Russia’s history shows that palace coups almost always happen first. The
people’s revolution comes later.
Five years ago,
when then-Prime Minister #Vladimir_Putin announced that he would be taking back
the Presidency from Dmitry Medvedev, Russian intellectuals fell into despair.
They saw no end to the Putin regime, and prophesied that Vladimir Vladimirovich
would once again “castle” with his junior partner in 2024 to become Prime
Minister after his fourth term expired—yet another rokirovka, as the chess
move is known in Russian.
Then, two years ago, when Putin annexed Crimea and
invaded Ukraine, many of Russia’s intellectuals realized it was the beginning
of the end for Putin. What the majority of Russians saw as Russia’s dance of
triumph on the world stage, the liberal minority saw as the regime’s death
agonies.
Very few dared to voice such thoughts aloud at the time,
however. Russia’s liberals have been bitterly disappointed over and over again
since the fall of the Soviet Union, so caution prevailed in their public
analyses. But many did whisper. “Putin won’t last past the end of 2015,” a
prominent Russian writer and journalist would insist to me off the air, often
just moments after we had finished recording an interview segment during which
he had been more circumspect about the likelihood of regime change.
Alas, 2015 came and went and Putin is still in the Kremlin.
But what previously were only whispers is now a lively public debate about what
will need to happen after the Tsar has been deposed. What laws will need to be
repealed? What should be done with Crimea? Does Russia need a thorough
lustration campaign to clean its Augean stables once and for all? And if so,
just how unforgiving should such a campaign be? The excited discussion is based
on the assumption that change is coming, and sooner rather than later. People
disagree, however, on just how the change might come.
Foreign observers tend to want to focus on signs of
civil unrest as hopeful signs. George Soros’ latest diagnosis is emblematic of the approach: Given
currently low oil prices, Soros foresees the Putin regime facing bankruptcy in
2017 when a large percentage of its foreign debt comes due. Economic collapse,
the thinking goes, will usher in political change. Soros says that Putin’s
“popularity, which remains high, rests on a social compact requiring the
government to deliver financial stability and a slowly but steadily rising
standard of living.” With money in short supply, the Russian people will get
testy—a dangerous proposition for a government with parliamentary elections
scheduled to take place in September.
Western news outlets are always on the lookout for
evidence of grassroots discontent. Trucker protests
across Russia (in
response to a tax benefitting one of the sons of Putin’s close friend and judo
sparring partner Arkady Rotenberg) were a favorite subject for a while.
Protests by holders of mortgages denominated in foreign currencies—people who
have seen their payments skyrocket as the ruble has tumbled—are currently a favorite subject of attention, despite the fact that the absolute number of those
affected is relatively small.
Russian observers, on the other hand, tend to look for
signs of how Russia’s elites might fracture and split. Maria Snegovaya, a
columnist for Vedomosti and a TAIcontributor, recently penned an excellent, provocative
column outlining
one such scenario. Comparing the Putin regime to the mafia-like Assad regime in
Syria, Snegovaya claims that Putin may in fact be more vulnerable than Assad.
Russia’s populist authoritarianism is grounded not in a sense of belonging to
an ethnic and confessional minority (as is the case in Syria), she argues, but
rather in the regime’s ability to redistribute monopoly rents to its various
stakeholders: Putin’s inner circle of elites, the security forces, bureaucrats,
and state employees.
Unlike in Syria, there is no particular group in Russia
whose members’ physical survival would depend on Putin. Thus, she concludes,
since the Russian regime fully depends on access to rents, an abrupt reduction
of these would inevitably destabilize it: economic collapse would cause
different groups to scramble for access to the shrinking pool of resources.
Political instability at the top would open the door for protests, with
business owners and the middle class joining in over time. Putin would have to
go in short order.
The Putin regime’s days certainly are numbered, and
smart observers like Snegovaya are right to look at the elites for signs of a
shake-up. What is less certain is that the revolt will be broad. Russia’s
history shows that palace coups almost always happen first. The people’s
revolution comes later.
Access to
resources in Russia belongs exclusively to a minority: Putin’s inner
circle—which consists of the aforementioned siloviki (mostly his
former KGB colleagues) and a number of businessmen whom Putin calls his
personal friends.
