Post-Soviet Affairs

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Sergey Glazyev and the revival of Soviet economics

Anders Åslund

To cite this article: Anders Åslund (2013) Sergey Glazyev and the revival of Soviet economics,
Post-Soviet Affairs, 29:5, 375-386, DOI: 10.1080/1060586X.2013.809199
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Post-Soviet Affairs, 2013
Vol. 29, No. 5, 375–386, http://dx.doi.org/10.1080/1060586X.2013.809199

Sergey Glazyev and the revival of Soviet economics

Anders Åslund*

Peterson Institute for International Economics, Washington, DC, USA

A veteran Western observer and authority on Russia’s political economy

examines the recent debate on economic growth in Russia. Focusing on Sergey
Glazyev, a prominent statist and nationalist favored by President Vladimir Putin,
who reemerged at the top of the public debate, the author discusses the essence of
his ideas (state capitalism, Eurasian integration, and expansionary fiscal and
monetary policy). He proceeds to analyze the critical response of liberals, citing
inter alia objections to loose fiscal and monetary policies. Russia’s liberal
economists favor broader international integration, whereas Putin is clearly
in favor of state capitalism and Eurasian integration. This study ends with an
up-to-date politico-economic assessment titled “Where is Putin going?”
Keywords: Sergey Glazyev; Russian macroeconomic policy; state capitalism;
expansionary money policy; Eurasian economic integration; crony capitalism;
military-industrial development
2000 Ams Classification number: E50; E60; H50; O11; O20

President Vladimir Putin’s third term, which began in May 2012, has brought
about some uncertainty concerning the future direction of Russia’s economic
policy. The main objective of high-economic growth, which prevailed from 1999
to 2008, persists in 2013, but the rate of growth has halved since 2009. In view of
its likely decline in the absence of change in economic policy, the key question is
whether or how economic growth can be revived – a theme which has precipitated
vigorous debates in Russia.
Since 2004, Russia’s economic policy has been characterized by an intricate
dualism between microeconomic and macroeconomic policies. On the one hand,
large state corporations are expanding rapidly, gobbling up big private companies,
and increasing state ownership is leading to the deterioration of corporate
governance. On the other hand, Russia has pursued conservative fiscal and
monetary policies with steady budget surpluses. This dualism has led to an
increasing acrimony in the country’s economic policy-making. Liberals, who
dominate the public economic debate, advocate more deregulation and
privatization, whereas the state corporations demand more state funding at the
expense of looser fiscal and monetary policy. The big private businessmen have
largely stayed out of the public debate.

*Email: AAslund@PIIE.com

q 2013 Taylor & Francis

376 A. Åslund

Rather precipitously, this dualism has come to the fore in the public debate, as
Sergey Glazyev has risen as the leading spokesman for state capitalism since
becoming Putin’s personal economic advisor in July 2012. As a top young
economist, Glazyev became First Deputy Minister for External Economic
Relations in the first Russian reform government in November 1991. In December
1992, he advanced to the position of Minister for External Economic Relations,
but resigned in September 1993 in protest against President Boris Yel’tsin’s
dissolution of the pre-democratic parliament. He then joined the leadership of the
Communist Party for a short period and then became affiliated with various
nationalist parties. In 2004, Glazyev ran as an independent nationalist presidential
candidate against Putin, coming in third with 4.1% of the vote. He has gradually
moved toward Putin, and for the last 2 years before becoming Putin’s official
advisor, he held the positions of Deputy General Secretary of the Eurasian
Economic Community and Secretary of the Commission of the Customs Union.
Glazyev is eminently connected in the Russian elite.1
During the last year, the prolific Glazyev has presented the blueprint of a full
economic program and managed to publish more of his writings than usual. Still only
52 years of age, he is intelligent and forceful, with an ideological outlook that has not
changed much over time. As a convinced nationalist and statist, Glazyev advocates
state capitalism, protectionism, and much looser monetary and fiscal policy, which he
claims will lead to high-economic growth. He has never been a liberal and his
membership in the Gaidar reform government was rather accidental. It is easy to
recognize his ideas from the mid-1990s (Glazyev 1996), or in his nationalist
campaign against Putin in 2004 (Glazyev 2005). Glazyev has persistently defended
three ideas: protectionism, state ownership, and loose monetary and fiscal policy.
Although Glazyev’s ideas are old and well known, the novelty is that he now
appeals to Putin, whereas in 2004 he attacked the very same Putin for being an
economic liberal.2 In early 2013, Moscow’s many economic liberals launched a
furious attack on Glazyev, showing that they take the threat posed by his ideas
seriously. A March 2013 editorial in Nezavisimaya Gazeta eloquently summarized
the current state of affairs:
The name of the President’s Counselor Sergey Glazyev does not disappear from the
pages of newspapers. The reason is that Academician Glazyev has presented an
alternative to the current economic course . . . many do not like Glaziev’s ideas. But
the current ministers are also losing confidence, as the economy moves toward
stagnation under their management . . . . The interest in Glazyev’s work has been
caused by the January media information that [reports] President Vladimir Putin has
ordered the President of the Russian Academy of Sciences Yuriy Osipov to prepare a
study about the possibilities of Russia [being able] to secure sustainable
development in the global crisis. (Glazyev 2013)
In this study, I shall first summarize the essence of Russia’s economic policy-
making since 2000. Second, I will proceed to discuss Russia’s current economic
problems. A third section lays out Glazyev’s current economic program, and a
fourth outlines the liberal response. Finally, I shall assess what is known about
Putin’s recent reactions to these ideas.
 Post-Soviet Affairs 377

