Pew International Journalism Program

Russia's New Pragmatic Elite Shuns Empire Building for Economic Development, Says Russia Expert

By Ariana Eunjung Cha, Fall 2002 Pew Fellow

WASHINGTON, October 14, 2002 -- A new generation of Russian leaders led by Vladimir Putin has abandoned dreams of empire in favor of transforming Russia into an economically viable state that can compete in the global economy, says an expert on the region.

Ilya Prizel, a political science professor at the University of Pittsburgh, said that Russia's leaders are content to let the United States play the role of global policeman, convinced that this will strengthen Russia in the long term. Prizel told a Pew Fellows in International Journalism seminar that the old Russia of Mikhail Gorbachev and Boris Yeltsin's generation was driven by the need to assign blame for the breakup of the former communist superpower and the desire to salvage the remnants of the old Soviet empire; in contrast, he said, Putin's Russia in recent months has shown that it is "much more hard-headed and pragmatic."

In this new era, the Russian elite's priority is to build a legitimate economy, Prizel said. During the first chaotic years of post-Soviet rule the so-called oligarchs, many of them from the old Communist power structure, built billion-dollar empires by taking advantage of the chaotic climate. These men and women still control many Russian industries but now these former crooks are behaving more like normal businessmen, Prizel said. "The Russian elite wants to be part of the international game."

More than 25 Russian companies are now listed on the New York stock exchange, and over a dozen are listed on the London stock exchange. A major Russian oil company recently bought the Getty chain of gas stations in the United States. A Russian business tycoon even serves on the board of the Guggenheim Museum in New York, Prizel noted.

Since the disastrous collapse of the Russian ruble in 1998, Russia has had four continuous years of growth. Prizel said that while corruption hasn't stopped completely, foreign businesses have been encouraged by at least the appearance that Western-style business protocols and predictable taxes, and have begun to step up their investments in Russia to capture its big internal market and take advantage of its top-rate engineers, scientists and computer programmers.

Prizel cited as examples the Swedish furniture maker Ikea, which is building three factories in Russia to meet internal demand; the US airline manufacturer Boeing, which now employs 700 engineers in Moscow, and the German electronics giant Siemens, which now conducts most of its research and development in the city of Novosibirsk.

As part of this new climate, Prizel continued, Russia has reconciled itself to the eastward expansion of the European Union, which will most likely encompass the small Baltic states of Estonia, Lithuania and Latvia. Russian leaders expect that their closer neighbors -- most notably Ukraine, Belarus and Moldova -- will remain in Moscow's sphere of influence, but without the expensive subsidies the old Soviet state paid in the past to ensure loyalty. The new Russian pragmatism has also extended to the resource rich Caspian basin, said Prizel. After years of resisting energy development in that region, Russian oil companies are now partnering with the countries surrounding the Caspian sea to develop their rich oil and natural gas reserves.