Challenges of Rebuilding the Russian State During the Era of President Vladimir Putin

By sakhri Mohamed

Abstract

This article examines the challenges faced by President Vladimir Putin in rebuilding the Russian state after the tumultuous 1990s following the collapse of the Soviet Union. It analyzes Putin’s presidency from 2000-2024, looking at how he sought to recentralize power, restore Russia’s economy, reign in the oligarchs, and reassert Russia’s position on the global stage. The key challenges examined include reestablishing federal control and unity, cracking down on separatist movements, reforming the economy, restoring fiscal discipline, reigning in oligarchs, fighting corruption, developing natural resources, restructuring the military, and reasserting Russia’s role in international affairs. The paper argues that while Putin was largely successful in rebuilding Russian state power and prestige, this came at the cost of democratic institutions and freedoms. His strongman approach left the country overly dependent on energy resources and vulnerable to global economic forces beyond its control. The paper concludes that the future trajectory of the Russian state will depend heavily on how Putin’s successors navigate tensions between centralization and democratization.

Introduction

When Vladimir Putin first became president of Russia in 2000, he inherited a country in deep crisis. After the collapse of the Soviet Union in 1991, Russia experienced immense political, economic, and social upheaval throughout the 1990s. The once formidable Russian state had been dramatically weakened, facing threats of disunity, criminalization, and irrelevance on the global stage. Putin’s historic mission was to rebuild and strengthen the Russian state after the chaos of the post-Soviet decade. This paper examines the various challenges Putin faced in this monumental task, analyzing his presidency from 2000 up until the present day in 2024.

The 1990s under Boris Yeltsin saw a rapid liberalization of the Russian economy, often termed “shock therapy,” combined with attempts to swiftly democratize the political system. The results were disastrous. Russia’s GDP shrank by nearly 40% between 1991 and 1998, while inflation skyrocketed over 2000% in 1992 (White). Criminal elements stepped into the vacuum left by the collapse of state institutions. Oligarchic clans used manipulation, fraud and sometimes force to gain control of former state assets, particularly in natural resources. The central government struggled to maintain authority across Russia’s vast territory, facing rebellion and secessionist movements. Coupled with military failure in the First Chechen War from 1994-96, Russia under Yeltsin risked becoming what some termed a “failed state” (Jack).

Against this backdrop of chaos and collapse, Putin presented himself as a strong leader capable of recentralizing power and bringing order. His core objectives were to rebuild state power vertically from the Kremlin down and horizontally across Russia’s regions and to reassert Russia’s great power status, countering what he saw as excessive Western influence following Soviet decline. This paper examines the key challenges Putin faced in pursuing these towering tasks, looking at efforts to restore federal unity, recentralize control, reform the economy, rein in oligarchs, fight corruption, develop energy resources, rebuild the military, and reassert Russian international might. While Putin was able to restore stability and strength in the revitalized Russian state, this came at a cost to democratization and human rights. Putin’s reliance on centralization of authority and silencing of opposition are crucial factors that will continue to shape Russia’s political development.

Challenges to Federal Control and Territorial Integrity

When Putin became acting president at the close of 1999, he faced the immense challenge of recentralizing rule over Russia’s 89 regions and republics across 11 time zones. Yeltsin had been forced to strike political deals with regional elites to keep the country together, allowing them to often act with impunity. This decentralization of power weakened the coherence and stability of the Russian Federation (Stoner-Weiss). Putin moved assertively to rein in regional autonomy and consolidate federal authority.

One key challenge came from separatist movements within the Russian Federation, most prominently in Chechnya. After the humiliating military defeat in the First Chechen War, Putin showed decisiveness in launching the Second Chechen War to bring the separatist region back under Moscow’s control in 1999-2000. This reassertion of Kremlin authority sent a signal to other restive regions. However, Putin inherited a low-level Islamist insurgency in the North Caucasus that has dragged on and flared up periodically over his rule. While able to prevent outright regional secession, managing the conflict in Chechnya and containing terrorism risks emanating from the North Caucasus have remained ongoing governance challenges.

Even more dangerous to Russia’s territorial integrity was NATO expansion. There was little Putin could do to stop the accession of the Baltic states, but NATO’s courting of Georgia and Ukraine represented strategic threats. Putin responded forcefully, including through the 2008 Russo-Georgian War and the 2014 annexation of Crimea, signaling Russia would fight to defend its sphere of influence in the near abroad. Prevention of further NATO enlargement helped solidify Putin’s image as protector of the Russian homeland. But ongoing conflict in Ukraine also made rebuilding economic and political ties with the West more difficult.

