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An investigation by cyber security firm Symantec has now uncovered that the North Korean government is stealing tens of millions of dollars by hacking into banks and forcing ATMs to dispense cash to mules.

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A Hi-Tech Russian Doll: Putin’s Fourth-Term Reboot

Putin’s goal is now neither to recreate the USSR, nor to become part of the West. Rather, the ambition is to build an economic and technological “West” inside Russia, while continuing an aggressive posture towards the West on the outside.

President Vladimir Putin’s annual “State of the Nation” speech to parliament on March 1, just outside the Kremlin walls, came less than three weeks before the election he is expected to win. But its message was as much for a foreign audience as for Russian voters. In his fourth term, Putin wants to rebuild a Russia that will contain much that is Western on the inside but compete with it aggressively on the outside.

Beforehand, commentators asked aloud two questions. Would the speech outline Putin’s election program? And if so, would it contain talking points written by the team of modernizers led by former finance minister Alexei Kudrin? 

Once it was clear that the answer to both question was “Yes” and Putin would indeed set out a domestic modernization agenda in his speech, the assumption was that the international part of the address would be more conciliatory. The president would say something along the lines of: “It’s not our fault that we are in this state of extreme confrontation, we were merely responding to threats and unilateral actions. But let’s quietly stop where we are and begin to turn this around.” 

The rationale for this approach is that in order to modernize at home Russia needs to integrate with the global economy. It must increase exports and diversify away from the oil and gas sector, attract investment and new technology into the country and take part in global intellectual and digital life.

Putin’s actual speech presented something different. The president did indeed set out a vision of modernizing Russia in line with Kudrin’s strategy. But in his foreign policy part Putin took no hostages, fiercely rejecting any notion of accommodation with the West and the United States in particular in the name of economic growth. Instead he threatened the West with a new generation of missiles, suggesting that Russia could build new technology, and compel the West to make an equitable peace with a new modern high-tech Russia on its own terms. There was no answer to the question of what would happen if the West chose not to be intimidated into compromise.

Putin’s speech roamed as far as the warheads he boasted of. Its first target audience was Russia’s middle class, businessmen and white collar workers—the section of the public which voted for him in the 2000s but has deserted him in recent years. 

There was a departure from the conservative populist talk of recent years and no mention of religion or religious values. Instead Putin talked about “digital platforms, compatible with the global information space,” and modernization of the urban environment. He discussed restructuring the state bureaucracy, lowering the government’s share in the economy, online medicine, making all the opportunities of the digital world available to the public—and even genome research. The text did not include the word “reform” — it would be unseemly to declare a program of major reforms after 18 years in power — but Kudrin’s ideas for rebooting the economy were clearly present. 

The speech markedly did not, in Soviet style, mention smoking chimneys or thundering mills. It contained little to please the nostalgic supporters of the classic industrial economy, and should encourage supporters of a post-industrial one. This is not the first time Putin has ventured to be modern or talked about the Internet, but it was much more sophisticated and programmatic than before, looking ahead six years—or more. 

The second part of the speech was designed to compensate for the effect of the first—and did so to the point of destruction. Many in the Russian government will not be thrilled to spend the next six years implementing a program devised by in-house liberals. These officials prefer a more severe, industrial and statist model of development, that rests on sovereignty and autocracy, not “global platforms.” 

Putin gave this target audience the present of some rockets. When the president first mentioned these new high-precision rockets striking a nominal (but clearly overseas) enemy the bureaucrats and deputies in the hall applauded with loud enthusiasm. So the rockets struck their first intended target even before there is proof that they exist. And those voters who still think in old Soviet categories (Ministry of Heavy Industry, Ministry of Non-Ferrous Metals), who may be thinking about voting for the Communist Party and who don’t understand all the digital gibberish will have liked the rockets, too. 

There was also a third target—a foreign one. The outside world was given a message about what modernization Russian-style means: “We are talking about the next six years in the international language of technology, investment and digital platforms. But if you think that means unilateral concessions, you are wrong. We are not going to give up our foreign policy victories, our voice in global affairs and the superpower status we gained in war, for some economic reboot. As in Dostoevsky, we recognize God, but we don’t accept his world. Yes, we recognize that we live in a world where technology, interest rates and digital services are powerful. But that world is unfair and we will fight it.”

The first and second parts of the speech were in obvious contradiction with each other. How can we both pursue a global financial, economic, technological and scientific engagement with the world while threatening the West with new weapons? Surely that will preclude an exchange of trade and technology with the West. 

But from another perspective there is no contradiction here. Putin’s speech depicts his vision of Russia as a kind of matryoshka, a Russian doll. The inside of the doll—the domestic part—is digital, wears hipster glasses and a short trendy jacket. The outside foreign part is dressed in military camouflage fatigues. After all that is how the Russian government machine works. Inside, the technocrats, economists, and managers are responsible for growth, while outside the president and the military-diplomatic bloc defend the country against hostile forces.

The ghost of the Soviet Union hung over Putin’s March 1 speech. For years there has been a consensus that Russia is still trying to overcome the traumatic period of the 1990s and regain the status of the USSR. Putin’s speech contained many echoes of Soviet phraseology, of how the country “has already caught up and surpassed” quotas or competitors with regard to grain yields, cargo trade and weaponry. The message is, “You thought Russia was a poor copy of the Soviet Union with its military might, and that is why you tore up the old Anti-Ballistic Missile Treaty. But in reality Russia is stronger, so it it’s time to re-sign that document and others as well.”

Yet there is no answer here to the question about what happens if Russia’s acquisition of new weaponry does not facilitate a transition to peaceful coexistence. What happens if it just triggers new fears, sanctions and embargos? If that is the case, how can Russia respond?

The framework has changed. Putin’s goal is now neither to recreate the USSR, nor to become part of the West. Rather, the ambition is to build an economic and technological “West” inside Russia, without turning into it on the outside. Unlike the Soviet Union, or modern Iran, Saudi Arabia, Venezuela, and North Korea, Russian citizens are not being offered a life that differs profoundly from the West. Rather, the plan is to offer them a similar existence, but in a wholly sovereign shell, with the formula “like them but without them.” 

Putin’s speech described a plan to combine the post-industrial global economy with an industrial-age conception of sovereignty, to put modern economic substance into a classic but now-outmoded military-political form. This is the unusual—some would say unrealizable—ambition now unveiled for Putin’s fourth term. 

-Alexander Baunov

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