Economic policymaking under Putin

During the 13 years that Vladimir Putin has been in power, economic policy-
making has changed more than is commonly perceived. It is useful to distinguish
three different periods that largely coincide with the presidential terms.
From 1999 until 2008, Russia had the highest real economic growth in its
history, averaging 7% a year for a decade. Measured in current US dollars, the
growth was considerably greater. Gross domestic product (GDP) rose almost 10
times from a pitiful $200 billion in 1999 to a respectable $1.9 trillion in 2008.
Meanwhile, Russia reduced its public debt from 100% of GDP to 3%, and built up
huge international currency reserves peaking at almost $600 billion in August
2008 (Sutela 2012).
Three ingredients generated this impressive growth spurt. First, the market
reforms and privatization of the early 1990s lay the groundwork. Second, the
catharsis of the financial crash of 1998 convinced the Russian elite about the need
for fiscal conservatism. Third, high oil prices from 2003 gave Russia a free ride.
President Vladimir Putin’s two first terms coincided with this economic
expansion, but he was not the cause of that success. Economic growth started in
1999 before Putin’s arrival. Furthermore, the principles of the market-oriented
reform program that he pursued in his first 3 years in office, 2000 –2002, had
largely been formulated before his arrival; moreover, he abandoned such liberal
economic policies in 2003. Thus, President Putin arrived at a laid table and
enjoyed its fruits (Åslund 2007).
Three groups have been responsible for economic policymaking under
President Putin, and they have represented very different economic policies. The
first group consists of liberal economists from St Petersburg, who have occupied
the top economic posts. They were most influential during Putin’s first presidential
term, from 2000 to 2004. Former KGB officers who moved to the top of state
corporations form the second group. They dominated policymaking during Putin’s
second term, from 2004 to 2008. Finally, private friends of Putin from St
Petersburg, thriving from favorable state procurement and from buying cheap
assets from state corporations, appeared most important during Putin’s third
(informal) term, from 2008 to 2012. All these sharply contradictory groups remain
in play, and this assembly has been labeled Politburo 2.0 (Minchenko 2012).
In 2000, Putin’s Economics Minister Herman Gref brought together a large,
operative economic reform program. The so-called Gref Program was to a large
extent legislated and implemented in 2000– 2002, including a new tax code, a civil
code, a judicial reform, and deregulation. Finance Minister Aleksey Kudrin was
the other major reformer under Putin, who had become the backbone of the
conservative fiscal policy. Gref and Kudrin represented a continuation of the
thinking of Russia’s reformers in the early 1990s, namely the former Acting Prime
Minister Yegor Gaidar and former First Deputy Prime Minister Anatoliy Chubais.
This group of like-minded liberal economists has dominated the Ministries of
Economy and Finance and the Central Bank. Although both Gref and Kudrin have
left the government, their successors have remained liberal (Åslund 2007).
378 A. Åslund