Let’s name some names. The siloviki feature
such officials as Putin’s Chief of Staff Sergei Ivanov, Security Council
Secretary Nikolai Patrushev, Foreign Intelligence Service head Mikhail Fradkov,
and FSB head Alexander Bortnikov. These are the people at the very top who,
along with Putin, exclusively determine Russia’s foreign policy and military
strategy. The members of the cabinet responsible for economics and finance are
never consulted in these matters. Their access to the decision-making process
is limited to making speeches at economic forums in the hope of being heard and
heeded by Putin himself—which seems to rarely happen.
The other part of Putin’s inner circle are
businessmen, whom Putin publicly identifies as friends: the aforementioned
Rotenberg family, Yuri and Mikhail Kovalchuk, Gennady Timchenko, and the
Shamalov clan (the son, Kirill Shamalov, 33, whose wealth is estimated to be around $3 billion, is Putin’s
younger daughter Katerina’s husband).
Both the siloviki and the business friends
feel strong bonds to their benefactor Putin: they fully owe him both their
standing in Russian society and their staggering wealth. Gennady Timchenko was
not even in the Forbes richest Russians list nine years ago. In 2008 Timchenko
premiered at the 43rd position, after his energy shipping conglomerate Gunvor
started to rake in billions by shipping oil and petroleum products out of
Russia. Arkady Rotenberg, who founded a major federal contracting company,
first appeared on Forbes’ Russian list in 2010 at number 99. In 2014, Rotenberg
was sitting at number 27, his net worth estimated at $4 billion; Timchenko, who
managed to sell Gunvor for an undisclosed sum a day before landing on the U.S.
sanctions list, was the sixth richest man in Russia with a net worth estimated
to be $15 billion.
The siloviki, on the other hand, are less open
with their wealth—fortunes that are largely built in the shadows.
It is said that the distinguishing feature of Boris Yeltsin’s rule was that
businesses were shaken down by bandits, whereas under Putin, they were shaken
down by the siloviki. It is, unofficially, their official work.
A second tier of the hyper-rich sits under this elite
group. These people, who amassed their fortunes during the Yeltsin era,
today don’t enjoy the same guarantees as Putin’s inner circle. In the 1990s and
early 2000s, people like Oleg Deripaska, Roman Abramovich, Boris Berezovsky,
and Mikhail Fridman were at the top of the oligarch pile, awash in both wealth
and political influence. Under Putin, many of these oligarchs—the so-called
“Yeltsin family”—have multiplied their wealth many times over, but at the cost
of forfeiting their political influence.
The first prominent casualty from this group at
Putin’s hands was media tycoon Vladimir Gusinsky, who claims he was forced to
sell his assets (including the formerly independent NTV television channel)
under duress before being made to leave the country. For those who did not
quite get the message, Mikhail Khodorkovsky’s ten years’ imprisonment was meant
to underline the point: keeping your wealth is completely contingent on your
renouncing political ambitions. Most of them fell in line.
Then, in the fall of 2014, Putin rattled the old
guard’s cages once again: Vladimir Yevtushenkov, who was at that time number 15
on the Forbes Russia list with an estimated net worth of $8.3 billion, was
arrested for fraud and stealing the shares of one of the biggest oil companies
in Russia, Bashneft. After Yevtushenkov transferred his shares of Bashneft over
to the government, he was released. He is still said to be worth some $2.8
billion.
Putin’s rationale for doing this was likely twofold.
First, Medvedev’s comparatively liberal stint at the Russian presidency during
the rokirovka had culminated in massive political protests in
2011-2012 in Moscow. The opposition leader Alexei Navalny in particular was
enjoying a surge in popularity, and by 2013 he had done better than almost
anyone expected in challenging Putin favorite Sergei Sobyanin for the Mayorship
of Moscow. I personally know of several Russian multi-millionaires who financed
Navalny’s campaigns discreetly—by spreading moderate sums of money among their
friends and having them donate to the cause. Putin needed to send a strong
signal that this kind of behavior was not welcome or condoned. The Yevtushenkov
case served that purpose.
And second, Yevtushenkov was used to demonstrate
beyond a reasonable doubt that property rights in Russia are neither valued nor
protected—including those of the “Yeltsin family”. This part of the message was
received loud and clear by many. For example, the owner of Alfa Bank, Mikhail
Fridman (worth $14.6 billion, number 2 on Forbes’ list), along with almost all
of Alfa’s top management, have fled Russia for London. The only person who
remains in Moscow is Alfa Bank’s CEO Petr Aven. As his friends and allies have
privately whisper, “Aven stays as a hostage.”
