Technology and Governance in Russia: Possibilities

Wednesday, October 3, 2018
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This paper will ruminate in a highly preliminary way on the possibility of change in Russian governance as a result of disruptions in technology.  No such momentous changes are on the horizon at the moment.  That said, history moves in surprising ways, and unintended consequences are the norm.  Technological disruption, too, usually brings change in unforeseen directions.  Whatever happens, it will not happen the precise way we might anticipate.  We shall begin with background remarks about Russian governance and Russian ingenuity, and then briefly explore 1) demographics and robotics; 2) new communications technologies and domestic politics; and 3) alternative energy and political alternatives.  Omitted here are important areas such as additive manufacturing (so-called 3-D printing), which has the potential to upend global trade as we know it, and agricultural bioengineering, which could reduce or even end scarcity, in effect driving deglobalization.  Be that as it may, today the main trend is toward militarization and authoritarian enhancement.

Observations on Governance in Russia

Russia is a middle income country with an undiversified and stagnant economy.  The country also has immense Soviet legacies, for better and for worse.  The Soviet inheritance, along with additional investments, has enabled Russia to become a conventional military great-power again, with the world’s largest nuclear arsenal and a veto at the UN security council.  Russia is a military power because it prioritizes being one (unlike, say, Germany or Japan, which have far larger economies).  Russia also inherited scientific technological prowess, which it maintains despite changes and corrosion since Soviet times.  And, even after the loss of vast territories as a result of the Soviet dissolution, it retains a challenging but also empowering geography impinging on Europe, the Middle East, East Asia, and the Arctic.  In geopolitical terms, much of Russia’s political class came to detest the 1991 settlement of the Cold War that was imposed when, by its own doing, Russia was flat on its back.  (The settlement’s implications emerged more clearly over time, it must be said.)  Predictably, however, Russian power has undergone a revival, and now it possesses not only motive but also the means to force adjustments in the 1991 settlement.

Today, as in the past, Russia has an authoritarian political regime, some might even say a kind of gangster state, dressed in democratic decoration.  Although Russia’s economy is no longer planned, that is, state-managed outside legal market mechanisms, as in the Soviet period, four-fifths of its largest companies are state-owned, third in the world behind only China and the UAE.  Many government officials are self-dealing almost exclusively.  There is an astonishingly corrupt side to the state regulation of the economy. The sprawling interior ministry is considered as especially corrupt.  Russia’s middle class largely consists of managers of state-owned corporations and officials who work for the state – that is, dependent not independent people.  But the Russian state can confound analysts who truck in binaries.  All too many analysts predict Russia’s pending economic collapse, because of falling oil prices and rising sanctions, and get surprised at the success of Russia’s macroeconomic policies (for two decades now).  Russia manages to be overflowing with both corruption and professionalism; formal institutions and informal practices; gangsters and sophisticated technocratic elites.  There is considerable state capacity in the ministry of finance as well as the state bank, not to mention the diplomatic corps.  There is also an outsized, simultaneously corrupt and professional, security service.

Russian politics to a significant degree can be understood as a mostly behind-the-scenes contest between the security services, on one side, and the finance and economic ministries, on another.  That is, Russian politics is largely a struggle between those who emphasize the need to gird against perceived threats and prioritize “stability,” versus those who prioritize development, between those who see the outside world as almost exclusively menace and those who see it as primarily opportunity.  Of course, security and development can be compatible.  We should not assume that these two general groups in Russia are always diametrically opposed, even though they often clash.  Members of each wing share the other’s core concerns to an extent.  Both groups see themselves as fiercely patriotic.  Too often, however, security is allowed to override internal development, opportunity is viewed as a Trojan Horse, and economic expertise is reduced to macroeconomic stability, rather than development.  That is where Russia, once again, finds itself today.  Development is blocked, in the name of security and stability, which actually translates into regime preservation.  The latter ends up trumping all other concerns.  What results is a debilitating conflation between personal regime preservation and national interests.

Despite a surface stability even in the face of blocked development and gangster politics, Russia’s authoritarian regime is less stable than it appears.  There is a great deal of grievance and yearning for a better life – inside the state, let alone in the society.  Still, perhaps the main sources of instability are, firstly, the circumstance that authoritarian regimes tend to hollow themselves out over time and, secondly, the state’s absence of a clear and lawful succession mechanism at the top.  To simplify a bit, instability emerges from the very success of authoritarianism, whose repression and censorship squeeze out political alternatives and suppress or distort accurate information about society.  Much pressure is let out by allowing or forcing emigration (exit rather than voice), but a whole society cannot emigrate.  The suppression of alternatives has the effect of exacerbating the already acute succession question that bedevils almost all authoritarian regimes.  Authoritarian regimes degrade their own institutions and governance performance, by emasculating their judiciaries and legislatures, and failing to control their own executive officials.  The regimes leave themselves with less and less resilience in their drive for more and more control.