Overall, Putin was largely successful in recentralizing power and reestablishing federal supremacy after years of Yeltsin-era fragmentation. But struggles to integrate restive regions like Chechnya and deter NATO expansion have remained core strategic challenges of Putin’s leadership.

Reining in Oligarchs and organized crime

Another monumental challenge facing Putin was getting control over the oligarchs who had amassed huge wealth and power owning former state assets, especially in natural resources. Under Yeltsin the oligarchs often ran their fiefdoms like independent states. Putin began steadily neutering their political influence and autonomy. Most infamously, Putin moved against “robber baron” Mikhail Khordokovsky, head of the Yukos oil empire, having him arrested and Yukos dismantled for alleged financial crimes (Sakwa). This sent a message to other oligarchs to toe the Kremlin line.

Putin offered an informal pact where oligarchs could keep their assets so long as they stayed out of politics and paid their taxes. He was able to force the business elite into subservience to state interests. However, Putin also used strengthened state control over the economy to build up new oligarchs loyal to his rule. So taming the dominance of the Yeltsin-era oligarchs only paved the way for a new generation of Kremlin-connected billionaires, albeit ones more constrained in their autonomy.

Relatedly, Putin had to rein in the criminalization that had infected regional governments and the business world during the lawless 1990s. According to Galeotti (2021), under Putin the Russian state incorporated and domesticated organized crime. Criminal groups were given some autonomy to run illicit enterprises so long as they contributed to regime stability. Some were absorbed into government. For instance, Putin drew heavily upon security service veterans linked to organized crime to staff his administration. Ultimately organized crime was suppressed enough to restore day-to-day order while tamed enough to serve useful purposes for strengthening the state.

Reforming the Economy

In the economic sphere, Putin inherited a country still reeling from the 1998 financial crash. Reestablishing functioning federal authority required getting the economy in order. Putin was fortunate that rocketing oil prices in the 2000s fueled growth. But he did take crucial steps such as tax reforms and institution of strict fiscal and monetary policy that provided macroeconomic stability. GDP and investment grew substantially and poverty rates declined.

However, Putin failed to break Russia’s addiction to natural resources. Though some reforms were made, the economy remained dominated by oil and gas. Growth has largely come through energy exports rather than diversification or innovation in technology. Russia remains dependent on global commodity cycles and has struggled to modernize. Corruption and state interference still stifle development of a competitive market economy outside the energy sector. Putin’s reliance on spreads from state oil and gas companies to fund patronage networks also hindered productive investment.

After growth tapered off, long-term economic stagnation has set in over Putin’s later years. Falling oil prices after 2014 and Western sanctions over Ukraine severely impacted standards of living. The economy remains dependent on resource rents and suffers from unsustainably high inequality, lack of competition, and emigration of top talent. While Putin stabilized Russian state finances, genuine restructuring of the economy to spur sustained growth was left unfinished.

Fighting Corruption

Rampant corruption among officials was another immense obstacle inherited by Putin from the lawless 1990s. It undermined effective governance and weakened legitimacy. Putin took symbolic steps to show corruption would no longer be tolerated, such as firing many Yeltsin-era officials. But his record on meaningfully reducing corruption has been mixed at best. Despite periodic high-profile prosecutions of officials, Putin has given tacit approval to bureaucrats enriching themselves so long as they achieve Kremlin aims. In Transparency International’s Corruption Perception Index, Russia has only marginally improved from very high levels of perceived corruption since the early 2000s.

According to Ledeneva (2013), Putin established stability using corruption as an informal set of controls and incentives. Tacit permission was given for bureaucrats to engage in practices like bribe-taking or skimming state funds, so long as they channeled portions of the spoils to superiors. This allowed Putin to avoid empowering independent formal institutions while creating networks of loyalty and control through informal deals. But it entrenched corruption as a core feature of governance under Putin rather than truly mitigating it.

Developing Energy Resources

Putin did make notable progress in restoring state control over Russia’s immense natural resources, especially in oil and natural gas. During the 1990s the energy industry had been heavily privatized with little regulation, becoming an unproductive oligarchic fiefdom. Putin brought the sector back under state authority starting with the dismantling of Mikhail Khordokovsky’s Yukos oil giant. This enabled the use of energy rents to fund state priorities and patrons.

The oil windfall of the 2000s gave Putin resources to consolidate governing authority and pursue ambitions abroad. He was able to effectively deploy energy as a tool of foreign policy. State giants like Gazprom gave Russia leverage over Eastern Europe through pipeline politics. High oil profits papered over structural deficiencies elsewhere in the economy.

