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STRATEGIC

STUDIES

INSTITUTE

The Strategic Studies Institute (SSI) is part of the U.S. Army War 

College and is the strategic-level study agent for issues related to 

national security and military strategy with emphasis on geostrategic analysis.

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Strategic Studies Institute Monograph

CAN RUSSIA REFORM?

ECONOMIC, POLITICAL, AND MILITARY 

PERSPECTIVES

Stephen J. Blank

Editor

June 2012

The views expressed in this report are those of the authors and 

do not necessarily reflect the official policy or position of the Department of the Army, the Department of Defense, or the U.S. 

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classified information, jeopardize operations security, or misrepresent official U.S. policy. Such academic freedom empowers them to offer new and sometimes controversial perspectives 

in the interest of furthering debate on key issues. This report is 

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ii

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ISBN 1-58487-531-3
iii

CONTENTS

Foreword ..................................................................v

Introduction ...........................................................vii

1. Russia’s Choice: Change or Degradation?...... 1

 Lilia Shevtsova

2. The Impossibility of Russian Economic

Reform: Waiting for Godot .............................37

Steven Rosefielde

3. Reform of the Russian Military and Security

Apparatus: An Investigator’s

Perspective ........................................................61

 Mark Galeotti

About the Contributors .......................................107

v

FOREWORD

The nature of the Russian state and the economy it 

superintends raise more than academic questions, for 

if we understand the nature of the state and its subordinated economy, we can then form an accurate vision 

of what Russia’s overall policy and strategy will be. 

We may say, euphemistically, that the beginning of 

wisdom in understanding Russian policy and strategy 

is to grasp the answers to key questions concerning 

the nature of its political and economic processes. In 

line with that approach to understanding Russia, the 

Strategic Studies Institute (SSI) is pleased to present 

the first volume of papers from its annual conference 

on Russia conducted on September 26-27, 2011. The 

resulting papers go straight to the heart of the most 

important questions concerning the nature of the state 

and the possibilities for its economic reform.

In the wake of Vladimir Putin’s return to the 

presidency of Russia, those are, indeed, the crucial 

categories of questions we must answer. SSI's annual 

conference on Russia represents the institute's efforts, 

together with those of a distinguished array of other 

U.S., European, and Russian scholars, to answer the 

questions and discern the trajectory of Russian developments as they occur. We do so in the belief that this 

knowledge is not only valuable in its own right, but 

that it also provides a valuable resource for experts 

on Russia, interested laymen and, most of all, policymakers who must formulate policies dealing with 

and/or affecting Russia, a country that deliberately 

tries to remain opaque to foreign observers despite its 

many changes. Accordingly, we hope that the papers 

presented here and in subsequent volumes will both 

enlighten and edify readers and stimulate the effort to 
understand and deal with one of the most important 

actors in international affairs today.

DOUGLAS C. LOVELACE, JR.

Director

Strategic Studies Institute

vi
vii

INTRODUCTION

These papers represent the first in a series of papers 

taken from the Strategic Studies Institute’s (SSI) fourth 

annual Russia conference that took place at SSI’s headquarters in Carlisle, PA, on September 26-27, 2011. As 

such, they also are part of our on-going effort to make 

sense of and clarify developments in Russia. The three 

papers presented here offer attempts to characterize 

first of all, the nature of the state; second, the prospects for economic reform within that state—perhaps 

the most pressing domestic issue and one with considerable spillover into defense and security agendas as 

well—in contemporary Russia; and third, the nature 

and lasting effects of the defense reform that began in 

2008. The papers are forthright and pull no punches, 

though we certainly do not claim that they provide 

the last or definitive word on these subjects.

Nevertheless, for our readers in particular these 

are the most crucial issues as we go forward, particularly after the recent reelection of Vladimir Putin 

as President. Can or will Putin change the nature of 

the state and economy? Though many doubt that he 

either wants to, can, or will undertake the necessary 

transformations of the political system, his actions 

and those of his colleagues who today steer the ship 

of state will tell us the answers to those issues. The 

same question applies with equal, if not greater, intensity to the nature of the Russian economy. Likewise, it is essential for us to grasp how the military 

reform launched in 2008 has changed and affected the 

Russian armed forces and what their profile, outlook, 

composition, and organization, not to mention their 

doctrine, will look like going forward.
viii

These are critical questions for experts and policymakers alike. Interested laymen no doubt will also 

find the proceedings of considerable interest, if not 

actually provocative in their assessments. But as we 

have noted, we do not aim at providing answers for 

eternity, but at enhancing the understanding that only 

comes about through controversy and reflection. We 

therefore hope that the following essays will not only 

pique our readers’ interests, but also force them to 

think on a deeper plane about the inherent challenges 

that Russia presents to us.

 

Professor Stephen J. Blank

Strategic Studies Institute
1

CHAPTER 1

RUSSIA’S CHOICE:

CHANGE OR DEGRADATION?

Lilia Shevtsova

The December 2011 protests have proved that Russia has come to the point when the most educated and 

forward looking segments of the society are starting to 

realize that the personalized power system’s continued existence is leading to national and social degradation with potentially dramatic consequences for the 

country. But this growing awareness has not yet produced any alternative that could secure broad political 

and public support, and Russia thus continues down 

its destructive road. Moreover, Vladimir Putin’s ruling team is going to reproduce the system during the 

December 2011 and March 2012 “managed” elections.

In this chapter, I reflect on the nature of Russia’s 

political system, the external factors influencing its 

existence, the strategic implications of its degradation 

and the prospects for its transformation.

 SURVIVING WITHOUT CHANGE 

Russia let slip an opportunity for liberal transformation at the moment the Soviet Union collapsed. A 

number of circumstances complicated Russia’s transition to liberal democracy: history, traditions, culture, 

an anti-Western nationalism, the need to accomplish 

four revolutions (create a free market, build a new 

state, democratize the regime, and let go of an imperial identity), reluctance to part with any sliver of its 

sovereignty in order to integrate into Europe, and Eu-
2

rope’s own unwillingness to offer effective external 

incentives for Russia’s transformation. At the start of 

the 20th century, it was Russian society that was not 

yet ready to leave the traditional system behind, but 

at the start of the 1990s, it was the Russian elite that 

were not ready for this transformation. As the communist era came to an end, the blame for the failure 

of Russia’s liberalization appeared to lie largely with 

the seemingly liberal and democratic-minded groups, 

who proved unable to offer society an alternative and 

placed their hopes instead on a leader (Boris Yeltsin), 

thus paving the way to a revival of the personalized 

power model.

The Yeltsin, Putin, and Dmitry Medvedev presidencies saw the consolidation of a system based on 

three fundamental principles borrowed from the past 

(the Russian Matrix): personalized power, a merger 

between government and property, and the atavism 

of great power mentality (derzhavnichestvo) with its 

claims to “spheres of influence.” This system’s builders gave it a makeover, however, wrapping up the old 

concepts in a new packaging that imitated the principles on which Western civilization is based. One 

cannot deny the Russian elite’s sense of irony anyway: they managed to create an alternative to liberal 

civilization by imitating it. New Russia’s rulers had 

not only to establish their hold on power, but also to 

ensure that no challenge to their monopoly will arise 

and they do so through the crucial instrument of managed elections. The Russian elite took the liberal election principle of “certain rules and uncertain results” 

and turned it on its head, putting in place an electoral 

system based on “uncertain rules and certain results.” 

Elections devoid of political competition but where the 

authorities manipulate public opinion have become a 
3

means for guaranteeing the ruling elite’s monopoly 

hold on power. 

One might ask, what happened to that other pillar 

of the traditional matrix, militarism, which over time 

had become such an intrinsic part of the existence of 

Russia’s state and society? Historically, militarism, 

and more specifically the constant search for an outside enemy, was not just the cornerstone of Russian 

foreign policy, but also a means of consolidating elite 

control over the population and part of daily life. After the collapse of the Soviet Union, the Kremlin abandoned the doctrine of total military confrontation with 

the West, but retained aspects and symbols of militarism, which still often impose their logic on the current system. 

Today’s new-look Russian system presents several 

salient features, in particular the hybridization of economic, social, political, and foreign policy. This is reflected in adherence to mutually exclusive principles, 

such as market and state control, paternalism and 

Social Darwinism, and cooperation with and rejection 

of the West. Ambiguous principles, absence of a clear 

direction, the constant game of “Let’s pretend!” have 

become a new Russian way of life. Meanwhile, having 

abandoned ideology in typically post-modernist fashion, the Russian elite adopted pragmatism as its credo, 

which it proclaims as its guiding light and source of 

pride. 

The Russian elite has also demonstrated considerable tactical skills. Let us not forget, though, that clever 

tactics often mask an absence of strategic vision. The 

authorities swing between repressive action and coopting of representatives of various social and political groups (nationalists, leftists, and liberals) into the 

Kremlin’s orbit, thus discrediting the political currents 
4

they represent. The Kremlin has long realized that 

any rhetoric and slogans can be manipulated for the 

purpose of nipping the emergence of any opposition 

in the bud. The elite use the impression of a change 

in leadership, for example, to maintain its monopoly. 

Putin did not try to guarantee his hold on power by 

the blatantly unconstitutional means of running for a 

third term in office as president, but instead took the 

prime minister’s job and set up a tandem structure 

with Medvedev, while keeping the real power in his 

hands—this was a new way of reproducing the same 

regime. The Kremlin also alternates between Russia’s 

“special path,” and a supposed desire for European 

integration. These constant zigzags and mutually 

exclusive slogans demoralize and disorient society, 

undermine its confidence in the future, and leave no 

solid ground on which any real alternative can develop. In this unclear situation, the authorities look like 

the only guarantor of stability. This imitation-based 

system has proven an effective means of maintaining 

the current ruling team in power. But its categorical 

rejection of the principles of freedom and competition 

undermine any hopes for and attempts at renewal and 

modernization from inside. 

Russia’s post-modern experiments have disproved 

a number of axioms on democratic transition and 

hybrid regimes. The fathers of democratic transition 

theory held the view that, as Samuel Huntington said, 

“the halfway house does not stand.”1

 One could certainly imagine that hybrid systems built on mutually 

exclusive principles cannot be stable and will eventually start to wobble. But this kind of political death can 

be a very drawn-out process, it turns out. Indeed, it can 

be precisely the existence of these mutually exclusive 

principles that prolong the life of such hybrids. For ex-
5

ample, the personal freedoms that let Russia’s people 

live their lives independent of the authorities (under 

the condition that they do not meddle in politics) and 

Russia’s relative openness to the outside world lead to 

apathy, emigration, and/or withdrawal into personal 

life rather than to society trying to expand its freedoms. Instead of helping to shape and develop democratic habits, imitation of democratic institutions and 

liberal rhetoric only discredits democratic principles. 

Theorists say that the middle class is the foundation 

of liberal democracy, but in Russia the middle class 

provides the support for the centralized state. Another purely Russian paradox that helps to keep the personalized power alive is the destruction of traditions 

and stereotypes existing before the Bolshevik revolution of 1917. The Communist period eradicated this 

old mindset, but the Russian society it produced, now 

atomized and deprived of its traditional social bonds 

and aspirations, is inclined towards a new form of monopoly hold on power as a means of survival. 

The West also plays a prominent part in keeping 

Russia's authoritarianism alive. The Russian elite’s opportunities for personal integration in Western society 

(as exemplified by Roman Abramovich, former governor of Chukotka and now one of Britain’s wealthiest 

citizens), joint projects between Western and Russian 

business, the efforts to draw Western intellectuals into 

the projects of the Russian authorities, and the involvement of Western political circles’ in corrupt deals with 

the Russian elite—all play a part in helping to keep the 

system afloat. 
6

RUSSIA AS THE WEST’S PARTNER AND

OPPONENT

Foreign and security policy are other instruments 

the Russian system uses to keep itself going. The nature and role of Russia’s foreign and security policy 

come through above all in Russia’s relations with the 

West. This is only natural, as it is Western civilization 

that provides the alternative to Russia’s political model and at the same time the West is a refuge place for 

the Russian elite. No matter whether or not Russian 

foreign policy takes the form of dialogue or confrontation with the West, its aim remains to keep in place a 

personalized power system that is inherently hostile 

to liberal democracy. The optimists who get excited 

every time the Kremlin starts cooperating with Western partners would do well to remember this. 

Let us deliberate on how the domestic agenda influences foreign and security policies and makes them 

its own instrument. The key goal of the Russian system domestically is to preserve the status quo, and first 

of all, the ruling elite’s monopoly on power. Foreign 

and security policies have to: 1) guarantee a benevolent international environment for the Russian system 

and its international legitimacy (the latter becomes 

crucial in the situation when the system is losing its 

domestic legitimacy); 2) deliver additional drivers for 

society’s consolidation around the authorities; 3) secure economic resources to support the system; and, 

4) guarantee ways for personal integration of the Russian elite with the Western society (this goal is new 

compared with the Soviet survival mechanism). 

Foreign and security policies have to pursue contradictory paths. For the outside, these policies have 

to create the image of Russia as a modern and respon-
7

sible European state. For the inside, foreign policy has 

to supply constant justification for the “Besieged Fortress” mentality and secure rejection of the Western 

standards by the Russian society. This “driving two 

horses in opposite directions” is actually the agenda 

of Russian foreign and security policies that the Kremlin has been pursing with great skill during the last 10 

years. This agenda is instrumental for reproduction of 

the centralized state and personalized power that cannot exist without an alien environment. One thing has 

to be added: foreign and security policy reproduces 

fears, phobias, and complexes dominant in the Russian 

domestic policy, which transfers into the realm of Russia’s relations with other states: suspicion, arrogance, 

attempts to demonstrate might and at the same time 

the Kremlin’s lack of vision and ability to forecast the 

consequences of its actions. One could risk the conclusion that the Kremlin foreign and security policies are 

more influenced by domestic needs than by the logic 

of international relations. This is what makes Russia 

such a difficult partner, forcing other states to view 

Russian international behavior through the prism of 

the Russian domestic trajectory. This creates puzzling 

situations when, from all points of view, Russia acts 

against common reason, ruining its own reputation as 

it is doing, for instance, in its relations with Georgia, 

recognizing the occupied territories as independent 

states. But these actions could be easily predicted and 

explained if one will look at the needs of the Russian 

system and its personalized power. 

Over the last 20 years, the Russian elite has developed a foreign policy model that one could define as 

“together with the West (and even within the West) 

and against the West at the same time.”2

 Depending 

on the circumstances at home and abroad, the Russian 
8

authorities shift the emphasis between different aspects of this contradictory model. But no matter what 

line the Kremlin takes with regard to the West, its main 

domestic goal remains unchanged: to structure the 

Russian society on the basis of principles alien to the 

West. The authorities can tone down this anti-Western 

inclination during periods of dialogue and cooperation, but will never give up encouraging anti-Western 

attitudes among the Russian public, continuing to 

pursue “the Besieged Fortress” paradigm. In analyzing Russia’s foreign policy, one should not forget at 

the same time that this is the policy of the Kremlin, 

and the country’s ruling elite is not representative of 

Russia as a country. Russian society comprises a wide 

range of groups, and large sections of the public do 

not necessarily share the authorities’ views on various 

foreign policy and security issues.

The Kremlin’s foreign and security policy has 

gone through phases corresponding to the stages in 

the formation of the Russian political system. During the first phase (1991–93), when the Yeltsin team 

had not yet renounced its highly amorphous democratic aspirations, the Kremlin tried to set Russia on 

a course of integration with the West. The policy was

too contradictory and vague, however, as even during 

this time Russia’s elite, including the liberals, still held 

on to great-power ambitions and the Soviet behavior 

model. In fact, during this stage the Kremlin tried to 

integrate Russia into the West on its own terms.

In a second phase (1993–99), Russia was engaged in

dialogue with the West, but at the same time one could 

see that the Russian elite returned to its usual suspicion with respect to the West. Moreover, the Kremlin started to use elements of containment trying to 

prevent North Atlantic Treaty Organization (NATO) 
9

enlargement. The Russian system had already taken 

on its main outlines by this time, with power based 

around a single leader who relied on a corrupted oligarchy for support. This regime saw elements of the

great-power mentality return to the fore.

In a third phase (2000–04), Putin made attempts

to establish a partnership with the West based on Realpolitik, hoping to become an equal member of the 

Western club while retaining the monopolist power 

system in Russia and holding on to its neo-imperial 

aspirations. James Sherr rightly pointed out that there 

was in this “a strong geo-economic emphasis.”3

 In Putin’s view, this geo-economic leaning had to become 

the new basis for returning to the first echelon of the 

global actors. Although Putin’s version of Realpolitik 

found support in the West, the Kremlin was unhappy 

with the results in the end. Putin did not see signs 

that his Western partners were ready to treat him as 

an equal and endorse partnership with Russia on the 

Kremlin’s conditions.

In 2004-08, a new fourth stage in Russia’s foreign 

policy development began. The Orange revolution in 

Ukraine was a watershed that pushed the Kremlin 

into taking a more aggressive line in its relations with 

the West. I doubt that Putin actually believed that 

Western countries planned and organized Ukraine’s 

upheavals. Rather, Moscow used the events in Kiev 

as a justification for its increasing dissatisfaction with 

the West, this on the back of a burst of self-confidence 

brought on by rising oil prices and Putin’s growing 

domestic popularity. The Russian elite had the sense 

at that moment of a “Russia risen from its knees,” and 

a large part of the public shared this view. Putin’s team 

concluded that the time had come when Russia held 

the upper hand and could dictate its rules to the West. 
10

Dmitry Trenin described the Kremlin’s new course 

as an “imposed partnership” and defined the conditions Putin laid before the West: “Take us as we are 

and do not meddle in our internal affairs; accept us 

as your equals; in areas where our interests meet only 

compromise solutions can be considered. We will 

make concessions only if you do too.”4

 I would add a 

few more conditions to this list: respect Russia’s right 

to a sphere of influence in the post-Soviet area, conclude with Russia energy-security agreements that 

would guarantee it long-term contracts for energy 

supplies and ensure favorable conditions for Russian 

business in Western markets.

Putin not only formed Russia’s new foreign policy doctrine but also succeeded in turning it into the

main factor in consolidating the Russian society. He 

definitely felt that foreign policy could be used more 

aggressively to pursue a domestic agenda. On the outside, Putin’s doctrine looked like a very contradictory

cocktail. Its main theses, set out on various occasions

by Putin and Foreign Minister Lavrov, can be summed

up as follows: the existing system of international rela- of international rela- of international rela- international rela- international international relations is outdated, Russia proposes establishing a new

tripartite world government together with the United 

States and the European Union (EU) that can steer the

global boat forward, and Russia calls for “networking

diplomacy” and a renunciation of old alliances (above

all, NATO). 

In return, Moscow was ready to take into account 

Western business interests in Russia. In February

2007, Putin delivered his famous Munich, Germany, 

speech that was an attempt to force the West to accept 

the new role of Russia and its terms of partnership. 

Putin declared that “the world has reached a decisive

moment when we need to give serious thought to the 
11

entire global security structure.” This speech was an 

ultimatum that made clear Russia’s willingness to risk 

worsening relations with the West if it refused to accept the Kremlin package, i.e., its proposal to revise 

the rules of the game established after 1991. 

This rhetoric made it clear that by 2007 Russia had 

become a revisionist power. Moscow demanded a return to some aspects of the bipolar world that existed 

before the collapse of the Soviet Union. In essence, this 

was a demand to recognize Russia’s right to a new format of neo-imperialist policy. No, this is not imperialism any more. This is a “post-imperialist syndrome,” 

some would say. I would argue that if the goals of 

this policy are to influence domestic developments in 

neighboring countries using not only soft power but 

tough pressure, this is definitely a variation of imperialism. But at the same time, Moscow tried to avoid 

the confrontation that characterized the Cold War era.

