In time, he addressed the economy of Russia, putting forth the opinion, the authors assert, that even if Russia's GDP per person rose by 8% over the subsequent 15 years, the economy of Russia would only be as good as Portugal; and in order to get up to speed with France or the UK, Putin believed, annual growth would need to reach 10%.

Achieving that goal would require restructuring the Russian economy, and doing it quickly: "The paramount word is fast ... we have no time for a slow start," MacKenzie et al. wrote on page 416. At the time Putin was put in charge, Russian workers averaged about $65 a month, and economic output in terms of production had dropped some 53% since 1990.

Several reasons for the decline in production for Russia included: a corrupt political environment; many wealthy and powerful people had been allowed to avoid being taxed; the population of Russia had slipped by some 6 million people, meaning of course fewer people paying taxes.

But Putin was determined to turn things around, and one of the first things he did was go to Germany (he speaks German), where $150 billion was owed, some 60% of Russia's total foreign debt at that time.

By late in his first year in office, Russia's economy began to improve somewhat, brought on mostly, the authors write, by "higher world oil prices" (423) albeit Russian "living standards and life expectancy remain(ed) dangerously low." Clearly, Putin had inherited a legacy from Yeltsin that was drenched in red ink, and he had also been handed responsibility for a nation of people hungry for positive social improvement, short of human necessities and looking for a stronger economy for better jobs.

Late in 2000, when the budget -- Putin's first as president -- was passed by the Duma (similar to the House of Representatives in America), it apportioned only "40%" to the regions and 60% to the central portion of the country. This was hard to swallow for all those outlying states, since they were giving more in taxes to the central government than they were receiving in benefits. And this left local governments, Shevtsova writes (140), with not enough money for those many satellite states to meet "education and health care" needs.

But meantime, while the economy showed some very positive gains (largely due to higher oil prices on the world market; the economic numbers for 2000 were "the best in Russia in the past quarter-century," Shevtsova explains) nothing was being done to reform the economic structures in Russia; Putin appeared to be riding out the situation on the glow of the those higher oil revenues and sparkling numbers.

His lack of aggressive reform policies with reference to the economy allowed little embarrassments to become bigger, however, as Shevtsova points on (141); "Andrei Illarionov, the president's economic adviser, suddenly launched an attack on the Kasyanov government ... [for] failing to take advantage of a unique economic opportunity for advancing reform."

'The intoxicating air...

What the attack showed was that Putin was perfectly willing to allow his cabinet and advisors to speak up, speak out, even be critical, and his approach was "indecision and wavering," and a failure to fully understand "which side to choose" (142). At a time when Putin could have made some decisive moves to bolster an economy was running on fumes, he vacillated, the author explains.
Meanwhile, in December of 2000, a close ally of Putin, German Gref, came out and told the president that by 2003, because of the poor state of the economy, Russia would not be able to pay back the "Paris Club" of debtor nations (which was owed $48 billion). If Russia was going to be able to make the 2003 payment ($17.5 billion) that would mean sending half the budget for fiscal year 2003, a not-very-likely scenario.

On page 215, Shevtsova explains further how the good fortunes of the economy apparently led to the failure to fix an economic system that needed reform badly. The economic expansion of the Russian economy was 8.3% in 2000 -- and that year the gross domestic product jumped 20% as well -- and the economy expanded 5.8% in 2001.

Issues like the "non-payment of salaries and pensions" were resolved in that period. Revenue into the government coffers jumped too, 50% in fact, as a result of the flat 13% "personal income tax" that was instituted in 2000; that tax was the only real reform of the economy at that time. And a new Land Code was put in place, allowing people to "buy and sell non-agricultural land," which certainly was a reform but didn't affect the economy.

Putin, at this time in his presidency, had the appearance of being potent. "The sources of Putin's power became clear," Shevtsova writes on 161. The first source was high oil prices, mentioned previously in this paper, and the second source of his power was "his amazingly high approval ratings, which stayed hi despite the emerging disillusionment with him among some social groups." It became a game of resisting and postponing "necessary but clearly unpopular" reforms such as utility and housing changes in policy just because "they threatened to wreck his high ratings."

It was beginning to look like Putin began his day with a look at popular ratings in the polls, and went where the wind blew best for him, including issues on the economy. "If the liberals were unhappy," Shevtsova writes, "he turned to them, talking about market reforms." But it was hard to "avoid the feeling that the energies of the president and his team" were being plundered on "fluctuations" in those ever-present popularity ratings. And that is no way to run a country that needs desperately to reform itself along more stable economic lines.

Meanwhile, towards the end of Putin's second year as president, while the economy already had shown signs of sagging, oil prices slipped to $15 a barrel on the world market, and investment from foreign sources only added up to $2.5 billion. That foreign investment was lower than in 2000 and less than Poland or the Czech Republic. Also, the stock market "remained risky" (216) and "the bulk of Russian assets was in the hands of sharks -- Russian oligarchs" who had no interest in bringing in foreign investments. There was "no working banking system" and the legal system was in the hands of a very few.

Making matters worse was the 2.7 billion rubles ($90 million) owed in back wages and pensions -- people expect to be paid for work, and when they retire, they fully expect to receive the money they have paid into pension funds. So Putin had problems on his hand that had not been properly addressed earlier in his administration.

Since the bulk of the economic positives had been made possible by oil and gas revenues, when those revenues faded, things got tight (216); and because the emphasis on oil and gas conglomerates "did not allow medium-sized and small enterprises to develop" and because "modernization from above was producing immense bureaucratic pressure" -- an obstacle to free enterprise and initiatives by private groups -- an effective new market was not possible.

All these obstacles to a thriving economy caused Putin to realize (217) that he needed desperately to initiate drastic reforms, but, Shevtsova writes, while Putin attempted to restart economic reform, he promptly "vacillated," pressing "different pedals" and wound…