(The last time Mikhail Fridman publicly showed up in
Moscow was Boris Nemtsov’s funeral last year. Fridman and Nemtsov were close
friends, and Nemtsov’s assassination was a personal blow to Fridman. His
appearance at the funeral of a former Russian Vice Premier and sitting member
of a regional parliament, which neither Putin nor Medvedev attended, was noted
and appreciated by Nemtsov’s family, his friends, and by the liberal
opposition. Since then, if Fridman has left the UK, he has mostly gone to visit
his hometown of Lviv, in Ukraine’s pro-Western heartland, where he sponsors the
annual Jazz Festival.)
Two main things distinguish Putin’s inner circle from
the Yeltsin-era oligarchs. Putin’s people are the only ones who are guaranteed
property rights by Putin himself: they actually own things and not just
temporarily possess them. Furthermore, Putin’s people make their fortunes in a
unique way: they are directly milking the federal budget. They are usually the
sole beneficiaries of grossly inflated federal contracts for everything from
infrastructure development to energy exporting. The first generation of
oligarchs also looted the state using murky deals during the era of
privatizations, but they no longer have that privilege.
When Russian
analysts hopefully talk about elites beginning to squabble over the spoils of
the state as the economy turns sour, they sometimes bring up the example of
Ukraine. Several of the Ukrainian oligarchs sided with the idealistic young
protesters on the Maidan back in 2014, and they betrayed their crooked
president, Viktor Yanukovych. If it happened next door, these analysts’
argument implies, surely the same could happen in Russia.
The comparison is, unfortunately, misguided in several
ways.
Since its independence from the Soviet Union, Ukraine
has been carved up into ade facto federation by a set of rapacious
oligarchs. These oligarchs not only managed to extract rents from their
domains, but also in large part controlled and ruled over them politically.
Whoever was President would have to cater to the various oligarchs’ interests,
both on domestic and international matters. Squabbles between the oligarchs and
the central government have always been the norm in Ukraine. So when President
Yanukovych failed in his job to cater various oligarch interests, many of them
were happy to use the Maidan protesters to get rid of Yanukovych.
In Russia, Putin has ensured that this dynamic can’t
be replicated. In 2004, he abolished the direct election of governors, and
although he restored indirect election of governors in 2012, over the course of
his fifteen years in power he has replaced all of them. Regional elites in
Russia do exist, of course: a regional governor will end up cultivating a set
of people under him who will end up controlling whatever resources are within
their purview. But once a governor is dismissed by Putin (which can happen
often and quite unexpectedly), all the governor’s people are dismissed as well.
Regional Russian elites do not own anything.
They are only allowed to enrich
themselves for a set period of time, until Moscow says otherwise.
The aforementioned Yevtushenkov case also happens
to cast light on how Moscow has reined in the regions. The oil company
Bashneft, which is at the heart of the Yevtushenkov episode, was created in the
1990s under Yeltsin, when ownership of the state-run oil interest in
Bashkortostan was transferred to the regional government. Yeltsin’s pal Murtaza
Rakhimov, who ran Bashkortostan as his personal fiefdom, privatized Bashneft in
2003 and transferred a controlling stake in it to a holding company run by his
son, Ural.
In 2009, Yevtushenkov’s company bought a controlling stake in
Bashneft. When Yevtushenkov was arrested in 2014 and forced to hand over his
shares, Ural fled Russia and was convicted in absentia for also
stealing Bashneft shares, as well as for money laundering. Murtaza
Rakhimov, Ural’s father, had ruled the oil rich Bashkortostan from 1993 until
he was replaced by Putin in 2010. Owning the region’s major oil resources had
made Rakhimov’s family a regional power. Rakhimov had won his clout long before
Putin came to power and owed no special allegiance to him. This could not
stand. Ultimately, Putin took care of it.
One Russian governor does break the mold to a certain
degree: the Chechen leader Ramzan Kadyrov. Kadyrov appears untouchable. He has
his own private army of some 25,000 well-trained troops (there are videos
floating around of Kadyrov’s combatants, wearing uniform without any insignia,
being trained by a special forces “Alfa” commander). In December of last year,
Putin handed control over an oil company located in the region, originally run
by Rosneft, to the Chechen regional government. Several of the people arrested
in connection with the Nemtsov murder were Kadyrov’s soldiers, and several of
Kadyrov’s close associates who have been accused of planning and ordering
Nemtsov’s murder have successfully been kept from investigators. Several times
in the last few weeks, Kadyrov took it upon himself to publicly threaten the
lives of Russian opposition members without official sanction, or official condemnation,
from the Kremlin.
