Russian President Vladimir Putin has been in power now for 25 years. The BBC’s Russia editor Steve Rosenberg wrote a retrospective as his first ever story was to write up Yeltsin’s resignation on December 31, 1999, passing the presidency to Putin.

“I will never forget New Year's Eve 1999,” Rosenberg began. “I was working as a producer in the BBC's Moscow bureau. Suddenly there was breaking news: Russia's President Boris Yeltsin had stepped down. His decision to resign took everyone by surprise, including the British press corps in Moscow. When the news broke there was no correspondent in the office. That meant I had to step in to write and broadcast my first BBC dispatch.”

I remember that night just as well. The announcement caught everyone off guard, as it came in the late afternoon and everyone was already out of the office, getting ready for the parties that were about to start that evening. And if you have spent any time in Russia, you will know that New Year’s Eve is THE big party of the year.

(Because Russian festivals still work on the Gregorian Calendar December 25 Christmas is a total non-event, as the Orthodox Christmas is on January 7 and even that is a meek second fiddle to Easter, the main Christian festival in the East.)

The Moscow press corps scrambled, running back to the office to bang out a write up of the most momentous story since Yeltsin signed off on the dissolution of the Soviet Union, also in December on the 26^th almost a decade earlier.

But it turned out to be easier than you might think. As Yeltsin was so sick – he disappeared entirely from the second round in the crucial 1996 presidential elections to have a multiple by-pass open heart surgery – pretty much everyone had an obituary on file as Yeltsin was expected to die any day. So, all we had to do was a search and replace of the word “died” for “resigned” and almost everything else could stay unchanged.

Rosenberg goes on to list the Putin legacy, which naturally enough focuses on the war in Ukraine.

·        Since Vladimir Putin's decision to launch his so-called "special military operation" Russia has sustained heavy losses on the battlefield

·        Russian towns and cities come under regular drone attack

·        Ukrainian soldiers have occupied a part of Russia's Kursk region

·        International sanctions are heaping pressure on Russia's economy

·        What's more, the country's demographic situation is dire

·        Domestic repression has picked up apace

But as one of the longest serving foreign correspondents in Russia, Rosenburg adds some nuance: “One thing I can say with certainty: over twenty-five years I've seen different Putins.”

This is exactly my experience. Putin and the Russia story is complicated. As a journalist that mainly focuses on business, as early as the end of his first year I wrote there are two Putins: the political one and the economic one. And they are very different.

The political one kills people with poisoned tea, represses free speech and crushes democratic opposition. The economic one has overseen the most remarkable economic revival, restored Russia as a great economic power, made some deep and very effective reforms to things like the tax system and to deal with Russia’s demographic crisis (although he hasn’t solved that problem), and lifted an entire generation out of poverty into relative prosperity.

I went to his very first state of the nation speech where he put demographics at the top of the policy priority list and set the goal of “catching up with Portugal as the top economic priority. Today Russia is the fourth largest economy in the world in adjusted terms, ahead of Germany and recently overhauled Japan as well. Out of the top five biggest economies in the world three are BRICS nations (China, US, India, Russia, Japan).

And he put his money where his mouth is by hiring German Gref, now the head of Sberbank, as an economic guru who launched the “Gref Plan” to implement a radical economic reform plan. It was a heady time. Gref was a total outsider and had no power of his own, yet thanks to Putin’s personal backing he pushed through radical change after radical change that has evolved into today’s National Projects 2.1 that is still a top domestic policy initiative.

The heavy irony is that Putin’s ambition is not to recreate the Soviet Union, but, as he recently laid out in great detail in his Valdai speech, to Make Russia Great Again.

His quote about “the greatest tragedy of the 20^th century was the fall of the Soviet Union” is widely abused as the rest of that quote, never mentioned, is “… for Russians who found themselves trapped in “foreign” countries…” ie living in the newly independent 15 republics created in December 1991.

European dreams

And Europe was up for a partnership with Russia in general and Putin in particular – until Russia started booming in the second decade of this century.

Putin has always seen the best way to make Russia great is through partnership with Europe. Former First Deputy Prime Minister Arkady Dvorkovich told me this personally: “China is too far away, and they are too different from us. Russia is a European country. Our future is with Europe.”

It is also widely forgotten that Putin’s first foreign trip as president was to the UK, where he stood on the floor of the House of Commons and announced a 50:50 joint venture with BP and the privately owned Russian oil company TNK. This was not a 51:49 joint venture, but an unheard of even split 50:50 joint venture – in other words, a true partnership. Tony Blair jumped at the deal and BP made an absolute mint over the next two decades.

Putin then went on to Brussels where he met with Mario Draghi, then head of the EU, and asked to join the EU. He was told “no.” Russia is simply too big and would have swamped the EU institutions. Putin accepted that, so he went on to do the next best thing: he started to build the Eurasian Economic Union (EUU).

I interviewed the architect of the EEU several years later, who told me it was specifically designed to mirror the EU (unlike its precursor, the Customs Union), using exactly the same rule book, so that it could easily integrate with the EU and create a single market “from Lisbon to Vladivostok” - a phrase much loved by Putin for many years.