Authoritarian regimes – and Russia is no exception – tend to be all-powerful yet fundamentally brittle.  (By contrast, democracies are feckless yet resilient.)  They elicit low levels of trust from the populations in whose name they rule (a circumstance that, in a crisis, can be fatal).  And they invite destabilizing intrigue, whether from ambition and survivalism (or both), in anticipation of pending all-or-nothing moments of political succession when a change in ruler can threaten elites’ wealth, freedom, and lives.

Icarus – Ingenuity

Today’s Russia suffers a severe high-education, low-human-capital paradox.  In 2012, it came in just 21st in patents registered under the Patent Cooperation Treaty, the convention associated with the World Intellectual Property Organization.  This put it behind Austria, even though Russia has a population more than 15 times greater than that of Austria.  Russia was earning 35 times fewer international patents per university graduate than Austria.1 “Once a scientific powerhouse,” in the words of one scholar writing in 2015, “Russia has experienced over the past 25 years a dramatic decline of its research and development capacities and is now lagging far behind other industrialized nations in terms of scientific output.”2 This downward trend has in part been arrested more recently with massive state investments in scientific laboratories.  But Russia faces ongoing brain-drain, largely provoked by its authoritarian political system.  Since 1991, more than 5 million Russians have departed for new lives abroad beyond the territory of the former Soviet Union, a stunning loss of human capital. Fewer than one-third of researchers in Russia are age 30 to 50, while a quarter are beyond 70.3

But let us begin with an American documentary film – Icarus, which won the Oscar for best documentary in 2017.   In Greek mythology, Daedulus, while imprisoned in his own invention (the Labyrinth), fabricated two sets of wings out of feathers affixed to a wooden frame with wax, one pair of which he gave to his son Icarus for a trial.  The idea was that father and son would escape the Labyrinth.  Even though his father had warned him that flying too close to the soon would cause the wax adhesive to melt, Icarus, intoxicated with his newfound ability to fly, did just that.  The feathers detached, and Icarus fell to his death in the sea below.  The film that took its title from this story of hubris relies upon the whistle-blowing of Grigory Rodchenkov to explore Russia’s audacious illegal doping practices in the 2014 Winter Olympics, which were held in Sochi.  Rodchenkov had served as the Russian anti-doping laboratory’s director; an independent investigation corroborated his charges.  He exposed a state-sponsored scheme whereby a Russian lab switched out the urine samples of athletes that had been contaminated with performance enhancing drugs for clean samples even though the bottles containing the samples were tamper-proof.4

The documentary on cheating seems to reconfirm the increasingly blackened image of Russia.  Against the considerable evidence, including electronic files, the Russian government denied official involvement in the doping scheme, but Russian hackers tied to military intelligence stole and released internal emails of the world anti-doping agency to try to discredit its probe.  Within weeks of each other, Vyacheslav Sinev, former chairman of the executive board of the Russian Anti-Doping Agency (RUSADA), died aged 58, and Russia’s anti-doping chief (Nikita Kamaev) died aged 52.  At the time, Russian Sports Minister Vitaly Mutko said, “It’s a very unexpected death.  He [Kamaev] seemed healthy and everything was fine.”5 Rodchenkov, a mastermind of Russian state-sponsored doping (before he flipped), has a Ph.D. in analytical chemistry, and admitted that for Russian athletes he had invented a cocktail of banned anabolic steroids that could go undetected.  When this failed, the Russian state found a more ingenious solution.6 Herein lies the documentary’s bigger lesson.

For the Sochi Olympics, the Swiss company Berlinger designed the sample bottles such that once they had been sealed, they could not be opened without breaking the cap, meaning that any attempted change of their contents could not escape detection.  The caps had unique seven-digit numbers so no substitute caps could be used for broken ones.  Moreover, athletes’ names were not included on the sample bottles.  But Russian sports officials had also collected clean urine samples from every athlete many months before they had begun doping for the Olympics, and officials had the athletes snap and send photos of their official Olympic urine sample forms (showing the unique seven-digit numbers) to identify every cheating athlete’s sample.  Most impressively, the Russian security services designed a way to open the bottles without destroying the caps. 

In sum, the documentary’s tale of tawdry Russian cheating is also one of impressive Russian ingenuity.  One could argue that too much of Russia’s ingenuity is devoted to burnishing the regime’s image by hook or by crook, rather than to developing the country for the long-term.  That said, it would be foolish to underestimate Russia.  To this day, the Swiss company does not know how Russia’s FSB (successor to the KGB) managed to open the bottles. 