But despite all that, even Kadyrov is in reality
contained. For one, it is an open secret that Putin’s siloviki are
deeply opposed to Kadyrov’s rule. While Kadyrov has relatively free reign
within Chechnya itself, he has no chance of leaving his republic or expanding
his reach beyond its borders. He can have an opposition leader murdered in
Moscow, and his people can intimidate an official in
Krasnoyarsk, but those
kinds of moves are probably close to his limits.
Furthermore, Kadyrov is not popular among Chechens. A
wealthy Chechen diaspora exists all around the world, and in December and
January a number of anti-Kadyrov rallies were held in Vienna, Berlin,
Stockholm, Oslo, Istanbul and even in Kyiv. The 1.4 million Chechens living in
Chechnya are even less fond of Kadyrov due to his harsh and oppressive rule.
The Chechen leader demands an extraordinary “mandatory donation” from every
working inhabitant of the republic to the Akhmad Kadyrov Foundation, an NGO
(named after Ramzan’s father) that is understood to serve as Ramzan’s own
personal slush fund. Public employees are said to be tithed at least 10 percent
of their monthly salaries, private sector employees are forced to give up as
much as a third of their paychecks, and business owners are told to cough up as
much as half of their profits.
Finally, Kadyrov has earned the enmity of hundreds of
Chechens fighting under the banner of the Islamic State in the Middle East.
Several newspapers ran unconfirmed reports that one prominent IS commander in
Syria, Abu Omar al-Shishani (Omar the Chechen) put a $5 million bounty on
Kadyrov’s head after Kadyrov threatened to kill the “bandits” who “threaten
Russia and pronounce the name of our President Vladimir Putin” on his Instagram
account. Kadyrov’s often-professed solidarity and love for Putin doesn’t just
earn him the hatred of Islamist militants, however. Few Chechens, outside of
Kadyrov’s inner circle who directly profit from the federal funds that the
Kremlin sends to Grozny, can forgive Russians for the two bloody wars they waged
on their territory. Most are infuriated by Ramzan’s constant pledges of loyalty
to the Russian President, who is blamed for having starting the second,
incredibly cruel and bloody war.
Many analysts, and most Russians, assume that Kadyrov
and his army are meant to be Putin’s personal bodyguards in case of political
turmoil and popular protests. In exchange, Putin keeps the siloviki off
Kadyrov and keeps sending Ramzan billions of rubles in subsidies from the
federal budget. But should Putin for some reason go, the very next day Kadyrov
is likely dead. His mercenary army will not have time to get to Moscow. Its
members will be all too busy trying to fend for themselves.
There is a
Russian saying that goes something like this: “Why is it impossible to share everything
with everyone? Because there are too many of everyone and there is too
little of everything.” When oil prices were well above $100 per barrel, as they
had been for most of Putin’s reign, that saying was not strictly true for the
elites: there was plenty for everyone to steal. But as oil prices continued to
plummet—blowing through $100 in August 2014 and hitting the mid-forties in
January 2015—the energy export-dependent Russian economy began to contract. The
pie is shrinking, and there are fewer and fewer opportunities for elites to get
their unfair share around.
Case in point: as this piece was being written, news broke that Putin had proposed creating a regular
“dialogue” between business and law enforcement organs, mediated by the
Kremlin. Two days later, Dmitry Kameshnik, the owner of the second largest
airport in Russia (Domodedovo), was arrested in connection with the
investigation into the 2011 terrorist attack on the airport, charged with not
providing adequate security. In the the weeks and months after the attack in
2011, the siloviki had tried to take Domodedovo from Kamenshik. But
Medvedev was President at the time, and Kamenshik, who had invested over $1
billion in the airport, was able to make a deal with the government. Russian
observers are unanimous in their analysis: this is another Yevtushenkov-like
shakedown—Putin’s friends taking from those not in the inner circle.