Putin’s second term was characterized by the confiscation of Yukos through

Rosneft and the rise of large state corporations through mergers, notably of
Gazprom, Rosneft, Russian Technology, Russian Railways, United Shipyards,
United Aircraft, Sberbank, VTB, and Vneshekonombank. Not all, but most were
run by former KGB officers, and all directors were close personal friends of Putin.
The state corporations appeared to represent state capitalism, whose growth
dominated Putin’s second term (Gustafson 2012).
In parallel, a third group surged, Putin’s private business associates from St
Petersburg, who dominated Putin’s third term. They have naturally denied that
their incredible success in state-related business had anything to do with their
personal friendship with the president. The group was first named in public in 2004
(Minchenko 2012).

Russia’s new economic problems: low growth

Thus far, Putin has presided over three distinctly different economic programs,
and it is not obvious which program he will choose in the future. From his
perspective, each of these policies has undoubtedly served him well; all three
groups remain in play in the elite. A fourth group now rising in his government is a
nationalist, statist group, headed by Deputy Prime Minister Dmitriy Rogozin,
former chairman of the political party Rodina (Fatherland). His close ally and
successor as leader of Rodina was Glazyev.
To judge from recent enterprise takeovers, crony capitalism appears to be
closest to Putin’s heart, and the perpetrators (directors of the large state
corporations) are his closest personal friends. To my knowledge, no authoritarian
ruler who has opted for crony capitalism has later abandoned it voluntarily. And
the rise of the large state corporations is virtually unstoppable. With plenty of
cheap state funds, they can easily buy up one big private company after another,
and continue to do so. It would be very difficult for Putin to put a halt to this chain
of events, even if he desired to do so.
Clearly, the liberals are at a disadvantage, being the least necessary and the
most distant from Putin’s perspective. Although the state and crony capitalists
want to get their hands on more state funding, the fiscal conservatives are
attempting to block them. We may argue whether Putin is primarily a crony
capitalist or a state capitalist, but he is certainly no free marketer.3 The liberals
have to justify themselves through useful deeds.
To Putin’s great surprise and chagrin, Russia’s GDP plummeted by 7.8% in
2009, the greatest contraction in any G-20 country. Annual GDP growth was 4.3%
in 2010 and 2011, and 3.4% in 2012, clearly leveling off, and the official forecast is
2.4% for 2013. This declining growth became the top economic concern.
In recent years, the Russian government has promulgated two major economic
programs. In the winter of 2007– 2008, it presented Russia 2020. Its aim was to
leave the country with a strong economic program after Putin left the presidency;
however, that program was never implemented. Similarly, in 2011 the government
prepared another major program. Two leaders of the liberal economic research
 Post-Soviet Affairs 379

establishment, namely Vladimir Mau, Rector of the Academy of the National

Economy, and Yaroslav Kuzminov, Rector of the Higher School of Economics,
led the work. They presented their final 864-page report in January 2012. Entitled
“Strategy 2020: A New Growth Model – a New Social Policy” (Strategiya 2012),
it updated the dormant Russia 2020. However, the Kremlin disregarded this liberal
reform program too.
From Putin’s perspective, the liberals’ record must not look all that promising.
The liberals are no longer delivering economic growth, and they refuse to make
available all the money that his state and crony capitalist friends desire. To judge
from his lack of action, Putin is not all too interested in their reform programs, and
the two liberals who were personally close to Putin, Gref, and Kudrin, are no
longer in the government.