I. Demographics and Robotics

Russia’s death rate for males rose steadily between 1960 and 2005; alcoholism served as one of the principal causes. (In fact, the male death rate uptick slowed briefly during Gorbachev’s anti-alcohol campaign.)7 Russia’s demographic situation has alarmed its leaders.  True, in 2009, the secular decline in Russia’s natural rate of population was reversed, but that reversal has ended.8 Russia’s population as of January 1, 2018 was estimated at 146,880,432 (this includes the 2.3 million people of Crimea, which is not internationally recognized as part of Russia).  Controlling for territorial shifts, this represents an increase of just 76,060 from the previous year, thanks to a net migration gain of 211,878.  The natural population declined by 135,818 over the year.  Russia has still not regained its 1991 population level (148,689,000).  Moreover, The U.N. forecasts a total population in Russia of 119 million by 2050. 

Russia’s demographic problems could turn out to be a blessing.  But will they?

Without immigrants, Russia is poised to experience great labor shortfalls.  Immigration has averaged around a quarter million people in recent years and has not exceeded half a million per year since the mid-1990s.9 Immigrants come to Russia predominantly from the former Soviet republics, which are suffering its own demographic shortfalls, especially in the critical cohort of 15 to 29 year- olds (those most likely to migrate).  And Russia must compete for Slavs from Ukraine with Poland.  (Somewhere between 1 and 2 million Ukrainians are working in Poland.)  Lately, Russia has attempted to incentivize legal ethnic Russian immigration from the former Soviet republics.  New rules were introduced (2014) for citizens of former Soviet countries to obtain Russian citizenship provided they spoke the language and could prove Russian ethnicity.  Non-Russian immigrants from Central Asia and the Caucasus – as opposed to guest workers – remain low in number.  Migrant workers in Russia peaked at 7 million, an estimated 3 million of them illegals, before a crackdown in 2012, which was followed by the ruble crash in 2014.10 Temporary labor migrants (mostly Armenians, Uzbeks, Tajiks, Kyrgyz) are not popular in Russian society, even if the regime understands their necessity to the economy.

The implications of demography for the Russian economy are far-reaching.  A large generational cohort is dying off, while a far smaller one is coming of age.  Economy Minister Maksim Oreshkin explained in September 2017 that the birth rate cratered to its lowest point in 1999, and that this “small” generation was now beginning to enter the workforce.  He predicted that “we are going to lose approximately 800,000 working-age people from the demographic structure every year” for the foreseeable future.11 On current trends, Russia’s workforce could shrink from 85 million to 65 million by 2050 – a severe blow to GDP.12 Demographers have grimly projected Russia’s maximum economic growth range at between 1 and 2 percent.13

The number of pensioners in Russia could equal the number of people in work by 2044, according to government projections, which would imperil the state budget, on top of the fact that there is already something of a labor shortfall.  Accordingly, there is severe pressure to raise the retirement age.  Back in 2005, Putin said, “I am against increasing the pension age, and while I am president, no such decision will be made.” In June 2018 (on the first day of the World Cup) the Russian government announced a proposed increase in the retirement age for women from 55 to 63, and men from 60 to 65.  After a backlash, the President felt compelled to backtrack, slightly, lowering the new age for females to 60, while holding firm on that for males.14 In Russia when workers begin reach the age to begin collecting their state pensions, and exercising a right to free public transport, they mostly continue to work for wages, but pensions provide supplemental income.  State pensions average just 13,342 rubles (under $200) per month, but for many people this is crucial.  Moreover, because life expectancy for men is a mere 67.5 (77.6 for women), many fear never seeing the pension money if the age limit is raised.15 Be that as it may, pension reforms, if enacted, promise no relief for the labor shortages. 

Older workers, in any case, are often ill-suited to jobs based upon new technologies.  The regime’s pension reform dilemma – which has degraded Putin’s favorability ratings, to the extent such ratings can be trusted – is self-created, for on the eve of every election since 1996, the government has raised the amount of pension benefits, but all along the way, the government has not been as aggressive in investing in new human capital (education and health care).16 On the contrary, the government, for political reasons, has driven into exile a very large number of people it helped educate, hemorrhaging human capital (the shortage of highly skilled workers is great).  Moreover, severe pressure on the state budget (a deficit in seven of eight 8 years between 2009 and 2016, and a spending down of the fund) is leading some analysts to forecast a decline of 20 percent in education spending and 25 percent in health care spending over the three years 2017-2019.17

What could rescue the situation for Russia?  Higher productivity is the other solution (besides expanding the workforce) for the labor shortages.  Russia’s labor productivity is dismally low by comparison to other industrialized countries, with much room for improvement.  Paradoxically, if Russia were to make use of robots, its productivity problems could be solved and its demographic shortfall could become a strength, because workers displaced by robotization would face less competition for other jobs.

