Putin's Economic Legacy

Putin was lucky to become president when Russia's arduous economic reforms were close to completion and high growth had already taken off. Most deregulation and privatization were done in the early and mid-1990s. However, the opposition to financial stabilization led to huge budget deficits and the 1998 crash. Luckily, the financial crisis completed the market transformation and taught the elite the need for sound budgetary policies. Putin continued the reforms for two and a half years, pushing ahead with radical tax reform, improving conditions for small business, and allowing trade in agricultural land. Unfortunately, reforms came to a screeching halt with the confiscation of Yukos in 2003. A wave of renationalizations followed, driven by extensive corruption. Oil prices rose dramatically in 2004, allowing Putin to ignore all reforms. At the end of 2007, Russia returned to deficit spending although inflation was surging. Putin formulated the goal of joining the World Trade Organization by 2003, but Russia is still not a member because he allowed protectionist interests to override the national interest. At the end of his second presidential term, Putin leaves a large backlog of badly needed reforms.