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Op-ed

Putin's Three-Ring Circus

by Anders Aslund, Peterson Institute for International Economics

Op-ed in the Moscow Times
December 14, 2007

© Moscow Times


Circus Putin fascinates not only Russia but the entire world. The questions are numerous, but we will soon have the answers. Will Putin stay on as president? Or will he secure dominant powers by other means? Are the siloviki still all-powerful, or are they destroying themselves in a civil war? In the end, while the market economy seems set to prevail, the question is how soon Russia will move on to full-fledged democracy.

Putin's disinformers have played with many alternative scenarios. The main scenario was that Putin would sack then-Prime Minister Mikhail Fradkov in September, which he did, and appoint one of the two optional crown princes, First Deputy Prime Ministers Dmitry Medvedev or Sergei Ivanov, which he did not. Instead, he appointed the obscure Viktor Zubkov, who may soon disappear into the obscurity from which he arrived. The common feature of all these Putin favorites is that they are considered weak, and the assumption has been that Putin would prevail.

Among all the plausible successors, nobody seems more attractive than the cultured and mild Medvedev. His statements have persistently been democratic and market-oriented. He has no known connection to the KGB, and he has largely abstained from foreign aggression, save turning off gas to Ukraine on primetime television in a rare macho display. Admittedly, Gazprom is the country's foremost state-controlled raiding company, but few really think that Medvedev is the main force behind this.

Medvedev is considered absolutely indecisive and unable to make any serious decision without the guiding hand of Putin. Russian optimists draw comparisons with Mikhail Romanov, who was elected tsar in 1613 after the Time of Troubles. The boyars could unite around him only because he was the weakest man at hand, but he outlasted them all. The parallel falters, however, because Putin's visible hand will undoubtedly remain the dominant force. Putin will call the shots, and it seems unlikely that Medvedev will exert any real power.

Will Putin become prime minister? I doubt it. The Russian prime minister has very limited power both by Constitution and in practice. Regarding the third-consecutive-term scenario, before the State Duma elections, the Kremlin alleged that the "spontaneous" For Putin movement had collected 30 million signatures in favor of him staying on. It might appear as if this option has fallen by the wayside, but it may still be resurrected.

The main advocates of a third term for Putin have been the most odious KGB characters around him, led by Igor Sechin, the head of his chancery. It is rumored that Sechin has been demoted because he has overplayed his hand. That might be the case, and it would be about time. The problem is not the Yukos confiscation but that substantial evidence about Putin's personal corruption has been circulating in the past days, particularly on the Internet.

The strongest evidence is the Marina Salye report on Putin's corrupt foreign trade deals in St. Petersburg in 1992. The report has long been known, but the original has not been publicized until now. Two days before the election, a scanned report of the original popped up on several Russian websites, and it suggested that Putin and his friends embezzled $92 million during the days he worked under St. Petersburg Mayor Anatoly Sobchak. It was first leaked on the free-wheeling livejournal.ru, which was quickly bought by Alexander Mamut, a Kremlin-friendly oligarch.

The people who have the greatest interest in such information being divulged are the Sechin group because it forces Putin to stay on for a third term, however illegal that may be. The evidence remains there, and Putin cannot just discard it in the broader world. He needs all the legal protection he can get, and staying on as president maximizes his immunity.

We have been witnessing a severe struggle between two groups of Putin's KGB friends from St. Petersburg. The group headed by Sechin and Federal Security Service chief Nikolai Patrushev appeared to launch an all out war on the competing faction headed by Viktor Cherkesov, the Federal Drug Control Service chief, and Viktor Zolotov, head of the Putin's personal security service. Until November, it seemed as if Sechin and Patrushev were winning, but recently it looks like Sechin has lost out. Some analysts compare this struggle with the internecine "bankers' war" that effectively ended the preeminence of the oligarchs. Is the KGB nomenklatura self-destructing?

The strongest evidence of such an interpretation is the incredible November 30 interview with Oleg Shvartsman in Kommersant. With the words "velvet reprivatization," Shvartsman has coined the phrase by which the Putin era may be remembered. Shvartsman told us in first person how the KGB-related businessmen extort private businesses and pursue lawless corporate raiding. Can Putin's system of renationalization survive these revelations?

This war among the siloviki is not over, and its next turns may very well decide the outcome of the country's presidential selection. Obviously, we can no longer talk about elections in Putin's Russia after the total scam of the Duma elections.

A third option for Putin to stay in power is the formation of a new Russian-Belarussian state, of which he would become president. On the one hand, it has always seemed a far-fetched complication. On the other hand, it is becoming more possible as Belarus and Lukashenko are becoming more isolated from the Western world.

Putin is in Minsk for a two-day visit ending Friday—quite a long trip it would seem. What will the two leaders be discussing for two full days? Last week, a seemingly genuine Belarussian leak claimed that documents had been drafted for finally uniting the two friendly states, the last two dictatorships in Europe, and that Putin would become president and Lukashenko speaker. Nowadays, most rumors in Russia are disinformation, but we shall soon know if they contain any truth.

The fundamental point is that we have no idea what Putin is going to do because he does not want us to know—and because he enjoys dictatorial powers. The good news is that by overplaying his hand and surprising almost everybody at every turn, Putin is quickly and effectively compromising his authoritarian rule. The profound advantage of democracy is that decisions take time and require a certain consensus and elaboration. People need stability and predictability—something that Putin promises but no longer delivers.

We might be happy that Medvedev was nominated as presidential candidate, but all the people attending the meeting in Putin's study—save Medvedev—appeared as if they were present at a funeral. When United Russia leader Boris Gryzlov was shown at this meeting on the evening news, he looked like he was on the verge of crying, regardless of his words of praise for Medvedev. Will all these obvious enemies of Medvedev just give up? I doubt it. If Medvedev were to be "elected," his mandate would have no legitimacy because Russia no longer holds real elections.

Compared with the alternatives, it would be nice if Medvedev persevered, but do not hold your breath on this one. On the contrary, we need to look forward to the next unpredictable act in this wonderful Circus Putin. It might do more to discredit his dictatorship than anything else.


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