The domestic policy of Vladimir Putin concerns the internal Russian policies of Vladimir Putin during his tenure as President of Russia, as well as the effects of Putinism and the Putin legislative program within Russia. He previously served as president from 2000 to 2008, and has held the position since 2012.
Background Putin's domestic policies, especially early in his first presidency, were aimed at creating a strict "vertical of power". On 13 May 2000, he issued a decree dividing the 89 federal subjects of Russia between 7 federal districts overseen by representatives named by himself to facilitate federal administration. Putin also pursued a policy of enlargement of federal subjects: their number was reduced from 89 in 2000 to the present 83 after the autonomous okrugs of Russia were merged with their parent subjects.
According to Stephen White, Russia under the presidency of Putin made it clear that it had no intention of establishing a "second edition" of the American or British political system, but rather a system that was closer to Russia's own traditions and circumstances. Putin's administration has often been described as a "sovereign democracy".R. Sakwa, Putin: Russia's Choice, 2008, p. 42-43 First proposed by Vladislav Surkov in February 2006, the term quickly gained currency within Russia and arguably unified various political elites around it. According to its proponents, the government's actions and policies ought above all to enjoy popular support within Russia itself and not be determined from outside the country.Sovereignty is a Political Synonym of Competitiveness Vladislav Surkov, public appearance, 7 February 2006Our Russian Model of Democracy is Titled «Sovereign Democracy» Vladislav Surkov, briefing, 28 June 2006.
In July 2000, according to a law proposed by him and approved by the Federal Assembly of Russia, Putin gained the right to dismiss heads of the federal subjects. In 2004, the direct election of governors by popular vote was ended. This was seen by Putin as a necessary move to stop separatist tendencies and get rid of those governors who were connected with organised crime. The measure proved to be temporary: in 2012, as proposed by Putin's successor Dmitry Medvedev, the direct election of governors was re-introduced. Along with the return of elected governors, Medvedev's reforms also simplified the registration of political parties and reduced the number of signatures required by non-parliamentary parties and independent candidates to participate in elections, thus reverting or further loosening the restrictions imposed by previous Putin-endorsed legislation. Notably, the tough electoral legislation has been among the government actions effected under Putin's presidency that have been criticised by many independent Russian media outlets and Western commentators as anti-democratic.
During his first term in office, Putin moved to curb the political ambitions of some of the Yeltsin-era oligarchs, resulting in the exile or imprisonment of such people as Boris Berezovsky, Vladimir Gusinsky, Mikhail Khodorkovsky; other oligarchs soon joined Putin's camp.
Putin presided over an intensified fight with organised crime and terrorism that resulted in two times lower murder rates by 2011, as well as significant reduction in the numbers of terrorist acts by the late 2000s.
Putin succeeded in codifying land law and tax law and promulgated new codes on labour, administrative, criminal, commercial and civil procedural law. Under Medvedev's presidency, Putin's government implemented some key reforms in the area of state security, the Russian police reform and the Russian military reform.
Economic, industrial, and energy policies
Under the first Putin administration the economy made real gains of an average 7% per year (2000: 10%, 2001: 5.1%, 2002: 4.7%, 2003: 7.3%, 2004: 7.2%, 2005: 6.4%, 2006: 8.2%, 2007: 8.5%), making it the 7th largest economy in the world in purchasing power. Russia's nominal Gross Domestic Product (GDP) increased 6-fold, climbing from 22nd to 10th largest in the world. In 2007, Russia's GDP exceeded that of Russian SFSR in 1990, meaning it has overcome the devastating consequences of the 1998 financial crisis and preceding recession in the 1990s.
During Putin's first term of eight years in office, industry grew by 76%, investments increased by 125%, and agricultural production and construction increased as well. Real incomes more than doubled and the average monthly salary increased sevenfold from $80 to $640.Putin's Economy – Eight Years On . Russia Profile, 15 August 2007. Retrieved 23 April 2008 From 2000 to 2006 the volume of consumer credit increased 45 times and the middle class grew from 8 million to 55 million. The number of people living below the poverty line decreased from 30% in 2000 to 14% in 2008.
In 2001, Putin, who has advocated liberal economic policies, introduced a flat tax rate of 13%;Daniel Mitchell . The Heritage Foundation. 24 March 2003. the corporate rate of tax was also reduced from 35 percent to 24 percent; Small businesses also get better treatment. The old system with high tax rates has been replaced by a new system where companies can choose either a 6-percent tax on gross revenue or a 15-percent tax on profits. The overall tax burden is lower in Russia than in most European countries.
A central concept in Putin's economic thinking was the creation of so-called National champions, vertically integrated companies in strategic sectors that are expected not only to seek profit, but also to "advance the interests of the nation". Examples of such companies include Gazprom, Rosneft and United Aircraft Corporation.
