COMMENT: 8 years in power - Putin's domestic legacy

By bne IntelliNews August 10, 2007

Katya Malofeeva and Tim Brenton of Renaissance Capital -

This is the first in a series of three articles looking at Putin's legacy as he prepares to step down.

On August 8, 1999, Russia's first president, Boris Yeltsin, nominated Vladimir Putin, head of Russia's Security Council, as the new acting prime minister, and this nomination was confirmed by the Duma the following week. On December 31 of the same year, Yeltsin resigned, calling for early presidential elections and leaving Prime Minister Putin to come in as acting president.

By that time, it was obvious that Putin, largely unknown to the general public just six months before, was a clear frontrunner in the presidential race. His popularity was rising very quickly, and Putin was elected to the presidency in March 2000. In other words, following Putin's nomination as prime minister his rise to the top job was unstoppable, and it would be fair to say, therefore, that August 8 marks the eighth anniversary of his era.

In domestic politics, Putin will leave behind a much more consolidated country than the one he took charge of in August 1999. Some of the key burning issues - including Chechnya and political instability, which were, according to opinion polls, troubling the population, are now in the past. On the negative side, however, Putin leaves little clarity on what may come after his term expires - with just over six months before a new president takes charge in the Kremlin, it is still anybody's guess as to what may be expected in terms of the personality and policies of the new president.

Putin's successes in international politics are very well received domestically; however, arguably, Russia has fewer friends in the West today than it did when Yeltsin was president. On the other hand, Russia is gradually restoring its international influence in other parts of the world. The economy is the area of Putin's overwhelming success. Russia's economy is growing very quickly, foreign debt has been paid down, capital flight has turned into very strong private capital inflow, and significant progress has been made in fighting poverty and unemployment.

Putin's eight years have, undoubtedly, changed Russia. In 2007, Russia considers itself economically successful and politically strong - a greatly different self-perception from that of 1999. Retrospectively, the change is massive and truly dramatic, and accounts for the majority of Putin's legacy.

Russia's first president, Boris Yeltsin, in attempts to avoid Russia going into full-blown economic and social collapse after the break-up of the Soviet Union, was forced to compromise and rule only what was controllable. In his presidency, Yeltsin distributed power to a number of fractious regional leaders, often bent to the will of the Communist-led legislature and, on a number of occasions, was forced to go cap-in-hand to big business interests to gain the support of their private media empires and access to their huge pools of capital. Putin has managed to successfully force a good deal of the executive power back into the hands of the Kremlin. Essentially, he has transformed the executive into the most powerful entity in the Russian state structure, while undermining the independence of legislation, the courts and the media.

By mid-1999, most Russians were eager to see President Yeltsin leave his post, and were rather nervous about who might replace him - none of the most popular politicians at the time (a list including Zyuganov, Luzhkov and Zhirinovsky) stood a chance of winning the hearts of the majority of Russians.

Eight years on, Russians are much more content with their lives and do not want their president to leave. Significant uncertainty remains, however, about who will be Russia's new president, and whether he will be as successful as Putin in delivering the most highly prized commodities, stability and prosperity.


The consolidation of media control in Russia - achieved to a significant extent in Putin's first term - came hand-in-hand with the removal of two of Putin's main political rivals, Boris Berezovsky and Vladimir Gusinsky. Gusinsky fled Russia in June 2000, following tax raids on his Media-Most empire. Berezovsky, another media mogul and businessman with very strong political connections, left Russia in December 2000 after a long-running investigation into his financial dealings at Aeroflot. In April 2001, NTV, a Gusinsky-owned entity, was closed down by tax authorities, and within days the same fate befell all Gusinsky-owned media. They were then all sold on to Gazprom Media, the media arm of the state-owned energy major. In early 2002, many of Berezovsky's media assets were closed down with the help of the courts. Greater control of the media was instrumental in securing both United Russia's strong performance in the 2003 parliamentary elections and Putin's own victory in the first round of presidential elections in April 2004. The media is now fully geared up to conduct the 2007-2008 election campaign in accordance with the Kremlin's recommendations, with alternative points of view very unlikely to be broadcast. Control of the media continued to tighten in Putin's second term, often causing concern in, and even criticism from, the West.

Regional and local authorities

Putin began to implement his strategy to bring Russia's 89 regions under closer control of the central executive very soon after his entry into the Kremlin in 2000.

In May of that year, he established seven super regions, each ruled by a presidential plenipotentiary (those selected for these positions tending to be allies of the president). State-administration reforms, launched in September 2004, also ended the direct election of regional governors, who now depend on a presidential nomination. This was followed, more recently, by the introduction of direct nomination of mayors by the regional governors, thereby fully subordinating executive power in Russia to the president.


Bringing the legislative wing of the government under control is another key area in which Putin centralised power in order to avoid some of the headaches of the Yeltsin years. To this end, Putin has reformed the composition of the Federation Council, and made it impossible to enter the upper house of the legislature without support from the Kremlin. Parliamentary elections in Dec 2003 to the Federal Duma saw a landslide victory for the Kremlin-friendly United Russia party, which had been heavily supported by the president and given a great deal of coverage by state-owned media. It immediately gained 224 of the 450 parliamentary seats, and has since strengthened its standing through the migration of deputies. Right-wing parties, including Union of Right Forces and Yabloko, have lost their seats in the parliament (except for several won through single-seated constituencies). The relevance of the Communist Party of Russia has also been significantly undermined. Lately, Putin has further complicated access to the legislature by increasing the threshold for parties to be able to enter the legislature to 7% from 5% of the popular vote, and removing singlemandate districts in favour of an entirely proportional election system. The Yeltsin administration's difficulties in pushing legislation through parliament are unknown to Putin.

