Putin’s ‘National Goals’ For Next 6 Years: Ambition vs. Reality

March 23, 2018

Since Vladimir Putin’s predictable victory in last Sunday’s presidential “election”, official statements regarding the president’s next actions have been few and far between. Concrete commitments were, however, indicated by the incumbent in the run-up to the election itself.

In his Presidential Address to the Federal Assembly, Vladimir Putin outlined several ‘national goals’ for the next six years and beyond, and ordered his administration to create ways for his vision come to fruition. These goals address social and economic problems faced by Russia, which is plagued by demographic issues, low life expectancy and a slowing economy with state monopolies severely inhibiting growth and free enterprise.

One of Putin’s primary aims is to significantly improve life expectancy in Russia, currently measured at 71.5 years on average. Under new plans, Putin is likely to commit to raising life expectancy to 78 by the end of his fourth term, and up to 80 by 2030.

In order to facilitate this, Alexey Kudrin, chairman of the Centre for Strategic Research and former finance minister, has suggested diverting defence funds to increase public spending on education and healthcare. He also hinted at increasing the public deficit in order to obtain the necessary funds. It is unclear, however, whether the government will follow his advice.

Kudrin also leaves out the issue of endemic corruption and its devastating effects on the Russian economy and political system, which has made Russia an incredibly high-risk area for potential investors.

Among Putin’s designated national goals is a promise to reduce poverty by half in Russia. In 2016, 16% of the population subsisted beneath the poverty line; this puts Russia above the average for poverty among the world’s biggest economies. It remains to be seen whether Putin will be able to follow through on this pledge.

The Russian president also made commitments to rejuvenate the Russian economy, targeting a place in the top 5 global economies by the end of his fourth term, a claim similar to those made before previous presidential terms, which failed to materialise.  Private enterprise and economic growth has lagged considerably in recent times owing to the dominance of state monopolies in many areas of the economy (up to 70%), as well as labour inefficiency.

In his address, Putin emphasised the need to enlarge the role of small business. By 2025, Putin wants to see small business amount to 40% of the country’s GDP and employ 25 million people, 6 million more than at the present moment; an aim labelled ‘ambitious’ by Alfa-Bank economist Natalia Orlova.  Medium and small businesses continue to suffer significantly due to the absence of the rule of law, and the lack of security for their investments, which can be acquired by hawkish competitors with good local government and law enforcement connections.

Elsewhere, Putin pledged to raise living standards for at least 5 million families annually, facilitated by a rejuvenated economy. The Ministry of Economic Development endorsed Putin’s pledges, calling them workable if structural economic reform is carried out. It remains to be seen, however, whether this will come to fruition. The avoidance of deep economic reform has become a feature of the Putin era (soon to enter its second decade), and to many in Kremlin, a reduction of state interference in the economy will be seen as resulting in instability, not opportunity.

The prospects of Russia entering the top five global economies are also seemingly slim. While the global economy is due to grow by 3.1% in 2018 and 2019, IMF forecasts indicate that the Russian economy will grow by 1.7% and 1.5% respectively; at nearly half the global rate. Clearly, considerable work is yet to be done if Putin’s pledges are to be satisfied.

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