Before 2004, the Kremlin was satisfied with the 

role of enabler and spoiler. From 2004, Putin’s team 

wanted more leverage. In his analysis of the Chinese 

domestic and foreign policy, Bobo Lo wrote that China has been trying to assert its status as a global player 

while “absolving it(self) of leadership responsibilities,” which means that China wants “to sit in the front 

of the car, but doesn’t want to drive.”5

 Putin’s team 

offered a much more ambitious agenda for Russia: 

they wanted it to be part of the global leadership and 

wanted to “drive the car.” True, the Kremlin planned 

to drive the car together with the United States and 

the EU (though, the Russian team never took the EU 

seriously).

Most Russian politicians and experts at the time 

based the Russian foreign policy revisionism on geopolitical arguments—Russia’s growing power, West-
12

ern weakness, the need to ensure respect of Russia’s 

national interests, and the desire to make up for past 

humiliations. But there was also the position set out by 

Foreign Minister Sergei Lavrov, who declared that the 

domination of Anglo-Saxon values was over and that 

an era of competition in the “civilization dimension” 

has begun. Not so long ago, members of the Russian 

elite had been talking about how they accepted liberal 

principles but applied them in accordance with Russia’s specific conditions. During Putin’s second presidency, they started to lay claim to their own value system, though it remained unclear exactly what values 

they had in mind. 

One could conclude at that time that the Kremlin 

wanted to establish Russia’s status in a space somewhere between the West and the rest of the world, one 

that would give it the chance to play by its own rules, 

which were not always clear and certain. One fact, 

though, was apparent: the Kremlin’s ambition was to 

have an independent system with satellites in Russia’s 

orbit. At the same time, Moscow wanted to be part of 

Western decisionmaking mechanisms without making any commitments to the West. 

Putin’s team wanted to ensure themselves a place 

in the global governance with the West. This implied 

a proposal to the West to return to a balance of power, 

but with a Western guarantee that it would hold itself back with regard to Russia while recognizing the 

country’s right to have its sphere of influence. The 

Western leaders were hardly prepared for this unusual paradigm. This macho foreign policy model became 

a powerful factor in Russian domestic affairs that had 

to legitimize the Kremlin’s political regime. In the absence of ideology and an attractive domestic agenda, 

the foreign policy doctrine had to ensure the interests 
13

of the Russian rentier class, the raw-materials model 

of capitalism, and an authoritarian government. One 

could hardly fail to notice an interesting phenomenon: 

While seeking to maintain the status quo inside Russia and keep the ruling team in power, the Kremlin 

was attempting to revise the status quo that emerged 

in the world after the Soviet collapse. Being a dogmatist and a revisionist at the same time has become the 

Kremlin’s credo. Taking a look at the Russian elite’s 

rhetoric in 2006–07, one could see statements such 

as “Russia cannot take any one side in the conflict of 

civilizations. Russia is ready to act as a bridge.” The

Kremlin’s choice of words—mediator, bridge, superpower, network diplomacy, and geopolitical triangle—illustrated the reigning mood among the Russian 

ruling team at the time. 

The Kremlin’s offensive worked. The Russian elite 

succeeded in forming a fairly broad range of instruments of influence in the West that continues to work 

today. It includes co-opting Western business and 

intellectual representatives into their own network, 

playing on the contradictions between Western countries, imitating the West and making use of Western 

double standards to justify Russian double standards. 

This has become a clear model of a ruling class that 

wants to have all the benefits the Western world can 

offer but at the same time rejects its standards. Moscow could defend Serbia’s territorial integrity but at 

the same time undermine Georgia’s and threaten to 

split Ukraine. Russia could take part in the Russia–

NATO Council but at the same time consider NATO 

its enemy. Meanwhile, Western leaders have failed to 

offer an antidote to the Kremlin’s game.
14

ATTEMPTS TO MODERNIZE THE SYSTEM AND 

ITS FOREIGN POLICY SUPPORT

The global economic crisis in 2008 forced Putin’s 

team to tone down its ambitions and ushered in a new 

phase in the Kremlin’s foreign and security policy development. The authorities realized that the domestic status quo was fragile and the economy in need of 

modernization. This required a change of tactics, and 

they therefore laid aside for the time being attempts 

to blackmail and intimidate the West. They concluded 

that what Russia needed to do was to make use of 

financial and technological opportunities offered by 

the West to overcome its backwardness, following a 

formula that was used successfully on two previous 

occasions in Russian history—by Peter the Great and 

Joseph Stalin. The Kremlin decided to attempt for the 

third time to use the West in bringing about post-industrial modernization while not changing the system 

itself, i.e., without expanding freedom and competition. 

The “reset” in Russian–U.S. and Russian–EU relations provided the authorities with the ideal tool for 

carrying out their plans. Medvedev’s arrival in the 

Kremlin gave this new model of relations a political 

basis. The cooling in ties during Putin’s presidency 

had come to an end and the mood in the West was 

generally hopeful and looking to Medvedev’s supposedly pro-Western aspirations and liberal views. 

Henry Kissinger wrote enthusiastically that “we are 

witnessing one of the most promising periods in 

Russian history.”6

It soon became clear, however, that hopes that 

Medvedev would become the architect of a new breakthrough with the West were greatly exaggerated.
15

Those who hoped that new president could set in motion a pro-Western shift in the Kremlin were failing to 

see the obvious. 

During the war against Georgia in 2008, Medvedev 

sounded more hard-line in his anti-American and antiGeorgian declarations than Putin, the senior Russian 

leader. Medvedev put forward five principles for Russia’s foreign policy, among which was Russia’s right 

to take action beyond its borders to protect the lives 

and dignity of Russian citizens wherever they may be, 

and to pay special attention to specific regions where 

Russia has “privileged interests.” This clearly showed 

a desire to re-establish the historic buffer zone around 

Russia and proved that Medvedev has been working 

within the same foreign policy model as Putin. It was 

after Medvedev’s arrival in the Kremlin that Russia 

began threatening to take measures in response to 

American missile defense plans in Europe, in particular by deploying Iskander missiles in the Kaliningrad 

Region. It was also under Medvedev that the latest gas 

war between Russia and Ukraine flared up at the start 

of 2009. Medvedev threatened Ukraine’s President 

Viktor Yushchenko. For all the economic contradictions between the two sides and Kiev’s ambiguous 

position, there was no doubt that Moscow’s tough approach to the dispute pursued the political objective of 

destabilizing the situation in Ukraine and influencing 

the political struggle for power in that country and at 

the same time discrediting Ukraine in the West’s eyes 

and thus blocking its road to Europe. 

Medvedev’s idea of a new binding treaty on European security and his explanation of his understanding 

of this security arrangement has been the continuation 

of an approach typical of Putin. It was not hard to see 

the Kremlin’s intent—to prevent NATO expansion, 
16

put the Alliance outside the European security system, 

and at the same time draw the European countries 

into long years of senseless negotiations with Moscow 

on the format of a new security agenda. True, quite 

a few Western and Russian observers prefer not to 

notice the Putin-Medvedev continuity in foreign and 

security policy. They prefer to stress the “reset” signs. 

Supporters of the reset have several arguments. They 

point to the normalization of Russian–U.S. relations, 

which is of course a positive step in itself. 

Russia has normalized its relations with Poland, 

too. Moscow decided not to torpedo United Nations 

(UN) Security Council Resolution 1973 on Libya, giving the Western allies the chance to try to stop Muammar Gadhafi’s war against his own people. I agree that 

the efforts to overcome the tensions in Russia’s relations with the West and the Russian neighbors during 

Medvedev’s presidency are positive. But the point I 

want to get across is that this change in tone and even 

in tactics does not reflect any fundamental transformation in Russia’s foreign policy doctrine and its domestic roots. Without such a change, we can view the 

reset policy as simply a tactical move on the Kremlin’s 

part. The new tactics have their cause: the Russian 

authorities are trying to breathe new life into a disintegrating system that is inherently hostile to Western 

civilization and to the interests of Russian society. The 

reset simply turned out to be the most effective means 

of achieving these objectives. 

Moreover, Medvedev’s lack of real powers and his 

never going outside the role of the “chair-warmer” 

for Putin during his presidency only proved that his 

foreign and security policy initiatives have been part 

of Putin’s survival project. If one looks attentively at 

Putin-Medvedev politics (I mean the real decisions 
17

and actions, not the rhetoric), one would see that the 

Russian ruling group has been constantly moving in 

various directions: to the right, to the left, forward, and 

back. This fits the logic of a hybrid system made up of 

opposing tendencies. The reset policy of the tandem 

formula was an attempt to solve the problem of the 

Russian economic modernization. But there are other 

imperatives as well, first of all the need to preserve 

monopoly on power. There is no other way to do it 

without returning back to the usual trick—searching 

for an enemy. Thus, at any moment the Kremlin can 

push the button labeled “Cold Shower.”

CAN THE ‘RESET’ CHANGE THE RUSSIAN 

SYSTEM?

Reflection on Russia’s foreign and security policy 

brings a number of questions to the fore. One of them 

asks whether foreign policy interests or internal political logic is the determinant factor? What led to the 

strain in relations between Russia and the West during 

NATO’s period of expansion and the Kosovo crisis, 

for example? Most Russian observers would blame 

the West’s policies, but I would say that the logic the 

Russian system follows is to blame. If alienation from 

Western civilization was not essential for keeping the 

Russian power system in place, NATO’s eastward 

expansion would not be perceived as a threat. On 

the contrary, Russia would even seek to join the organization, perhaps, and the idea of NATO drawing 

closer would not generate so many negative emotions. 

Eastern European countries would perhaps not have 

been so eager to rush into NATO’s embrace in the first 

place, as they did in fear of an undemocratic Russia. If 

the Russian authorities had changed their attitude to 
18

the value of human life and human rights, they would 

not have tried to support Slobodan Milosevic, and the 

Kosovo crisis would not have taken such a dramatic 

turn. The reasons for the cooling in relations between 

Russia and the West during this period thus lie, above 

all, within Russia itself. It was the Russian system’s 

internal logic that made foreign policy differences so 

antagonistic. The same reasons explain the cooling of 

the relationship in 2000-08—this was the work of the 

Russian matrix.

Another question is, can the “reset” in Russia’s 

relations with the United States and the EU lay the 

foundation for a more solid and lasting partnership? 

How should one assess the numerous initiatives that 

seek to establish a new partnership model or at least 

promote cooperation between Russia and the West? A 

few of these initiatives are worth recalling. Igor Ivanov, Wolfgang Ischinger, and Sam Nunn, for example, proposed a “new approach” to resolving Europe’s 

security issues and a “thorough reorganization of the 

existing institutions, including the EU and NATO.” 

This proposal is in the spirit of Medvedev’s initiative 

to establish new European security organizations that 

would weaken NATO. For their part, Igor Yurgens 

and Oksana Antonenko proposed a new NATO-Russia Strategic Concept and pursuit of confidence building measures between the two sides. There have also 

been the proposals that keep coming up to give Russia 

membership in NATO. It is hard to object to measures 

that would build greater confidence between the two 

sides, but the question is, how realistically can they 

be actually carried out if the principles and standards 

the two sides pursue are fundamentally alien to each 

other? Achieving real change in relations would require real change in the principles underpinning Rus-
19

sia’s foreign policy, that is to say, real change to the 

regime’s interests and nature. 

Could external factors act as the impetus for such 

change? During Mikhail Gorbachev’s time, the winding down of the Cold War certainly gave impetus to 

internal liberalization in the Union of Soviet Socialist 

Republics (USSR). But let us not forget that Gorbachev 

himself realized the need to end confrontation with 

the West because he understood that this was harming 

the Soviet Union and depriving it of sources of growth 

and development. In short, internal considerations 

were the primary factor in forming “the New Thinking” that emerged under Gorbachev. Today, too, Russia’s foreign policy will change only if the principles 

that form the foundation of the Russian system also 

change. Partial solutions such as cooperation between 

Russia and the West on missile defense or addressing 

the Iranian and North Korean nuclear programs can 

serve as the basis for nothing more than a temporary 

warming in relations and pursuing tactical interests 

together. They cannot produce lasting and stable cooperation. 

This does not mean that tactical measures that 

strengthen confidence between the two sides are not 

needed. But to think that such measures will fundamentally change relations is an illusion, and it is precisely such illusions that help the Russian monopolist 

power system to stay alive. 

 For now, things are clearly incompatible. Medvedev has been speaking of a successful reset (while Putin has been complaining that the reset did not bring 

what Russia had anticipated), while at the same time 

approving a new Military Doctrine (in February 2010) 

that names as the main threats to Russia’s security 

“NATO’s desire to extend the military organization of 
20

its member countries closer to Russia’s borders” and 

“attempts [by Western countries] to destabilize the 

situation in particular countries,” deployment of military contingents “on the territory of countries neighboring Russia” and “the creation of a missile defense 

system.” In other words, containing the West is the 

Military Doctrine’s main goal. Indeed, it sets the objective not just of containing the West, but of preparing for future wars in space. Wars with whom? With 

the West, of course! “Air and space defense . . . is not 

a deterrent instrument but a policy of preparing for a 

major war against the main powers and alliances in 

the world,” warned Alexei Arbatov, giving his assessment of the Military Doctrine’s primary objectives.7

 The reset thus does not change the essence of the 

Kremlin’s foreign policy paradigm. So long as the 

Russian authorities still hope to use the West to support Russia’s modernization efforts, one can expect 

the Kremlin to refrain from an aggressive line. In any 

case, the Russian elite’s new means of survival through 

integration at the personal level into the Western community neutralizes the threat of a new cold war. The 

Russian elite is not devoid of common sense, after all, 

and it realizes that Russia’s possibilities are limited; 

it is clearly not about to take any suicidal steps. But 

the Kremlin’s pragmatism did not prevent the sharp 

cooling in Russia’s relations with its Western partners 

in 2004–07. A number of internal factors force the Russian authorities to turn up the anti-Western rhetoric 

again. First among these are the parliamentary and 

presidential elections in 2011 and 2012. Russia’s elections are always accompanied by a dose of the rhetoric 

of the “besieged fortress.” There is a new phenomenon to consider too, namely, the public’s growing discontent with the country’s leaders, including Putin. In 
21

this situation, and with social problems on the rise too, 

the Kremlin’s anti-Western rhetoric will only increase. 

Faced with dwindling possibilities for pepping up the 

public, the Russian authorities always start looking 

for an enemy, and the obvious candidate among Russia’s potential enemies is the United States, of course. 

Surveys in January 2011 showed that 70 percent of 

respondents think that Russia has enemies. This shows 

that the mentality typical of the militarist paradigm 

of state life endures. Who are these enemies today? 

Chechen terrorists were named by 48 percent of respondents, while 40 percent named the United States, 

32 percent said NATO, and 30 percent “some forces in 

the West.” Despite the reset, 65 percent consider the 

United States an aggressor that seeks to take control 

of the entire world. The Soviet model of relations with 

the United States, with the Kremlin’s help, thus continues to flourish today. The Kremlin’s anti-Western 

rhetoric at home will inevitably spill over into its foreign and security policy, too. 

FUTURE SCENARIOS: BETWEEN ATROPHY 

AND IMPLOSION

Russia’s options are becoming more limited every 

day because the system cannot compete with Western 

society in innovation or ability to address global challenges. Meanwhile, the Russian elite cannot permit 

even limited liberalization because that would threaten its monopoly on power and property. Political 

pluralism and competitiveness would mean the end 

of history in Russia, i.e., the end of the era of personalized power. The conservative part of the Russian ruling team may try to preserve the system by wielding 

an iron hand and even more blatant anti-Western pos-
22

turing. The iron hand scenario will be more likely in 

case the authorities start to lose control over the Russian developments. The more liberal part of the political class oriented toward dialogue with the West may 

not support the repressive scenario (though this is not 

certain). But could it consolidate its position so as to 

prevent the emergence of a stronger form of authoritarianism or even neototalitarianism? The answer is 

not clear. This is not a potential clash of ideologies or 

even of political orientations, but a clash of different 

ways of existence for the same rentier class. However, 

even if the iron hand scenario prevails, it is unlikely 

that the traditionalists will be able to hold on to power 

for long. Russia does not have the prerequisites for 

that, such as the willingness of the political class to 

isolate the country completely, reliable power structures and the public’s willingness to turn Russia into 

North Korea. But if the ruling team chooses that path, 

Russia and possibly the outside world will pay a high 

price. Moreover, the jury is out as to how and in what 

shape Russia will exit from the iron hand scenario.

The more liberal segment of the Russian rentier 

class and a new batch of systemic reformers could try 

to preserve personalized power in a new form under 

a liberal banner. However, soft authoritarianism that 

undermines itself with empty liberal rhetoric will 

hardly be sustainable either. It does not lead to the liberal opening. Quite the contrary: this would discredit 

the liberal idea and pro-Western longings just like the 

Yeltsin presidency did. In any case, Putin’s return to 

the Kremlin makes the option of softer authoritarianism rather doubtful. Sooner or later, Putin will have to 

turn to tougher measures to secure his hold on power.

 Any open conflict within the Russian elite contains 

the seeds of hope, however weak, for the transforma-
23

tion of the traditional state. But a liberal breakthrough 

is possible only if a responsible and anti-systemic 

liberal opposition that will secure society’s support 

emerges in Russia. Without that, a schism in the political class will lead to yet another mutation of the 

same old autocracy or will trigger the unraveling of 

the state. Despite growing resentment of the population and loss of credibility, Putin’s ruling team has all 

the reasons to retain control over the country and secure the replication of its power beyond 2012. Such an 

outcome would mean that Russia would be stuck in 

growing stagnation for an indeterminate time. If oil 

prices remain high, society continues to be passive, 

business interests willingly serve the regime, the opposition stays fragmented, and the West supports the 

Kremlin, then degradation and atrophy is the most 

probable scenario for Russia at least in the next 5–7 

years.

In a regime that is not prepared to impose mass 

repressive measures but is also incapable of dialogue 

with society, it does not matter who stands as the embodiment of political power. Nor does it matter what 

rhetoric or governing style the regime employs. In 

this scenario, economic growth in certain spheres is 

possible, which will create the appearance of development. Economic growth during the Putin’s presidency 

not only did not lead to the formation of a diversified 

economic model, it did not halt the growth of the gap 

between Russia and the developed world either. The 

result will be continuing rot. This is the worst possible 

scenario. It can continue for a long time and bring total degradation of the population. The nation will lose 

steam and the desire to succeed. In some Russian regions, this degradation has already reached the point 

of no return. 
24

Another scenario cannot be ruled out—that of a 

new violent implosion in Russia. With the highly centralized system recreated by Putin, dysfunction in one 

part can set off a chain reaction leading to a repeat of 

1991. All such a chain reaction requires is an economic 

crisis more serious than the one that befell Russia in 

2008. Even without an economic crisis, the failure of 

individual elements in the political system (for example, a disruption in the connection between the 

center and the regions) could topple the first domino 

and start total unraveling. Collapse of the system can 

also result from a series of technological catastrophes 

befalling Russia’s Soviet-era industrial infrastructure. 

If you recall, the Chernobyl accident provided an incentive for Ukraine to leave the Soviet Union, making 

its disintegration inevitable. But both scenarios—the 

one of gradual rot and the one of fast implosion—will 

bring the collapse of the state in the end.

The Russian public is suffering government failures silently for the time being. The reason is not due 

to Russians’ world-renowned patience, but because 

people do not see an alternative. But at some point 

people will start looking to look for it. 

Surveys demonstrate that the mood of the Russian population is definitely changing. In the spring 

of 2011, about 84 percent of Russians said they saw 

no opportunity to influence political process. The 

majority of the population was not prepared to participate in politics, relied only on itself, and tried to 

avoid any contact with official structures. This proves 

that Russians have rid themselves of their traditional 

paternalism. The system and society are now drifting 

in opposite directions. So far, this fact has helped the 

system to survive, but it is worth remembering that 

the last time that happened, in 1991, the Soviet Union 

collapsed. 
25

The fact that social anger and frustration are growing faster than the political process can channel it increases the danger of turmoil daily. At the moment, 

the collapse scenario seems rather unlikely. But since 

it is only possible to understand part of what is going 

on, it is reasonable to keep that scenario on the table. 