Widespread use of robots on production lines in Russia seems far off.  Today, Russian robotics are seen predominantly in the military, where Russia has been deploying unmanned drones for some time.18 Recently, the Russian armed forces showcased the “Uran-9,” a heavy unmanned ground vehicle for remote reconnaissance and combat support armed with a 7.62mm machine gun and anti-tank guided missiles.  It is just one of numerous unmanned combat vehicles being developed, alongside a roboticized medium and small-range missile defense system, AI-infused cruise missiles, and more.  It remains to be seen how viable these unmanned vehicles are in actual combat, and whether they might even be turned against their battlefield deployers by hackers.19 Meanwhile, Russia is boasting about mass production of an android army.  “The serial production of combat robots for the Russian armed forces may start already this year,” defense minister Sergei Shoigu stated in mid-March 2018 at a domestic technology gathering dubbed “Russia: the Country of Possibilities.”  This work is led by, among others, the Russian Foundation for Advanced Research (created in 2012 and roughly analogous to the American Defense Advanced Research Projects Agency or DARPA).  Russia’s Foundation for Advanced Research in March 2018 proposed that the Ministry of Defense standardize AI research around four areas: image recognition, speech recognition, control of autonomous military systems, and information support for weapons’ life-cycle.20

Beyond the obvious military application, however, it is unclear the extent to which Russia’s civilian economy is poised to take advantage of robotics.   As MIT professor emeritus Loren Graham has pointed out, Russians invented lasers (two Soviet scientists got the Nobel for it), performed pioneering work on computers, and detailed the possibility of fracking in scientific journals, but all these innovations were developed and commercialized in other countries.21 Russia has the science, and to an extent the financing, and even in many ways the entrepreneurial spirit, but the country lacks the appropriate institutions and investment climate.  Small- and medium-sized businesses comprise only 18 percent of GDP, less than half the ratio in successful economies.22

Many Eastern European factories are already automated, but Russia lags very far behind them.  The Russian association of Robots (founded in 2015) has as few indigenous members the companies Promobot, Hamster, and Abagy.  (The other two members are Kawasaki and ThyssenKrupp.)  In April 2018, the Skolkovo Institute for Science and Technology held its 6th International Robotics Forum, focused on driverless transport and medical robotics.  Skolkovo, sometimes optimistically known as Russia’s Silicon Valley, is a state-sponsored technopark founded in 2010 that seeks to marry research and industry.23 As then President Dmitry Medvedev stated in a 2009 speech to the Federal Assembly setting out the vision: “To sum up, an inefficient economy, semi-Soviet social sphere, fragile democracy, negative demographic trends, and unstable Caucasus represent very big problems, even for a country such as Russia. . . Achieving leadership by relying on oil and gas markets is impossible.”24

For the Skolkovo Innovation project, Medvedev’s administration chose open land (some 600 acres) outside Moscow, not the site of any of the country’s long-standing scientific universities, and proclaimed five clusters: biomedical, nuclear, space, IT, energy.  The project devoured enormous sums of state funding in its early years, some of it misappropriated, which uncharacteristically for Russia led to indictments.25 (Medvedev had highlighted the imperative to battle corruption as a strong motivation to launch the innovation project; the arrests came after Putin had returned to the presidency.)  Skolkovo had been bruited as a possible site for a 2014 G-8 meeting, but its lagging construction killed that idea and, in the event, Russia was evicted form the group for its illegal annexation of Crimea.  No major companies have emerged from Skolkovo.  Russia’s hemorrhage of human capital has not helped.26 Skolkovo’s ambitions appear to have been scaled back.27

One could argue that a successful Russian Skolkovo Innovation Center already exists – in Israel.  How many émigrés from Russia form a part of Israel’s high tech sector is hard to say.  Russian immigration to Israel in the 1990s doubled that country’s population of engineers and scientists, but many Russian-born engineers in Israel could only find employment as service workers, housemaids, and welders.28 Either way, they do not work in Russia. 

There is another, even more interesting geopolitical inflection to Russian robotics: back in April 2015, the government announced a partnership between the Skolkovo Foundation and China’s Cybernaut Investment Group for a joint robotics center (in China) and a joint robotics startup incubator (in Russia).  (The highly rated Chinese venture firm was begun by a Chinese-born returnee from Silicon Valley.)29 Whether anything has come of this partnership is difficult to establish.  China is Russia’s greatest present and long-term external challenge.

II.Information Technology and Domestic Politics

We are long past the heady days of predictions that the Internet and new communications technologies would prove unmanageable for authoritarian regimes, and usher in democracy.  To be sure, technology-enabled activism is real, and can empower groups that are merely basic tech savvy.  But that has severe limits in countries without the rule of law.  Authoritarian regimes can and do shut down the citizen activism with arrests, hefty fines and jail terms, expulsion from employment or school, and deportation.  More than that even, authoritarian regimes have shown they too can be tech savvy, using new technology for enhanced policing via face recognition, surveillance of social media accounts, and fake account entrapment.30 Arguably, the principal change in governance from new information technology has been enhancement of the authoritarian toolkit.