Glazyev’s economic program

Putin’s appointment of Sergey Glazyev as his advisor (sovetnik) on 30 July 2012
attracted considerable attention, because he stands out as the most prominent
ideologue of statist economics. At the same time, Glazyev became a member of
the board of the Central Bank of Russia.
Putin has repeatedly cited Glazyev and his ideas, especially on the Eurasian
Union, but how great Glazyev’s influence on Putin really is remains open to
question. Putin has a habit of skillfully appealing to many different constituencies.
During a meeting with his Economic Council just before Glazyev’s appointment as
his advisor, Putin cited liberal former Minister of Economy Yevgeniy Yasin [2013,
Dve Politiki i Dve Tsenariya (Two Policies and Two Scenarios). Ekho Moskvy blog,
March 3. http://www.echo.msk.ru/blog/yasin] and Glazyev as counterpoints, but
suggested that they agreed on some things and could work together (Putin 2012b).
Glazyev is an experienced and well-connected political operator. In January,
he made big news with a 58-page economic program written under the auspices of
the Russian Academy of Sciences (Glazyev 2013a). He has popularized his ideas
in a number of hard-hitting publications (e.g., Glazyev 2013b). As reflected in
Putin’s annual address to the Federal Assembly on 12 December 2012 (Putin
2012a), Glazyev favors the ideas of restructuring of the economy, de-offshore-
ization, de-monopolization, renewal of manufacturing,4 creation of mechanisms
for extending long-term lines of credit for production, improvement of the tax and
budget policy, and economic integration in the post-Soviet area.
As do all who want to influence Putin, Glazyev refers to his decree of 7 May
2012 “On Long-Term State Economic Policy” (Putin 2012c). He observes the
main quantitative targets – notably the creation and modernization of 25 million
highly productive jobs by 2020, increase of investment to 27% of GDP by 2018,
and increase of labor productivity by 50% from 2011 to 2018 – but also notes the
more liberal endeavor to improve Russia’s ranking in the World Bank’s Ease of
Doing Business index from 120th place in 2011 to 20th in 2018.
Glazyev’s (2013a, 2) focus is the “rising difference between the desired and
actual economic growth,” and more specifically its deceleration to 2 – 3% a year.
380 A. Åslund

Related concerns are the paucity of innovation, technological backwardness,

meager investment, and the excess of savings over investment. Glazyev claims
that he can resolve Russia’s economic conundrum. Under his leadership, the
Institute of Economic Forecasting of the Russian Academy of Sciences has drawn
up a development strategy to achieve and exceed Putin’s goals, with an annual
GDP growth rate of 8%, industrial production growth of 10%, fixed investment
growth of 15%, and research and development spending growth of 20%.
Glazyev’s starting point is a condemnation of the structural reforms of the
1990s, which he calls a catastrophe. He attacks privatization as harmful in itself,
and all the more so because of how it was carried out. He complains about the
criminalization of property relations (e.g., see Gans-Morse, 2012), the destruction
of scientific-technical potential, and the impoverishment of the population. He
further decries the fact that privatization hampered the formation of large,
competitive companies, while benefiting foreign investors (Glazyev 2013c). These
are old Soviet criticisms, but they continue to enjoy a great deal of popularity.
The salient idea in his strategy is technological leap-frogging, thanks to
militarization of the economy and a stronger role of the state (Glazyev 2013a). He
favors state intervention and military-industrial development, referring to Ronald
Reagan’s Strategic Defense Initiative, which he claims catapulted the information
technology revolution in the USA. Increased military expenditures would stimulate
the demand for new technological products. This strategy requires more
nationalization of large enterprises as well as state planning to make sure that
resources are not being misused. “To achieve the necessary investments and
innovation activity, state participation in the development of the economy must
sharply expand both in volume and quality” (ibid., 18). Glazyev calls for centralized
financing and industrial policy, concluding with the phrase: “It would make sense to
work out a 5-year program for the modernization of the economy . . . ” (23).
Although all of this resonates with the Soviet past, Glazyev carefully avoids
such references, and his language is modern, without socialist or Marxist terms.
His militarized state capitalism sounds like President Putin’s actual policy. He
emphasizes that Putin salvaged Russian corporations from bankruptcy with large
credits during the global financial crisis, and notes that only the state can provide
long-term financing for investment today (Glazyev 2013b).
Most controversial is Glazyev’s macroeconomic policy. He criticizes monetary
and fiscal conservatism sharply. Monetary policy, he argues, has wrongly
constrained the supply of money and financed commercial banks’ international
speculation rather than domestic production. Russia has become too dependent on
international credits. Instead, Glazyev advocates cheap credits for business and
support for small and medium-sized business with subsidized, long-term lines of
credit. Inflation should be controlled through a more effective anti-monopoly
policy. One of his many proposals is to restore the old kolkhoz markets in cities to
drive down prices through competition. This call for a return to an expansionary
monetary policy is reminiscent of that of Central Bank Chairman Viktor
Gerashchenko (from 1992 until 1994), who together with Glazyev was an
erstwhile leader of the Fatherland party.
 Post-Soviet Affairs 381