He even asked to join Nato, which was met with a half measure: the Russia-Nato council.

But of course, it went wrong most obviously from the 2014 annexation of the Crimea. In the run up to the annexation, the EU blocked many of Russia’s attempts to create other partnerships like BP-TNK that Putin pursued, like buying shares in EADS (Airbus) in an attempt to get a seat on board to rescue Aeroflot and Russia’s aviation industry, or its attempt to buy the bankrupt Opel carmaker to rescue AvtoVaz.  That deal was blocked by the US to prevent the technology transfer to Russia that would have created a European automotive powerhouse. Putin, who had personally brokered the Opel deal with former German Chancellor Angela Merkel, was visibly furious when Washington put the kybosh on it. And that is not to mention Russia’s 18-year-long WTO accession saga that finally ended in 2012 – probably the high water mark in East-West relations, when the long-sought “partnership” looked like it might work. Russia made a lot of significant concessions to get into the WTO, like basically sacrificing its entire pork production business to European imports.

Putin became disillusioned as it became clearer and clearer that the EU would never accept Russia as a partner. The Maidan revolution in Ukraine in 2014 crystalised these fears. Putin came to the conclusion that the West was actively afraid of Russia’s competition in things like aviation and automotive and actively trying to hobble Russia’s development, but at the same time the EU was happily helping itself to Russia’s cornucopia of raw materials and giant consumer market, the largest in Europe.

These tensions came to a head when EU foreign policy chief Josep Borrell came to Moscow in 2021 to broker a deal and repair relations with an increasingly brittle Kremlin. He suggested trade should be separated from politics – a compromise. But it was too late. Borrell was met by Russian Foreign Minister Sergei Lavrov who humiliated the EU diplomat by having three EU diplomats expelled while the two men were sitting across the table from each other and then followed up with the “new rules of the game” speech delivered in February 2021 at a joint press conference. Lavrov’s main point was: Russia would no longer tolerate the West doing business with one hand and applying sanctions and interfering with Russian domestic policy with the other. With this speech, Putin’s patience with the West had run out and the speech was the first shot fired in what would become the Ukraine war a year later.

Putin’s dream of a single market from Lisbon to Vladivostok was dead. Putin never wanted to partner with China – Russians remain as afraid of China as the West is – but given the failure of building a European partnership, the Chinese option is the obvious alternative. By rejecting Putin’s overtures to build real working relations and engaging with Russia, albeit a difficult and daunting prospect, the upshot has been to drive Moscow into Beijing’s arms, which I suspect will prove to be a major geopolitical blunder in the long-term.

Economic revival

As the commentary on Putin’s 25 years in office comes out the focus is on the half dozen wars he has overseen and the growing repression. These things are true, but the Russians themselves focus on the economic revival Putin engineered and the stability he has brought.

It’s hard to overstate how much Russians hated the Yeltsin-era. In the West, Yeltsin is seen as a hero who tried to bring democracy to Russia. In Russia he is seen as the man who destroyed the country.

The Western-advocated “shock theory” introduced by Prime Minister Yegor Gaidar inflicted almost a decade of misery and an early grave for tens of millions of men. I arrived in Russia in 1993 just after the price liberations were put in place and inflation was running at 1,400% a year – 4% a day. The economic crash was an order of magnitude worse than anywhere else in the former Warsaw Bloc, as detailed by bne IntelliNews’ despair index, and the payment system collapsed so completely that Russia became a barter economy as its money became meaningless – the so-called virtual economy, made famous by academics Barry Ickes and Clifford Gaddy – again something that is rarely mentioned these days.

Putin quickly fixed all these problems, starting with a complete overhaul of the labour code that slashed Soviet bureaucracy and the introduction of a flat tax regime that unfettered business. The tax rates – the lowest in Europe – have remained untouched for almost all of Putin’s tenure. It has only just been amended in the last few months to finally introduce the beginnings of progressive taxes 25 years later.

The effects of these reforms were stunning. Russia was still reeling from the default and devaluation on August 13, 1998 when Putin took over at the start of 2000. The International Monetary Fund (IMF) was predicting that Russia’s economy would spend years in recession at the time; GDP expanded by 10% that year in a record that has never been matched. That marked the start of a totally unexpected decade-long boom that transformed everyone’s lives.

“At the time the average per capita income in the US was $30,000. If you took that as the baseline for the equivalent incomes in Russia in 2000, then by 2008 the equivalent per capita incomes in Russia were $600,000 a year,” a Russian friend explained to me to describe what the change felt like.

Again, it is hard to overemphasise how dramatic the economic changes of the first two decades of Putin’s rule have been:

GDP size:

2000: Russia's nominal GDP was approximately $278.3bn.

2024: The nominal GDP is projected to be around $1.862 trillion.

Debt levels:

2000: Central government debt stood at 55.9% of GDP.

2024: This ratio decreased to 14.6% of GDP and it can cover every penny of this debt with its cash reserves.