Using force to prolong a doomed system can only 

hasten its end and have devastating consequences for 

Russian statehood. Then again, any of the possible 

scenarios, including the transformational one, carries 

the threat of breakdown, due to the fact that Russia 

contains national and territorial communities that are 

civilizationally and culturally incompatible with each 

other. The North Caucasus is one example. 

Fear of territorial loss and statehood implosion is 

a substantial obstacle to any political change. Even 

Westernizing liberals shudder to think that liberalization could create a repeat of the events of 1991. But 

it is worth noting that within Russian expert circles 

the idea that the current system is not likely to be reformed, and even if it is reformed as the result of the 

social and political protests, both options will lead to 

a new statehood is being already widely discussed. 

However, neither the Russian political class as a 

whole nor the public is ready for that possibility. The 

public, for the time being, will not support reform if 

it believes that reform will lead to territorial loss or a 

new state. But moods do change, and there may come 

changes of public perceptions and anticipations. Thus, 

it is important to deliberate now on what a new fragmentation of Russia would mean for the world. What 

would be the reaction of neighboring countries such 

as China and Turkey, or those in Central Asia and the 

Islamic world?
26

Decentralization of power in Russia is unlikely to 

lead to Siberia and the Far East breaking away from 

European Russia, but these regions will certainly seek 

greater autonomy and a greater influence on foreign 

policy. It is entirely possible these regions’ relations 

with China, Japan, South and North Korea, and the 

United States will become far more important in their 

eyes than relations with European Russia. The future 

of Russia’s nuclear facilities and industry is another 

issue as far as future developments go, and could 

become a problem every bit as serious as the Iranian 

nuclear issue. Lax security and safety measures at 

nuclear-waste storage sites in Russia already threaten 

the lives of local people and in a situation of growing chaos and lack of control could become an even 

greater danger. 

The consequences of Russia’s existence as a civilizational hybrid imitating the West are already starting to make themselves felt now. Russia is not a direct 

military threat to the West, and this lulls the West into 

a false security with regard to Russia. A civilizational 

hybrid of Russia’s type can have an indirect effect on 

the prospects for liberal democracy in other countries. 

Mikhail Khodorkovsky rightly warned that Russia 

has become a big exporter not just of commodities, 

but also of corruption. The Russian elite, having integrated at the personal level into Western society, 

have already succeeded in turning some Western financial organizations into a money-laundering machine. There is now a unique situation in which the 

Western elite tries to educate the Russian political 

class about the principles of liberal democracy, while 

this same political class turns these principles into an 

imitation. This could become a real threat to Western 

civilization itself.
27

BUILD-UP OF SUSPENSE

The paradox—one of many—is that those factors 

that helped to strengthen the Russian system have begun to undermine it. Take, for example, corruption, 

which until quite recently was one of the pillars of the 

Russian state. Today it has become a dreadful source 

of weakness. Corrupt police and public officials provide little support for the ruling team. The corrupt 

state apparatus disobeys orders from the center with 

impunity. The regime understands the threat posed 

by corruption, but taking decisive measures against it 

would mean rejecting the principles on which the system is built. Or consider another factor: the elections 

whose management the Kremlin has now mastered. 

Until recently, manipulating elections and falsifying 

their results helped to preserve continuity of power. 

But falsification only works when the public agrees 

to play “Let’s pretend!” The time may come when 

the public says, “Enough! We don’t want to play that 

game anymore!” That is exactly what the people of 

Serbia and Ukraine did. 

To achieve the results it wanted in the parliamentary and presidential elections of 2011–12, the regime 

had to falsify results on much greater scale than before. 

That means that a regime based on blatantly rigged 

elections will lose all pretense to legitimacy. The only 

way it will be able to hold on to power is through applying more broadly the means of repression. But the 

state is not ready for repression on a massive scale. No 

matter how hard the political class tries to keep Russia drifting through the zone of uncertainty, sooner 

or later it will have to acknowledge that the present 

Pseudo-Project has exhausted itself. A state that satisfies narrow vested interests while pretending that it is 
28

satisfying national ones, and which has no resources 

to shut society from the outside world is doomed, and 

its use of imitation to survive only increases the danger of its inevitable collapse. 

It is not clear how the traditionalists in the Russian elite would behave in a crisis. But the probability 

is high that they will try to use foreign policy tools 

in a power struggle. It is hard to tell what form that 

might take: conflicts with neighbors, using foreign 

“hot spots” to provoke tension, new “gas wars,” or 

a new chill in the relationship with the West, and accusations that it is guilty of the Russian misfortunes. 

What is important is that a system that replicates itself 

by nursing its great-power ambitions, and which is 

based on anti-Western sentiments, will not be able to 

give either up easily.

In any case, the current “reset” should not make 

either Russia or the outside world complacent. The 

new warmth between the Russian state and the outside world can hardly be sustainable if the Russian 

elite continues to view the West as a foe that has to be 

deterred and the country’s neighbors as satellites who 

belong to its sphere of influence. The honeymoon can 

continue only if the Western powers accept the Russian way of dealing with the world.

Meanwhile, the time is approaching when the Russian regime will not be able to provide the standard of 

living and consumerist lifestyle that the most dynamic 

strata of Russian society have come to expect over the 

past 20 years. The social base of the system, which has 

kept things stable throughout the Putin–Medvedev 

period, may be undermined at any moment. Revolutions take place when people have lost all hope in the 

future and when improvement gives way to falling 

living standards for the population. The relative open-
29

ness of Russian society can contribute to undermining 

stability: people will compare the situation in Europe 

and Russia and see that the comparison is increasingly 

not in Russia’s favor. One of the causes of discontent in 

Ukraine in 2004 was the comparison Ukrainians made 

between themselves and their increasingly prosperous Polish neighbors. 

There are questions that will come up on the agenda very soon. One of them is what would be the personal fate of Russia’s leaders if upheaval were to begin 

in the country? How would the world in general react 

if the Russian people took to the streets and the Kremlin decided to use force to suppress them? The West 

would do well to reflect on these issues ahead of time 

and not end up wavering in its response, as during the 

Arab revolutions. Should they put in place conditions 

that would enable Russia’s leaders to depart peacefully, and guarantee them safety outside Russia? How to 

avoid Russia following the Gadhafi or the Assad scenarios, in which a leader driven into a corner resorts to 

civil war and bloodshed? These questions could come 

up sooner than is commonly thought. 

Attempts to build stable and constructive relations 

between Russia and the West will either fail or produce imitation mechanisms in Russia so long as they 

do not address the root links between the country’s 

internal development and its behavior on the world 

stage. Understanding these links will at least help to 

predict possible zigzags in relations and to understand 

Russian motivations. The West will eventually have 

to come to the realization that the Russian system is 

doomed and that the search for a new development 

model in Russia is inevitable. This will be a difficult, 

painful, and dramatic process. The West would be 

able to facilitate this process somewhat if it at the very 
30

least refrains from any action that only serves to legitimize a doomed system. 

HOW TO GET OUT OF THE TRAP

I have described a bleak picture. Ironically, Russia presents a more optimistic landscape when viewed 

from outside. The domestic audience, including the 

official establishment, on the contrary starts to view 

Russia’s future as a catastrophe. What does Russia 

need to do to break out of its vicious circle and take 

on a European identity? Is there still a chance to do 

this? Or has Russia reached the point of no return in 

its stagnation slide? 

In order to survive, Russia must reform its state 

matrix. This presumes a solution to the triad problem:

a transition to the principle of competition in economics and politics, a rejection of the principle of merging power and property, and strengthening the rule 

of law. In practice, these three issues mean a transition to political struggle, and the inevitable end of the 

ruling regime and its focus on continuity and control 

of property. Solving the triad problem is impossible 

without a review of the Putin–Medvedev foreign policy doctrine, which justifies simultaneous cooperation 

and containment of the West. To undergo such a radical transformation, the Russian elite must first realize 

that the current model of Russia’s development is exhausted. 

Today the Kremlin’s modernization mantra 

proves that the ruling elite is not ready to start a real 

de-hermetization (liberalization). This leads to the 

unpleasant conclusion that a crisis—whether social, 

economic, or political—is needed to persuade the elite 

that the system is threatening its survival. Regretfully, 
31

there are no examples in Russian history of preventive reform before a crisis hits. For the time being, the 

current ruling team has mistaken the lack of massive 

social unrest and anger as a license to continue moving in the same direction indefinitely. “We’ll think of 

something tomorrow,” the denizens of the Kremlin 

tell themselves, but the longer they take, the greater 

the danger of their losing control of the situation.

 There is one more factor that may be just as important for Russia’s transformation. No liberal transformation has ever taken place without the country 

in question coming into the orbit of the West. Since 

World War II, the key factor in transitions to democracy has been external pressure. This was what facilitated the democratic development of Germany and 

later of Southern European countries. Accession to the 

EU and NATO was the guarantee of irreversible transformation for the European post-Communist states. 

But openness to outside influence means readiness on 

the part of a country to limit its own sovereignty. Today Russia finds itself in a situation where Europe is 

not prepared to integrate it, and it is not prepared to 

give up even part of its sovereignty. On the contrary, 

retaining sovereignty has become the elite’s most important tool for retaining power. Even Russian Westernizing liberals do not dare to mention that the country might have to give up a portion of its sovereignty 

to supranational European structures. For the man in 

the street, the very idea is blasphemous, a betrayal of 

the Homeland. Russian leaders see their primary mission as strengthening Russia’s sovereignty and maintaining its independent path. How different they are 

from Chancellor Konrad Adenauer, who led Germany 

to democracy, when he dared to declare in 1953 that 

“Europe is more important than a nation!” 
32

“Nothing to worry about,” say some liberal observers in Russia, “we can make Russia a modern state 

while taking an independent path and subordinating 

ourselves to no one.” Alas, there is no precedent for 

liberal transformation without the influence of the 

West and some type of integration with the West, and 

Russian development after 1991 gives no indication 

that that precedent is about to be broken. Meanwhile, 

the logic of history moves on. In its day, the Soviet 

Union based its existence on a global missionary project. That project was bound for nowhere, but at least it 

conferred an idea and passion to the system. Today’s 

Russian system has two ideas: national egotism and 

personal enrichment. But people are beginning to ask: 

“Is our might a delusion? And who is going to make 

us rich, and how?” The Russian authorities do not 

have the answers.

 The mood is already changing. About a third of 

Russians could now be considered to form the modernist part of society—people who are psychologically prepared to live and work in a liberal system. 

The modernist part of Russian society and the passive 

strata that could join it would comprise about 68 percent of the population. Today about 53 percent of poll 

respondents believe that it is most important to “respect civil, political, religious, and other rights” and 

only 27 percent think that the most important action is 

“subordination of the minority to majority.” About 50 

percent think that Russia has to join the EU, and only 

27 percent think that it should not. At the moment, 

these people are atomized and are just hoping to get by 

on their own. It is not clear who or what could awaken 

them, or what will happen when they do awaken. But 

an enormous part of the Russian public is ready to accept new ways of doing things. This fact may become 

the key to Russia’s future.
33

However, the Russian elite do not show signs that 

they are able to comprehend that continuing on the 

present path is suicidal. In the past, Russia has always 

sought its truth at the bottom of the abyss. In order 

to keep from falling into the abyss yet again, society 

must pressure the elite to take stock of its situation. 

For now, the public seems to be content with playing the regime’s games. Those members of the elite 

who understand their plight remain too enmeshed in 

the system to speak out. For the time being, no one 

is taking responsibility for Russia’s future. People 

who are able and willing to do so appear, however, 

when there is a societal demand for them. The liberalization of the Gorbachev era arose spontaneously, 

bringing to the fore previously unknown figures who 

grasped the historical moment better than anyone else 

(although they were not ready to offer a constructive 

alternative). 

For now, the attempt to modernize Russia without 

changing the rules of the game may be the last Russian illusion. It is, in any case, an illusion that few in 

Russia seem inclined to believe. Even the Kremlin spin 

doctors have not bothered trying to make it sound 

convincing. The country’s leaders are obviously confused, and it is clear that they do not know where they 

are leading it. The elite is trying to guess at what is 

ahead, while safely squirreling away their families 

and finances in the West—just in case. The political regime cannot halt the growing dissatisfaction in 

its ranks.

What are the steps that could guarantee that this 

time Russia is ready to dismantle the Russian matrix? Let me give the “Must Do” agenda. Russia will 

need to:
34

• Hold free elections of the National Convention 

that will endorse the new constitution that will 

eliminate the omnipotence of the leader and introduce the checks and balances mechanism;

• Endorse new elections laws and guarantee free 

registration of the parties;

• Hold free elections to the legislatures and local 

self-government bodies and form a new government responsible to the Parliament;

• Secure freedom of media and meetings; and,

• Disband the current courts and law enforcement bodies (using the Georgian example) and 

form new ones.

These will be the first steps that could help Russia 

to get rid of the old system and start with new rules 

of the game. This transformation cannot be successful without massive pressure from the society, and the 

transformation itself cannot be done by the current 

ruling elite. All attempts to change the system just by 

new elections and bringing “new blood” into the state 

structures without changing the hyper-presidential 

constitution will be doomed to become a new Potemkin village exercise. 

The true Russian transformation will be the result 

of domestic developments, activity, and actors. But 

this transformation has no future without incentives 

from the outside. The West and its readiness to create 

a constructive external environment for the Russian 

transformation could become a serious, if not crucial, 

factor of change. In order to play this role, the collective West will have to be able to avoid the confusion 

in which it found itself many times before, i.e., being 

caught flat-footed by the rush of history. In 1991, Western leaders and experts did not foresee the collapse of 
35

the USSR—a comment on the quality of their Sovietology. In 1995–96, the West failed to appreciate the character of the system founded by Yeltsin. In 1999–2008, 

many Western politicians were mesmerized by the 

“Russian miracle,” failing to understand the substance 

of the Putin regime and the kind of economic stability 

he created. In time, the number of inveterate optimists 

was reduced. But there are still quite a few who hail 

the idea of Kremlin modernization from the top with 

enthusiasm. These optimists are matched by others 

who reject the possibility of Russia’s ever becoming 

a normal liberal country that maintains friendly relations with the West. Hopefully, today the West will be 

more prepared for a new stage of development. 

One should not be lulled by the fact that things 

in Russia are quiet for now. This is a deceptive quiet. 

Even if a significant part of the public and a not-so-insignificant part of the elite believe they are living in a 

temporary shelter that needs to be rebuilt, that in itself 

is a condemnation of the system and of the Russian 

state. The Russian elite can keep engaging with Western counterparts, and Russian society may look as if 

it continues to sleep (or pretends to sleep), but deep 

down society is stirring. The new Russian “moment of 

truth” is inevitable. Regretfully, it will have to come 

after Russia and the West overcome the new illusion 

that Russia can modernize itself without changing its 

old genetic code.

ENDNOTES - CHAPTER 1

1. Samuel P. Huntington, The Third Wave: Democratization 

in the Twentieth Century, Norman, OK: University of Oklahoma 

Press, 1991, p. 137.
36

2. One of the first observers to notice and formulate the “fundamental ambivalence” of Russia’s struggle to define its place in 

the world was Robert Legvold who coined the following definition: “with, although not necessarily as part, of the West, or within and perhaps against the West.” 

3. James Sherr, Russia and the West: A Reassessment, The 

Shrivenham Papers, NO. 6, 2008, Shrivenham, UK: Defence Academy of the UK. 

4. Dmitri Trenin, Russia’s Coercive Diplomacy, Moscow, Russia: 

Moscow Carnegie Center, Briefing, Vol. 10, Issue 1, 2008.

5. Bobo Lo, China and the Global Financial Crisis, London, UK: 

Center for European Reform, 2010.

6. Henry Kissinger, “Finding Common Ground with Russia,” 

The Washington Post, July 8, 2008.

7. Alexei Arbatov, “Russia’s Foreign Policy and National Defense,” VPK.ru, March 30, 2011. 
37

CHAPTER 2

THE IMPOSSIBILITY OF RUSSIAN 

ECONOMIC REFORM:

WAITING FOR GODOT

Steven Rosefielde

INTRODUCTION

Policymakers have long been double-minded 

about Russian economic possibilities. During the cold 

war, some imagined that the Soviet Union could improve planning sufficiently to overtake or even surpass America. Others felt that while planning was 

intrinsically inferior, the Kremlin could always set 

things right by jettisoning command and transitioning 

to democratic free enterprise.

Post-communism has taught them little.1

 They fail 

to appreciate that the Soviet Union’s flaws went deeper than command and that neither “liberalization” nor 

global market participation are panaceas.2 Russia’s 

core Muscovite economic system was inferior for 4 

centuries before Joseph Stalin vainly tried to subdue 

rent-seeking New Economic Policy (NEP) commissars 

and red directors with “scientific” planning. Postcommunist leaders have not fared any better in taming 

the beast. Policymakers across the globe consequently 

continue to await Godot (God),3

 expecting Moscow to 

adequately reform itself without recognizing that this 

is ”impossible” in Kenneth Arrow’s rigorous sense.4

Arrow demonstrated mathematically that it was 

impossible to reform balloting procedures sufficiently 

to make the democratic provision of public goods and 

services as efficient as private sector supply because 
38

elections do not tell officials what the majority wants 

program by program.5 They only reveal favorite candidates. Electoral rules of course can be reformed, but 

this is subsidiary. What matters is the impossibility of 

any reform to make majority (or principals’) preferences comprehensively determinative. People held 

different views on the matter before 1953. After Arrow proved his theorem, the “possibility” issue was 

closed. The only question left on the table was democracy’s adequacy. 

Analogously, it can be proven that Russia’s rentgranting economic system cannot be made comprehensively responsive to the Kremlin’s, or the nation’s 

preferences, and that the disconnect between demand 

and efficient supply (including innovation) is far larger than those of its western rivals. Consequently, if 

Kremlin supply preferences, including keeping pace 

with its neighbors, is the success criterion, then Russia’s economy must disappoint, leaving no alternative but to accept significant inferiority, or switch by 

transitioning to the market. Moscow must choose to 

accept the limitations of reform within its system; or 

transition by replacing its current system with a better one. There is no middle way that allows Russian 

living standards to converge toward the west’s high 

frontier, and simultaneously preserve its reliance on 

rent-granting and rent-seeking (See Figure 2-1).
39

Source: Angus Maddison, The World Economy: Historical Statistics, 

Geneva, Switzerland: Organisation for Economic Co-operation 

and Development OECD, 2003, available from www.ggdc.net/maddison/Historical_Statistics/horizontal-file_03-2009xls. West Europe 

includes Austria, Belgium, Denmark, Finland, France, Germany, 

Italy, Netherlands, Norway, Sweden, Switzerland, and the United Kingdom. Gross domestic product (GDP) for West Europe and 

Russia is calculated in 1990 international Geary-Khamis dollars.

Figure 2-1. USSR-EU Territorial per capita GDP:

Comparative Size 1500-2006

(West European Benchmark).

Russia can reconfigure its economic institutions,6

but the Kremlin cannot make them work satisfactorily because principal-agent mechanisms capable of 

achieving competitively efficient rent-granting do not 

exist.7 Russian economic reform in this critical sense is 

“impossible,”8 despite eternal debates about “change” 

amid “continuity.”9

 In the Arrow case, one can imagine rival democracies performing similarly, but the 

Kremlin’s plight is harsher because Muscovite rentgranting is intrinsically inferior to competitive free 

enterprise.
40

One might suppose accordingly, that once the 

impossibility of adequate Muscovite reform is recognized, Kremlin leaders will immediately junk their 

rent-granting style of economic governance and transition to democratic free enterprise, but this is unlikely. Russia’s tsars, commissars, and presidents prefer 

delegating micro-governance authority to vassals in 

return for service, tribute, taxes, and political support. 

They are attracted to command, and would welcome 

market discipline, but steadfastly refuse to relinquish 

their sovereign-vassal style of rule because, on balance, Kremlin leaders believe Muscovite rent-granting and rent-seeking provide them with the highest 

personal well-being. 

