Writing down the future

Vladimir Putin might not be remembered for his academic past, but it is where you will find the roots of his political agenda

WHEN IT comes to assessing Vladimir Putin's real agenda, the Western world's focus on his foreign policy moves, or the state of democracy in Russia, is quite a ways off the mark. Putin's ultimate legacy may lie in the systematic creation of state-sponsored mega-conglomerates.

To the world at large, Russian prime minister Vladimir Putin is not known for academic achievement. However, as an officer in the foreign intelligence apparatus of the Soviet-era Committee for States Security (KGB), he had to have a college degree.

So he studied international law at the Leningrad State University, graduating in 1975 with the Russian equivalent of a BA.

The fact that Putin also wrote and defended a candidate's dissertation in economics - which would rate close to a PhD in elsewhere - has remained little-known both in Russia and abroad. Perhaps this is because the future Russian leader tackled this task in 1997, while working as deputy mayor of St Petersburg.

The degree comes from the city's Mining College - certainly no rival of the London School of Economics or University of Chicago as far as its economic faculty is concerned. Such mid-career dissertations are often used by Russian officials for mere prestige purposes. The real determinants of career advancement in Russia's Byzantine bureaucratic system depend on a complex web of alliances, favours and intrigues - not university diplomas. But at a certain level of the bureaucratic ladder, it becomes desirable to add some impressive-sounding academic credentials to one's resume.

To be sure, Putin has never referred to his academic prowess since becoming Russia's president in 2000. The only time the subject of Putin's PhD surfaced in the Western media was in 2006, when some researchers who bothered to look up his thesis discovered that 16 pages in the 200-page opus, as well as a number of tables and diagrams, were lifted verbatim from a 1978 US textbook.

Putin may have cut some corners by beefing up his dissertation with "quotes" from an American textbook, but he certainly took his dissertation seriously. Two years later, in 1999, he got its main points published in the scholarly journal of the St Petersburg Mining College in the form of an article. It so happens that it was the year when he was picked out of the blue to succeed president Boris Yeltsin.

Titled Strategic Planning of the Reproduction of the Resource Base, the work criticised the privatisation of Russia's valuable resource companies, which allowed them to fall into private hands. In a prediction that, by now, has turned out to be a reality, he argued that the pendulum would eventually swing back from private ownership of strategic resource industries to greater involvement by the Russian state.

In his article, Putin proposed the creation of large financial industrial groups under the auspices of the state, which would be used as a foundation for rebuilding Russia's industrial base and its military-industrial complex. That he took his subject extremely seriously is proven by the fact that his presidential administration's policies clung very closely to the blueprint provided by Putin's dissertation.

Looking back, you can see a very logical method in Putin's actions since 2000. His first order of business was to eliminate rivals who didn't share his vision - but were at the time powerful enough to stand in his way.

Boris Berezovsky - the man who allegedly did the most to promote Putin - was one of the first to go. Berezovsky, sometimes called the Gray Cardinal behind Yeltsin's throne, boasted in the mid-1990s that all of Russia is run by seven bankers, himself among them. The second major figure to fall was Mikhail Khodorkovsky. The founder and largest shareholder of Yukos Oil, Khodorkovsky presented an alternative economic and political strategy for Russia.

He followed a Western business model, making Yukos the largest Russian enterprise in terms of market capitalisation. Unsurprisingly, Yukos's most productive assets were eventually, and unceremoniously, renationalised by Putin - and now form the core of Rosneft, Russia's state-owned oil company. Along the way, Putin cleaned up Gazprom, the world's largest natural gas producer and Russia's largest company. The government was always the largest shareholder in Gazprom, but during Yeltsin's years it used to be run like the private fiefdom of its top managers. However, none of these moves meant that Putin was not willing to work with Russia's remaining oligarchs, or wanted to bring back the planned economy. On the contrary, in his graduate thesis Putin states categorically that Russia's development must take place in a free market environment in order to attain greater efficiency.

But his ruthless defeat of Berezovsky and Khodorkovsky scared the daylights out of the remaining oligarchs. Those billionaires - the heads of Lukoil, Norilsk Nickel and other conglomerates - quickly expressed their eagerness to work with the Russian state for the benefit of Mother Russia.

In keeping with the ideas Putin expressed in his thesis, the remaining oligarchs have been working to create Russian-based corporations with a truly global reach. From steel to aluminium, the only condition has been that those corporations are controlled or greatly influenced by the Kremlin.

Perhaps the most fascinating dimension of all this is that such industrial conglomerates, and a built-in link to a supportive nation-state, hark back to another place and another era. Think Imperial Germany in the late 19th century. To most this may be ancient history, but not to Putin. Growing up in the Soviet Union, he had to be immersed in the economic and political works of Lenin, who devoted an inordinate amount of space to the discussion of Germany's emergence as an industrial power.

In Lenin's time, it was the most important story of the day. However grudgingly, Lenin came to admire Germany's economic success and industrial prowess. And Putin, who studied German and was eventually posted in Dresden as a KGB operative, had to devote special attention to Lenin's writings about Germany - even if they seemed hopelessly out of date.

In Lenin's time, Russia was condemned to watch helplessly as Germany pulled ahead in economic competition. Now, Putin seems to be determined that Russia, too, will build up powerful international companies like the German giants of industry in the present day: Krupp, Thysen, Siemens and the like. Of course,

Russia as of now lacks industrialists and entrepreneurial engineers of the same stature as the founders of Germany's huge industrial empires.

Better yet, Putin hopes that some day, leaving their 19th-century German counterparts in the dust, his tamed robber barons will bare even closer similarity to American originals.

Alexei Bayer is eastern European editor for The Globalist. He previously served as senior financial markets economist at the Economist Intelligence Unit