Before the Putin era, in 1998, over 60% of industrial turnover in Russia was based on barter and various monetary surrogates. The use of such alternatives to money has now fallen out of favour, boosting economic productivity significantly. Besides raising wages and consumption, Putin's government has received broad praise also for eliminating this problem.Iikka. Korhonen et al. The challenges of the Medvedev era . Bank of Finland's Institute for Economies in Transition, 24 June 2008.
Some oil revenue went to the stabilization fund established in 2004. The fund accumulated oil revenue, allowing Russia to repay all of the Soviet Union's debts by 2005. In early 2008, it was split into the Reserve Fund (designed to protect Russia from possible global financial shocks) and the National Welfare Fund, whose revenues will be used for a pension reform.
Inflation remained a problem however, as between 1999 and 2007 it was kept at the forecast ceiling only twice, and in 2007 the inflation exceeded that of 2006, continuing an upward trend at the beginning of 2008. The Russian economy is still commodity-driven despite its growth. Payments from the fuel and energy sector in the form of customs duties and taxes accounted for nearly half of the federal budget's revenues. The large majority of Russia's exports are made up of raw materials and fertilizers, although exports as a whole accounted for only 8.7% of the GDP in 2007, compared to 20% in 2000.Rosstat Confirms Record GDP Growth Kommersant. Retrieved 5 May 2008.
In December 2011, after 15 years of negotiations, Russia finally joined the World Trade Organization. The accession to WTO was expected to be ratified by Russian Parliament in the spring of 2012.
To boost the market share of locally produced vehicles and support the Russia's automotive industry, the government under Putin implemented several protectionist measures and launched programs to attract foreign producers into the country. In late 2005, the government enacted legislation to create special economic zones (SEZ) with the aim of encouraging investments by foreign automotive companies. The benefits of operating in the special economic zones include tax allowances, abolishment of asset and land taxes and protection against changes in the tax regime. Some regions also provide extensive support for large investors (over $100 million.) These include Saint Petersburg/Leningrad Oblast, Kaluga Oblast and Kaliningrad Oblast. Under Putin as president and Premier, most of the world's largest automotive companies opened plants in Russia, including Ford Motor Company, Toyota, General Motors, Nissan, Hyundai Motor, Suzuki, Magna International, Scania and MAN SE.
In 2005, Putin initiated an industry consolidation programme to bring the main aircraft producing companies under a single umbrella organization, the United Aircraft Corporation (UAC). The aim was optimize production lines and minimise losses. The programme was divided in three parts: reorganization and crisis management (2007–2010), evolution of existing projects (2010–2015) and further progress within the newly created structure (2015–2025).
The UAC, one of the so-called national champions and comparable to EADS in Europe, enjoyed considerable financial support from the Russian government, and injected money to the companies it had acquired to improve their financial standing. The deliveries of civilian aircraft increased to 6 in 2005, and in 2009 the industry delivered 15 civilian aircraft, worth 12.5 billion roubles, mostly to domestic customers. Since then Russia has successfully tested the fifth generation jet fighter, Sukhoi Su-57, and started the commercial production of the regional airliner Sukhoi Superjet 100, as well as started developing a number of other major projects.
In a similar fashion, Putin created the United Shipbuilding Corporation in 2007, which led to the recovery of shipbuilding in Russia. Since 2006, much effort was put into consolidation and development of the Rosatom Nuclear Energy State Corporation, which led to the renewed construction of nuclear power plants in Russia as well as a vast activity of Rosatom abroad, buying huge shares in world's leading uranium production companies and building nuclear power plants in many countries, including Iran, China, Vietnam and Belarus. In 2007, the Russian Nanotechnology Corporation was established, aimed to boost the science and technology and high-tech industry in Russia.Future Vision The Wall Street Journal
In the decade following 2000, energy in Russia helped transform the country, especially oil and gas energy. This transformation promoted Russia's well-being and international influence, and the country was frequently described in the media as an energy superpower.Russia, China in Deal On Refinery, Not Gas by Jacob Gronholt-Pedersen. The Wall Street Journal, 22 September 2010 Putin oversaw growing taxation of oil and gas exports which helped finance the budget, while the oil industry of Russia, production, and exports all significantly grew.
Putin sought to increase Russia's share of the European energy market by building submerged gas pipelines bypassing Ukraine and the New Europe (the countries which were often seen as non-reliable transit partners by Russia, especially following Russia-Ukraine gas disputes of the late 2000s (decade)). The pipeline projects backed by Putin include the Blue Stream from Russia to Turkey (build on the Black Sea bed), Nord Stream 1 from Russia to Germany (the longest sub-sea pipeline in the world, built through the Baltic Sea) and the planned South Stream from Russia to the Balkans and Italy (via the Black Sea). Russia also undermined the rival pipeline project Nabucco by buying the Turkmen gas and redirecting it into Russian pipelines.