This chapter elaborates the evolution of the Russia’s Muscovite economic governance regime (sometimes called patrimonial bureaucracy),10 and then 

describes an impossibility theorem proving that there 

is no intra-systemic reform (rent-granting, command, 

and incomplete markets)11 that can make Russia’s 

economy sustainably competitive with its rivals.12

Moscow could switch systems (transition), but is most 

likely to continue waiting for Godot.

CORE MUSCOVITE MODEL

Russia has been reforming its core Muscovite 

economy created by Ivan the Great in the late 15th 

century for at least 300 years. The pure model was 

a unitary state economic governance scheme where 

Tsars, (principals) unable to micro-plan and command 

production throughout their vast domains, chose to 

lease their freehold property on a revocable basis to 

vassals (agents) in return for crop shares, tax collection, and imperial service. Servitors were given a free 
41

hand to manage these tenuous grants, subcontracting 

to overseers down a chain of command that ended 

with task masters flogging serf-slaves. There was no 

place in this primitive extraction system for multiple 

goals and competitive compensation. Tsars, servitors, 

and subcontractors merely sought to get what they 

could from the weak (satisficing),13 leaving the serfslaves with bare subsistence, and dividing the booty 

arbitrarily among themselves.

TSARIST STATE ECONOMIC MANAGEMENT 

REFORM

The core model served its purpose and was deemed 

adequate until Peter the Great decided that state munitions and luxury good suppliers to the court had to 

meet quantitative and qualitative standards. Primitive 

rent-granting and service repayment suddenly was 

insufficient. State economic governance now required 

professional management for acquiring appropriate 

technologies, assuring quality control and large-scale 

production. The reform left unitary nonmarket state 

governance intact, and was a far cry from Stalin’s concept of comprehensive economic command, but nonetheless should be seen as a baby step toward communist central planning.

ECONOMIC CO-GOVERNANCE

The 18th century witnessed a counter trend. The 

scope of state economic management continued to 

increase at a snail’s pace, however, it gradually was 

supplemented with emerging agrarian and industrial 

markets. Marketization accelerated during the 19th 

century, assisted by the abolition of serfdom and an 
42

influx of western foreign direct investment (FDI).14

These forces radically altered the core Muscovite model by transforming it from a unitary to an economic 

co-governance regime (rent-granting extraction, embryonic command, and market). Serf-slavery limited 

the market’s salutary impact on productivity, but 

opened up the possibility of Soviet NEP-style reform, 

or as many 19th and 20th century observers preferred 

to believe, a transition to democratic free enterprise. 

Vladimir Lenin feared that prospect.15 The economist 

Mikhail Tugan-Baranovsky documented the transformation,16 and Anders Aslund prematurely declared 

capitalism’s triumph in 1997.17

SOVIET MUSCOVITE REFORM

Economic co-governance was junked 1917-21 during War Communism in favor of requisitioning and 

rationing (unitary state economic governance).18 Lenin 

declared that his (and Friedrich Engels’s) “post office” 

scheme for ordering, producing, and delivering goods 

in lieu of markets would be systems-changing, replacing capitalism (Muscovy) with socialism (command 

control), but the initiative failed.19 Muscovite economic co-governance (rent-granting, command, and 

markets) was restored during NEP 1921-29 (including state leasing).20 This market communist experiment soon fell victim to Stalin’s political intrigues. He 

scrapped NEP economic co-governance in September 

1929, reverting to Ivan Grozny’s and Peter the Great’s 

rent-granting/command model, “improving” it with 

central planning, material incentives, terror, and Gulag forced labor.21 Stalin’s unitary state communist 

Muscovite reform regime was periodically tweaked. 

Nikita Khrushchev, fearing Stalin’s ghost, dispensed 
43

with terror. In the 1960s, he promoted the Liberman 

profit-seeking enterprise reform22 and decentralized and downsized the Gulag.23 Alexei Kosygin followed in his footsteps,24 but rent-granting command 

(agent management, weakly guided by Tekhpromfinplany [technical-industrial-financial plans]) reigned 

throughout,25 until Mikhail Gorbachev’s partial reintroduction of cooperative leasing (Arenda) in 1987.26

Gorbachev’s blending of leasing markets, and 

command (Perestroika) marks the beginning of the latest economic co-governance episode distinguished by 

the Kremlin’s remarkable indulgence of servitors empowered to extract state resources and capture anticompetitive market opportunities.27 Some competitive 

market elements have been beneficially introduced, 

including partial integration into the global economy, 

but remain subsidiary in the grand new scheme. Boris 

Yeltsin’s version of Russia’s latest Muscovite economic co-governance regime devised by Stanislav Shatalin 

and Grigory Yavlinsky, Perekhod (transition), has been 

heralded as a clean break with extraction and rentgranting. It is supposed to have launched a 500-day 

transition from communist Muscovite command to 

democratic free enterprise.28 The claim, if sincere, however was wishful thinking.29 Yeltsin and his chosen 

Russian secret police (FSB) successor, Vladimir Putin, 

modernized Muscovite economic co-governance, but 

the core system remains intact with little prospect of 

authentic transition.30 The reintroduction of Russian 

style co-governing markets is not enough, nor has it 

ever been sufficient to create a competitive model that 

can keep pace with Moscow’s rivals. This does not 

mean that Russia’s economic co-governance system 

cannot be improved, but it does mean that we should 

temper expectations, if as seems likely the Kremlin 

chooses to cling to its tried and defective ways. 
44

A COMPETITIVE SECOND BEST

What are the prospects for Putin discovering a 

lasting Muscovite second best co-governance model 

that will allow Russia to keep pace with, or outstrip 

its rivals? Although hope springs eternal in the Kremlin, Alexander Gerschenkron’s studies suggest that 

it cannot be done. His research shows that economic 

reforms in the 18th, 19th, and 20th centuries allowed 

Russia to develop in fits and starts (reforms sometimes 

had fleeting beneficial effect), but no Muscovite governance regime ever enabled it to sustainably challenge 

the west.31 Figures 2-1 and 2-2 illustrate the dilemma. 

They show that Russian per capita GDP steadily declined for more than a half millennium relative to the 

European Union (EU) norm. It fared worse in comparison with America. There have been a few fleeting moments of catch up, but no sustained reversal of 

fortune.32

Source: Maddison, The World Economy: Historical Statistics.

Figure 2-2. Russian-EU Per Capita GDP:

Comparative Size 1820-2006

(West European Benchmark).
45

IMPOSSIBILITY THEOREM

The fatal flaw in Muscovite economic governance 

is the conviction that anticompetitive privilege granting will not degrade economic efficiency enough to 

matter; that satisficing (making do) will not keep Russia permanently behind the competition.33

Kremlin leaders want to have their cake and eat it 

too. They prefer to lease or sell their rights as “principal” to economically govern, yet still retain firm control over agent behavior and outcomes. They know 

with certainty that agents will be tempted to subordinate duty to personal interest because of asymmetric 

information and principals’ need to curry agents’ favor, but expect everything to work out well enough.

This principal-agent problem can be formally expressed as a trilemma,34 where 1) the crown can delegate broad “extractive” authority (Muscovite rentgranting), supplemented with weak edicts (ukazy); 

2) it can construct a strong plan-command control 

regime accepting the deficiencies of central planning 

and morally hazardous compliance schemes; and, 3) 

it can install competitive, market-disciplined co-governance.35

Tsars, commissars, and presidents must choose 

one, and only one primary option as a basic style of 

rule, even though rent-granting can be partly combined with command and markets. They cannot empower servitors, and simultaneously subordinate 

them to command, or allow them to competitively 

vie with markets without negating “oligarch-agent” 

autonomy. They cannot comprehensively plan, and 

simultaneously rent-grant, or permit markets to countermand plan directives without undermining plan 
46

compliance.36 They cannot make markets supreme 

and simultaneously rent-grant and command without 

compromising the benefits of competition.

The market option is synonymous with transition 

and has been steadfastly resisted for more than 500 

years. Post-Soviet leaders have rejected command 

planning. Thus, Putin and his successors find themselves stuck with rent-granting, haphazardly mitigated with aspects of plans and markets, just as Tsar 

Nicholas II did before them. The possibility of economic reform enabling Russia to parry its rivals therefore 

depends on the existence of a potent principal-agent 

mechanism; one capable of optimally integrating rentseeking, command, and markets.37 It must reconcile 

the intrinsic contradictions among delegation, command, and competitive market discipline.

There is a vast technical economic literature on 

the difficulty of holding wily servitors accountable 

under a wide range of circumstances given asymmetric information, but none showing how agents can be 

compelled to comply with unstated objectives that 

principals do not bother formulating, when rulers are 

inclined to forgive most peccadilloes in an institutional setting that rejects effective market discipline. These 

lacunae are telltale signs. Russia’s tsars, commissars, 

and presidents insist on satisficing,38 and reject subordinating their authority to competitive markets. They 

would gladly command, but with the Soviet experience in mind shun it, even in the military industrial 

complex (VPK). The principal consequently cannot 

devise an incentive scheme to discipline agents, and 

could not apply one if it existed because rulers insist 

on satisficing. Muscovite rent-granting as a free standing system cannot pass the principal-agent coherency test when rulers want vassals to fulfill unstated 
47

desires. Nor can the crown allow markets to do the 

job without infringing on Kremlin sovereignty. The 

impossibility of formulating and designing coherent 

principal-agent incentive mechanisms to reconcile the 

contradictions of mixed Muscovite economic control, 

proves the impossibility of systems empowering Russian economic reform under prevailing circumstances. There is nothing that the Kremlin can do that will 

allow it to overtake the west, keep pace, or surpass 

it thereafter under a Muscovite unitary or co-governance system. 

 Russia’s GDP can grow, and the living standard 

gap can be narrowed through modernization and 

technology transfer,39 but Russia will remain forever 

at the back of the pack as long as Muscovite rentgranting is in command. It may flourish from time to 

time through divine coincidence,40 but even then it will 

not take long for servitors to undo any good that that 

might be done. This judgment is not abstruse. It is eminently practical. There are classes of principal-agent 

problems that can be solved, or at least adequately 

managed, but Muscovite regimes do not qualify because rulers do not have operational objective functions, collude with their servitors, and condone their 

mischief.

GUNS AND BUTTER

Nonetheless, Gerschenkron has demonstrated that 

while Muscovite rulers cannot reform their way to 

competitive success, they can try to compensate by 

emphasizing the production of guns or butter. Putin 

appreciates the possibilities, and for the moment has 

implicitly chosen butter over guns, tolerating low 

volumes of weapons production despite the govern-
48

ment’s ambitious weapons production plans.41 These 

policies may have limited benefits, and can be construed as economic reforms in a narrow sense, but 

cannot in and of themselves change the dismal fundamentals.

PROSPECTS

The likelihood of Russia’s economy becoming sustainably competitive with its main rivals by reforming its Muscovite co-governance mechanism is nil, 

despite misleading statements implying that Russian 

per capital GDP dectupled 1999-2011.42 Russia’s living standard increased 64 percent 1999-2006 according to Angus Maddison’s OECD calculations, and is 

unchanged point to point 2006 through 2011. Its per 

capita GDP today is the same as it was in 1989,43 after 

2 decades of hyper-depression ( a depression roughly 

twice as severe as America’s 1929-33) and recovery 

in 1999-2008 followed by a steep drop of 8 percent in 

2009 and a return to growth of about 4 percent in 2010.

Russia’s economy could improve in the years 

ahead, given its extreme economic backwardness, 

through technology transfer, gradual gains in market efficiency and the windfall benefits of high natural resource prices,44 but not enough to significantly 

close the gap with its rivals. Sovereign debt issues in 

the European Union and America could help Russia 

keep up for a while,45 but would also dampen western import demand from the Federation, and place 

downward pressure on natural resource prices, essential to Russia’s financial well-being. Similarly, Beijing’s fast growing market communist system might 

seem to provide a glimmer of hope because the Russian and Chinese systems share many common traits, 
49

and their per capita incomes are on a par (Figure 2-3). 

But Russia is unlikely to capitalize on its advantages 

of relative backwardness because the Kremlin views 

foreign investors and outsourcers more as adversaries 

seeking resource rents than as business partners.46 Of 

course, Putin still has an ace in the hole. If one believes 

in miracles, then Russia can abandon Muscovy and 

transition.47

Source: Maddison, The World Economy: Historical Statistics.

Figure 2-3. East-West Divergence and Convergence 

1500-2006 China versus the EU per capita GDP

(Western Europe = 100).

Some political scientists will consider this assessment pessimistic. They have faith in the march of 

human progress and are adept at finding auspicious 

signs. This was the stock-in-trade of the International 

Money Fund (IMF) and World Bank during the transition euphoria of the 1990s and 2000s, before 2009.48

These institutions and others insisted that as modernization and globalization raised living standards in 

less developed countries, emerging nations would in-
50

evitably forsake authoritarianism for democratic free 

enterprise.49 Although, the prediction clearly has gone 

awry in the Federation, the hope persists that Russia’s 

transition merely has been delayed because its per 

capita GDP now exceeds $10,000, computed in current dollars with an overvalued ruble exchange rate.50

This hypothesis cannot be disproven, even though the 

Kremlin has had ample opportunity during the past 

half millennium to quit Muscovy, but the internal 

signs are not propitious. Putin is not wavering, and 

Obama’s “reset” hasn’t triggered a popular domestic 

ground swell for democratic free enterprise.

ENDNOTES - CHAPTER 2

1. Andrei Shliefer and Daniel Treisman, “Russia: A Normal 

Country,” Foreign Affairs, March/April 2004, Cf; Steven Rosefielde, “Russia: An Abnormal Country,” European Journal of Comparative Economics, Vol. 2, No. 1, 2005, pp. 3-16. Academic Russian 

economists are pessimistic about prospects for sustainable reform 

or transition. See Institutsional’naya ekonomika: razvitie, prepodavanie, prilozheniya, Mezhdunarodnaya Konferentsiya, Gosudarstvennyi universitet upravleniya, Moscow, Russia, 2009; D. Trenin, 

“A new and modern foreign policy,” Moscow Times, May 14, 2010.

2. Steven Rosefielde, Masaaki Kuboniwa, and Satoshi Mizobata (eds.), Two Asias: The Emerging Postcrisis Divide, Singapore: 

World Scientific, 2012.

3. Samuel Beckett, Waiting for Godot, London, UK: Faber and 

Faber, 1956. The play is a classic absurdist tragicomedy.

4. Kenneth Arrow, Social Choice and Individual Values, 2nd Ed., 

New York: Wiley, 1963.

5. Arrow proved that balloting does not assure that majority preferences determine most government programs in democratic societies. Elected officials may faithfully implement their 

platforms, but only some of the planks in the platform will be 
51

majority approved. A minority of voters may prefer the rest of 

the planks. Minority (“dictators”) preferences therefore determine numerous issues, contrary to the presumption that majority preference govern outcomes throughout. The same problem 

doesn’t best perfect competition. It can be proven in principle 

that markets are capable of responding efficiently to consumer 

preferences, without entailing “paradoxes.” This claim does not 

apply to the Russian Muscovite economic control system which 

is strewn with principal-agent paradoxes that degrade its performance relative to the west.

6. The Kremlin decriminalized private ownership, business, 

and entrepreneurship in the late 1980s. It implemented the initiative by establishing new legal business entities, decontrolling 

prices, opening the economy, permitting capital inflows and outflows, cutting taxes, developing macroeconomic management capabilities, and promoting the rule of (contract) law, all purportedly to create a state guided, competitive market system aimed at 

advancing consumer utility and social welfare. When these efforts 

went awry, it made mid-course corrections and counted on spontaneous market forces (including the maturation of civil society) 

to do the rest; all to no avail. Sergey Teplyakov, “Institutsional’nyi 

vektor postsotsialisticheskoi transformatsii v Rossii,” Mezhudnarodnaya konferentsiya, Institutsional’naya ekonomia: razvitie, 

prepodanvanie, prilzheniya, Gosudarstvennyi universitet upravleniya, Moscow, Russia, November 16-17, 2009, pp. 166-174. 

“Dmitry Medvedev’s Building Project,” The Economist, November 

26, 2009. 

At times Mr. Medvedev’s speeches sound uncannily like postmodern renditions of Mr. Gorbachev’s. His diagnosis is relentless: a primitive, commodity-based economy that cannot create 

prosperity; the lack of reforms; and all-pervasive corruption.

Unable and unwilling to touch the foundations of the political 

system that created him, Mr. Medvedev has been reduced to 

uninspiring talk of simplifying Russia’s 11 time-zones and of 

creating business incubators at universities.

Mr. (Sergei) Guriev (head of the New School of Economics) 

suggests that the reason Russia has failed to modernize is that 

its ruling class can pocket rents from things as they are. Serious 

modernization threatens them because it would require stronger institutions that would make this harder.
52

Under Mr. Putin the political system is held together by the 

collective interest of those who divide up rents, combined with 

occasional repression. If the oil price stays flat or falls, that formula may keep working only if the repression is stepped up.

7. The same principle holds for mixed arrangement where 

rent-granting predominates, but is supplemented by command 

and markets.

8. This claim assumes that rivals are competitively efficient, 

and that special factors like resource endowments are not decisive. 

9. Alexander Gerschenkron, Continuity in History and Other 

Essays, Cambridge MA: Belknap Press, 1968.

10. Max Weber, Economy and Society, Berkeley, CA: University 

of California Press, 1978.

11. The proof can be extended to that form of social order that 

Russians call “Sobornost,” i.e., spiritual communalism.

12. The proof is “weak,” because although it can be shown 

that mechanisms do not exist for reconciling the conflicting goals 

of rent-granting, command, and competitive markets, an optimum might be achieved by “divine coincidence.” If readers believe in miracles, the proof provided later is “weak.” 

13. Satisficing is an economic term for incomplete utility 

searching and profit maximizing. The antonyms are maximizing 

and optimizing. It is akin to optimal satiation, but different, because satisficers do not bother to inquire whether it is worth their 

while to seek more. Judgments about what constitutes enough are 

emotionally, not rationally based by definition.

14. John McKay, Pioneers for Profit: Foreign Entrepreneurship

and Russian Industrialization, 1885-1913, Chicago, IL: University of 

Chicago Press, 1970.

15. Vladimir Lenin, The Development of Capitalism in Russia: The 

Process of the Formation of a Home Market for Large-scale Industry, 
53

Moscow, Russia: Progress Publishers, 1899 (published under the 

pseudonym Vladimir Il’in). 

16. Mikhail Tugan Baranovsky, The Russian Factory in the 19th

Century, Homewood, IL: Richard D. Irwin, 1970.

17. Anders Aslund, Russia’s Capitalist Revolution: Why Market 

Reform Succeeded and Democracy Failed, Washington, DC: Peterson 

Institute, 2007; Anders Aslund, Building Capitalism: The Transformation of the Former Soviet Bloc, Cambridge University Press, 

MA: 2001; How Russia Became a Market Economy, Washington, DC:

Brookings, 1995.

18. Alec Nove, An Economic History of the USSR, 1917-1991, 

3rd ed., London, UK: Penguin, 1992; Steven Rosefielde, The Russian Economy: From Lenin to Putin, Oxford, UK: Blackwell, 2007. 

19. Vladimir Lenin, State and Revolution, New York: International Publishers, 1917.

20. Russia’s wealth in principle was the tsar’s patrimony. He/

she effectively leased assets to servitors just as Lenin did during 

the New Economic Policy (NEP). Both tsarist and Bolshevik leasing were revocable.

21. Alexander Gerschenkron, “Russia: Patterns and Problems 

of Economic Development, 1861-1958,” in Gerschenkron, ed., Economic Backwardness in Historical Perspective, Cambridge, MA: Harvard University Press, 1962, pp. 119-151. Steven Rosefielde, Red 

Holocaust, London, UK: Routledge, 2010.

22. Evsei Liberman, Economic Methods and the Effectiveness of 

Production, New White Plains, NY: International Arts and Science 

Press, 1972.

23. Rosefielde, Red Holocaust.

24. Gertrude Schroeder, “The Soviet Economy on a Treadmill 

of Reforms,” In Soviet Economy in a Time of Change, Washington, 

DC: Joint Economic Committee of Congress, 1979, pp. 312–366.
54

25. Tekkpromfinplany were enterprise, technical, industrial, 

and financial microplans.

