Can Russia make modernization work in the 21st century?

By Alexander Kliment

"Today Russia has a new agenda, one that incorporates sustainable development and the modernization of key economic sectors. I believe we stand a good chance of seeing these plans materialize."

-Prime Minister Vladimir Putin, Oct. 5, 2010

"Modernization and the introduction of high technology is a key feature of our activity. I repeat that this is key."

-Putin, Oct. 18, 2010

"The modernization of Russian democracy and establishment of a new economy will, in my opinion, only be possible if we use the intellectual resources of post-industrial societies. And we should do so without any complexes, openly and pragmatically."

-President Dmitry Medvedev, in "Go, Russia!" Sept. 10, 2009

The idea of "modernization" is hardly new to Russian politics. From Peter the Great to Stalin to Putin, Russia's leaders have always been obsessed with "catching up" to a more modernized Europe. But over the past two years, the word has become a kind of magical catch-all term in the Russian political lexicon. The word is on the lips of just about every mayor, governor, minister and businessman in the country. A flurry of high level governmental commissions has been formed to address the issue. Moscow has even contracted a New York PR firm to gin up a website that shows -- depending on your point of view -- how "modern" Russia is or how far the country has to go.

The trouble with all this is that it's still very hard to understand what modernization really means for the people who use it and what it would actually take to "modernize" Russia.

Most Russian officials agree that their economy is far too vulnerable to price fluctuations in international commodities markets and that Russia's industrial base is in sorry Soviet shape. Beyond that, however, agreement breaks down. Each of the country's various political and economic interest groups has its own conceptions of what the modernization of Russia means and how best to go about achieving it. And as with interest groups everywhere, the definitions are often self-serving. 

Some officials, like Medvedev, articulate a liberal idea of modernization. Liberal modernizers -- who draw support from some of the president's closest economic advisors and the country's cosmopolitan elite -- want to do three things: upgrade Russia's dilapidated infrastructure and rusting industrial base; diversify Russia's economy away from over-reliance on oil and gas exports via state-funded development of various high tech industries; and, crucially, to undertake political reforms at some medium-term point.

This version of modernization depends in large part on the cultivation of closer ties with the developed economies of Europe and the Americas to help with investment and access to latest technologies. You can find a fuller description of this model in Medvedev's famous "Go, Russia!" manifesto, which appeared in September 2009. The essay drew largely on ideas laid out by Putin a decade earlier , but the focus on modernization of Russian politics and society was bold, lucid, and -- in today's Russia -- almost totally impracticable.

Then there's the modernization that Putin talks about today. That version, which, not surprisingly, has much more political support behind it, shares the liberal modernizers' plan to upgrade infrastructure and diversify the economy. But you won't find anything in this version that includes serious consideration of political reform, especially of the kind that might allow for genuine pluralism. For Putin and his circle, you can't undertake serous economic reform without the centralized authority guaranteed by Russia's current quasi-authoritarian political system. To attempt both at once is to invite the chaos of perestroika.

(In a way, Putin, like Pyotr Stolypin, Russia's great, pre-revolutionary modernizer, wants "twenty years of peace and quiet" before genuine political reform can be attempted. Stolypin only got 11 years before he was assassinated.)

Then there are those Russian officials who use the word modernization to promote any major state spending projects that will line their pockets. This is the kind of modernization favored by many of Russia's state capitalists, those who see modernization as an opportunity to win government contracts from commercial partnerships with particular state-run companies. These guys have no more interest in political reform than Putin does, and they have almost nothing to say on the subject of economic diversification. Within the dinosaur-era industries, those kept alive only by state subsidy granted to prevent a surge of unemployment and the resulting political unrest, these are the last of the mastodons. This is the opposite of modernization -- by anyone's definition.

What does all this mean for Russia's future? Does modernization simply mean application of a new coat of paint and construction of some new pipelines? Or is there a credible and clearly demarcated path toward construction of a 21st century economy?

Not yet.

The Skolkovo Innovation Center, which aims to create a "Russian Silicon Valley" just outside of Moscow, will move forward haphazardly, and Medvedev will continue to talk up plans to transform Moscow into an international financial center, though few informed analysts believe it can extend its influence much beyond the former borders of the Soviet Union anytime soon. But political reform, the kind that might enable innovation from below instead of endlessly subsidizing it from above, is not really on the table -- and won't be for the foreseeable future.

It's hard to think of any developing state that has succeeded in implementing reforms on this scale without strong central planning. But for states to modernize economies, they also need to modernize themselves. The real modernization challenge facing Russia today, in contrast with the campaigns of previous centuries, is not one of mobilizing massive numbers of bodies to build things. It's about cultivating, unleashing, enabling and then protecting the innovative potential of the Russian people. That's where bloated bureaucracy, weak rule of law, and weak democratic accountability slam on the brakes.

When it comes to modernization, Russia's current system can certainly plant many of the seeds. But without substantive political reform, it will ultimately have little chance of harvesting them.

Alexander Kliment is an analyst in Eurasia Group's Europe and Eurasia practice.