No matter how much technology they bring to bear, self-styled activists and political opposition cannot run candidates, let alone register political parties.  Often regimes just eliminate direct elections, as happened in Russia under Putin.  In the first period of his presidency (2000-2008), appointment replaced election for positions in the upper house of parliament and governorships, while direct elections to the lower house of parliament were replaced with party lists voting.  Following the mass protests of 2011-12, when President Putin announced he had decided (on his own) to become president again, some direct elections were reinstated after the mass protests of 2011-12 (direct district-based elections to the lower house of parliament; some gubernatorial elections).  But even when there are elections, candidate nomination–registration processes facilitate state control over candidates.  The Kremlin has gone so far as to undermine independent powers of regional elites, let alone of any self-styled opposition.

Even basic forms of citizen self-organization have been bottled up.  Russia once had an estimated 277,000 NGOs (in 2008), but the number declined significantly after, in 2012, the regime introduced a law requiring that NGOs receiving foreign funding register as foreign agents.  (The Constitutional Court upheld the law’s compatibility with the constitution.)31 The regime has also stepped up its creation of NGOs, sometimes mocking called government NGOs, which engage in imitations of election monitoring or human rights monitoring.  They persecute and repress political opposition and freedom of speech.  A June 2014 amendment to the “foreign agents” law allowed the justice ministry to register NGOs as foreign agents without their knowledge, if it determined that they were receiving foreign money or engaging in politics.  Criticism of the “foreign agents” law itself qualifies as political activity under the law.32 In parallel, Putin’s regime introduced an “undesirable organizations” law, which authorizes a ban at the regime’s discretion.

Perhaps, however, technological disruption is changing the very forms of citizenship and governance?  Technology has massive promise for enhanced government performance, including offering new metrics for assessing government performance.  We are seeing alternative citizen databases for measuring and holding government officials to account.  Outside of showcases such as Estonia, however, technology is disrupting government practice and citizenship much less than it is reshaping the private sector and daily life.  Estonia’s borderless, blockchained governance and citizenship model can be overhyped.33 Nationalism has not disappeared from Estonia, let alone from countries that are still not “virtual.”  On the contrary, Estonia is using e-governance to advertise itself among nations.  The country has been on a multidecade crusade to buttress its cultural identity and language and rid itself of many ethnic Russians who arrived during Soviet times.  That said, Estonia’s impressive digital advances show how government can be made to work better – in an unambiguously rule-of-law setting.

The assertion, meanwhile, that the world has entered a “Networked Age” whereby “all humanity is connected beneath the surface like the giant colonies of aspen trees in Colorado that are actually all one organism,” is unsupported by the evidence.  Exhortations to policymakers to adopt a “network mindset” (connectedness, sharing, engagement), instead of a chessboard emphasis on states and sovereignty, self-interest and coercion, betray the extent to which this has not happened.34 Networks have not and cannot replace competing states.  To a great extent, increasing interconnectedness has helped reinforce nativism and authoritarianism.  This also happened during the world’s first globalization in the period 1850s-1930s.

Just as in the 1930s, moreover, repressive states, with Russia in the forefront, have shown themselves capable of interdicting the spread of information and ideas they oppose, and of crafting, disseminating, and controlling effective narratives on their own behalf.  The instruments they wield – once again, developed in the free countries of the West – seem even more powerful than those previously (such as photography, motion pictures, radio).  Indeed, social media have become weapons for the state-sponsored and rogue-actor dissemination of lies and confusion on the broadest imaginable scale.  We need to be careful not to exaggerate the lasting effects of this malign activity – after all, radio (broadcast directly into people’s homes) caused a panic about the end of truth and the advantages of authoritarianism.  But we can hazard a guess that the Internet in the precise form we know it today cannot and will not last, given its utter anonymity, breathtaking lack of security, and facilitation of theft, surveillance, smears, and lies.

III.Alternative Energy and Political Alternatives

Saudi Arabia, famously, has been investing in alternative energy sources and attempting to diversify an economy far more dependent on hydrocarbons than Russia’s.  Back in 2000, none other than Sheikh Ahmed Zaki Yamani, the former oil minister of Saudi Arabia, stated in an interview that “Thirty years from now there will be a huge amount of oil – and no buyers. Oil will be left in the ground. The Stone Age came to an end, not because we had a lack of stones, and the oil age will come to an end not because we have a lack of oil.”

