When time magazine named Russia’s Vladimir Putin Person of the Year my esteemed b5 editor thought it would make a good leadership post. I didn’t disagree, I just didn’t believe that I had the in depth knowledge to discuss it. But I had something better—my Russian business partner, Nick Mikhailovsky, CEO of NTR Lab. Nick and I have enjoyed a multifaceted business relationship for nearly ten years and during that time have become good friends, so I dropped him a line. You can, too, if you’d like to meet him—nickm@ntrlab.ru.

So here is Vladimir Putin through the eyes of a thirty-something Russian entrepreneur.

What is Putin like as a leader from the viewpoint of a Russian entrepreneur? It is not easy to answer this question, but I will try to.

First of all, let’s look at the global economic, and as a consequence, political context.

The 90’s gave the entire world the impression that the new economy was coming. The Western world viewed the new economy as the “knowledge economy,” developing, overpopulated economies like India and China—as globalization and post-socialist countries as a transition to the free market.

These hopes have mostly come true, except for the knowledge economy, which in large part gave us the dotcom bubble.

In Putin’s time – the first half of the 2000’s – the western world faced the fact that the economy is once again resource-limited (most of the rest of the world never forgot about that, because simple resources like food are a considerable part of an ordinary person’s budget). Being limited, natural resources have significantly grown in price, the most recent spurt being food, with metals and oil growing in price earlier in the decade.

Most large businesses have realized the challenges posed by these prices quickly enough (and those who didn’t, such as the US automotive industry, have significant problems now). This fact led to the understanding that controlling natural resources, especially energy, is critical in the new situation. Where this control cannot be accomplished by the power of money, it should be done by political power, was the further natural understanding. The latter understanding was especially easy in the USRussia, both Putin and Bush being close to the oil lobby (not that there are many significantly different industrial lobbies over here in Russia). and

In my opinion, Putin has done reasonably well working on the most critical problem of his time in power in Russia’s national interests. He has effectively nationalized the least nationally oriented oil company in Russia, Yukos. Contracts on Sakhalin signed during Yeltsin’s rule have been reconsidered in a national direction. He stopped Chechen war that was destabilizing the region critical for Caspian oil transit through Caucasus.

Putin has, so far, also been reasonably efficient preventing US invasion in Iran. On the other hand, Putin failed to prevent the US invasion in Iraq and this is probably his largest failure in the fight for oil control. On the other hand, it is not quite clear if such an invasion would have benefited Russia or not—Iraqi experience shows that the oil control takes quite some time, if it’s at all achievable, and any invasion into a significantly oil-producing country results in another surge of oil prices.

Another area in which Putin seems to have significant achievement is the fight with terrorism. Terrorism is a child of mass media, and actually a purely informational phenomenon. You might not know it, but there was no terrorism in Soviet Union, because there was no free press. And if an act of terror did happen, almost nobody would ever know about it. Efficient collaboration with the US, which experienced 9/11 early in Putin’s time, and alignment of the national media have reduced the problem, although the root causes—the absence of national ideology comparable in power to the Islamic one and exceptionally low income in Caucasus region—still remain unsolved.

(Continued tomorrow)

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This entry was posted on Thursday, January 10th, 2008 at 3:00 am and is filed under About Leadership, What Leaders DO. You can follow any responses to this entry through the RSS 2.0 feed.
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