Law-enforcement agencies and the army

Government agencies, while being an important tool of Putin's initiative to centralise Russian power, were also a hindrance to it, as they were often at the behest of special interests and local authorities, and were all too often prepared to render their services to the highest bidder. The president has overseen a number of anti-corruption campaigns, with senior figures having been replaced with Putin loyalists. In addition, the president's decision to streamline his Cabinet in 2001 saw a number of key jobs amalgamated, and many of the Yeltsin oldguard removed from power. By the end of Yeltsin's rule, his popularity in the army was at its lowest, and respect for the army among the general public was falling through the floor. Boosting the army's standing in Russia was another important campaign goal of Putin's administration. Army financing was improved, and serious attention paid to bringing discipline to the way in which the military spends money. A non-military defence minister was appointed. President Putin often uses the manifestation of Russia's military capabilities to support his own popularity. Poor discipline and hazing (dedovschina) in the army remain a major problem that refuses to go away, and although financing of the military has increased significantly, its level of technology remains rather low.


Reform of the judiciary, along with anti-corruption campaigns, allowed the presidential executive to take greater control of law enforcement in Russian society, and eventually to largely use the legal and judicial system to the government's advantage. Dmitry Kozak, then deputy head of the presidential administration, introduced a number of key reforms in this regard, in early 2001.

These included the introduction of trial by jury across Russia's regions, changing the process by which judges were selected, limiting the age of judges and increasing their pay. Perhaps the key reform element was an attempt to limit the influence of the powerful prosecutors office in favour of the justice ministry, by reducing the role of prosecutors in criminal cases and almost totally removing them from civil actions. Prosecutors did retain their right to investigate crimes, bring legal cases and decide whether a case has been legally investigated. Over time, however, the judiciary has proved to be increasingly cooperative with the prosecution, rather than increasing its independence. The judiciary has clearly come more firmly under the control of the presidency, and the success of reform efforts aimed at reduction of the influence of prosecutors seems questionable - particularly given the recent swap between Yuri Chaika (formerly justice minister, now prosecutor general) and Vladimir Ustinov (formerly prosecutor general, now justice minister) - the two organisations seem to be as intertwined as ever.

Admittedly, Russian courts are now used less as a tool in commercial wars between business groups than was the case in the late 1990s. That said, rather than serving as independent arbiters, the courts are increasingly taking the side of the state in both commercial and criminal cases. Putin's era, having reduced the use of the court system by competing business groups, has given birth to the new concept of 'Basmannoye Justice', denoting a court system fully aligned with the government interests. The Yukos affair is widely perceived as the clearest illustration of the new status of the Russian courts.


In Chechnya, long the most troublesome of Russia's regions, Putin began to strengthen his grip even before he was finally elected as president, having launched the second Chechen War, after a string of Moscow bombings in September 1999 that were quickly linked to Chechen separatists. The second war was much better planned and executed than the first (1994-1996) and brought the region more firmly under Russian control. However, the 1999 Moscow bombings were not the last acts of terrorism linked to Chechnya. In October 2002, hostages were taken during a musical performance in east Moscow; and in May 2004, during Victory Day celebrations, Akhmad Kadyrov - the Chechen president, who had strong support from the Kremlin - was assassinated. Later in the same year (September) came the tragedy of the Beslan school siege. Immediately after Kadyrov's assassination, Putin struck a partnership with his son, Ramzan, who was appointed first deputy prime minister of the Chechen Republic the day after his father died. In 2006, Ramzan Kadyrov became the country's prime minister, and soon after he turned 30, he became the Chechen president. Russia has been gradually withdrawing its military force from Chechnya over the past few years, and is expected to leave only a small number of its interior forces in the republic. Military control is being gradually transferred to the local administration, and Kadyrov has helped to keep Chechnya relatively peaceful recently.

Send comments to The Editor

Related Articles

Drum rolls in the great disappearing act of Russia's banks

Jason Corcoran in Moscow - Russian banks are disappearing at the fastest rate ever as the country's deepening recession makes it easier for the central bank to expose money laundering, dodgy lending ... more

Kremlin: No evidence in Olympic doping allegations against Russia

bne IntelliNews - The Kremlin supported by national sports authorities has brushed aside "groundless" allegations of a mass doping scam involving Russian athletes after the World Anti-Doping Agency ... more

PROFILE: Day of reckoning comes for eccentric owner of Russian bank Uralsib

Jason Corcoran in Moscow - Revelations and mysticism may have been the stock-in-trade of Nikolai Tsvetkov’s management style, but ultimately they didn’t help him to hold on to his ... more

Register here to continue reading this article and 2 more for free or 12 months full access inc. Magazine and Weekly Newspaper for just $119/year.

If you have already registered, enter the information below with the same email you used previously and you will be granted immediate access.

IntelliNews Pro subscribers click here

Thank you. Please complete your registration by confirming your email address. A confirmation email has been sent to the email address you provided.

Thank you for purchasing a bne IntelliNews subscription. We look forward to serving you as one of our paid subscribers. An email confirmation will be sent to the email address you have provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

If you have any questions please contact us at

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

IntelliNews Pro subscribers click here

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

If you have already registered, enter the information below with the same email you used previously and you will be granted immediate access.

Thank you. Please complete your registration by confirming your email address. The confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.