26. Steven Rosefielde, and Stefan Hedlund, Russia After 1984:

Wrestling with Westernization, Cambridge UP, London, 2007.

27. Rosefielde and Hedlund, Russia After 1984.

28. Shatalin, Stanislav, et al., Transition to the Market: 500 Days,

Part I (English Ed.), New York: St. Martin’s Press, 1991. Cf. Steven 

Rosefielde, “Russia’s Aborted Transition: 7000 Days and Counting,” Institutional’naya ekonomika razviet, 2010.

29. Stanislav Shatalin asserted that it did not matter whether 

transition took 500 days or 500 years, as long as it rid Russia of 

communism. Public lecture, Duke University, November 1991.

30. Clifford Gaddy and Barry Ickes, “Russia After the Global Financial Crisis,” Journal of Eurasian Geography and Economics, 

May-June 2010, pp. 281-311. Gaddy and Ickes declare that “Russia 

is addicted to resource rents,” meaning subsidization of Sovietera industry. They claim that like “all” resource-rich economies, 

“rent management” is the key to understanding the laws of Russian economic motion, and liken Putin’s governance to a “protection racket.” Cf. Clifford Gaddy and Barry Ickes, Russia’s Addiction: The Political Economy of Resource Dependence, Washington, 

DC: Brookings, 2010. Leon Aron claims that around one-fourth of 

the 900,000 inmates in Russian jails today are entrepreneurs, accountants, legal advisers, and midlevel managers. The chairwoman of Business Solidarity, an organization that defends the rights 

of entrepreneurs, decried the “criminal-legal repression,” calling 

it “a state within a state.” See L. Aron, “Dimitri Medvedev’s Modernization Thaw: Objectives, Actions, and Policy Tests,” AEI Russian Outlook, September 9, 2010.

31. Gerschenkron, “Russia: Patterns and Problems of Economic Development, 1861-1958.” 

32. Andrei Illarionov recently showed that Russian industrial 

output fell for 7 consecutive months and therefore, according to 

National Bureau of Economic Research (NBER) criteria, Russia’s 

economy has succumbed to its second depression/recession in 
55

the past 5 years. This behavior, observable in the United Kingdom and no doubt soon in the United States, too is the normal 

aftermath of major financial crises. See Carmen Reinhart and 

Daniel Rogoff, This Time Is Different: Eight Centuries of Financial 

Folly, Princeton, NJ: Princeton University Press, 2009. Андрей

Илларионов,экономист, available from www.echo.msk.ru/blog/

aillar/812549-echo/ НОВАЯ РОССИЙСКАЯ РЕЦЕССИЯ (New 

Russian Recession), сентября 17 2011, 09:14. See Figure 2-4.

Note: Recessions are indicated by the vertical bars.

Source: Data from NIU VSHE.

Figure 2-4. Index of Industrial Output, January 2000 = 100.

33. Anticompetitiveness degrades both micro and macroeconomic efficiency. Nassim Nicholas Taleb has compiled a list of the 

macro risks for western economies, which are doubly applicable 

to Muscovy: (1) “too big to fail” notions; (2) the socialization of 

losses and privatization of gains; (3) “nothing succeeds like failure” attitudes; (4) incentivizing regulatory incompetents to manage risk; (5) excessive complexity; (6) empowering government 

to play with matches; (7) allowing government to play the confidence-building con game; (8) giving government excess-spending 

addicts further doses to assuage their pain; (9) canonizing charlatan experts; (10) patchwork reform used as a substitute for fundamental systems redesign. Nassim Taleb, Black Swan: The Impact of 

the Highly Improbable. New York: Random House, 2007.
56

34. A trilemma is a difficult choice from three options, each 

of which is (or appears) unacceptable or unfavorable. There are 

two equivalent ways to express a trilemma: it can be expressed as 

a choice among three unfavorable options, one of which must be 

chosen, or as a choice among three favorable options, only two of 

which are possible at the same time. In the Muscovite case, rentgranting is desired, but deemed not good enough. Command 

planning is appealing, but the Soviet experience was disappointing. Kremlin rulers reject markets as unacceptable infringements 

on their authority.

35. O. Williamson, Markets and Hierarchies, New York: The 

Free Press, 1975; M. L. Weitzman, “The New Soviet Incentive 

Model,” The Bell Journal of Economics, Vol. 7, 1976, pp. 251-257; 

S. Ross, “The Economic Theory of Agency: The Principal’s Problem,” American Economic Review, Vol. 63, 1973, pp. 134-139; E. 

Maskin and J. Tirole, “The Principal-Agent Relationship with 

an Informed Principal, I: Private Values,” Econometrica, Vol. 58, 

1990, pp. 379-410; E. Maskin and J. Tirole, “The Principal-Agent 

Relationship with an Informed Principal, II: Common Values,” 

Econometrica, Vol. 60, 1992, pp. 1-42; T. Lewis and D. Sappington, 

“Ignorance in Agency Problems,” Journal of Economic Theory, Vol. 

61, 1993, pp. 169-183; J. J. Laffont and J. Tirole, 1993, A Theory of 

Incentives in Procurement and Regulation, Cambridge, MA: MIT 

Press, 1993; J. Berliner, Innovation in Soviet Industry, Cambridge, 

MA: MIT Press, 1975; Douglass North, Understanding the Process of 

Economic Change, Princeton, NJ: Princeton University Press, 2005; 

Elizabeth Ostrom, Understanding Institutional Diversity, Princeton NJ: Princeton University Press, 2005; Oliver Williamson, The 

Economic Institutions of Capitalism: Firms, Markets and Relational 

Contracting, New York: Free Press, 1985; and Oliver Williamson, 

Mechanisms of Governance, Oxford, UK: Oxford University Press, 

1996; Oliver Williamson, “The New Institutional Economics: Taking Stock, Looking Ahead,” Journal of Economic Literature, Vol. 38, 

No. 3, September 2000, pp. 595-613. Also see Ronald Coase, “The 

New Institutional Economics,” American Economic Review, Vol. 88, 

No. 2, May 1998, pp. 72-74; Donald McCloskey, The Bourgeois Era,

Chicago, IL: University of Chicago Press, 2010.

36. This is why Russian Defense Minister Anatoly Serdyukov 

is empowered to carry out cost efficiency based military reforms, 
57

but is denied independent authority to make deeper military 

policy. The same principle holds throughout the Kremlin bureaucracy, but not among rent-grantees.

37. Some Slavophil romantics prefer Sobornost spiritual communalism.

38. Herbert Simon, Models of Man: Social and Rational, New 

York: Wiley, 1957.

39. Steven Rosefielde, and Stefan Hedlund, Russia After 1984:

Wrestling with Westernization, London, UK: Cambridge University 

Press, 2007.

40. Rent-grantors control the nation’s natural resource rents, 

the outsourcing of state functions to themselves, government interest rate and foreign currency price manipulation, the sale of 

lucrative positions, the usufruct (a right of enjoyment enabling a 

holder to derive profit or benefit from property that either is titled 

to another person or which is held in concurrent estate, as long as 

the property is not damaged or destroyed) from government programs, and incomes created by overpayments to government and 

private contractors, the diversion of foreign aid and foreign direct 

investment, bribes, embezzlement, and asset misappropriation. 

They both create and control rents. Collusive practices inflate 

natural resource prices, and overcompensate vendors without 

augmenting value-added, with the unearned incomes distributed 

on the basis of power, rather than competitive contribution. Enterprise and institutional revenues, assets, credits, and guarantees 

are similarly mal-distributed. 

41. Stephen Blank, “Russia’s 2012 Elections: Do They Matter?” World Defence Systems, 2011; Steven Rosefielde, “Moment 

of Truth,” The Impact of Economic Crisis on International Strategic 

Configuration, Stockholm, Sweden: Institute for Security and Policy Development, Fall 2009; Steven Rosefielde, “Economics of the 

Military-Industrial Complex,” in Michael Alexeev and Shlomo 

Weber, The Oxford Handbook of Russian Economy, Oxford, UK: Oxford University Press, 2012.
58

42. Andrew Kuchins, “Putin’s Return and Washington’s Reset with Russia,” Washington, DC: Center for Strategic and International Studies, September 30, 2011. ‘Russians are far wealthier 

today, with a per capita GDP of close to $20,000 (it was just about 

$2,000 in 1999),” available from rep@csis. Kuchins does not discuss 

his statistics, but the distortion which holds in both directions 

(1999 and 2011) probably reflects the use of nominal rather than 

constant ruble-dollar ratios (foreign exchange rates).

43. Russian GDP per capita computed in constant 1990 U.S. 

dollars is $7,779 in 1990, $4,777 in 1999, and $7,831 in 2006. See 

www.ggdc.net/maddison/Historical_Statistics/horizontal-file_03-

2009xls. Russia’s living standard rose 6 percent in 2007, but the 

gain was more than erased by the global financial crisis of 2008-11.

44. Rising natural resource prices, together with derivative 

ruble appreciation, increase wealth and with it domestic demand, 

which in turn creates overfull employment and the illusion of sustainable above-trend economic growth. Also, note that while the 

advantages of economic backwardness enabled China to quadruple its per capita income during the last 2 decades, Russia failed 

to grow at all point to point 1989-2009. See Masaaki Kuboniwa, 

“Lessons from BRICs,” in Steven Rosefielde, Masaak Kuboniwa, 

and Satoshi Mizobata, eds., Two Asias: The Emerging Postcrisis Divide, Singapore: World Scientific, 2012.

45. Steven Rosefielde and Assaf Razin, “PIIGS,” in ibid; Bruno 

Dallago and Chiara Guglielmetti, “Institution setting, structural 

vulnerability, and policies: the EU in the framework of global imbalances,” in ibid.

46. Steven Rosefielde, “Communist Asia,” in Paul Hare and 

Gerald Turley, eds., The Economics and Political Economy of Transition: Handbook, Abingdon, UK: Routledge Press, 2012; Masaaki 

Kuboniwa, “Lessons From Brics,” in Rosefielde et al., eds., Two 

Asias.

47. Douglass North, however, has cautioned that formally 

adopting the institutions of democratic free enterprise may not be 

enough. “Since it is the norms that provide ‘legitimacy’ to a set of 

rules, revolutionary change is never as revolutionary as its supporters desire and performance will be different than anticipated. 
59

And economies that adopt the formal rules of another economy 

will have very different performance characteristics than the first 

economy because of different informal norms and enforcement.” 

Douglass North, “Economic Performance through Time,” Nobel 

Prize Lecture, December 9, 1993; K. Darden, Economic Liberalism 

and Its Rivals: The Formation of International Institutions Among the 

Post-Soviet States, Cambridge, MA: Cambridge University Press, 

2009.

48. Andrei Shliefer and Daniel Treisman, “Russia: A Normal 

Country,” Foreign Affairs, March/April 2004. Cf. Steven Rosefielde, “Russia: An Abnormal Country,” European Journal of Comparative Economics, Vol. 2, No. 1, 2005, pp. 3-16.

49. Francis Fukuyama, The End of History and the Last Man, 

New York: Free Press, 1992.

50. Andrew Kuchins, “Putin’s Return and Washington’s Reset with Russia,” Washington, DC: Center for Strategic and International Studies, September 30, 2011. “There is a natural tendency, as modernization theory argues, that as a nation’s per capita 

GDP grows beyond a level of $10,000, citizens demand greater 

government openness and accountability. Increasingly, at least at 

the elite level, Russians want more pluralistic, if not democratic, 

governance. This has been anything but Putin’s priority in the 

past; he may have to reconsider his stance now.”

61

CHAPTER 3

REFORM OF THE RUSSIAN MILITARY

AND SECURITY APPARATUS:

AN INVESTIGATOR’S PERSPECTIVE

Mark Galeotti

In February 2008, President Minister Vladimir Putin said that Russia’s armed forces had become more 

mobile and combat-ready than ever before.1

 Then 

in August, Russia unleashed those forces on its far 

smaller neighbor, Georgia. Moscow had been preparing for this conflict for a couple of years and was able 

to deploy 35,000-40,000 Russian troops and allied auxiliaries against up to 15,000 Georgian troops. The Russians also had clear air and naval superiority and also 

a preponderance of heavy firepower. They won, but 

that was never seriously in doubt. The real lesson was 

that they did not win more quickly, more cheaply, and 

more decisively. Their tactics were often drawn from 

the Soviet playbook, and often dictated by the lack 

of effective, modern command, control, communications, and intelligence (C3I) and night vision systems 

and the weaknesses of the aging global navigation 

satellite system (GLONASS). Although the Georgians 

were strategically inept, on a tactical level they often 

proved not just better equipped than the Russians, but 

also more flexible.2

The Kremlin could and did congratulate itself on 

a successful military-political adventure that at once 

humbled an upstart neighbor and reminded the other 

states of post-Soviet Eurasia that Russia’s claims to it 

as an area in which Moscow has “privileged interests” 

(in President Dmitry Medvedev’s words3

) are backed 
62

with muscle. At the same time, though, the war provided a clear test of the military, and one that identified equally clear shortcomings. This was seized upon 

by Defense Minister Anatoly Serdyukov and his Chief 

of the General Staff, Nikolai Makarov, as ammunition 

in their campaign to bring meaningful reform to the 

military. They had been appointed in 2007 and 2008, 

respectively—despite serious misgivings about both 

of them within the high command—with an explicit 

mandate to that effect. However, from the first, they 

faced open opposition and covert resistance, and it 

would take the Georgian conflict to force their recalcitrant generals to accept the need for radical change in 

the name of modernization and operational effectiveness. As Makarov noted, “We had serious drawbacks 

in the conflict and learned a number of lessons. We 

will deal with them as soon as possible.”4

Thus in October 2008, Serdyukov announced a farreaching package of reforms intended to break away 

from the old Soviet-model armed forces based on the 

expectation of fighting a mass, conventional war on 

the plains of Europe or northern China. The main elements were a reduction in the total size of the military 

from 1,130,000 to one million, with a particular pruning in the bloated officer corps (to shrink from 355,000 

to 150,000); the replacement of conscript sergeants 

with professionals; further efforts to attract and retain 

good-quality kontraktnik (contracted) volunteers, in 

part through significant pay rises; the abandonment of 

the division as the basic building block of the ground 

forces, to be replaced by more flexible and smaller 

brigades; and eliminating skeleton units whose only 

role was to be ready to accommodate reservists in a 

time of general mobilization.5 This represented a dramatic reorientation of Russia’s military structures and 
63

thinking and could only have been done with the full 

support of both Vladimir Putin and Medvedev. It also 

represented a major logistical challenge, but nonetheless the initial stage, the reorganization of divisions 

into brigades and the dissolution of numerous under-strength formations (only 17 percent were fullymanned and operationally ready6

), was carried out 

through 2009 with surprising ease and speed. By the 

end of the year, 203 army divisions, many of which 

existed only in part or on paper, had been replaced by 

around 70 brigades (to rise to 83).7

If Russia is to go through a truly meaningful and 

sustainable defense reform, though, this can only be 

the first step. Ultimately, reform will have to go further 

even than Serdyukov and Makarov admit or probably 

even realize if Russia is to be able to create genuinely 

world-class forces able to match those of the first-rank 

powers of the day into the next several decades and 

to be able to do so without bankrupting the state. This 

will mean continued reductions in the total strength 

of the military, not least so as dramatically to reduce 

the dependence on conscription—perhaps even finally to carry out long-standing promises to transition 

to an all-volunteer army. In the process, Russia will 

also have to develop a credible and forward-looking 

doctrine and operational art matching a realistic set of 

threats and potential missions. Meanwhile, a stubborn 

resistance to buying foreign-made equipment, which 

is admittedly now being broken down, will have to 

give way to a realistic appraisal of the limits of Russia’s defense industries.

All in all, this will represent a comprehensive assault not just on the self-interest of many senior officers (especially as cuts continue to reduce the number 

of general rank positions) but also the self-image of 
64

the military as a whole. As Dale Herspring has put 

it, “the closest comparison of these reforms, in terms 

of magnitude, is the early communist period when a 

totally new structure was imposed on the remnants of 

the Bolshevik Army.”8

 There has been inevitable resistance from within the high command, as well as a 

rising tide of complaint within the ranks as a whole. 

After all, Serdyukov’s announcements led to a volatile situation in which expectations have risen more 

quickly than conditions and living standards for most 

soldiers remain appalling. There is thus a growing and 

sometimes orchestrated backlash against Serdyukov’s 

reforms. Speaking to veterans and serving soldiers in 

Moscow around the 2011 Den’ Pobedy (Victory Day) 

celebrations, I was struck by how persistently they deployed the language and imagery of a “crime” against 

the military. This kind of language even seems to have 

been adopted by ordinary soldiers and junior-level officers, men who received a very poor deal in the old 

order and who are benefiting from slow but real improvements in pay and conditions, as well as the twosteps-forward-one-and-a-half-steps back campaign 

against the pervasive culture of Dedovshchina (violent, rank-based bullying) and the exploitation of the 

rank-and-file by the senior officer corps. The worrying 

prospect is that this could conceivably be the start of 

some new iteration of a Weimar Germany-style “stab 

in the back” myth9

 in the future, providing fertile soil 

for a nationalist-military alliance. In the shorter term, 

though, it is more likely part of a political campaign to 

make the Serdyukov-Makarov reform program politically unpalatable, especially on the eve of parliamentary (December 2011) and presidential (March 2012) 

elections.
65

Nonetheless, this rhetorical device does suggest 

a potentially interesting alternative way to conceptualize the reform program and its prospects and 

preconditions for success. If crime this be, then what 

better framework to understand it than the Sledovatel’ 

or Russian police investigator’s traditional trinity of 

means, motive and opportunity? Analyses of military 

reform tend to focus on specific policies or practical 

constraints, from the demographic to the economy. 

They also often fail to address quite what “success” 

may be, and in this case, it means not just carrying 

Serdyukov’s changes through to completion, but doing so in such a way as to leave Russia with viable, usable armed forces meeting the country’s political needs 

and economic resources. Traditional analyses are entirely valid and useful,10 but maybe it is also helpful 

to break the preconditions for reform down into more 

thematic and less specific categories and seek to quantify them. For each of nine separate preconditions, 

an assessment will be made of the plausibility that it 

will provide the necessary support for reform, ranging from “No” (1), through “Unlikely” (2), “Possible” 

(3), “Likely” (4) and “Almost Certain” (5). From these, 

it will be possible simply to identify the nature and 

spread of preconditions met and unmet for long-term 

and self-sustaining reform, and briefly to compare the 

military’s prospects with those of the police and the 

security and intelligence apparatus.

MEANS

At the risk of being extraordinarily banal, without 

the ability to commit a crime, no crime can be committed. Likewise, there are certain fundamental prerequisites without which no military reform is even 

plausible.
66

Conceptual Capacity. 

In many ways the hardest thing, especially within 

political systems with limited genuine pluralism of 

views (which Russia undoubtedly remains), is to be 

able to generate a viable and compelling vision for 

change. It is relatively easy to develop plans built upon 

relatively minor, incremental change: similar but better weapons, slightly fewer soldiers who are slightly 

better trained, fixing specific problems that have come 

to light. Stripped of grandiose rhetoric, this was, in essence, the basis for most of Russia’s proposed military 

“reform” programs (not that they deserved this name) 

through the 1990s and into the 2000s. There certainly 

were those who could see and advocated more substantive changes, but they were marginalized by a 

range of factors: a lack of resources, a belief that maintaining a large army provided security and prestige, 

the self-interest of the officer corps, and an unwillingness of the part of the political elite to confront the 

Siloviki, the political lobby that formed around active 

and former military and security officers.

