■"Investors of the World, Here's the Word on Putin Inc.," by Erin E. Arvedlund, New York Times, 2 March 2005, p. A4.
A tough but reasonable verdict from a Kremlin official (their rep to the G-8 until he was relieved for these comments): when the Kremlin engineered that nasty renationalization of Yukos through the bogus auction, Andrei Illarionov declared, "Today, by our own decisions, we have done what is now, regrettably, clear to the outside world-we opted for the third world."
What Illarionov means is that Putin and Co. are acting like a Gap state instead of a Core one, more Saudi Arabia than Norway, say.
After a first term in which local and international business confidence was rising, Putin's second term is downright scary in its renationalizations, the uncertainty it's introduced in property rights, and its "tax terrorism" that beats any crony capitalism we've seen in Asia over the years.
So, if the first-term model seemed like Pinochet's Chile, or something akin to China or Singapore, now experts are calling it closer to PRI Mexico with its dominance of Pemex, the Mexican oil company it's run quite badly over the decades. Others say that's too easy a judgment, and that Russia will be Russia, not some carbon-copy of some other country's model.
Here's the real danger:
"Given that the Kremlin has succeeded in concentrating power, the worry is they're enjoying it for its own sake," said Mr. Litwack of the World Bank. "There's no proof you have to be an open democracy or free market to attract investment. But you have to create conditions for investors."
Good markets demand good governments, says Martin Wolf of the Economist in his book, "Why Globalization Works." But good markets require good market conditions. Putin is not creating those right now, and eventually it will cost him, no matter how much energy he's hoarding to the state.
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