Is Putin a threat to the West?

So long as the Russian economy remains a basket case, Vladimir Putin poses no real threat, says Matthew Lynn.


Russia's strongman should not scare us
(Image credit: Credit: ITAR-TASS Photo Agency / Alamy Stock Photo)

There are fresh stories almost every day about Vladimir Putin and the Russian government he presides over attempting to manipulate elections across the Western world. Only last week, he met with Marine Le Pen, the far-right candidate for the French presidency. The US president, Donald Trump, is fighting off allegations he was helped by Russian campaigning. In this country, some critics have alleged that the Brexit campaign was supported by the Russians. And the Germans have already taken steps to try and stop Putin easing Angela Merkel, a key critic of Russian foreign policy, out of power.

There is some truth in all this. The Russian government is indeed spending increasing amounts on propaganda for its regime, undermining its critics, and subsidising websites that churn out crazy stories about candidates it doesn't like. Putin wants to make Russia a major power again and part of that involves installing friendly leaders around the word. As a former KGB officer, Putin is certainly not squeamish about the dark arts of subterfuge and misinformation. But this doesn't mean we can pin all the blame on Putin for the rise of populist, anti-establishment politicians.

There is nothing new about it, for a start. When the Kremlin's archives were opened after the fall of the Soviet Union, it turned out the Russians had been funding anti-establishment organisations for years the coal miners, for example, in the strikes of the early 1980s, received plenty of Russian money. It didn't lead to the overthrow of Western capitalism. And, of course, we have been doing the same thing ourselves. The BBC World Service pumps out our point of view globally. The CIA is hardly a stranger to covert manipulation of elections in other countries. It is hard to be that outraged if the Russians do it as well.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

The bigger point, though, is that Putin doesn't have the economic power to back up his claim to great power status. He has less and less of it with every year that passes. True, after a severe recession, Russia's economy is now forecast to grow by 1.5% this year. The rouble has stabilised and the stockmarket has bounced back from its losses following Russia's annexation of Crimea. But there are no signs of genuine development. Russia's economy remains almost entirely dependent on natural resources, with few new industries of the sort that have developed in other emerging markets.

Have you ever bought a smartphone made in Russia or a car, or a television, or indeed anything at all? The only thing you are ever likely to have bought is some petrol. Russia has virtually no exports other than natural resources, and there are no Russian companies anyone has heard of apart from a few energy giants.

Its population has dropped from 148 million to 142 million since the fall of the Soviet Union and shows no signs of recovering. Russia has Japanese-style demographics but without anything close to Japan's wealth and efficiency. In the wake of the Crimea crisis, and the tumble in oil prices that came soon afterwards, GDP dropped by a massive 40% before stabilising. But at current growth rates it will take decades to claw that back. The average monthly wage has dropped below $450, less than Romania.

The reality is that Russia is an autocratic, state-directed economy, with rampant cronyism, and what little economic activity there is is controlled by a handful of oligarchs with close ties to the government. In the end, political power is based on economic power. While Putin's economy remains a basket case, as it seems likely to, he poses no real danger to anyone. There are lots of real threats to the West Putin is not one of them.

Matthew Lynn

Matthew Lynn is a columnist for Bloomberg, and writes weekly commentary syndicated in papers such as the Daily Telegraph, Die Welt, the Sydney Morning Herald, the South China Morning Post and the Miami Herald. He is also an associate editor of Spectator Business, and a regular contributor to The Spectator. Before that, he worked for the business section of the Sunday Times for ten years. 

He has written books on finance and financial topics, including Bust: Greece, The Euro and The Sovereign Debt Crisis and The Long Depression: The Slump of 2008 to 2031. Matthew is also the author of the Death Force series of military thrillers and the founder of Lume Books, an independent publisher.