Putin 12 more years?

Putin 12 more years?
From time to time, Russia surprises observers and defies consensus forecasts. Seemingly monolithic political regimes fall in the blink of an eye. This was the fate of the Soviet Union and its monopolistic Communist Party. This may be the fate of Vladimir Putin’s ‘power vertical’ which is quickly losing credibility and which will face an important test on the presidential election day on 4 March. We have analysed the vertical’s unresponsiveness to public concerns in our earlier articles. There are also signs that it may be failing to accomplish even its most important strategic projects such as the Sochi Winter Olympics (see http://www.itar-tass.com/c142/315542_print.html). The vertical is also increasingly deceiving its own creator – Vladimir Putin. As argued by RusEnergy’s prominent oil and gas analyst Yuri Kogtev (http://www.rusenergy.com/ru/comments/comments.php?id=57076, in Russian only), the Federal Subsoil Agency and Gazprom may be providing inaccurate information concerning the growth of Russian oil and gas reserves and export of Russian natural gas. Opposition rallies draw increasingly bigger crowds: 6,000 at Chistye Prudy on 5 December, 50,000 at Bolotnaya Square on 10 December and 80,000 at Prospekt Akademika Sakharova on 24 December. A march is scheduled for 4 February – the date on which 300,000 marched through the streets of Moscow in 1990 demanding that the constitutional monopoly of the Communist Party be abandoned. Whereas the government has so far ignored the protesters’ demands, the most prominent of which are new parliamentary elections and the sacking of Vladimir Churov, chairman of the Central Electorate Commission, it proposed several draft laws to ease registration of political parties and presidential candidates and reintroduce direct gubernatorial elections. Most of these changes, however, are designed to directly affect national elections only at the end of the current election cycle. Vladislav Surkov, who as first deputy head of the presidential administration, stood behind political restrictions of the 2000s and was seen by the protesters as the manipulator-in-chief responsible for rigging the 2011 Duma elections as well as several previous polls, resigned from the administration to join the cabinet as a deputy prime minister.  In his new role he will be responsible for modernisation and innovations and will thus continue to enjoy access to big money, but he will be significantly removed from the tip of the vertical. Surkov’s replacement, Vyacheslav Volodin, who is also Putin’s chief campaign strategist, is seen as a less sophisticated and more conservative functionary. Unlike Surkov (who shortly before his career move called the protesters ‘Russia’s best people’), Volodin is expected to oppose a compromise with the opposition. Although Putin and Medvedev showed support to Churov (Medvedev had called him ‘a magician’), Putin has had to promise greater transparency at polling stations (his response to allegations of rigging was to invest the equivalent of $500 million in installing web cameras at the stations).  An even larger number (than in December) of volunteer election observers is expected on 4 March. Given the pressure from the public, Putin will be unable to secure a triumph with the little help from Churov’s agency alone, and will need to do something in the remaining month and a half to improve his falling approval ratings. On Volodin’s advice, Putin started his campaign with a series of verbal attacks on the democratic opposition and is trying to mobilise support of a group that could best be described as Russia’s equivalent of ‘rednecks’. In this territory he has begun competing with Communist Gennady Zyuganov and quasi-nationalist Vladimir Zhirinovsky. He has also begun exploiting Russians’ fear of a revolution and the trauma of the 1990s, emphasising his support for evolutionary changes while proposing no specific ones. Additionally, the Kremlin hopes that the return of direct gubernatorial elections will bring back the diminishing support of regional elites. Several senior officials, including Sergey Ivanov, the new head of the presidential administration, have acknowledged that they now regard the second round as an acceptable possibility (if no candidate receives over 50% of the vote on 4 March, the two most popular candidates will face each other in the second round). Putin’s most serious contenders, hoping to reach at least the second round, will include Gennady Zyuganov, Vladimir Zhirinovsky, A Fair Russia’s Sergey Mironov (a former chairman of the Russian parliament’s upper house unceremoniously sacked by the Kremlin in 2011 when it was looking for employment for the unpopular St Petersburg governor Valentina Matviyenko), left liberal Yabloko’s veteran Grigory Yavlinsky and billionaire Mikhail Prokhorov (who may be the Kremlin’s own creation for right-of-the-centre liberals).  None of the emerging leaders of the opposition that drew crowds at Bolotnaya Square and Prospekt Akademika Sakharova are running and they have called on their supporters to vote for any candidate other than Putin in the first round and, expecting Putin to be one of the two leaders, for non-Putin in the second. This opposition has already established the Voters League led by prominent writers, journalists and activists. Alexey Navalny, an anti-corruption activist, is emerging as the most popular leader for the Voters League supporters. Navalny, who was urged by many among the opposition’s rank to run for the presidency in 2012 has refused to take part in what he described as a procedure designed to elect Putin. In his interview with Grigory Chkhartishvili, who, under the pseudonym of Boris Akunin, is Russia’s best known modern author, Navalny formulated the opposition’s main objectives as: 1) the establishment of the court system independent from the executive government; 2) decentralisation of political power with delegation of a great degree of legislative powers to municipalities; 3) a radical reform of the law enforcement sector; 4) a ruthless national anti-corruption campaign with, in Navalny’s own words, the ‘hot iron mode on’; 5) deregulation and de-bureaucratisation; 6) improvement of corporate governance standards at state-owned companies; 7) high legal standards in the area of immigration; and 8) an educational reform in order to reinstate university education as a means of stimulating social mobility. According to Navalny and his supporters, the opposition’s main objective is to make sure that there is sufficient pressure on whoever wins the presidential election to reform the country’s political institutions and step down as president once the new laws designed to reform the system are enacted. Russian business elites are beginning to drift away from Putin. There are persistent rumours that leading financial and industrial groups are funding the opposition. They may as well be funding Putin’s bandwagon but the rumours are indicative that alternative centres of power are emerging. Several owners of prominent mid-sized business groups (e.g. the owner of the country’s largest furniture maker) have attended the opposition rallies. The bottom line is that Putin might still win the election, albeit in the second round (or be announced the winner) but the opposition will keep the pressure up. Putin may have attempted to run for the presidency in order to consolidate the elites (see our past analysishttp://www.riskadvisory.net/analysis/story/vladimir-the-consolidator-and-prospects-for-investors). The elites will defy his consolidation attempts. There will be factions keener to reach agreement with the opposition leaders, counting on them for improvements in the business climate. The cost of doing business in a more transparent environment may outweigh the political risk of opposing the less formidable Kremlin. The likely implications for foreign investors might mean that large contracts secured in the natural resources sector, including oil and gas, and deals with large state-owned companies in the infrastructure field might be jeopardised as, for the first time in the recent years, there exists a chance that the Kremlin will not have it its way. For the first time, there is the possibility that Russia will not elect Putin or keep him in the driving seat. Even if Putin claims victory, it is very probable that the opposition will continue to exert pressure for systemic political reforms (as Navalny has already indicated) and this will mean that the Kremlin is surrounded by the population of Moscow and other large cities which is hostile to it and waiting for any sign of weakness to attack. As the Kremlin remains dependent on high oil prices to ensure economic stability, it will remain vulnerable to factors outside its control. Any victory for Putin in 2012 – whether it is a fair victory, involving mobilisation of the loyal voters, or a rigged one, or a combination of both – would be temporary. Twelve more years? Probably not. By Oleg Babinov Head of Russia, Eastern Europe and Eurasia, Moscow
Published: 19th January 2012