Too Early to Judge Putin

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In a pleasant surprise, Russia has made business headlines across the globe in recent months. The latest example was on Saturday, when Sberbank and Oleg Deripaska's GAZ joined forces with Canadian auto parts maker Magna International in a successful bid for Opel.

Several days earlier, Yury Milner, principal of Digital Sky Technologies and the moving force behind such major Russian web sites as Yandex.ru, Mail.ru and Odnoklassniki.ru, purchased a 2 percent ownership interest in Facebook for $200 million, and world markets were pleased.

Has Russia bounced back once again, phoenix-like, from the precipice? As Zhou Enlai, the Chinese prime minister from 1949 to 1976, is reported to have said about the effects of the French Revolution, "It's too early to tell."

In any case, perhaps the more important issue is how much Russia has learned from this crisis. Consider Russia's reactions to the financial crisis of 1998. Starting in 2000, then-President Putin broke the oligarchic stranglehold on the Russian economy. The government implemented a rational and competitive tax structure designed to encourage legalization of gray income. Finance Minister Alexei Kudrin was given nearly carte blanche authority to amass sovereign wealth and foreign currency reserve funds that remain -- even amid the crisis -- the envy of the developed and developing worlds. Finally, strategically sensitive sectors and business activities were defined both legislatively and politically, and Russia began to use its petrodollar windfall to diversify the nation's industrial infrastructure.

It is easy to quibble with various aspects of this decade-long resurgence, and many observers correctly take Russia's leadership to task over other equally significant developments, such as the steady growth in corruption and the consistent, aggressive tightening of screws on fundamental freedoms such as speech and print. Nonetheless, Russia has had a breathtaking 10-year run, and Russians are rightly proud of their now resurgent nation.

If Zhou was unable to drawn firm conclusions about the effects of the French Revolution, then it is certainly far too early to attempt a similar analysis of the current crisis and Russia's response. Nonetheless, it is possible to suggest criteria by which such an evaluation might eventually be conducted.

The first analysis should focus on whether the crisis has been used as a catalyst for positive change. A nation whose prime minister prides himself in mastering judo should be able to turn unexpected negative forces into a strategic advantage. Has the government assessed its goals and determined which of these might be furthered by harnessing unanticipated changes in the political, economic or social landscape?

The Kremlin also should be asking itself uncomfortable questions about whether this crisis could have been avoided -- or its effects significantly mitigated -- had other legislative mechanisms and administrative shock absorbers been in place beforehand. From President Dmitry Medvedev on down, the Russian government's first reaction to the panic when the crisis broke out in September was that this was largely a U.S. phenomenon. While there might have been an element of truth to this, pointing the finger beyond Russia's borders is not a formula for effective governance.

Russians are a proud people, and they have much to be proud of. While Russia can point to specific examples of collective achievement in their past, these are often victories borne of tremendous national stress, duress or self-imposed deadlines.

Rather than breathing a collective sigh of relief or reveling in recent coups in international business, Russians need to derive objectively self-critical lessons from this crisis and the nation's reaction to its challenges. This process should begin at the top, and it should be hard-nosed and unflinching.

If Russia wishes to build on this wave of recent success in international markets, then the nation will need to accomplish a collective and complete yevroremont, or Western-style refurbishment, of its political and economic infrastructure. For now, the champagne should remain chilled and uncorked. ? 

Vladimir Berezansky, Jr. is a U.S. lawyer with more than 15 years of experience in Russia and other CIS republics.