“Putin Watches Russian Economy Collapse Along with His Stature,” blared a headline in Time in late 2014. Yet three years have passed since the price of oil crashed in 2014, halving the value of the commodity that once funded half of Russia’s government budget. That same year, the West imposed harsh economic sanctions on Russia’s banks, energy firms, and defense sector, cutting off Russia’s largest firms from international capital markets and high-tech oil drilling gear. Many analysts—in Russia as well as abroad—thought that economic crisis might threaten Vladimir Putin’s hold on power. It doesn’t look that way now.

Today, Russia’s economy has stabilized, inflation is at historic lows, the budget is nearly balanced, and Putin is coasting toward reelection on March 18, positioning him for a fourth term as president. Putin has recently overtaken Soviet leader Leonid Brezhnev as the longest-serving Russian leader since Joseph Stalin. Economic stability has underwritten an approval rating that hovers around 80 percent. Putinomics made it possible for Russia’s president to survive repeated financial and political shocks. How did he do it?

Russia survived the twin challenges of the oil price crash and Western sanctions thanks to a three-pronged economic strategy. First, it focused on macroeconomic stability—keeping debt levels and inflation low—above all else. Second, it prevented popular discontent by guaranteeing low unemployment and steady pensions, even at the expense of higher wages or economic growth. Third, it let the private sector improve efficiency, but only where it did not conflict with political goals. This strategy will not make Russia rich, but it has kept the country stable and kept the ruling elite in power.

That said, does Putin really have an economic strategy? A common explanation of Putin’s longevity is that he survives because Russia’s oil revenues keeps the country afloat; Russia’s economy is known more for corruption than for capable economic management. But the Kremlin could have adopted different economic policies—and some of the alternatives would have made it harder for Putin to sustain his hold on power. They might also have left Russians worse off. Consider what Russia looked like in 1999 when Putin first became president: a middle-income country in which oil rents constituted a sizeable share of GDP. A country led by a young lieutenant colonel committed to using the security services to bolster his power. A president who claimed the mantle of democratic legitimacy in part based on his ability to force big business and oligarchs to follow his rules, whether by means fair or foul.

This could well describe Chavista Venezuela, still governed by an autocratic regime, still dependent on declining oil revenues, and still failing to build an economy based on rules rather than political whim. The difference is that the Chavistas spent recklessly during the oil boom while presiding over a mismanagement-induced collapse in oil production and, now, painful shortages of consumer goods created by poorly conceived price controls. According to World Bank estimates, Venezuela was wealthier on a per person basis than Russia in 1999. No longer.

Surely no one could have reasonably expected Russia to turn out like Venezuela today? In fact, in 1999, some observers thought Venezuela was better placed to prosper. At the time, credit rating agencies judged it safer to lend to Venezuela’s government than to Russia’s. The economic problems we currently associate with Venezuela—consumer good shortages, runaway inflation, and military-enforced food requisitions—were the story of Russia’s twentieth century. There was little reason in 1999 to think that this sorry history would not persist into the twenty-first century. Today, however, few people compare Russia and Venezuela. That is because the two countries’ lieutenant colonels had very different strategies.

The Kremlin’s skill in mustering and distributing resources explains why the Russian elite has maintained power for nearly two decades and how it has deployed power abroad with some success. Many oil-fueled dictatorships squander their oil revenues on Ferraris and on Fendi handbags. Russia’s ostentatious oligarchs have certainly accumulated their share of British football teams and hundred-million-dollar yachts armed with missile defense systems. But unlike its own spendthrift 1990s, Russia during the 2000s saved hundreds of billions of dollars during the good years, stowing resources in reserve funds for use when oil prices fell. If the Kremlin’s economic policy was as simplistic as is often portrayed—as a series of thefts and errors lubricated by oil revenue—its rulers would not still hold power even as they wage two foreign wars.