But the restoration of state energy dominance came at a cost. Private sector creativity and investment in energy development were stifled. Rather than modernizing, the industry grew increasingly inefficient over reliant on Soviet legacy infrastructure. Output from aging oil fields is expected to decline without needed levels of new exploration and technology upgrades. Putin used energy wealth to shore up critical support and buy off opposition rather than encouraging diversity and competition. Russia’s economy was made even more dependent on fluctuating natural resource exports.

Rebuilding the Military

After the decay of Russia’s military following Soviet collapse, Putin made restoring Russia’s hard power capabilities a top priority. Real military spending under Putin increased almost tenfold between 1998 and 2017 (Cooper). After reforms the Russian military proved newly potent, as evidenced in victories against Georgia in 2008 and occupying Crimea in 2014. New capabilities like advanced air defense systems were fielded. Putin also improved morale in the ranks by increasing pay and living standards after the privations of the 1990s.

But the impressive revival also had limitations. Much of the windfall funding was lost to waste and corruption. Russia still lags far behind the U.S. in defense spending and technology like precision guided munitions. Manpower challenges remain due to demographic decline. NATO containment and a closed society have restricted access to innovations emerging from globalized supply chains. While restoring Russia as a military power able to effectively defend its regional interests, gaps persist in modernizing the forces.

Reasserting Russia on the Global Stage

More broadly, Putin aimed to restore Russia’s role as a decisive global power and defend national sovereignty after the USSR’s loss in the Cold War. He took advantage of U.S. distractions under the War on Terror to reassert Russian interests in Central Asia and Europe. Limited partnerships were formed with major non-Western powers like China and India to counterbalance American hegemony. Putin also reestablished control over much of the former Soviet media and propaganda sphere, cultivating Russian diaspora communities abroad to expand the country’s influence and encourage reintegration.

But structural constraints hampered Russian ambitions of renewing multipolarity in the international system. Its economy and population are far smaller than the USSR’s during the Cold War. China inevitably became the dominant Eurasian power. Western sanctions limited investment needed for further development. And Russia found itself isolated over actions in Georgia and Ukraine that crossed red lines for other states. Lacking the ideological appeal of communism or resources of the Soviet superpower, Putin’s Russia could at most strive for selective disruption of Western institutions and regional sway rather than seriously challenging American dominance.

Conclusion

In reviewing Putin’s leadership, Russia in the 2000s was largely successful in overcoming the chaos of the post-Soviet 1990s to rebuild itself as a coherent national state with renewed military might and burgeoning global influence. But this was achieved through a prohibitively strong reliance on centralization of authority and silencing dissent. Democratization was abandoned in favor of control and stability. Hopes were pinned to fluctuating natural resource rents rather than empowerment of an economically diverse and civic society. These choices have left Russia ill-prepared for coming challenges like diversifying its economy, responding to public demands, and maintaining leverage abroad as energies transition away from oil and gas.

Much will depend on how Putin’s successor navigates between opposing imperatives of centralization and pluralism. Will they pursue more reform and transparency to empower Russian society? Or hold fast to paternalistic authoritarianism to keep oligarchic rule entrenched? Putin may have restored Russia as a formidable power during his long period in command. But he leaves behind an unbalanced system vulnerable to crisis without the flexibility afforded by democratic institutions and civic dynamism. The future trajectory of the Russian Federation will be highly contingent on how the eventual post-Putin leadership manages these unresolved tensions inherent in Russia’s fragile reemergence under Putin’s state-centered stewardship.

References

Cooper, Julian. 2018. “The Funding of the Russian Armed Forces.” Center for Strategic and International Studies.

Galeotti, Mark. 2021. We Need to Talk About Putin. London: Ebury Press.

Jack, Andrew. 2005. Inside Putin’s Russia. New York: Oxford University Press.

Ledeneva, Alena. 2013. Can Russia Modernize? Sistema, Power Networks and Informal Governance. Cambridge: Cambridge University Press.

Sakwa, Richard. 2008. Putin: Russia’s Choice. Abingdon, UK: Routledge.

Stoner-Weiss, Kathryn. 2006. Resisting the State: Reform and Retrenchment in Post-Soviet Russia. Cambridge: Cambridge University Press.

White, Stephen. 2011. Understanding Russian Politics. Cambridge: Cambridge University Press.

SAKHRI Mohamed
SAKHRI Mohamed

I hold a Bachelor's degree in Political Science and International Relations in addition to a Master's degree in International Security Studies. Alongside this, I have a passion for web development. During my studies, I acquired a strong understanding of fundamental political concepts and theories in international relations, security studies, and strategic studies.

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