However, there does seem to be grounds for cautious optimism on this front. In 2010 a new military 

doctrine was adopted that, while fundamentally very 

close to its 2000 predecessor, does represent a welcome intrusion of a modicum of realism into Russian 

defense thinking. That does not, of course, necessarily 

mean that it makes Russia a less problematic country 

for its neighbors or the wider world. While on the one 

hand, the 2010 doctrine embodies a grudging retreat 

from claims to a truly global status, on the other, it 

articulates a much sharper and arguably more aggressive assertion of its regional power status and, indeed, 

its claims to hegemony in post-Soviet Eurasia.11 Maybe 
67

Moscow has come to realize the wisdom of Frederick 

the Great’s dictum, that if you try to hold everything, 

you hold nothing. The last years of the Medvedev 

presidency saw less global grandstanding and needless posturing, including hints of a more positive 

line on preventing Iranian nuclear armament after he 

expressed alarm at U.S. Central Intelligence Agency 

(CIA) reports of the program.12 However, this was not 

so much conciliatory as reflecting an acknowledgement that it is better to focus effort and political capital on what really matters to Russia. There certainly 

has been no relaxation in efforts to secure Eurasian 

hegemony and eject foreign influence from the region.

Together this does imply an erosion of some of the 

assumptions of the 1990s and even 2000s, which were 

still in so many ways informed by Soviet-era (or rather, Brezhnevian) beliefs as to Moscow’s place in the 

world and global role. In place of skeletal divisions 

intended as little more than vessels for mobilized 

reserves, the army has been reorganized into higherreadiness brigades designed for interventions that, in 

Serdyukov’s words, are “more flexible, mobile, and 

modern,”13 with brigade commanders expected to be 

able to use an unprecedented—for a Russian army—

degree of personal initiative.14 After a lengthy period of 

neglect—receiving virtually no new aircraft between 

1995 and 2008—the air force is being modernized with 

an eye to ground support and air defense rather than 

long-range operations; and the navy, while proudly 

vaunting a blue-water capability and talking of future aircraft carrier battle groups, is actually shifting 

to smaller, multipurpose vessels geared more for defense and (possibly multinational) peacekeeping and 

intervention operations. A reformed military, after all, 

is meant to be a more usable one.
68

That said, though, there is still a clear disconnect 

between broad political beliefs about the importance 

of change and a coherent and, above all, operationalized reform program. There is a reasonable, if not 

especially impressive, amount of thinking and research taking place as to how military structures can 

be operated and fight at a brigade level or lower, even 

if it remains to be seen how well it will be applied. 

Chief of the General Staff Makarov, who has a professional background in the area, has put considerable 

emphasis on the need to improve the level of practical training taking place. Beyond basic technical skills, 

though, training must reflect both doctrine and operational art, and here issues arise. There seems, after all, 

to be a dearth of clear and effective thought about how 

reform affects the strategic and operational levels—

ironically two strengths of the old Soviet system. In 

March 2011, Makarov made a strongly-worded attack 

on the work of the Academy of the Military Sciences, 

clear evidence that much needs to be done. His attack 

also showed his (and Serdyukov’s) recognition of the 

need for a decisive break with old thinking. “In the 

past 20 years, we were not able to bring military art up 

to a modern level and we continued to live with obsolete concepts about the nature of modern wars,” he 

said.15 This problem is exacerbated by the torpor of the 

General Staff’s Main Operations Directorate (GOU), 

its main planning and coordinating organ. After the 

removal of Colonel General Alexandr Rukshin, a vocal opponent of reform, in 2008, the GOU was without 

a head for several months. Then the position went to 

Lieutenant General Sergei Surovikin, a fighting general brought in to purge the GOU, not inject any new 

ideas. He lasted just over a year, and his successor, 

Lieutenant General Andrei Tretyak, who was no in-
69

tellectual powerhouse, requested dismissal on health 

grounds in mid-2011. He was eventually formally removed in October and replaced by Lieutenant General 

Vladimir Zarudnitskii, a line officer with a respectable 

but hardly inspirational pedigree. Meanwhile, the 

GOU has been cut by three quarters, to 150 officers, 

arguably at the very time when it is most needed.16

Thus it is impossible to be entirely optimistic. 

There does seem to be a greater awareness than at any 

time since 1991 of the invalidity of the Soviet-legacy 

military policies that have dominated Russian security thinking. There are also some people thinking hard 

about how to adapt to a new world of network-centric 

warfare and limited interventions. However, there are 

not enough, and in many cases, they are still either 

marginalized or else being forced to think at a purely 

tactical level.

Overall Assessment: Possible (3)

Economic Capacity. 

Reform costs money. Although we have no firm 

figures for the total reform package, military rearmament alone in the 2011-20 State Armaments Program 

is meant to cost 19.4 trillion rubles ($688.35 billion) 

to 2020, and Medvedev pledged that the state would 

continue to spend at least 2.8 percent of gross domestic 

product (GDP) on defense until then.17 In this context 

of the fall-out from the 2008 global economic slowdown and uncertainty as to long-term fluctuations in 

the oil and gas prices on which the Russian tax base 

depends, it is legitimate to ask whether Russia has the 

money now and will it in the next decade. 

Although Steven Rosefielde expresses his doubts 

in Chapter 2 of this collection about the long-term 
70

prospects of the Russian economy compared with that 

of Western Europe, when it comes to funding military 

reform, again, there is scope for some cautious optimism. Despite the long-term problems facing the Russian economy, which will almost certainly impact the 

Kremlin’s aspirations, short- and long-term projections alike suggest that while Moscow may not have as 

much money as it would like (who does?), it will have 

enough to be able to continue a viable reform program 

and maintain credible forces capable of both national 

defense and at least a limited power projection role. 

As of this writing, the World Bank is currently projecting 4 percent economic growth in 2011 (the Russians themselves claim 4.1 percent), which compares 

with the global figure of 3.2 percent the World Bank 

is predicting.18 Further out, the Euromonitor predicts 

that Russia will have the world’s fifth largest economy 

by 2010, and PricewaterhouseCoopers (PwC) assesses 

that even by 2050 it will be the sixth largest.19

Of course, it is vital to appreciate—over and above 

the pitfalls of any such projections—the associated 

variables coming to bear here. What proportion of national budget will the leadership be willing and able to 

devote to the military (which relates to the Will factor 

discussed below)? According to the Stockholm International Peace Research Institute (SIPRI), for example, 

2010 saw the real spending on national security reach 

5 percent of GDP compared with the official 2.8 percent, suggesting that even under Medvedev, there was 

a determination to maintain a strong defense spend.20

Will this money be spent wisely (which, to a large extent, depends on the realization of sufficient Conceptual Capacity) and what proportion will be embezzled 

or devoured by inappropriate procurement, padded 

supplier prices, and excessive margins (which will de-
71

pend on suitable Human Capacity, Traction with Agents 

and Traction with Suppliers)? Nonetheless, in raw terms 

it looks as if the Kremlin will have the money to spend 

on reform, albeit not without having to withhold it 

from other, arguably more important sectors, such as 

health and infrastructure.

Overall Assessment: Likely (4)

Human Capacity. 

In other words, are there the people to enact 

change, whether effective leaders at the top, or those 

with the necessary skills or capacities at the bottom? 

Military reform in Russia entails limited downsizing, 

but a more than proportionate qualitative improvement in the training and ability of the remaining soldiers. There is a need for able and above all committed personnel to manage the process, both at the top 

and also lower down the structure. More to the point, 

there is also the need for adequate numbers of common soldiers.

Within the senior command structure, it is hard to 

be wholly bullish. The Serdyukov-Makarov combine 

has proven unexpectedly successful, but is beleaguered. It has drawn on capable individuals outside 

the military structure, including Deputy Ministers 

Anatoly Antonov, Dmitri Chushkin, Tatiana Shevtsova, Mikhail Mokretsov, Nikolai Pankov, and Alexander Sukhorukov (First Deputy Minister for procurement). Antonov hails from the Ministry of Foreign 

Affairs; Pankov, the secret police (KGB/FSB) apparatus; Chushkin, Mokretsov, and Shevtsova, from the 

tax service (Serdyukov’s old fiefdom); and Sukhorukov also spent some time within the tax service as well 

as the finance ministry and prime minister’s office. 
72

As of this writing, of the eight deputy ministers, only 

two—Makarov and Dmitri Bulgakov (responsible for 

logistics)—are career military.

On one level, this is a liability and a sign of Serdyukov’s relative isolation within the ministry (pointing to problems exerting Traction with Agents). It has 

sometimes led not only to clashes with the General 

Staff apparatus and the service chiefs but also to signs 

of a lack of a full understanding of how a national military works. In October 2008, for example, Serdyukov 

announced plans to reduce the number of officers in 

the military from 355,000 to 150,000, complaining that 

the current structure of the military was “like an egg, 

swollen in the middle, we have more colonels and 

lieutenant-colonels than junior officers,” and with far 

too many officers than regular soldiers.21 By the end 

of 2010, some 129,000 officers had been discharged—

but in March 2011 he then reversed his position and 

announced that the size of the officer corps would be 

increased from 150,000 to 220,000 by 2012, a process 

that would in part involve rehiring former officers.22

He presented this in terms of the need for highly-qualified technical specialists for the new unified Aerospace Defense Command created in 2011.23 In fact, this 

u-turn also seems to have reflected not just unease at 

the scale of resistance from officers, veterans’ associations and some political lobbies, but also a failure to 

consider the full need for capacity to cover periods of 

leave and illness. On the other hand, while the new 

defense ministry elite may lack the ingrained expertise of their uniformed predecessors, their ascendancy 

does also mean that there is scope for new thinking 

unconstrained by tradition, arm of service loyalty, and 

peer pressure, all of which played a substantial role in 

the past.
73

Further down the chain of command, modified 

training programs and above all the new emphasis on 

noncommissioned officer (NCO) training will have a 

real impact on the nature and character of the Russian tactical command structure if they are carried 

through. It is proving difficult to build up a reliable 

and effective cohort of professional NCOs, despite creating a new specialized training program in Ryazan.24

Nonetheless, a professionalized and competent NCO 

corps (even if initially there will be too few of them), 

combined with more effective training for junior officers, would address some of the key problems of 

the military. More NCOs would slowly free up junior 

officers from many of the inappropriate duties they 

currently carry out and also provide a sideways response to their shortage: even if it is not possible to 

increase their total number, the pressure will be eased 

by reducing the need for them. This would open up 

wider reform opportunities; for example, qualitative 

improvements permit further quantitative reductions. 

The question is whether this can come to pass. 

Above all, will there be enough soldiers? In 2009, 

following the reduction in the draft from 2 years to 

1, some 575,000 young Russians were conscripted, a 

figure that fell to 540,000 in 2010. In 2011, by contrast, 

the projected figure is 353,000.25 Present plans would 

suggest that, with a 12-month national service cycle, 

the Russian army needs 600,000-700,000 draftees a 

year—near enough the full cohort of young Russian 

males reaching draft age. Given that this is a shrinking 

pool and thanks to health, education, and other exemptions and deferments, only around 400,000 are actually eligible, this appears an intractable challenge.26

Furthermore, the 1-year term locks the military into a 

regular and disruptive churn of personnel and scarce-
74

ly provides the time for adequate training. One officer 

in a brigade regarded as one of the better ones in the 

Moscow region told me that it takes 9 months for the 

recruits to be “soldiers rather than trainees,” and their 

last month is often marked by premature “demob happiness,” such that he felt they only really were truly 

effective for 2 months. That said, it is not likely that a 

return to 2-year national service would be politically 

palatable to the Kremlin, even though the Communist 

Party has advocated an 18-month term.27

However, there are signs of awareness of this. Makarov is now talking of an ideal figure of 10-15 percent 

of the armed forces being conscripts,28 which would 

mean only 100,000-150,000 draftees a year. While to 

date the kontraktniki experiment has not been a particular success, this was to a considerable extent due 

to active resistance and sabotage within the military.29

Given that the recent trend has been for a hemorrhage 

of contract soldiers, it may seem naive to be at all optimistic.30 However, these are not intractable problems. 

There are questions as to whether the planned pay 

increases—by 2012, regular contract soldiers will receive 35,000 rubles a month ($1,130)—will be enough, 

especially as the militarized elements of the security 

apparatus will probably be willing to top this.31 Nonetheless professionalization could be addressed by a 

combination of greater buy-in (or discipline) within 

the military, higher wages, and a general economic 

slowdown. After all, while the unemployment rate 

has fallen from 7.5 percent to 6.4 percent in later 2011, 

many of these new jobs are in very low-salary sectors, 

against which a military career may look appealing. 

If Serdyukov succeeds in his efforts to “humanize” 

military service with better food and accommodation, 

more scope for leave and the outsourcing of the more 
75

menial duties characteristically assigned to soldiers—

and which occupied up to a third of their day, eating 

into training time—this might also improve the prospects for recruitment and retention.32

In the longer term, there is also scope for further 

shrinkage of the military to a size more in keeping 

with Russia’s economic and demographic capacities. 

Former deputy defense minister Vitaly Shlykov, perhaps the doyen of Russia’s defense analysts, has expressed the view that half a million well-trained and 

motivated soldiers are better than a force twice the 

size that is also full of the inept, the badly-trained, the 

criminal and the unfit.33 In 2011, the Russian Institute 

of Contemporary Development (INSOR), a think tank 

meant to be close to Medvedev, published a major report on Discovering the Future: Strategy 2012 that advocated creating an all-volunteer military some 400,000-

500,000 strong by 2018, even at the cost of increasing 

defense spending to 3.5 percent of GDP.34 This is unrealistic, not least in its time frame, but this kind of 

prescription is even gaining some traction within the 

ranks, too. In conversation with some officers from 

the GOU, I even heard the suggestion that someday 

Russia might have the same soldier-to-population ratio as France, which would imply a military cut to a 

strength of 460,000-470,000. This is hardly likely in the 

immediate future, but it was interesting to hear it being floated by a hard-nosed career soldier who clearly 

wants and anticipates further promotion. Either way, 

demographic pressures make the status quo increasingly untenable. Medvedev is on record as saying that 

“for the next 10-15 years, [Russia’s] recruiting system 

should combine both conscription and contracting” 

without comment about the balance between professionals and draftees.35 Whether through dramatic 
76

force reductions, by conscripting and recruiting women, or professionalizing the military—or a combination of the three—Russia will have to make substantial 

changes.

Overall Assessment: Likely (4)

MOTIVE

Crimes are committed for a reason; reforms likewise. After all, change is harder than continuity, even 

if the latter means a shabby decline that seeks to retain 

the forms of the past while losing its real nature. In 

the short term, reform is also usually more expensive. 

Maintaining the appearance of the status quo was 

good enough for Leonid Brezhnev and in a way Boris 

Yeltsin, too. Given that, what reasons would the national leadership have to grasp the nettle of reform?

Threat. 

How far has Russia’s perception of the near- and 

long-term threats it faces changed? This is a difficult 

one to assess, as rhetorically one could argue that worryingly little has moved on. The North Atlantic Treaty 

Organization (NATO) is still regarded as an actively 

hostile bloc, whose expansion into Eurasia is listed 

in the 2010 doctrine as the greatest military danger 

(which is admittedly different from a threat) to Russia. 

Likewise, attempts to “destabilize states and regions” 

near Russia—to Moscow, events such as the Ukrainian “Orange Revolution” and Georgian “Rose Revolution” proved not that people wanted change, but that 

nefarious Westerners were engineering pro-democracy movements in Eurasia—are explicitly listed as a 

danger in that document. Moscow’s take on the Arab 
77

Spring, and Libya in particular, have only sharpened 

this genuine belief in a conspiratorial pattern to global 

developments. This certainly came up in the context of 

the Tsentr” 2011 Collective Security Treaty Organization (CSTO) exercises, in which the CSTO Rapid Reaction Force was deployed to put down a putative coup 

attempt in Tajikistan.36 Makarov made the connection 

explicit: “The processes taking place in North Africa 

and the Middle East were difficult to forecast. . . .

This has to be a warning to all states. We have similar 

questions for the Central Asian countries. We must be 

prepared for anything. This is why we are practicing 

with these drills.”37

All this sounds as if Moscow still believes it must 

prepare for both a mass war against invaders from the 

west or the east as well as for major military incursions as the gendarme of Eurasia.38 However, the detail and the pattern of military organization and procurement suggest a more nuanced perception of the 

threats facing Russia. The switch to brigades provided 

an opportunity to move away from the implicit planning assumption that military manpower and organizational policies were ultimately to be determined 

by the need to maintain a mobilization structure for 

a multi-million-man mass army. This has long been 

a crucial planning constraint and also led to a huge 

wastage of resources on facilities and equipment being maintained for a someday-never Big War. To be 

sure, Russia still fears and plans for a future confrontation with China,39 but it is increasingly coming to 

terms that such a conflict would not be the Great Patriotic War redux so much as one to be deterred through 

the ability to focus high-impact forces in specific crucial engagements, political alliances, and the threat 

of tactical or strategic nuclear response. Likewise, 
78

NATO is still seen as a challenge, even a threat, but 

not a military one. Its efforts to undermine friendly 

regimes, woo the undecided, and exclude Russia from 

its rightful place—as Moscow perceives it—can best 

be dealt with through a combination of bare-knuckled 

diplomacy, energy politics, and the creation of credible, rapidly-deployable intervention forces.

After all, if by its deeds Russia does not seem to see 

a serious threat of mass war, it certainly is developing 

the capacity to deploy smaller intervention forces regionally. For example, the emphasis in procurement is 

largely on lighter forces more capable of rapid deployment, local intervention and full-spectrum warfare. 

From the decision to expand and re-equip the complement of snipers within the army, especially in eastern 

formations,40 as well as spending on wheeled vehicles 

rather than tanks, to the money being spent on the 

fighter fleet (even while the long-range bomber fleet is 

decaying) and C3I systems, following the money suggests Russia is at last waking up in more than just a 

rhetorical way to the age of network-centric warfare. 

The primary threats for which Russia is practically 

preparing itself for are not massive conventional conflicts but smaller-scale interventions in Eurasia (and 

conceivably within Russia) which will shade across 

from military aid to the civil power through to rapid 

incursions to effect political change.

Overall Assessment: Almost Certain (5)

Value. 

This is the flip-side complement of the previous 

point: has the leadership changed its notion of the 

benefits it can derive from its armed forces? To an extent, this can simply be posed as a question: would a 
79

reformed military do a better job responding to the 

kind of threats envisaged? The successful (in Moscow’s eyes) outcomes of the Georgian operation—for 

all the numerous failures in actual execution—certainly point to the value of having the capacity to launch 

effective interventions in Russia’s strategic neighborhood. Likewise, the rescue from Somali pirates of the 

tanker Moscow University and its crew by naval infantry from the destroyer Marshal Shaposhnikov in 2010 is 

still held up as an example of precise and professionally-executed power projection that married military 

and political success.

Although the Kremlin continues to harbor certain 

long-term and existential fears, especially around 

China’s future capabilities and intentions, its current 

thinking appears to be that it will benefit from armed 

forces that are sufficiently professional and wellequipped to be usable without a massive advantage in 

numbers; that can be mobilized and deployed quickly; 

and that are flexible enough for a variety of missions, 

from limited intervention and counter-insurgency to 

out-of-area peacekeeping and all-out war. Serdyukov 

has described his goal as creating “a performance-capable, mobile, and maximally armed army and navy 

ready to participate in three regional and local conflicts, at a minimum.”41 In keeping with this, Russia’s 

transport air fleet is being expanded, with plans to buy 

an extra 35-40 Il-476 planes from 2014 to supplement 

the existing Il-76 fleet and Ukrainian-built An-70s for 

2015-16. 

