Now that low
oil prices have exposed Russia's short-lived economic revival as a bubble,
it's tempting to dismiss President Vladimir Putin as a corrupt bureaucrat who
got lucky for a while. That analysis fails to take into account his cavalier
attitude toward risk.
Brent oil is hovering
around $30 a barrel, a highly uncomfortable level for the Russian economy that
pushes the exchange rate down and inflation and the budget deficit higher.
You'd think Putin might see this as a good time to stop juggling some of the
crises he has struggled with: Ukraine, Syria or the stifling government control
of the economy in the interests of his cronies. Yet he persists, even though
domestic public opinion seems to be showing alarming signs of weariness with
the government. If nothing else, this is a sign of uncommon courage.
Putin
hasn't backed down on Ukraine. Most recently, he appointed former Interior
Minister Boris Gryzlov, an inflexible, hard-line apparatchik from St.
Petersburg, as his chief negotiator on the implementation of Minsk cease-fire
agreements. Last month, Gryzlov visited Ukrainian President Petro
Poroshenko and made clear that there would be no softening of Russia's stand on
the return of Ukrainian territories held by pro-Russian rebels in the country's
east.
The Kremlin would still want a high degree of autonomy for these regions
-- meaning close ties with Moscow -- as well as a full amnesty for the rebels,
in exchange for Ukrainian control of the eastern border with Russia. Putin
doesn't care that it would be hard, perhaps impossible, for Poroshenko to push
this through a parliament he doesn't fully control: He wants nothing short of a
full victory.
In
Syria, President Bashar Assad's troops are close to retaking Aleppo, once the
country's most populous city. Russian airstrikes have allowed Assad's
tired and depleted troops to go on the offensive, and after months of
insignificant advances, a big success may be in reach: The Assad army has cut
off rebel supply lines with Turkey and is close to encircling the gutted city.
Tens of thousands of people are fleeing to Turkey to escape Russian bombs, yet
the territory controlled by the regime is expanding.
The United Nations
suspended the Geneva peace talks on Syria just two days after they began once
it became clear that the Assad side was playing for time, hoping for military
victories to strengthen its hand. The talks are scheduled to restart on Feb.
25, but even if they do, Assad may be in a much stronger position. Putin
seemingly has no fear of a military reversal even though he has been unwilling
to send ground troops to Syria. Nor is he afraid of getting mired in Syria the
way the Soviet Union got stuck in Afghanistan in the 1980s.
The
involvement in Syria is not costing Putin much financially or in casualties.
Yet it puts Russia on the edge of another major confrontation with the West.
Recently, a Russian warplane intruded into Turkish airspace again for the first time since the Turkish air
force downed a Russian aircraft in November, setting off a major confrontation
between the two countries.
On
the economic front, Putin is faced with the need to find money for the vast
spending programs that have funded his support base and
gigantic security apparatus. Ministers responsible for the economy are
pushing for large-scale privatization. It's a last-resort proposal in
a bear market, but sell-offs, if handled right, could make the economy
more open and give private initiative a chance after a decade of tightening
controls and the enrichment of a tight circle of Putin friends. Putin, however,
has made clear that if privatization is allowed to take place, it will be on
his terms.
On Monday, he named six
conditions. Two of these are critical. The government,
Putin said, must keep controlling stakes in "systemic" companies, and
the new owners must be "in the Russian jurisdiction" and paying with
their own money, not loans from state banks (pretty much the only ones capable
of funding large privatizations today.)
This
essentially means that Putin wants the Russian businesses to repatriate capital
from offshore havens to pay for stakes in companies that will remain under
government control. According to Economy Minister Alexei Ulyukayev, the oil
companies Rosneft and Bashneft and the diamond producer Alrosa are at the top
of the sell-off list for 2016.
Rosneft and Bashneft are, for a big part, made
up of assets expropriated from private owners -- the billionaires Mikhail
Khodorkovsky and Vladimir Yevtushenkov -- under Putin. Now others like them are
expected to pay up in exchange for zero control and a risk of expropriation.
It's difficult to see who except Putin's friends might agree to these
terms. If the privatizations occur, they will only strengthen the merger
of government and business that has been Putin's economic signature -- and the
Russian economy's curse.
So
Putin is not prepared to compromise on anything, though he must know that
Russians are getting restless. According to the Levada Center,
the last major independent Russian pollster, Putin's own approval rating, at 82
percent, isn't all that far off its June 2015 all-time peak of 89 percent.
(There are doubts about whether respondents answer questions about Putin
honestly.) The approval ratings of the government, the parliament and the
regional governors are down more sharply:
Besides, a
growing number of Russians -- 34 percent compared with 22 percent in June 2015
-- say they believe the country is headed for a dead end. That should be troubling
ahead of parliamentary elections scheduled for September, even if, as has been
customary under Putin, the vote is likely to be will be heavily doctored.
It
takes either a desperate risk-taker or a master of counterintuitive calculation
to push on so stubbornly under such adverse conditions. I think the former is the better
explanation.
In
"First Person," a 2000 book that contains the only set of candid
interviews Putin has given, the Russian leader provided an insight into his
behavior. He described how, when he was still a student, he and his judo
coach were driving in Putin's tin-can Zaporozhets car to a training base near
Leningrad:
There was a truck loaded with hay going
in thee opposite direction. I had my window open, and the hay smelled so nice.
When I came level with the truck at a turn, I stuck my hand out for the hay.
The vehicles were very close to each other, and then suddenly my steering wheel
spun and we were pulled toward the truck's rear wheel.
I turned sharply the
other way. The hapless Zaporozhets bucked on two wheels, and I practically lost
control. We were about to end up in a ditch, but luckily we landed on
four wheels again. My coach just sat there very still, he didn't say a word.
Only when we drove up to the hotel, he got out of the car, looked at me and
said, 'You're taking risks." Then he walked on without further comment.
Sometimes one does these totally inexplicable things. What did I want with that
truck? It must have been that nice hay smell.
In
a way, Putin is still sticking his hand to grab something that smells nice to
him, disregarding the risk of driving off the road. Only now he he is steering
a huge country, not a rattling Zaporozhets.
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