No longer are doomsday clairvoyants foreseeing a coming peak in oil supply.  Prognosticators have turned to predicting a possible peak in demand for oil, but their guesses vary greatly.  One think tank in London (Carbon Tracker) and a risk consultancy in Norway pinpoint the turn around 2023.  By contrast, BP published a study predicting demand will begin to decline between 2035 and 2040.  The International Energy Agency believes that demand for oil will continue to grow through into the 2040s even as it publishes scenarios for a dropoff in demand beginning already in the 2020s under climate change agitation.  The wide range of estimates should give cause for skepticism.  But investors are already making their bets based upon a sense of whether hydrocarbon-energy companies are prepared, or not, for a transition to renewables at some point.  This alone hastens the possibility that the predictions of sooner rather than later might be borne out.35 No one knows when renewables might begin to replace hydrocarbons on such a scale that it constitutes a fundamental shift in the global energy regime.  If that shift does occur, it is likely to occur very rapidly, like a self-fulfilling prophecy or bank run, as investors doubt the future returns on massive upfront investments in finding and exploiting new oil and gas fields, and sinking capital into new power plants or other energy delivers that are based upon hydrocarbons.

Russia’s three largest corporations are suppliers of oil and gas.  The ruble moves with oil markets (as the Russian Central Bank knows all too well) – only when the world crude price is above $60/barrel is the real ruble-dollar exchange rate higher than the inflation-adjusted exchange rate.36 The country boasts the world’s largest reserves of natural gas and the second largest of coal.  Oil and gas account directly for around one-quarter of Russia’s GDP (the share has not eclipsed 26.5 percent for the past quarter century).  One could make the argument that indirect measurements would significantly increase the proportion.  For example, Russia imports around 60 percent of its consumer products and pays for them with export earnings – and the latter are predominantly oil and gas.  This means that the role of oil and gas in the economy is greater than indicated by nominal GDP contribution.  Petrodollars underwrite investments and spending in many other sectors of the economy.  Still more consequentially, More than half of Russian federal government revenues (including 40 percent just from oil).   

Authoritarian regimes do not depend on economic growth per se.  It is a fallacy that there is some kind of bargain between the regime and the people, who supposedly accept limitations on their freedom in exchange for improved lifestyles: if economic growth stagnates, the populace lacks mechanisms to punish the regime’s failure.  The regime, for its part, does not admit it failed to fulfill the “bargain” and step aside; it ramps up its repression and manipulation.  But such regimes do face a significant crisis when they run out of cash flow.  The best sources for cash flow for authoritarian regimes are resources that are plentiful and easily extracted, such as diamonds, precious metals and minerals, or fossil fuels.   Russia’s political system is utterly dependent on hydrocarbons for its cash flow.  With oil and gas generating gushers of cash, the exploiters can emancipate themselves from the exploited.  But a new global energy regime would likely upend Russian politics.  The regime would run out of money and lose its ability to buy-off elites, who are difficult to manage even with full coffers, as well as the wider populace.  Another way to put the matter is that the more regimes are dependent for revenues not on resources but on their people (through taxation), the more those regimes face an imperative to treat their people like genuine citizens.

Today, renewables claim a relatively small fraction of global energy share.  The likelihood that renewables could overturn the existing hydrocarbon energy regime is, as noted above, a matter of considerable speculation and debate.  If it happens, and if it happens sooner rather than later, the implications for Russia governance are immense.

*

President Putin, on September 1, 2017, the first day of school, was shown on national TV speaking with teenagers in jeans in provincial Yaroslavl and stating that “Artificial intelligence is the future, not only for Russia, but for all humankind.  It comes with colossal opportunities, but also threats that are difficult to predict.  Whoever becomes the leader in this sphere will become the ruler of the world.”37 But the size of the AI/machine learning market in the country was under $12 million in 2017 (according to the Russian tech website cnews.ru).  When Putin speaks of AI, he means almost entirely military AI.  Here, Russia looks able to compete.38

So far, at least, predictions of disruption to authoritarian rule have proven wrong.  Perhaps the much-predicted disruption of authoritarianism is still coming? Perhaps Russia’s authoritarian government will be forced to engage in political liberalization and rule-of-law reforms in order to compete?  There is no empirical cause to answer yes, as the trend has been a strengthening and emboldening of authoritarianism, alongside the ongoing militarization.  Paradoxically, however, the stronger authoritarianism gets, the more brittle it becomes.  But just how robust are the leading democracies also remains to be seen.

Author and historian Stephen Kotkin is a Hoover Institution senior fellow and the Birkelund Professor of History and International Affairs in the Woodrow Wilson School and history department of Princeton University.


 1 Nicholas Eberstadt, “Putin’s Hollowed-Out Homeland,” WSJ, May 7, 2014: https://www.wsj.com/articles/nicholas-eberstadt-putins-hollowed-out-homeland-1399504005?tesla=y&tesla=y

 2 Quirin Schiermeier, “Russian Science Minister Explains Radical Restructure,” Nature, Jan. 26, 2015: http://www.nature.com/news/russian-science-minister-explains-radical-restructure-1.16776

 3 Judy Twigg, “Russia Is Losing Its Best and Brightest,” National Interest, June 13, 2016: http://nationalinterest.org/feature/russia-losing-its-best-brightest-16572?  Led Gudkov, the head of the Russian polling organization Levada Center, has noted of the exodus, “People who are leaving today are more liberally oriented, more intelligent, better educated, and consequently, we are left with a rather inert, passive mass with opportunistic attitudes.”