International hard currency reserves:

2000: Russia's foreign exchange reserves at the start of 2000 were an astonishingly low $12.5bn.

2024: By the start of sanctions in 2022 they had reached $600bn.

GDP per capita:

2000: GDP per capita (nominal) was about $1,902.

2024: Now it is approximately $13,005 in nominal terms and $47,299 in PPP (purchase power parity) adjusted terms, on a par with many EU countries.

Average incomes:

2000: The average monthly income was a mere $79 per month in nominal terms.

2023: Since then, incomes have decupled to $948 per month in nominal terms, by far the highest of any Former Soviet Union (FSU) country. In PPP adjusted terms that is equivalent to around $2,100 a month – again on a par with most EU countries.

This transformation was brought about by Putin’s decision to raise public sector wages by about 10% every year for a decade starting in 2000. Putin realised that the gap between private and public sector wages – half the country is budgetniki – was getting so big that it would inevitably lead to social unrest so he shared Russia’s petrodollar riches with the hoi polloi.

Inflation levels:

2000: After the hyperinflation of the 1990s, inflation was still high, with rates around 20.8%, and didn’t fall to single digits until 2007.

2024: Inflation remains the main macroeconomic headache but is still in single digits but is projected to be around 9% by year-end.

This economic transformation is the foundation of Putin’s popularity. It is not that the Russians love Putin, but they are grateful to him for normalising their lives. They may not like the way he runs the country, but they don’t rebel as they are more scared of losing what they have gained than demanding change in the hope they could live better under a more liberal system.

Moreover, Putin's job of making sure there is no alternative has been made easier by the fact that the opposition has remained fissiparous and ineffective. The two opposition politicians that might have replaced Putin – Boris Nemtsov and Alexey Navalny – were both murdered. But even if they had been allowed to run for office, most Russians see both as untested and unqualified to run the country. The irony of Russian elections is Putin would probably still win even if they were free and fair. When criticised by a reporter as Putin took office for the fourth time, he shot back: “And how many terms has Merkel served? Four, isn’t it?” She had just been re-elected for a fourth time two months earlier.

As for the Ukrainian war, Russian surveys conducted in 2022 universally found that Russians thought that going to war with their “brothers” in Ukraine was a stupid idea and were very uncomfortable with the idea of Russian troops invading Ukraine. However, since then similar surveys have found that once the war started, and as it is universally seen as a war with Nato, which is supplying most of Ukraine’s weapons and half its money, Russia needs to win.

That is another thing that Putin gifted Russia with: the restoration of the famous Russian national pride after the humiliation of losing its superpower status following Yeltsin’s dissolution of the Soviet Union – another reason why Yeltsin is so hated in modern Russia. Today patriotism is at an all-time high.

Make Russia Great Again

Rosenberg is aware of all this but like most is not sure how all this fits together to explain Putin.

“From the speeches he gives, the comments he makes, Putin appears driven by resentment, by an all-encompassing feeling that for years Russia has been lied to and disrespected, its security concerns dismissed by the West,” Rosenberg says. “But does Putin himself believe that he has fulfilled Yeltsin's request to "take care of Russia?"

Looking at the story from the business perspective I think this is exactly how Putin sees his relationship with the West. As one of the best-known reporters in Russia, Rosenberg had the opportunity to pose this question to Putin personally last month at the annual marathon presidential press conference.

"Boris Yeltsin told you to take care of Russia," Rosenberg reminded the president. "But what of the significant losses in your so-called 'special military operation', the Ukrainian troops in the Kursk region, the sanctions, the high inflation. Do you think you've taken care of your country?"

"Yes," President Putin replied. "And I haven't just taken care of it. We've pulled back from the edge of the abyss."

Rosenberg said Putin portrayed Yeltsin's Russia as a country that had been losing its sovereignty. He accused the West of having "patronisingly patted" Yeltsin on the shoulder while "using Russia for its own purposes". But he, Putin, was "doing everything", he said, "to ensure Russia was an independent sovereign state", Rosenberg writes.

“Presenting himself as the defender of Russian sovereignty: is this a view he's come up with retrospectively to try to justify the war in Ukraine? Or does Putin really believe this take on modern Russian history?” Rosenberg asks. “I'm still not sure. Not yet. But I sense that it is a key question.”

Personally, I think the answer to this question depends on which perspective you choose to take. Obviously, most of the coverage of Russia today compares Moscow of today with London, Washington and Brussels of today -- a comparison of the values, democracy, corruption, wealth etc. – and obviously Moscow falls down badly.

But if you take the other perspective, the Moscow of today set against the Moscow of January 1, 2000, then you get a completely different picture, one where Putin’s complaints seem much more reasonable and one where he appears as a much more effective and successful leader. Following the dissolution of the Soviet Union in 1991, since 2000 Russia has made the most progress and is the most prosperous of all the FSU countries created on that day.

The problem is that both these perspectives are valid. The question is which one do you choose, or how do you combine them?

As Rosenberg ends his article: “The answer to it may well influence how the war ends - and Russia's future direction.”