Economic reforms will have to be resumed with or without Putin as Prime Minister.
This year promises to be a year without a theme. Just like 1981, when the USSR was decaying quietly and without much ado. The doubts as to who is number one in the ruling tandem have been dispelled. As an instrument to rally the elites and public opinion, not to speak of transforming the economy and the state, Medvedev's modernization does not even match Gorbachev's "acceleration." Rather, it reminds one of Brezhnev's "improvement of the economic mechanism"-an attempt to breathe life into the economy while sticking to the main principle: the political system must remain immutable. In the absence of significant actions on the part of Medvedev, there seems to be no alternative to a third presidential term for Vladimir Putin.
Even so, the year will not be entirely devoid of events. Yes, the bureaucrats will behave as if they had never doubted that Putin would be back at the Kremlin, supporting his every word and disregarding any "signals." But when Putin is back at the Kremlin, he will need a Prime Minister. Various contenders will bid for the job of Prime Minister that will be vacated in 2012-after all, it is not universally accepted that Putin and Medvedev will simply swap jobs.
The policy articles and speeches by contenders for the country's second most powerful job do not speak of immediate actions. "There is no political will," one Prime Ministerial hopeful said before the New Year, explaining why no serious reforms were likely to happen in the foreseeable future. After all, the system withstood a severe test in 2009 without serious upheavals. So, there is no point in changing anything.
The dismantling of the more conspicuous elements of state capitalism initiated by the President last year with the Prime Minister's consent shows that the authorities are aware that the model that was installed in the second half of the 2000s leads to a dead end. Putin restored many elements of Soviet state capitalism: political monopoly, the dominance of the government sector in the economy, bureaucratization and politicization of economic decisions. But thanks to the liberal reforms of the 1990s, an important safety mechanism has been built into the system: money matters and the authorities are well aware of the importance of macroeconomic stability.
The current system's margin of strength is not unlimited. It is still full of inefficiencies. The "Putin formula" envisages massive redistribution of wealth from the successful to the socially or politically favoured. Think of the injection of 75 billion roubles into Avtovaz. Over-centralization of decision-making has steadily downgraded the quality of decisions simply because none of the subordinates dare to challenge Mr Putin. Last year, there was much talk about the rise of the rate of contributions to social funds starting from 2011, which had the Prime Minister's approval. The arguments of those who opposed the decision- and I know of no professional economist who thinks it is the right decision - were simply ignored. If the higher rates come into force, economic recovery after the crisis will be seriously slowed down.
One of the key lessons of Brezhnev-era stagnation and the Gorbachev-Yeltsin revolution is that change begins later than you expect it, but before you are ready for it. At the same time, a broad consensus among the professional elites can influence even the authorities if they are not constrained by external factors. This is highlighted by an episode now related to me about the autumn of 1991.
By mid-October, the euphoria generated by the August victory over the coup-makers had waned. The situation in the economy was fast deteriorating, the Russian government was practically dysfunctional, and President Yeltsin had retired to Sochi. In an interview with Nezavisimaya Gazeta, a young Russian MP, Mikhail Dmitriyev, a future co-author of the pension reform of the early 2000s, questioned the President's ability to implement a radical economic reform that even conservative professionals considered to be necessary. Mr Dmitriyev suggested that as a populist, Mr Yeltsin would find it easier to follow the national patriotic path trodden by Georgian President Gamsakhurdia.
Dmitriyev's interview caused a veritable euphoria in the group of economists who were writing the reform programme in total secrecy at a government dacha outside Moscow. The head of the group, Yegor Gaidar, was jubilant: Yeltsin was indeed wavering, and harsh criticism would induce him to make the right decision because the alternative was too grim.
As we now know, Gaidar had reason to be joyful.
Vladimir Fedorin, Deputy Editor-in-Chief, Forbes Russia