According to Glazyev (2013b), “Our tax and budget system holds back economic
development, although right now it is necessary to pour enormous resources into the
modernization of infrastructure and the development of new technologies.” In
particular, he opposes the budget rule of transferring a share of oil and gas revenues to
the Reserve Fund. Glazyev offers an eclectic mixture of populist proposals among
those favoring vested interests, notably the state corporations, without any explicit
theoretical base. His main proposals in tax policy are to abolish the value-added tax
and introduce a progressive income tax as well as a progressive ecological tax,
whereas investment and research and development should be stimulated with liberal
depreciation rules (Glazyev 2013a, 24).
Sensibly, Glazyev (2013a, 34 – 43) argues strongly for better fundamental and
applied research as well as reinforcement of higher education. He aspires to restore
the Russian Academy of Sciences as the all-dominant center of research, which
runs counter to the prevailing idea in post-Soviet Russia that research should be
combined with higher education as in Western universities. Instead, Glazyev
wants the Academy of Sciences to take charge of higher education and receive
huge new resources. He is clearly appealing to the Academy of Sciences as his
power base, opposing such direct competitors as Vladimir Mau’s Academy of
National Economy and Yaroslav Kuzminov’s Higher School of Economics.
Glazyev’s traditional favorite topic is Eurasian economic integration (ibid.,
45– 56). He is the greatest protagonist of the Eurasian Economic Union and the
Customs Union, citing fantastic and implausible numbers about the positive
effects of the Eurasian Economic Union, claiming that it will add up to $900
billion to the GDP of the three current member countries – Russia, Kazakhstan,
and Belarus (ibid., 48). Glazyev foresees far-reaching further integration.
Surprisingly, he mentions the World Trade Organization positively (although his
industrial policy involves considerable protectionism), while saving his scorn for
the International Monetary Fund and the Washington consensus.
Glazyev’s appeal to Putin can be summarized in four points. First, he praises
Putin’s actual policy of state capitalism, enterprise concentration, and
militarization, telling him to proceed more boldly on that anti-liberal road. In so
doing, Glazyev appeals to Putin’s power base of state corporations, the armaments
industry, and old Soviet industry. Second, he claims the superiority of the
Academy of Sciences, to which Putin pays considerable attention. Third, Glazyev
is Putin’s main prophet on Eurasian integration. Finally, Glazyev tries to persuade
Putin to opt for a very expansionary monetary and fiscal policy, of the
Gerashchenko style. Politically, this appeal may be quite astute, but it does not
make any economic sense.

The liberal response

The large liberal economic establishment in Moscow has had a heyday attacking
Glazyev since late 2012. Leading critiques have come from former Minister of
Economy Yevgeniy Yasin, former Finance Minister Aleksey Kudrin, and
Vladimir Mau.
382 A. Åslund

