Paul Lachine

The Kremlin’s Failing Monopoly

Few Russian policymakers, much less the Russian public, expected oil and gas prices to collapse as they have. If prices remain stagnant at current levels, the regime that Vladimir Putin created - one based on a combination of repression and redistribution - is doomed to failure.

CAMBRIDGE – Ever since Vladimir Putin came to power a decade ago, the Kremlin regime has relied on two pillars: the security forces and energy exports. By suppressing internal rivals and absorbing their assets, the regime created a dual monopoly.

Redistributing some of the profits from high energy prices enabled the regime to improve living standards and make itself popular with ordinary Russians. And resolving internal problems through a disproportionate use of force reassured even the regime’s security obsessed ex-KGB men.

Until recently, this combination of carrots and sticks functioned effectively. The virtual absence of popular protest in Russia during the Putin years seems amazing. But make no mistake: Putin’s popularity ratings relied not on his vigor, humor, or mystique, but on salaries and credits that Russians had never enjoyed before. And, as long as oil prices were growing faster than Russian salaries, those in power could still grab a big slice of the profits.

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