 4 New York Times, May 12 and 13, 2016: https://www.nytimes.com/2016/05/13/sports/russia-doping-sochi-olympics-2014.html; https://www.nytimes.com/interactive/2016/05/13/sports/russia-doping-sochi-olympics-2014.html?action=click&contentCollection=Sports&module=RelatedCoverage&region=Marginalia&pgtype=article .  By way of background, Athletes competing in major international competitions must submit a urine sample for testing, which is divided into two bottles: the A bottle, which is immediately tested; and the B bottle, which is stored for up to 10 years, in case the athlete’s performance subsequently falls under suspicion.

 5 The International Olympic Committee “banned” Russia from the 2018 Winter Olympics, but granted eligibility to Russian athletes.  (The “Olympic Athletes from Russia,” 169 in total, constituted one of the largest contingents in 2018.)  The infamous lab building in Sochi became a popular pub during the World Cup, featuring a yellow drink called “B Sample” (the substitute clean urine ones) made up of tequila, Sambuca, and Tabasco.

 6 To accelerate absorption of the steroids in the blood and shorten the detection window, Rodchenkov would dissolve the banned substances in alcohol — Chivas whiskey for men, Martini vermouth for women.  But in 2014, Russia notched the highest number of athletes caught by testing.  Rodchenkov blamed the athletes for mixing in their own choice performance-enhancing substances.

 7 “Smertnost’ v Rossii skvoz’ prizmu privatizatsii,” Demoscope, Feb. 2-15, 2009: http://www.demoscope.ru/weekly/2009/0363/lisa01.php

 8 Russia’s population declined by more than 5 million from 1990 to 2010, and then grew by 1.3 million in the next five years, for a net decrease of 3.7 million.

 9 Tom Balmforth, “Another Worrying Sign For Russia’s Dire Demographics,” Radio Free Europe (September 27, 2017), https://www.rferl.org/a/russia-population-decline-labor-oreshkin/28760413.html

 10https://www.newsru.com/russia/23nov2010/migranty.html

 11https://www.rferl.org/a/russia-population-decline-labor-oreshkin/28760413.html.  Even the good news is problematic. As Nicholas Eberstadt of AEI noted, “Russia’s present modest surfeit of births over deaths comes entirely from historically Muslim areas like Chechnya and Dagestan, and from heavily tribal regions like the Tuva Republic.” Nicholas Eberstadt, “Putin’s Hollowed-Out Homeland,” Wall Street Journal, May 7, 2014: https://www.wsj.com/articles/nicholas-eberstadt-putins-hollowed-out-homeland-1399504005?tesla=y&tesla=y

 12https://www.bloomberg.com/news/articles/2018-04-05/world-war-still-haunts-putin-as-population-decline-taxes-economy

 13 Nicholas Eberstadt, Hans Groth, Judy Twiff, Addressing Russia’s Mounting Human Resources Crisis, American Enterprise Institute (February 2013); Critical 10 Years: Demographic Policies of the Russian Federation: Success and Challenges, Russian Presidential Academy of National Economy and Public Administration (RANEPA) (2015): https://www.wilsoncenter.org/sites/default/files/10%20Critical%20years%20english%20version.pdf#page=13&zoom=page-actual,-208,115

 14 Finance Minister Anton Siluanov observed that the president’s concession would cost the budget 500 billion rubles ($7.3 billion) over six years. Andeei Kolsenikov, “Saving Colonel Putin: Why Russia’s Pension Reform Just Got More Expensive,” Moscow Times, (Aug. 31, 2018):  https://carnegie.ru/2018/08/31/saving-colonel-putin-why-russia-s-pension-reform-just-got-more-expensive-pub-77151

 15 “Rossiiane stali dol’she zhit’” (Sept. 11, 2017): lenta.ru/news/2017/09/11/zhizn/ . Russia’s gender lifespan disparity is the widest in the world.

 16 Sarah Wilson Sokhey, “Buying Support? Putin’s Popularity and the Russian Welfare State,” FPRI (Feb. 2018): https://www.fpri.org/wp-content/uploads/2018/02/SokheyRPE2.pdf?utm_source=Test+List&utm_campaign=8dd81ae9f2-EMAIL_CAMPAIGN_2017_12_28&utm_medium=email&utm_term=0_fa689ca428-8dd81ae9f2-

 17 Andrey Movchan, “Pensions and Security: Russian Budget Reveals Government Priorities,” Carnegie Moscow Center, Dec. 15, 2017: http://carnegie.ru/commentary/66454

 18 See also the US “Jason” paper, “Perspectives on Research in Artificial Intelligence and Artificial General Intelligence Relevant to DoD” (Jan. 2017): https://fas.org/irp/agency/dod/jason/ai-dod.pdf

