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Monday, January 12, 2009

Vladimir Putin and VVP

In Russia, many of the citizens refer to Vladimir Putin as VVP. This acronym has dual meanings. Putin's full name is Vladimir Vladimirovich Putin or VVP. Also, in Russian, Gross Domestic Product is Valovoj Vnutrennij Produkt or VVP. In fact, VVP, Valovoj Vnutrennij Produkt is the source of much of Putin's power. It is also the source potentially of his downfall.

When he swept into office in 2000, he made a grand promise. He promised the people of Russia that their VVP would grow at a minimum of 7.5% annually year over year under his leadership. To put this in perspective, a growth of 3% is normally considered excellent. What Putin was promising was nothing short of impossible. Yet, Putin has largely delivered on this promise.
Now, there are plenty of intelligent people in Russia. Many of them fully understand that the remarkable growth in GDP has much more to do with the remarkable growth in oil prices than anything Putin himself did. Yet, the thriving economy in the 1990's had much more to do with the explosion of the internet than anything that Clinton did. Yet, Clinton's popularity grew regardless.
The same thing is in play here. Putin's approval ratings are somewhere in the neighborhood of 80%. In fact, most in Russia see him as a very strong and capable leader. Much of the heavy handed tactics like jailing opponents, cutting off opposition, invading Georgia are not only disregarded but frankly viewed very favorably.
Putin first began his power grab in earnest when he jailed the head of Yukos, Mikhail Khodorkovsky, for tax evasion. To understand what Putin did, one needs some context on Russian tax laws at the time. Technically, Khodorkovsky probably was evading taxes but tax laws were so vague and ambiguous that tax evasion became a way of life in Russian business. In other words, Putin essentially set someone like Khodorkovsky up and then brought him down. Khodorkovsky had an opportunity to avoid jail. Putin offered for him to leave the country. Khodorkovsky thought that he had far too much power and didn't need to leave. Khodorkovsky had close ties to many in Putin's inner circle and he always thought that those ties would keep him out of jail. He is now making mittens in a Russian jail and learned the hard way just how much Putin is himself obsessed with power.
None of this phased much of the Russian society. They saw Putin as a tough leader cracking down on criminality. They viewed him this way in large part because his promise of growing VVP was successful. So far, it continues to be successful. With the world economy in freefall, and oil prices going with it, it is highly unlikely that for the near future he will continue to grow the Russian economy at the same rate. In fact, it is far more likely that for the near future VVP will decline.
The Russian people have not only overlooked a lot of tyranny on the part of Putin but rather they have embraced it. That's because they associated much of his tyranny with a growing economy. The masses in Russia are no more political astute than they are in any other country including the U.S. They viewed Putin's heavy handed tactics, a growing economy, and made the determination that he was a strong leader doing what he needed to do to grow the economy. How will they view his tyranny when the economy is weakening? Only time will tell, but just as VVP lifted Putin up, so to, may it bring him down.

1 comment:

Anonymous said...

Very good and obiectiv analysis...