The liberals agree with Glazyev on the poor state of the economy, and also are
absorbed with decelerating economic growth and the absence of structural
modernization. The outflow of capital disturbs them too. However, the liberals
seek a very different solution, arguing for a conservative fiscal and monetary
policy and more market reforms, especially in the social sphere (e.g., Mau 2013a).
The liberal economists are on the safest ground when it comes to
macroeconomics, where Kudrin has taken the lead as Russia’s leading fiscal
conservative. Yevgeniy Yasin [2013, Dve Politiki i Dve Tsenariya (Two Policies
and Two Scenarios). Ekho Moskvy blog, March 3. http://www.echo.msk.ru/blog/
yasin] puts it succinctly:
Glazyev’s option is absolutely unacceptable: he proposes an increase of money
supply over demand, which inevitably raises inflation, excludes private investments,
and leads to reliance on state investments, which are considerably less efficient.
Kudrin (2013) maintained that a substantial share of the oil and gas rents be set off
into a stabilization fund, which is anathema to Glazyev (2012). He also advocated
pursuing low inflation with the assistance of a flexible exchange rate, that is,
inflation targeting.
Mau (2013b) has probably delivered the most extensive attack on Glazyev’s
program, although characteristically not mentioning Glazyev by name. Like
Glazyev, Mau focuses on technology and argues that Russia must be globally
competitive, but sees the Soviet example as a deterrent. The stagnation of the late
Brezhnev years is the opposite of the modernization Russia now needs; “in the
current Russian situation the main macroeconomic indicators are reminiscent of
the situation of the USSR at the end of 1970s and the beginning of the 1980s”
(ibid., 16). In the late Brezhnev years, the Moscow leadership overestimated the
“crisis of capitalism” and underestimated the successful reforms in the West.
Today the Kremlin exaggerates the Western crisis and does not realize the
significance of Western reforms. Russia’s “key problem is poor capacity of the
economy to generate innovations and modernization”. (ibid., 17)
Mau goes on to argue that the old division between backward and progressive
industries is no longer valid. “In the contemporary world, any industry can be high-
tech or outdated” (ibid., 6), with the current technological revolution in energy as a
prime example. Economic growth must derive from increased productivity, which
requires far more creative destruction. Even Mau, who favors privatization, says
little about it, showing how unpopular that subject has become.
Mau lists several causes of the deceleration of Russia’s economic growth. To
him, it is a natural reflection of the ongoing recession in the EU, Russia’s dominant
export market, “the absence of modernizing structural reforms,” the capital
outflow, the record low unemployment rate (just over 5%), and the inclination of
many highly educated citizens to emigrate. Mau does not even believe that a high
growth rate is possible.
He and other liberals emphasize the need for real democracy for the sake of
economic modernization, again drawing parallels with the Soviet system. “The
political system of the USSR was exceedingly rigid, unable to react flexibly to
 Post-Soviet Affairs 383

arising new global challenges” (ibid., 17). Today, Russia needs “political
modernization, meaning qualitatively broadening of political and economic
freedoms, which must correspond to contemporary international standards” (ibid.,
19). Glazyev, who fought for democracy and freedom when he was in opposition
to Putin (Glazyev 2005), has now dropped this theme.
Mau carefully avoids contradicting Putin or Glazyev on the need for Eurasian
economic integration and the Customs Union, but he puts the emphasis on the
WTO and economic integration with the EU and the USA. His positive view of
the EU stands in stark contrast to Putin’s dismissive attitude. Mau ignores
Glazyev’s advocacy of the Academy of Sciences, obviously preferring his own,
rapidly expanding Academy of the National Economy and Public Adminis-
tration.
The contrast between the liberals in the current Russian economic debate and
Glazyev is great. First, the liberals focus on his implausible macroeconomic
policies, arguing that fiscal and monetary stimulus will not yield much growth
because Russia has no output gap. Second, they advocate substantial deregulation
in opposition to state capitalism, while they are rather understated about the need
for privatization, recognizing that it is not very popular in Russia today and thus
presumably not wanting to antagonize all state corporations. Third, the liberals
aspire to international economic integration primarily with the most developed
economies rather than predominantly within the Customs Union. Finally, they
speak up for real democracy.

Where is Putin going?

The official mood in Russia has changed sharply, as is evident from the repression
of opposition and the anti-American campaign. This change of view is also
apparent in economic thinking. Vladimir Yakunin, who is the CEO of Russian
Railways and one of Putin’s close friends from the KGB, reflected on the current
official attitude: “The neo-liberal paradigm was exhausted by the 2008 crisis and
never recovered.”5 The importance of this sudden and intense Russian debate
about fundamental economic issues lies at three different levels – concrete
appointments, economic policy, and Russia’s future.
Russian liberals fear that Putin will dismiss them and opt for Glazyev and his
program. His appointment as Putin’s counselor was a first step. In March 2013, the
strife over Glazyev grew more heated because of the president’s coming selection
of a new chair of the Central Bank of Russia. Glazyev declared himself a
candidate, joining a field that included several bankers and liberal economic
officials. Quite unexpectedly, Putin selected economic aide Elvira Nabiullina,
seemingly because she was the least controversial liberal and close to Putin. But
the question of Glazyev’s next job persists, and the intrigue surrounding his
possible future appointments is likely to continue.
Of greater importance is Putin’s policy choice. Both Glazyev and the liberals
suspect that the president may switch to Glazyev’s policies. The key question is
384 A. Åslund