 19 Samuel Bendett, “Russia Is Poised to Surprise the U.S. in Battlefield Robotics,” Defense One, Jan. 25., 2018: https://www.defenseone.com/ideas/2018/01/russia-poised-surprise-us-battlefield-robotics/145439/  As a former CIA analysts has written, “Russian systems – like practically all combat UGVs – are vulnerable to enemy fire such a heavy machine guns, rocket-propelled grenades, mines, IEDS or mortars that can target their sensors and cameras or engines and locomotion devices, not to mention the actual armaments themselves, which are not protected to any significant degree.”  Samuel Bennett, “Is Russia Building an Army of Robots,” National Interest, March 19, 2018: https://nationalinterest.org/blog/the-buzz/russia-building-army-robots-2496

 20https://ria.ru/technology/20180320/1516808875.htm

 21 Leon Neyfakh, “Russian Science is Amazing.  So Why Hasn’t It Taken over the World?” Boston Globe, Jan. 4, 2015.

 22 Andrey Movchan, Decline, Not Collapse: The Bleak Prospects for Russia’s Economy, Carnegie Moscow Center (February 2017), 11, http://carnegie.ru/2017/02/02/decline-not-collapse-bleak-prospects-for-russia-s-economy-pub-67865 , 10.

 23 A. Blagoveshenskii, “Viktor Veksel’berg predolizhil Skolkovo zapuskat’odin Google v god,” Rossiskaia gazeta, July 1, 2010.

 24 Medvedev, “Go Russia!” (Sept. 2009): http://en.kremlin.ru/events/president/news/5413

 25 “The Skolkovo setup is a very corruption-encouraging environment,” noted Ivan Ninenko, deputy head of Transparency International Russia.   “Skolkovo Office Searched in Corruption Probe,” Moscow Times, April 19, 2013: https://themoscowtimes.com/articles/skolkovo-office-searched-in-corruption-probe-23399

 26 “The Short Life and Speedy Death of Russia’s Silicon Valley,” Foreign Policy, May 6, 2015: https://foreignpolicy.com/2015/05/06/the-short-life-and-speedy-death-of-russias-silicon-valley-medvedev-go-russia-skolkovo/

 27 Mike Butcher, “Chill out — Russia’s Skolkovo project attempts a re-boot with a new venture fund,” Tech Crunch, June 9, 2017: https://techcrunch.com/2017/06/09/chill-out-russias-skolkovo-project-attempts-a-re-boot-with-a-new-venture-fund/

 28 Rachel M. Friedberg, “The Impact of Mass Migration on the Israeli Labor Market,” Quarterly Journal of Economics, 116/4 (2001): 1373-408.

 29 The Russia deal is not featured among the cases on their website: http://www.cybernaut.com.cn/en/cases.shtml

 30 Evgeny Morozov, The Net Delusion: The Dark Side of Internet Freedom (New York: Public Affairs, 2011).

 31 Lisa McIntosh Sundstrom, Funding Civil Society: Foreign Assistance and NGO Development in Russia (Stanford, CA: Stanford University, 2006)

 32 Elena Mukhametshina and Ol’ga Churakova, “Kritika zakona ob inostrannykh agentakh stala povodom dlia priznaniia agentom,” Vedomosti, May 10, 2016.

 33 Nathan Heller, “Digital Republic,” New Yorker, Dec. 18-27, 2017.

 34 Anne-Marie Slaughter, The Chessboard and the Web: Strategies of Connection in a Networked World (New Haven, CT: Yale University, 2017).

 35 Sarah Kent, “Could Oil Demand Peak in Just Five Years?” Wall Street Journal, Sept. 10, 2018.

 36 Andrey Movchan, “Just an Oil Company? The True Extent of Russia’s Dependency on Oil and Gas,” Carnegie Moscow Center, Sept. 14, 2015: https://carnegie.ru/commentary/61272

 37 “Putin Talks Power of Artificial Intelligence”, MSN, September 12, 2017, available at https://www.msn.com/en-gb/news/world/putin-talks-power-of-artificial-intelligence/vp-AArPZUt

 38 As the U Defense Intelligence Agency noted, “The Russian military has built on the military doctrine, structure, and capabilities of the former Soviet Union, and although still dependent on many of the older Soviet platforms, the Russians have modernized their military strategy, doctrine, and tactics to include use of asymmetric weapons like cyber and indirect action such as was observed in Ukraine.”  Russia Military Power: Building a Military to Support Great Power Aspirations, Defense Intelligence Agency (2017), 46: http://www.dia.mil/Portals/27/Documents/News/Military%20Power%20Publications/Russia%20Military%20Power%20Report%202017.pdf?ver=2017-06-28-144235-937 .  At the same time, Dmitry Gorenburg has observed that the Ministry of Defense tends to buy what the military-industrial complex is good at producing, not what the armed forces always need in terms of combat equipment.