Oct 19th 2017

Is Vladimir Putin Losing His Grip?

by Anders Åslund


Anders Åslund is a senior fellow at the Atlantic Council in Washington and author of the forthcoming book Russia’s Crony Capitalism. 
 



MOSCOW – In 1984, just before Mikhail Gorbachev’s ascent to power, there was a sense in Moscow that the Soviet Union was petrified, and nothing could change. Then everything did change, exposing the extent of the transformation that had occurred beneath the surface. Today, a similar mood pervades Moscow, with President Vladimir Putin’s regime appearing stable, even unbreachable. But, as was the case back then, a closer look reveals a number of chinks in the armor.

In many ways, Russia has been moving backward in recent decades. In the 1990s, Russia was a freewheeling place, where virtually everything was allowed. Moscow had 20 daily newspapers, with views ranging from liberal to Stalinist. Today, Russian civil society is severely stifled, and to watch television in Moscow is to find 20 channels controlled by the Kremlin.

In 1991, Boris Yeltsin, in one of his first actions as President, broke up the old KGB into several agencies, cut its staff by half, and slashed its budget. Today, the KGB’s successor, the Federal Security Service (FSB), has seized complete control over Russia’s security apparatus, including by arresting high-level generals in other law-enforcement agencies. The result is a single security service that is more powerful than at any time since Stalin – and viewed as independent from the Kremlin.

On the economic front, too, Russia has backtracked. In 2003, Russia’s private sector produced 70% of the country’s GDP. Today, the state sector generates most of the country’s output, squeezing out small and medium-size enterprises, and five big state banks dominate the financial market.

Moreover, Putin’s policy of “de-offshoring” has imposed such cumbersome controls on the business leaders of the 1990s that most have sold off their assets in Russia and decamped to London or Monaco. This trend has been accelerated by Russia’s lack of any real property rights, which has enabled the Kremlin to cut Russia’s wealthy down to size at will, often targeting the most law-abiding among them. Small wonder that forecasts for annual GDP growth are stuck at 1.5-2%.

The regime wants to change this pattern. In May 2016, Putin asked three expert groups to recommend economic-reform programs: a liberal group led by former Finance Minister Alexei Kudrin; a technocratic group led by Economy Minister Maxim Oreshkin; and the more statist Stolypin Club led by Putin’s business ombudsman Boris Titov. Each group has delivered thousands of pages of expert reports.

But any shift toward respecting the rule of law would be incompatible with the kleptocratic character of Putin’s regime, implying that genuine reform is out of the question. The mandate given to the three groups thus appears to have been little more than therapy for social scientists, a way to keep them busy – and out of the opposition.

Far from embracing change, Putin will seek a fourth term in next year’s presidential election – a race he will surely win, given the Kremlin’s control over the media and the courts. But, to render his victory credible, Putin needs Russia’s dispirited population to show up to vote. It is rumored that Sergei Kiriyenko, the Kremlin’s first deputy chief of staff, is targeting 70% turnout, with 70% of those votes going to Putin.

That won’t be easy to achieve. In the State Duma elections in September 2016, only 47.8% of registered voters turned out. In local elections last month, even fewer bothered to participate, with Vladivostok reporting just 13% turnout.

If voters are going to show up for next year’s presidential election, they will need to believe that real change is possible. Putin needs a credible rival, not the same old Kremlin-linked candidates – the communist Gennady Zyuganov, the nationalist buffoon Vladimir Zhirinovsky, and the purported liberal Grigory Yavlinsky – to join the race. The socialite Ksenia Sobchak, who announced her candidacy after meeting with Putin, may seem able to inject some life into the campaign. But there is only one real option to secure a large voter turnout: the anti-corruption campaigner and vocal Kremlin critic Alexei Navalny.

In September 2013, when Navalny ran for mayor of Moscow, he received 27% of the vote. But the independent pollster Levada Center reckons that, despite strong support for Navalny in Moscow, he would not obtain more votes today.

Given this, some Kremlin advisers want to let Navalny run, while keeping him off national television. And it seems that the Kremlin may be considering just that, as it has allowed Navalny to hold large campaign meetings with up to 10,000 people in 100 cities.

But others in Putin’s inner circle would prefer to lock up Navalny for the fourth time this year – no surprise, given his proven capacity to disrupt the Kremlin’s authority. Last March, for example, Navalny produced a 50-minute documentary on corruption, revealing that Prime Minister Dmitri Medvedev had used $1.3 billion in bribes to purchase six palaces and two vineyards. The film, watched on YouTube by some 25 million people, effectively killed Medvedev’s political career.

Now, Putin will need to consider who should succeed Medvedev. In the past, he has usually installed a loyal non-entity in that position, and he has many possible candidates, such as the remarkably ineffective Gazprom Chairman Alexei Miller. The question is whether the next prime minister will be more closely allied with Putin or the FSB.

The United States may play an unexpected role in this drama. The recently enacted Countering America’s Adversaries Through Sanctions Act, which calls for a report on Russian “oligarchs and parastatal entities” within 180 days, offers the US a unique opportunity to influence the Kremlin before the presidential election.

Many of Russia’s wealthy have already fled Russia in fear of the FSB. Now, Russia may see another wave of departures, with those close to the Kremlin fearing that Putin can no longer protect them. Putin may be guaranteed another presidential term, but a regime that cannot satisfy even its rulers is hardly sustainable.


Anders Åslund is a senior fellow at the Atlantic Council in Washington and the author of a forthcoming book about crony capitalism in Russia.

Copyright: Project Syndicate, 2017.
www.project-syndicate.org



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