whether the president will opt for loose fiscal and monetary policies. Putin’s policy
is changing rapidly as economic growth is slowing. At his press conference in
December 2012, Putin blamed the Eurozone situation and the bad harvest:
What were the causes of the slowdown this year? . . . the general slowdown in global
economic growth and even a recession in the Eurozone, one of the leading global
centers. The second reason is our domestic problem, which is primarily concerned
with crop failure. (Putin, 2012e)
By April 2013, his tune had changed considerably, reflecting Putin’s open
worry about the slowing growth.
For the first quarter of 2013 [economic growth] was only 1.1%. The Economic
Development Ministry has revised its economic growth forecast for 2013 downward
to 2.4%, but this is with energy prices still high. Let me bring to your attention that a
growth rate of 2.4% is lower than the global economy’s growth rate. It’s been a long
time since we were last in this situation . . . we need to do everything we can to
ensure our economy’s stable development. We need a package of measures to
stimulate economic growth. (Putin, 2013a)
Thus, Putin is opting for fiscal stimulus. Considering the president’s prior
acknowledgment that Russia’s biggest problems are the malfunctioning of the
state and corruption, it would have made more sense if he had focused on
structural reform and privatization. This is a significant indication that he is tipping
over to the Glazyev preference for loose macroeconomic policy.
Putin is a great enthusiast for Eurasian integration. He has repeatedly referred
to Glazyev’s very high assessments of the benefits of the Customs Union. At his
press conference on 20 December 2012, he praised the Customs Union:
Trade with these countries grew by 10% – that is not bad at all. Most importantly,
and I want to reiterate this in front of this large audience, we have a very good
structure of trade with the Customs Union countries. Machinery and equipment
make up 20% of all goods traded. That is very good, because machinery and
equipment make up only 2% in our trade with the rest of the world . . . .(Putin 2012e)
Similarly, in his talks with Ukrainian President Viktor Yanukovych, Putin
claimed implausibly that Ukraine would gain 1.5 – 6.5% in additional GDP
growth, depending on the depth of integration, if it joined the Customs Union,
drawing upon Glazyev’s work (Putin 2013b). Glazyev is allowed to act as the chief
Russian spokesman on the need for Ukraine to join the Customs Union, a favorite
topic of Putin.6
Implicitly, Putin has already adopted state capitalism, and in his December
2012 address to the Federal Assembly, he emphasized: “Russia is characterized by
a tradition of a strong state.” However, he qualified this statement by noting: “Poor
government efficiency and corruption are major problems that everyone can see”
(Putin 2012a). Putin subscribes to the Glazyev view of the “damned 1990s:” “You
know that the anarchy of the 1990s discredited both the market economy and
democracy”. (Putin 2012e)
He also agrees with Glazyev on the importance of the Academy of Sciences. In
May 2012, Putin combined praise for the Academy and military research at its
general meeting:
 Post-Soviet Affairs 385

. . . some of the Academy’s research centers become established . . . in response to

defense industry demands . . . we will use their resources to meet the challenge of
improving the country’s defense, while developing science . . . (Putin, 2012d)
This is an ideological debate for the hearts and minds of the citizens about
Russia’s future. After a decade of a broad liberal, market economic consensus,
much appears to be up for grabs again, as was the case in the 1990s. Strangely, the
combatants remain the same. For the time being, the liberals seem to be losing
ground.

Acknowledgment
Natalia Aivazova provided outstanding research assistance.

Notes
1. I should note here that I have known Glazyev since 1990 and continue to maintain
friendly contacts with him.
2. See especially Glazyev (2005, 22– 23), where using 15 points he highlights the
differences between his and Putin’s economic programs.
3. Strangely, Gaddy and Hill (2013) titled one chapter in their book about Putin “The
Free Marketeer,” but fail to offer any evidence.
4. For an assessment of efforts to restructure the manufacturing sector, see Kuznetsov
et al. (2011).
5. As quoted in Clover (2013). For a study of the effects of the global financial crisis on
Russian political attitudes more broadly, see Chaisty and Whitefield (2012)—Ed.,
PSA.
6. See Soglasheniye (2013).

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