These kinds of forces are also more relevant to the 

kind of multinational operations that the Kremlin is 

willing to entertain. The 2010 doctrine makes explicit 

reference to Russia’s “right” to intervene to protect 

Russian nationals abroad, a right clearly invoked 
80

during the 2008 Georgian war. Likewise, the CSTO’s 

Collective Rapid Reaction Forces (KSOR) formed in 

2009, while formally under multilateral control, are 

essentially dominated by Moscow. When Belarusian 

President Alexander Lukashenka suggested that 

KSOR could be used to suppress attempts at regime 

change within CSTO member countries—because, in 

his words, “nobody is going to wage a conventional 

frontline war against us, but there are quite a lot of 

those whose fingers itch to carry out a coup d’etat”—

he received a cool response from Moscow.42 However, 

CSTO Secretary-General Nikolai Bordyuzha separately said the CSTO might intervene when member 

states’ governments “are unable to protect the constitutional order, the lives and safety of citizens are 

threatened, and violent mass disorders are under 

way.”43 The difference between the two is essentially in detail, and it is clear that the Kremlin—whose 

views dictate Bordyuzha’s—is happy to see the KSOR 

or other CSTO forces deployed in Russian-led stability 

operations, which would help consolidate Moscow’s 

regional hegemony. 

When Kyrgyzstan’s interim government appealed 

for Russian and CSTO aid in 2010 to put down a violent insurrection in the south, Moscow demurred, not 

least because it lacked the kind of forces trained for 

public order duties and able to be mobilized to the 

country in time. However, military reform will provide those forces, with brigades notionally ready for 

deployment within an hour of alert (although rarely 

will this actually be possible) and an increasing number receiving specialized training, equipping them for 

missions ranging from Arctic warfare to peacekeeping 

and public order.44 In this way, a reformed military is 

also a foreign policy asset, a tool to support friendly 
81

regimes in Eurasia and, by implication, put pressure 

on those not fully aligned with Moscow.45

Overall Assessment: Almost Certain (5)

Spin-off. 

The irony of military forces is that they are configured, recruited, armed, and trained to fight wars, yet 

typically spend most of their time not fighting. (Even 

at the peak of the Soviet-Afghan War, for example, 

Russia’s most extensive military action since the 1968 

invasion of Czechoslovakia, no more than around 

150,000 troops were deployed at any one time out of a 

military establishment of some two million.) Fighting 

and deterring wars may be the military’s main role, 

but they also have many others, from socializing minorities to supporting the economy. It is thus important also to consider the incidental or subsidiary benefits associated with reform, over and above how well 

the armed forces actually fight wars. A number have 

been noted by reformists that appear to have gained 

traction in the Kremlin.

First of all, a smaller military, less of an emphasis 

on conscription, and a scaling down of the militarypatriotic education infrastructure created to support 

the draft, all mean less of a role for the armed forces 

as tools of socialization. However, this is probably no 

bad thing. Compared with the ideal of national service engendering patriotism and a sense of common 

national purpose, the regular litany of miseries of 

army life—bullying, poor conditions, criminality and 

abuse46—has actually created a process of “shadow 

socialization,” brutalizing and dismaying recruits. According to Chief Military Prosecutor Sergei Fridinskii, 

crime in the army rose by 16 percent in 2010, and while 
82

registered crimes fell by 10.6 percent in the first half of 

2011, the actual size of the military fell by a greater 

amount, so in per capita terms criminality continued 

to rise.47 Inevitably, this leads to crime in society as 

a whole as angry and brutalized young men return 

to the home front. More broadly, this has encouraged 

and legitimized a culture of not only evading the draft, 

but also demonizing the military in mainstream society. There is a better chance of dealing with these systemic problems (which date back long before 1991) in 

a smaller, better treated, and more professional army. 

In the process, a military life becomes less of a terror 

and ex-soldiers less likely to be damaged, delinquent, 

or disillusioned. Although this point has not been 

publicly aired, the leadership may also be aware that 

a more professional army might not only be insulated 

from some of the wider social problems of Russian society, as well as contributing to them, but also be less 

politically expensive to use: the sad truth is that the 

wider public tends to have a more permissive view of 

professional soldiers’ deaths than those of conscripts.

More significant is the extent to which military 

reform is seen as a way of taming the defense budget. Not to allow reductions, as there is a clear awareness of the cost of retraining, rearmament, and the 

retention of good soldiers. Rather, to tackle the extraordinarily high level of waste and embezzlement 

of state budgets earmarked for military purposes (in 

other words, to address the problem of Traction with 

Agents). In this respect, a new enthusiasm for buying 

foreign-made military technology—French landing 

ships, Italian FIAT IVECO light armored vehicles, 

Israeli drones—not only acts as a useful corrective to 

the power and entitlements of the domestic arms industry, it also offers the prospect of accessing at least 
83

a degree of advanced Western technology as well as 

providing a stimulus for development of the domestic 

defense industrial sector. The Tatarstan-based Kamaz 

enterprise, for example, will assemble Russia’s new 

M65 light armored vehicles, while collaboration deals 

for Mistral amphibious landing ships are driving the 

construction of new shipyards on Kotlin island near 

St Petersburg.48 At least as important are current and 

future deals for C3I systems and co-production agreements with Western companies considering Russia’s 

evident technological lag, as domestic projects such as 

the YeSU TZ automated command and control system 

continue to be delayed and problematic.49

In short, there are collateral political, social, and 

economic benefits that could potentially accrue from 

radical defense reform. In the process, this not only 

gives the Kremlin more reason to forge ahead (supporting its political Will), it also provides a further rationale for assigning the necessary resources to reform 

(the Economic Capacity).

Overall Assessment: Likely (4)

OPPORTUNITY

Having the intention and capability to commit a 

crime is not enough in and of itself: there also needs 

to be the opportunity. Likewise, without the necessary 

political and practical context, no reform program can 

succeed.

Will.

Sustained political will is a crucial prerequisite for 

any substantial (and expensive) military reform, one 

which will take not months, but years or even up to a 
84

couple of decades. This is often a particular problem 

within a democratic system, as it requires a degree of 

consensus able to survive changes in government and 

the crises and concerns du jour. In this respect, Russia 

is actually at an advantage in that so far the Putin-led 

regime has proven stable and lasting, spanning across 

the Medvedev presidency and, with the latter’s September 2011 endorsement, beyond the 2012 presidential elections, potentially out to 2024.

Despite differences in nuance and idiom, both Putin and Medvedev have been united on the basic outlines of military reform and thus—unless derailed by 

events or wider political calculations—it can be presumed that the present policy will extend for the foreseeable future. Furthermore, the regime appears disinclined to tolerate open resistance from the military for 

a combination of reasons ranging from practicality to 

an ingrained Soviet-era fear of “Bonapartism.” While 

there is still scope for foot-dragging by the generals, 

there is no credible threat of open defiance.

Overall Assessment: Almost Certain (5)

Traction with Agents.

Can the subject of reform be made to embrace the 

process? After all, as Rod Thornton has put it, “The 

Russian military, as a whole, does not want to modernize; or rather, it does not want to be ‘modernized’ in 

the way that its political masters want.”50

The extent to which the military high command, or 

key elements within it, is hostile to reform is apparent 

and well-known. It is also clear that while Serdyukov 

and Makarov dispose of the political firepower to deal 

with particular egregious or isolated critics, they are 

not able to purge the senior officer corps as a whole, 
85

not least because of the lack of suitably effective and 

like-minded alternatives. Even apparent allies may 

prove to be less reliable once in place, especially as 

they are worked on by the rest of the military elite. 

For example, when Ground Forces commander-inchief Colonel General Vladimir Boldyrev retired in 

2010, he was replaced by Colonel General Alexander 

Postnikov. Former commander of the Siberian military district and perhaps more importantly a former 

subordinate of Makarov’s, he was seen—not least by 

Makarov—as “his” man. In practice, though, by late 

2011 Postnikov appears to be trying to tread a delicate line between implementing reforms and resisting 

them where they are seen as impinging on the interests of the Ground Forces. 

On the other hand, the regular departures from 

senior positions as well as the risk of actually worsening one’s institution’s position by being seen as recalcitrant (several naval officers feel—rightly or wrongly—that the decision to move their headquarters to St 

Petersburg was a punishment for their efforts to lobby 

politicians against change and a failure to make efficiency savings) may be beginning to act as a deterrent to resistance. Furthermore, it is vital to appreciate that the high command is not a monolithic lobby. 

Sometimes, there is more sound than fury in apparent 

protests, and conspiracies and protests can actually be 

explained away by other processes or bureaucratic infighting between factions and interests rather than opposition to reform.51 However, this is not to underplay 

the problem. As the Kontraktniki debacle demonstrated, if the military hierarchy is opposed to change and 

adequate control mechanisms are not in place, then 

they have a wealth of opportunities to derail reform.
86

If the high command can be tamed, then the rest 

of the officer corps will probably follow, so long as 

the resources are provided (requiring Economic Capacity) to attract, retain, and motivate them (meaning 

Human Capacity). If the program to expand a cadre of 

trained, volunteer NCOs succeeds, then this will also 

be a great asset, even if the planned abolition of the 

otherwise-redundant warrant officer rank—a process 

launched in 2008 and then reportedly frozen in 2010—

goes ahead.52

However, throughout the armed forces a remaining key control variable is criminality and indiscipline.53 The dedovshchina that still grips the rank and 

file is debilitating and counter-productive,54 but arguably more serious are the challenges of embezzlement, 

corruption, and organized criminality throughout. 

The creation of a new military police force in 2011 under Makarov’s apparent leg-breaker-in-chief Surovikin may conceivably help, but it will take years for 

this to be properly operational.55 In the mean time, 

military corruption drains and diverts the defense 

budget: some reports say up to a third is embezzled, 

while the Military Procurator’s Office has put the 

figure at 20 percent.56 A personal estimate—subjective as it is, based largely on open source reports and 

anecdotal accounts—suggests 5-7 percent is actually 

stolen, with perhaps as much again instead diverted 

to alternative functions (such as providing repairs for 

officers’ apartments that ought to have been covered 

by military funds), for a total of 10-14 percent lost, still 

equivalent to more than $8.8 billion.57 This culture of 

endemic corruption also fosters indiscipline and selfinterested and mutually-protective cabals of criminalized officers.

Overall Assessment: Possible (3)
87

Traction with Suppliers.

One of the crucial, if often subterranean, forces impeding meaningful reform has been the role of the defense industries as lobbyists and also as the dominant 

players in their relationship with the defense ministry, 

forcing them to accept equipment not of the specification they wanted or else, more often, late and overprice (so unlike the situation in the West). Insofar as 

reform depends on technological modernization and 

the effective use of finite resources, the ability to force 

suppliers to comply with the needs of the process thus 

becomes a critical potential constraint.

This helps explain the failure of successive iterations of the Gosoboronzakaz (GOZ), or State Armaments 

Order.58 Speaking to a State Duma hearing on the draft 

2012-14 budget in October 2011, Deputy Minister of 

Economic Development Andrei Klepach admitted that 

the 2011 GOZ “will not be substantially fulfilled this 

year and it is highly probable it will not be fulfilled 

next year.”59 At the same hearing, Valery Goreglyad,

Deputy Chair of the Audit Chamber, criticized the (in)

effectiveness of the GOZ process and called for a completely new process to assign and manage orders. It 

has been estimated that the 2010 GOZ was 30 percent 

unfulfilled: according to Boris Nakonechnyi, deputy 

head of the Defense Ministry’s Directorate of State 

Defense Order Formation, that year a corvette, three 

submarines, three of nine ordered Yak-130 trainer aircraft, and 73 of 151 ordered BMP-3 infantry fighting 

vehicles were never received.60

After all, the failure of the Russian military-industrial complex (VPK) to meet its orders has become 

legendary. For example, the RSM-56 Bulava submarine-launched ballistic nuclear missile has suffered a 
88

string of failed tests (although 2011 may have been the 

year it turned the corner) while the Borey-class submarines built to mount it are waiting for it to become 

operational. In part, this reflects a simple inability to 

master the technical challenges of new-generation systems. In part, it is a product of inefficiency and clumsy 

management practices. At the end of 2010, an official from Rostekhnologii, the state holding company 

tasked with supporting defense research and export, 

admitted that many of the defense firms it was forced 

to take over were, to all intents, bankrupt because of 

embezzlement, mismanagement, problems meeting 

the state defense order, obsolescent technologies, and 

a lack of development capital.61 Given that, as one article in the specialist press bemoaned, “The Russian 

military industrial complex is basically equipped with 

aging Soviet equipment, and in need of fundamental 

modernization”—according to another account, 70 

percent of all its machinery is 20-plus years old—one 

could see the solution to be a combination of better 

management, more investment where it will make a 

difference and allowing enterprises to go under when 

it will not.62 Already even old giants of the VPK such 

as the Tupolev aircraft corporation are arguably moribund.63

Yet the problem is also one of VPK culture and 

political pull. Enterprises also sometimes fail to meet 

defense ministry requirements and order because of a 

willful refusal to prioritize domestic orders compared 

with exports, given that the latter tend to offer higher 

immediate profit margins or are backed by government export credits. Meanwhile, they have tended to 

rely on political contacts or a simple lack of alternatives to maintain their domestic order books. As Makarov complained,
89

Many producers do not want or are not able to produce prospective weaponry and military equipment. 

They are turning out products that the Armed Forces 

do not need. But the General Staff will no longer buy 

what the Armed Forces do not need, no matter how 

much the defense industry enterprises try to persuade 

us to do so. Whether they like it or not.64

Citing an increase in the price of a T-90 tank from 

42 million rubles in 2008 to over 100 million by 2011, 

Makarov also criticized their pricing policies, something Serdyukov also made a key theme. Later in the 

year, for example, he furiously attacked Sevmash for 

padding the price of the Severodvinsk submarine class, 

for example, saying that “We are willing to pay, but 

only if the pricing process is transparent. Practice 

demonstrates that if all elements in the contracts are 

‘decoded,’ then it seems possible with confidence 

to deduct up to 30% from the final cost of a finished 

product.”65

Here there is again some evidence of reasons for 

optimism, even if it must be cautious. Makarov’s and 

Serdyukov’s words represented a stepping up of the 

defense establishment’s rhetoric, but potentially a 

more concrete step was the appointment of Alexander Sukhorukov as First Deputy Defense Minister for 

procurement in August 2011. Sukhorukov was formerly Director of the Federal Service for the Defense 

Order (Rosoboronzakaz or FSOZ), and so the hope appears to be that he will be a tough insider able to tame 

the defense industries. There is little evidence that he 

was able to be successful at this in his previous position, but insiders have suggested to me that this was 

in part because of the political constraints he was under there—while Rosoboronzakaz is subordinated to 
90

the defense minister, it must work closely with the 

VPK—and that he will be more active with his new 

position. We shall see, but he has a major challenge 

on his hands. The VPK is a powerful lobby which has 

proven very adept at leveraging its export successes 

and the fact that it employs up to 3 million workers 

(20 percent of all manufacturing jobs)66 to persuade 

the Kremlin to maintain what are in effect subsidies 

through uneconomic orders and padded costs.

Overall Assessment: Unlikely (2)

PROSPECTS

This is, of course, in no way a serious scientific exploration, rather a thought exercise in trying to conceptualize the preconditions for meaningful reform. 

Under Medvedev—albeit with Putin’s necessary 

agreement—Russia’s military has embarked upon 

the first stage of a long-overdue process of modernization and reconceptualization that, if sustained and 

supported, could create qualitatively different armed 

forces that, if not at the very leading edge, were at least 

capable of operating on a modern, network-centric, in 

a way today’s Russian soldier definitely cannot.

Overall, this exercise suggests that there is an unexpectedly strong potential for real and sustained military reform in Russia. However, that potential is by 

no means certain to come to fruition, and it would be 

very easy for the process to be derailed. For example, 

were the political environment to take a further shift 

towards the nationalist-statist pole, that might not 

just affect all the Motive factors, but also impact on 

the Means: Conceptual and Opportunity: Will. However, 

an even more nationalist regime could conceivably 

be even more determined to modernize its military. 
91

After all, reform tends to come from a combination 

of fear and opportunism. Medvedev never managed 

to develop any real rapport with the Siloviki, but he 

probably spoke for many of them when he said, “We 

cannot leave our country without the sufficient development of the Armed Forces and law-enforcement 

bodies. We shall simply be torn to pieces.”67 During 

Yuri Andropov’s brief tenure as General Secretary of 

the Communist Party (1982-84), one of his key aims 

was to force the Soviet elite to open their eyes to the 

security implications of their country’s growing backwardness. As a result, one of his most powerful legacies was to change the basis for political discussion: 

it no longer was about whether change was needed, 

it was about what kind of change and how it should 

be introduced. Likewise, for all that Medvedev himself may go down in history as a rather sad figure, a 

disposable stand-in for Vladimir Putin, and his presidency may have seen a similar paradigm shift within 

security discourse. Even those advocating a return 

to 24-month conscription or a larger military are not 

arguing for a return to a true Soviet model. By the 

same token, the reformers are basing their arguments 

as much as anything else on effectiveness, that a new 

model army will hit harder, further and faster. After 

all, military reform without political reform would 

mean that an essentially authoritarian—or at best hybrid “competitive authoritarian”68—Kremlin would 

become rather more capable of throwing its weight 

around its strategic neighborhood. That it something 

even the most hidebound general could support.

Rather more serious for the prospects of reform is 

the risk that an economic slowdown would not only 

hurt the Means: Economic and Means: Human columns 

but potentially leave the government less able to re-
92

ward its soldiers (Traction with Agents) and dictate 

terms to an export-driven industrial sector (Traction 

with Suppliers). Everything connects with everything 

else, so a failure in one area can affect many others. 

See Figure 3-1.

Figure 3-1. Reform Prospects: The Military.

In summary, the key preconditions for meaningful 

military reform would seem to be:

• Continued political will, which will maintain 

adequate spending and empower the defense 

ministry to tame the high command and VPK 

alike;

• Continued economic stability and growth sufficient 

to cover the high up-front costs of reform without having such a damaging impact on the rest 

of the economy that it becomes politically untenable; and,

• A realistic and comprehensive concept that draws 

on the credible threats and opportunities facing 

Russia and can—in due course—drive doctrine 

and procurement and win over a new generation of military leaders.
93

Of these, arguably the third is the hardest to achieve, 

especially given the need to balance momentum and 

deliberation. Ruslan Pukhov, director of the Center 

for Analysis of Strategies and Technologies in Moscow, has cited Tsarist-era modernizer Sergei Witte, 

who said that, “In Russia, reforms must be carried out 

quickly and in great haste. Otherwise, most will either fail or falter.”69 In political terms, he is absolutely 

right, but debacles such as the flip-flops over professionalization and officer cuts, procurements blunders 

such as the building of the Borey submarines before 

their Bulava missiles were even close to completion, 

and the decision to dismiss the head of the GOU just 

before the Georgian war70 all demonstrate the danger 

in over-hasty decisionmaking in defense matters. In 

short, reform of Russia’s military is possible, but will 

take a steady hand, a willingness to spend considerable economic and political capital in bad times as 

well as good, and a clear-sighted understanding of the 

real threats facing the country and a credible program 

for how to address them.

A CODA: COMPARISON WITH THE SECURITY 

AGENCIES

It is perhaps worth finally comparing the situation 

facing the military with that of the rest of the security apparatus: the Foreign Intelligence Service (SVR), 

Federal Security Service (FSB), Federal Protection 

Service (FSO), and the like, as well as the Ministry of 

Internal Affairs (MVD). Starting with the former, the 

security and foreign intelligence services, the detail of 

how these various preconditions are obviously different—dealing with “suppliers” is best conceptualized 

as acquiring intelligence assets, for example. In a post-
94

ideological age, though, they will be bought for coin 

not commitment. Nonetheless, it is possible to draw 

some broad conclusions.

There is clearly far less of an intellectual commitment for change in this sector and Putin—who even 

under Medvedev asserted unchallenged personal authority in this sector—has shown no interest in substantive reform, just incremental improvement. This 

is certainly not a question of a lack of funds, as the 

intelligence and security sector consumes much less 

than the military (Julian Cooper suggests they receive 

some 14-15 percent of the military budget).71 Nor is 

it that the security Siloviki are flouting efforts to impose change upon them. There have been regular turf 

wars between agencies and factions, but these have 

been horizontal struggles for powers, budgets, and 

perquisites rather than directed against the Kremlin. 