The Kremlin’s aim in economic policy has not been to maximize GDP or household incomes. Such a goal would have required a very different set of policies. But for the Kremlin’s objectives of retaining power at home and retaining the flexibility to deploy it abroad, the three-pronged strategy of Putinomics—macroeconomic stability, labor market stability, and limiting state control to strategically important sectors—has worked.

Start with macroeconomic stability. Russia is a relatively rare kleptocracy that gets high marks from the IMF for its economic management. Why? Since the beginning of Putin’s time in office, he and the Russian elite more generally have prioritized paying down debt, keeping deficits low, and limiting inflation. Having lived through devastating economic crashes in 1991 and 1998, Russia’s leaders know that budget crises and debt defaults can destroy a president’s popularity and even topple a regime, as Boris Yeltsin and Mikhail Gorbachev both discovered.

When Putin first took power, he devoted much of Russia’s oil earnings to paying back the country’s foreign debt ahead of schedule. In the current crisis, Russia has slashed spending on social services to ensure that the budget remains close to balance. In 2014, oil and gas earnings constituted around half of Russia’s government budget. Today, oil trades at half the 2014 level, but thanks to harsh budget cuts, Russia’s deficit is around one percent of GDP—far lower than in most Western countries. Putin has supported Russia’s central bank as it has hiked interest rates, which has limited inflation but also stifled growth. The Kremlin’s logic is that Russian people want economic stability above all else. Russia’s elites, meanwhile, know they need stability to retain their hold on power. To ensure macroeconomic stability, the Kremlin has implemented a harsh austerity program since 2014, but there have been few complaints.

The second prong of Putin’s economic strategy has been to guarantee jobs and pensions, even at the expense of wages and efficiency. During the economic shock of the 1990s, Russian wages and government pensions often went unpaid, causing protests and a collapse in President Boris Yeltsin’s popularity. When the recent crisis hit, therefore, the Kremlin opted for a strategy of wage cuts rather than allowing unemployment to rise. Consider the difference in most Western countries. After the 2008 crash, unemployment spiked in the United States, but people who weren’t laid off did not experience sharp salary cuts. In Russia, by contrast, unemployment increased by barely one percentage point. But in 2015, wages fell by nearly ten percent. Business owners, who control their firms only with the Kremlin’s consent, got the message. Wage cuts were tolerated, but factory closures or mass layoffs were not.

This is far from an efficient policy, given that many Russians still work in Soviet-era factories that are in decline and have no hope of revival. In economic terms, it would be better to move these workers to more productive firms. But doing so is politically impossible given the layoffs it would require. Most sectors of the Russian economy face political pressure to employ unneeded workers, even if they don’t pay them much. This fits the Kremlin’s political calculus: Russians don’t usually protest salary cuts, but layoffs and factory closures will bring them onto the streets. Social policy is governed by the same logic. In the past, Russian pensioners have rallied to demonstrate against pension cuts. And so the government underfunds health and education but keeps pensions steady—evidence that the Kremlin values pensions’ contribution to political stability more than it regrets the extent to which poor schooling impairs medium-term growth.

The third prong of Putinomics is to let private firms operate freely only where they do not compromise the Kremlin’s political strategy. The large role that oligarch-dominated state-owned firms play in certain key sectors is justified in part by their willingness to support the Kremlin in managing the populace by keeping unemployment low, media outlets docile, and political opposition marginalized. The energy industry, for example, is crucial to the government’s finances, so private firms have either been expropriated or wholly subordinated to the state. Steel firms are less important, but they, too, must avoid mass layoffs. Service sector firms, such as supermarkets, have no such political role. “When it comes to politics,” supermarket magnate Sergei Galitsky has explained, “I sit down on the sofa and grab some popcorn—or sometimes I crouch down in order not to get shot.” Bosses of energy firms cannot afford to ignore politics. Usually they are the ones shooting. Given these political constraints, what hope does Russia’s private sector have of improving efficiency or driving economic growth? Some, but not much. This, too, fits the Kremlin’s logic. Growth is good, but retaining power is better.