Putin has been ruthlessly successful in consolidating
power around a small set of people, both personally close and loyal to him. In
fact, he has been so successful that even as the pie gets ever smaller, the
chances of a broad-based revolt arising are tiny. Regional elites are at
Putin’s mercy, while bureaucrats and civil servants have never had any
political power—they merely collect their above-average paychecks cut by the
Kremlin while preserving the corrupt machinery of the kleptocratic regime.
A palace coup, however, is still possible—and indeed
may be increasingly likely. Putin’s inner circle comprises two distinct groups
with ultimately differing interests and instincts. No matter how much the
Rotenbergs and Timchenko may say they support Putin’s foreign policy, they are
still primarily interested in making money. Meanwhile, the siloviki, who
certainly enjoy the windfalls from their shadowy, lucrative businesses, have a
fundamentally different way of thinking: a twisted, militaristic, zero-sum view
of the world.
For example, the President’s Chief of Staff Sergei
Ivanov, a KGB agent since at least the 1970s, has seen the West as a personal
enemy for many decades, and continues to see foreign affairs in stark, Cold War
terms. Working as a field officer, Ivanov appears to have been expelled from
the UK for spying in the 1980s, perhaps when his cover was blown by a British
double agent, Oleg Gordievsky. (Ivanov himself has tried to deny that it was he
who was expelled, claiming implausibly that it was another agent with the exact
same name as him but born a year earlier that got the boot; at least two
sources close to the Kremlin, however, have insisted it was indeed him.)
In the
public interviews he has given, Ivanov merely channels a more intense and
focused wariness of the West than Putin himself betrays. But at least on one occasion,
he has let his guard slip: speaking to a conference of regional governors last
year, Ivanov said that “Britain is our eternal enemy. She has always shat on
us, and will continue to do so.”
A different kind of monomania afflicts the head of
Russia’s Security Council, Nikolai Patrushev.
Like some
bizarre version of Dr. Strangelove’s Brigadier General Jack T. Ripper,
Patrushev appears obsessed with the idea that the United States is out to steal
Russia’s natural resources. The theory has some currency in the halls of the
Kremlin: Putin himself has alluded to it at times in interviews, and Deputy
Prime Minister Dmitry Rogozin wrote an editorial in 2012 that featured the
argument as well. But no one has returned to it as often as Patrushev. For him,
this theory explains everything from the real purpose of NATO to the eruption
of protests on the Maidan, and even the Western sanctions regime that followed
the annexation of Crimea.
In an interview with a major paper last year, Patrushev
explicitly claimed that Secretary Madeleine Albright had complained that Russia
unfairly owns Siberia and the Far East, and that she had proposed taking them
over. Albright’s thinking on the matter, it turns out, was originally
“unearthed” by a former KGB general who had worked for the organization’s
special paranormal studies bureau. In 2006, the elderly general claimed on TV
that his unit had telepathically connected with Albright’s thoughts in 1999—by
carefully studying photographs of her—and found that she pathologically hates
all Slavs, and had designs on Russia’s mineral wealth. Patrushev was clearly
deeply influenced by this brilliant military research.
There is a story that has been circulating around
Moscow for some time now: After the West imposed sanctions on various firms and
individuals surrounding Putin in 2014, the Rotenbergs let the President know
that they were feeling real economic pain. Putin reassured them: “Don’t worry,”
he said. “I will make up all your losses.”
This conversation, if it really happened at all, would
have coincided with crude oil prices starting their descent from highs of $110
per barrel. Today, oil is trading at around $30 per barrel, and the
consequences of Russia’s various wars are contributing to the country’s
economic pain. There is less and less of everything, but the number of people
stealing is staying the same.
The siloviki like their wealth, but their
particular paranoid mindset and militaristic worldview prevent them from taking
steps which might at least stabilize the economic situation. They think their
wars are necessary for the country’s long-term success in a hostile U.S.-led
world set on Russia’s destruction.
For now, Putin appears fully on board with the
militarism. But if his resolve wavers, perhaps in favor of the alleged promises
he has made to his business friends, the siloviki will not hesitate
to displace him. With broad control of the armed forces, they have the means to
do it. And if the siloviki are already uneasy with Putin’s
leadership, grassroots rallies fed by popular discontent with the failure of
domestic policies could provide the ideal pretext for launching a coup.
How ironic it will be to see a military junta seize
power in Moscow, made up of the same people who had falsely accused the
Ukrainian Maidan uprising from bringing a “fascist junta” to Kyiv…
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