Instead, it appears that Putin and his spies and secret 

policemen are united in a belief that they are doing a 

not just a good job but a necessary one. After all, he 

appears to see no problem to which they are not part 

of the answer: even “At a time when we are facing a 

problem related to modernization of the economy, assistance from the intelligence services is not superfluous.”72 Thus, there is little likelihood at present of any 

reform, or even talk of it, because those responsible 

see no need for it. See Figure 3-2.
95

Figure 3-2. Reform Prospects: The Security 

Agencies.

Comparing the situation of the security apparatus 

and the military directly dramatizes this contrast. The 

security apparatus has a score of 23—below the 27 

even an across the board “Possible” would earn. Conversely, the military has a score of 35. Furthermore, 

the categories in which a higher score is registered are 

essentially facilitating rather than initiating ones, demonstrating that were the Kremlin ever to fix on reform, 

the economic resources would certainly be available, 

along with the human capacity and levers of control. 

However, there is no real sense that reform would be 

needed or that the real threat facing Russian democracy, stability and economic dynamism will come from 

arbitrary political policing and aggressive intelligence 

operations, let alone any real notion among the current elite as to what shape reform would take.

Turning to the MVD and other law-enforcement 

structures, there was under Medvedev a growing appreciation of the practical advantages in reform—if 
96

not necessarily democratization—of policing. First of 

all, the old-style “militia” were not only held in generally low esteem, they were simply not very good at 

doing their job. Addressing their shortcomings not 

only helps bolster the Kremlin’s bases for technocratic legitimacy, it also brings associated advantages 

in establishing a more productive environment for 

economic development and addressing the security 

risks to be found in endemic corruption. As a result, 

on March 1, 2011, a new Law on the Police came into 

effect that not only saw their name changed back from 

the revolutionary term “militia,” but also mandated a 

20 percent reduction in their total strength but pay rises for the rest, new training, and more people-friendly 

procedures.73 Behind the new law, though, was also a 

concern about control of the police, a belief that they 

were not always in control of the center. In 2008, for 

example, Special Purpose Mobile Unit (OMON) riot 

police had to be flown 3,750 miles from Moscow to 

the Russian Far East when the Vladivostok leadership 

and police decided not to disperse protesters. Whereas in the past local authorities paid a share of police 

budgets—and often expected a say as a result—now it 

is all covered by the federal treasury (which reduced 

its subsidies to the regions to make up the difference). 

The new reshuffle of the MVD was also an opportunity to reassert a degree of power by culling the senior 

ranks of the ministry, with six of eight deputy ministers reshuffled.74 In other words, this was a reform 

as much motivated by a desire to consolidate Kremlin 

control over the law-enforcement agencies as by any 

hope of making them more transparent, democratic, 

responsive, or effective.

Even so, it is still high questionable how much 

real control the center has over grass-roots law en-
97

forcement and even over major structures, especially 

given the periodic turf wars between elements of the 

MVD, the Federal Counter-Narcotics Service (FSKN), 

the Procurator General’s Office, and other law enforcement agencies.75 Nonetheless, the score is still a 

respectable 30, driven largely by a changing appreciation of the advantages in change. Medvedev demonstrated a clear awareness that “legal nihilism” and 

inefficient or corrupt policing had a sharply negative 

impact on economic development and—by driving or 

keeping business underground—also the tax base.76

Although Putin may prove less interested in police reform and its practical value, the Kremlin can certainly 

afford it. The real question will be how far it can drag 

the force behind it. See Figure 3-3.

Figure 3-3. Reform Prospects: The Police.

A direct comparison makes the distinctions even 

more clear, with a baseline score of 9 (all “No” responses) and a pretty low divider of a 27 (all “Possible” responses). See Figure 3-4. 
98

Figure 3-4. Comparison of Reform Prospects.

In short, even a relatively positive reading—this is, 

after all, a question of the potential of reform, not a hard 

prediction as to whether reform will be achieved—

would suggest that military reform, while not easy, is 

most credible. The Sledovatel’ would presumably even 

now be bringing in the suspect to browbeat or simply 

beat a confession out of him. Police reform is certainly 

possible, although as the final tabulation suggests, 

the key issue relate to opportunity and mastering 

the rank-and-file law enforcers. However, reform of 

the security and intelligence apparatus—as opposed 

to simple evolutionary development thanks to new 

resources or technological improvements—seems as 

distant as ever. See Figure 3-5.
99

Figure 3-5. A Comparison of the Detailed Results.

ENDNOTES - CHAPTER 3

1. RIA Novosti, February 15, 2008.

2. For an excellent analysis of the war, see Ariel Cohen and 

Robert Hamilton, The Russian Military and the Georgian War: lessons and implications, Carlisle, PA: Strategic Studies Institute, U.S. 

Army War College, June 2011. See also Roger McDermott, “Russia’s Conventional Armed Forces and the Georgian War,” Parameters, Vol. 39, No. 1, 2009.

3. Interview on NTV, August 31, 2008.

4. RIA NovostiNovosti, December 10, 2008.

5. RIA Novosti, October 14, 2008.

6. Reuters, December 18, 2008.
100

7. Nezavisimaya gazeta, March 16, 2011.

8. Dale Herspring, “Is Military Reform in Russia for ‘Real’? 

Yes, But . . .,” in Stephen Blank and Richard Weitz, eds., The Russian Military Today and Tomorrow, Carlisle, PA: Strategic Studies 

Institute, U.S. Army War College, July 2010, p. 151.

9. The legend of the Dolchstoss was popularized by nationalists after World War I, who claimed that Germany had not been 

militarily defeated but instead betrayed by politicians, Jews, leftists, and other unpatriotic “November Criminals” (after the timing of the November 1918 armistice).

10. For an especially effective recent example, see Rod Thornton, Military Modernization and the Russian Ground Forces, Carlisle, 

PA: Strategic Studies Institute, U.S. Army War College, June 2011.

11. Mark Galeotti, “Force Projection,” Jane’s Intelligence Review, 

Vol. 22, No. 2, 2010; Mikhail Tsypkin, “What’s New In Russia’s 

New Military Doctrine?” RFE/RL, February 27, 2010, available 

from www.rferl.org/content/Whats_New_In_Russias_New_Military_

Doctrine/1970150.html; Stephen Blank, ed., Russian Military Politics 

and Russia’s 2010 Defense Doctrine, Carlisle, PA: Strategic Studies 

Institute, U.S. Army War College, March 2011.

12. Reuters, June 27, 2010.

13. Odnako, February 15, 2010. The one exception to this 

conversion is the 18th Machine Gun Division based in the Kurile 

Islands.

14. Nezavisimoe voennoe obozrenie, June 23, 2011.

15. Voenno-promyshlennyi kur’er, March 30, 2011.

16. Segodnya, August 6, 2009.

17. ITAR-TASS, December 13, 2010; RIA Novosti, November 

25, 2010. For a good general assessment of the figures, see Stephen 

Blank, “Lurching Toward Militarization: Russian Defense Spending in the Coming Decade,” Eurasia Daily Monitor, January 5, 2011. 
101

18. World Bank, Global Economic Prospects 2011, available from web.worldbank.org/WBSITE/EXTERNAL/EXTDEC/EXTDECPROSPECTS/EXTGBLPROSPECTSAPRIL/0,,menuPK:659178

~pagePK:64218926~piPK:64218953~theSitePK:659149,00.html.

19. Top 10 largest economies in 2020, Euromonitor, July 7, 2010, 

available from euromonitor.typepad.com/files/gdp-rank-final.pdf; The 

World in 2050, PwC, January 2011, available from www.pwc.com/

en_GX/gx/world-2050/pdf/world-in-2050-jan-2011.pdf.

20. SIPRI Yearbook 2011, Stockholm, Sweden: Stockholm International Peace Research Institute, 2011, p. 163.

21. Rossiiskaya gazeta, October 15, 2008.

22. Krasnaya zvezda, December 29, 2010; Interfax, February 2, 

2011.

23. The Aerospace Defense Command will, in Medvedev’s 

words, “combine the existing air defense and missile defense 

networks, missile early-warning systems and airspace monitoring systems under a unified strategic command.” RIA Novosti, 

November 30, 2010.

24. See Roger McDermott, “Russia’s “Spineless” Army: Paper 

Sergeants,” Eurasia Daily Monitor, April 19, 2011.

25. Izvestiya, October 2, 2011.

26. Dmitry Gorenburg, “The Russian Military’s Manpower 

Problem,” Russian Military Reform blog, July 29, 2011, available from 

russiamil.wordpress.com/2011/07/29/the-russian-militarys-manpower

-problem/.

27. Nezavisimaya gazeta, March 1, 2010.

28. Moskovsky Komsomolets, March 29, 2011.

29. Well explained in Thornton, Military Modernization and the 

Russian Ground Forces, pp. 8-10.
102

30. See Aleksei Arbatov and Vladimir Dvorkin, Novaya 

Voennaya Reforma Rossii, Moscow, Russia: Moscow Carnegie Center, 2011, pp. 21-25.

31. Interfax, October 5, 2011.

32. Trud, January 19, 2011.

33. Izvestiya, October 2, 2011.

34. Obretenie budushchego: strategiya 2012, INSOR, 2011, 

available from www.insor-russia.ru/files/Finding_of_the_Future%20.

FULL_.pdf.

35. RIA Novosti, April 4, 2011.

36. Pavel Felgenhauer, “Russia Begins Tsentr 2011 Military 

Exercises,” Eurasia Daily Monitor, September 15, 2011.

37. RIA Novosti, September 20, 2011.

38. Stephen Blank, “The CSTO: Gendarme of Eurasia,’ Eurasia 

Daily Monitor, September 26, 2011; Mark Galeotti, “A True ‘Medvedev Doctrine’,” Moscow News, September 26, 2011.

39. See, for an interesting take on the Vostok 2010 exercises, 

Roger McDermott’s “’Virtual’ Defense of the Russian Far East: 

Vostok 2010,” Eurasia Daily Monitor, July 6, 2010.

40. Each brigade will get its own specialized sniper platoon. 

RBK-Deily, September 13, 2011.

41. Nezavisimaya gazeta, December 24, 2008.

42. Official Internet Portal of the President of the Republic of

Belarus: Official Meetings, August 30, 2011, available president.gov.

by/en/press131372.html.

43. Interfax, August 30, 2011.

44. Rossiiskaia gazeta, May 18, 2011.
103

45. See, for example, Vlad Socor, “Medvedev’s Think-Tank 

Proposes Reinforcing Russia-Led CSTO, Part Two,” Eurasia Daily 

Monitor, September 9, 2011.

46. “World armies: Russian Federation,” Jane’s World Armies, 

July 12, 2011. 

The last comprehensive survey noted that four out of five 

conscripts face a beating by their officers or fellow soldiers at 

some point in their service, which for one in three will be serious enough to lead to hospitalization or a medical discharge. 

Another one in five will leave the army chronically ill as a result 

of poor diet, overcrowding, and minimal medical and sanitary 

provision. 

47. ITAR-Tass, March 25, 2011; Nezavisimoe voennoe obozrenie, 

July 29, 2011.

48. RIA Novosti, January 12, 2011.

49. For a good assessment of Russia’s C2 problems, see Roger 

McDermott, “’Is Anybody There?’ Russian Military Command 

and Control,” Eurasia Daily Monitor, October 4, 2011.

50. Thornton, Military Modernization and the Russian Ground 

Forces, p. 1.

51. See, for example, Jake Kipp, “Revolt of the Generals or 

Shadow Theater For the Discontented?” Eurasia Daily Monitor, 

July 25, 2011.

52. RIA Novosti, October 28, 2008; Nikolai Pavlovskiy, “Goodbye, Soviet Army,” Boss Magazine, February 15, 2010, quoted in 

Thornton, Military Modernization and the Russian Ground Forces, 

p. 42.

53. Mark Galeotti, “Terrorism, Crime and the Security Forces,” in Mark Galeotti, ed., The Politics of Security in Modern Russia, 

New York: New York University, USA, 2010).

54. See Dale Herspring, “Dedovshchina in the Russian Army: 

The Problem That Won’t Go Away,” Journal of Slavic Military 

Studies, Vol. 18, No. 4, 2005; “Dedovshchina: From Military to So-
104

ciety,” a special issue of the Journal of Power Institutions in PostSoviet Societies, Vol. 1, 2004, available from pipss.revues.org/

index190.html.

55. Komsomolskaya pravda, July 7, 2011; Mark Galeotti, “Russia’s New Military Police: About Time and About Order,” 

In Moscow’s Shadows blog, August 19, 2011, available from

inmoscowsshadows.wordpress.com/2011/08/19/russia’s-new-militarypolice-about-time-and-about-order/.

56. Economist, September 18, 2008; BBC, July 3, 2008, available 

from news.bbc.co.uk/2/hi/7488133.stm; Reuters, May 24, 2011.

57. Military Prosecutor Fridinskii included defense industry 

contractors among those he claimed were stealing up to 20 percent of the budget, which is not a figure I am able to assess, so 

the outstanding 6-10 percent may be accounted for by their sticky 

fingers instead.

58. The Gosoboronzakaz (GOZ)—State Armaments Order—

system and its woes are explored effectively in Julian Cooper, 

“The ‘Security Economy’,” in Galeotti, ed., The Politics of Security 

in Modern Russia.

59. RIA Novosti, October 10, 2011.

60. Nezavisimaya gazeta, March 2, 2011.

61. Open Source Center, Central Eurasia: Daily Report, December 17, 2010, cited in Jim Nichol, Russian Military Reform and 

Defense Policy, Washington, DC: Congressional Research Service, 

August 24, 2011, p. 19.

62. Nezavisimoe voennoe obozrenie, December 23, 2008; Nezavisimoe voennoe obozrenie, May 18, 2007.

63. Nezavisimoe voennoe obozrenie, September 16, 2011.

64. Voenno-promyshlennyi kur’er, March 30, 2011, available 

from vpk-news.ru/articles/7369.

65. Izvestiya, July 6, 2011.
105

66. RIA Novosti, June 2, 2009. 

67. RIA Novosti, April 7, 2011.

68. Liliia Shevtsova and Mark Eckert, “Russia’s Hybrid Regime,” Journal of Democracy, Vol. 12, No. 4, 2001; Steven Levitsky 

and Lucan Way, “The Rise of Competitive Authoritarianism,” 

Journal of Democracy, Vol. 13, No. 2, 2002.

69. St. Petersburg Times, March 9, 2011. 

70. Roger McDermott, “Russia’s Conventional Armed Forces 

and the Georgia War,” Parameters, Vol. 39, No. 1, 2009, p. 70.

71. Julian Cooper, “The ‘Security Economy’,” in Galeotti, ed., 

The Politics of Security in Modern Russia, p. 147.

72. RIA Novosti, December 18, 2010.

73. Rossiiskaya gazeta, February 8, 2011; Mark Galeotti, “Medvedev’s Law on Police: A Quiet Revolution,” oD: Russia, March 1, 

2011, available from www.opendemocracy.net/od-russia/mark-galeotti/medvedev’s-law-on-police-quiet-revolution.

74. Mark Galeotti, “Medvedev’s Police Purge, 1),” in Moscow’s 

Shadows blog, August 3, 2011, available from inmoscowsshadows.

wordpress.com/2011/08/03/medvedev’s-police-purge-1-the-ministers/.

75. Moscow Times, April 4, 2011; Nezavisimaya gazeta, October 

13, 2011. See also Brian Taylor, State Building in Putin’s Russia: Policing and Coercion after Communism, Cambridge, UK: Cambridge 

University Press, March 2011, especially Chap. 2.

76. Rossiiskaya gazeta, August 10, 2007.

107

ABOUT THE CONTRIBUTORS

STEPHEN J. BLANK has served as the Strategic Studies Institute’s expert on the Soviet bloc and the postSoviet world since 1989. Prior to that he was Associate

Professor of Soviet Studies at the Center for Aerospace 

Doctrine, Research, and Education, Maxwell Air Force 

Base, AL; and taught at the University of Texas, San 

Antonio, and at the University of California, Riverside. Dr. Blank is the editor of Imperial Decline: Russia’s 

Changing Position in Asia, coeditor of Soviet Military 

and the Future, and author of The Sorcerer as Apprentice: Stalin’s Commissariat of Nationalities, 1917-1924. He 

has also written many articles and conference papers 

on Russia, the Commonwealth of Independent States, 

and Eastern European security issues. Dr. Blank’s current research deals with proliferation and the revolution in military affairs and with energy and security in 

Eurasia. His two most recent books are Russo-Chinese 

Energy Relations: Politics in Command, London, UK: 

Global Markets Briefing, 2006; and Natural Allies? Regional Security in Asia and Prospects for Indo-American 

Strategic Cooperation, Carlisle, PA: Strategic Studies Institute, U.S. Army War College, 2005. Dr. Blank holds 

a B.A. in history from the University of Pennsylvania, 

and an M.A. and Ph.D. in history from the University 

of Chicago.

MARK GALEOTTI is Clinical Professor of Global Affairs and Academic Chair of New York University’s 

Center for Global Affairs. An expert on contemporary 

Russian security affairs ranging from its armed forces 

and intelligence services through to the impact of organized crime and corruption on its capabilities, he is 

also an historian and is working on a study of orga-
108

nized crime through the ages. He was attached in an 

advisory role to the Foreign & Commonwealth Office, 

where his remit covered Russian foreign and security 

policy and post-Soviet organized crime. Dr. Galeotti 

has taught at Keele University in the United Kingdom 

(UK). He has been Visiting Professor of Public Security at the School of Criminal Justice, Rutgers-Newark, 

and a fellow of Oxford University’s Extra-Legal Governance Institute. He moved to New York University 

in 2008. Dr. Galeotti has published widely, with 12 authored and edited books (most recently, The Politics of 

Security in Modern Russia) as well as numerous articles 

in the academic, professional, and popular press, including a monthly column on post-Soviet affairs in 

Jane’s Intelligence Review in the period 1991-2006, and 

now a column in the Moscow News. Dr. Galeotti combines his scholarship with practical work with governments, corporations, and law enforcement agencies 

(including the British National Criminal Intelligence 

Service, the U.S. Federal Bureau of Investigation, and 

Interpol). Dr. Galeotti studied history at Robinson College, Cambridge University, UK, and holds a Ph.D. in 

politics from the London School of Economics

STEVEN ROSEFIELDE is Professor of Economics at the 

University of North Carolina, Chapel Hill; a member 

of the Russian Academy of Natural Sciences (RAEN); 

and Director of the Japan foundation Project on the 

Global Financial Crisis’s Impact on Asia. His most recent books include Russia in the 21st Century: The Prodigal Superpower (Cambridge University Press, 2005); 

Masters of Illusion (with Quinn Mills), Cambridge University Press, 2007); Russian Economy (Wiley, 2008); 

Russia Since 1980 (with Stefan Hedlund) (Cambridge 

University Press, 2009); Red Holocaust (Routledge, 
109

2010); Two Asias (edited with Masaaki Kuboniwa and 

Satoshi Mizobata, World Scientific, 2011); Prevention 

and Crisis Management (edited with Masaaki Kuboniwa and Satoshi Mizobata, World Scientific 2012); and 

Democracy and its Elected Enemies (with Quinn Mills), 

(Cambridge University Press, 2012).

LILIA SHEVTSOVA is Chair of the Domestic Policy 

Program, Moscow Carnegie Center, and Associate 

Fellow at the Chatham House, the Royal Institute for 

International Affairs. She is author of several books, 

including Yeltsin’s Russia: Myths and Illusions; Putin’s 

Russia; Russia—Lost in Transition: The Yeltsin and Putin 

Legacies; Lonely Superpower, Change or Decay: Russia’s 

Dilemma’s and the West’s Response (in co-authorship 

with Andrew Wood).
U.S. ARMY WAR COLLEGE

Major General Gregg F. Martin

Commandant

*****

STRATEGIC STUDIES INSTITUTE

Director

Professor Douglas C. Lovelace, Jr.

Director of Research

Dr. Antulio J. Echevarria II

Editor

Dr. Stephen J. Blank

Director of Publications

Dr. James G. Pierce

Publications Assistant

Ms. Rita A. Rummel

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Composition

Mrs. Jennifer E. Nevil