Richard Sakwa, one of my favourite Kremlin-watchers recently published a recap of the main events and processes of the past few months in Russia. Undoubtedly, the most important and strongest statement in the paper was that the politicisation of elite competition would eventually be a death blow to Putin’s system of power. I also think that the debates around the 2013 budget are the strongest proof so far that this competition has already become quite politicised. Diverging views on economic policies and state assets have led to the biggest conflict so far between the two branches of the executive, a considerable dispute within the government, as well as the likely emergence of yet another scheme to keep pluralism within the system.
The budget as the showcase of problems
The budgetary debate shed light on two important sources of tension within the government. The first is the debate about the dividends of Rosneftegaz; the second is the debate on the pension reform.
The ingenious idea of vice-PM Arkady Dvorkovich and the minister of economy Andrey Belousov was to finance Vladimir Putin’s election promises partly by laying hands on the dividends of Rosneftegaz, thereby also preventing the holding to participate in the “privatisation” of smaller state-owned energy companies. It had been pretty obvious from the beginning that Igor Sechin would not make peace with this arrangement. And indeed, the turf war began. Sechin vowed not to give a single kopeika without an explicit request by the President. Dvorkovich, in turn, reminded Sechin that it’s not the President but rather the government that supervises state-owned enterprises – and oh, by the way, Sechin would need approval from the government for the planned acquisition of BP’s 50% stake in TNK-BP too. Sechin, in turn, apparently sent his former colleague, Anton Ustinov, now a presidential advisor, to ask for further justification from Dvorkovich regarding the government’s planned recapitalisation of the state water energy firm RusHidro.
The most important thing that’s worth noting in this tangled story is that both Sechin and Dvorkovich, ultimately, expect Putin to do justice in the debate. Not only did Dvorkovich back down a bit when Sechin asked for a presidential order, and pledged to “cooperate” with the Presidential Administration, but in August he also sent a letter to Putin, similar to Sechin’s, complaining about the energy tsar. Apparently, Putin is still regarded as a capital D Decider, a role he used to base his power on. So, he’s winning out of this, right?
Well, not so much. There are a number of reasons able to make Putin uncomfortable with this very case, and all of them somehow come down to the “politicisation of elite competition” mentioned by Sakwa.
First of all, the Sechin-Dvorkovich debate is not only about rent seeking and control of assets, but, as I’ve blogged earlier, it reflects two diagonally opposed views of where Russia should be heading. Any decision having to do with private vs. state-led economy will potentially have an impact on badly needed investments.
Second, Putin is personally affected. After all, it’s his election promises that the money is needed for. Also, Sechin has not only been problematic lately because of the Rosneftegaz dividends, but also because he’s been entangled with a business dispute with another staunch Putin-ally, Gennady Timchenko, a businessman widely suspected to have strong and shadowy business bonds with Putin himself. Sechin has for a long time been sort of an anomaly in the system: he is trying to be a leading politician, an economic strategist, a businessman-quasi-oligarch and a mighty chinovnik at the same time that makes it difficult to put him into a niche. Consequently, he obviously thinks himself “too big to fail”, and not without reason. With a power system requiring more and more compromises (as it will require on in this case as well) though, Putin might not want too many people around him that are too big to fail (another example would be the chair of the Investigative Committee Alexander Bastrykin).
Third, this debate affects Putin personally also because it will make a precedent. With a simmering conflict between the Presidential Administration and the government, it has to be made clear how far the President can go in settling such disputes, i.e. actively participating in a more and more conflict-prone economic policymaking. When it’s exactly the opposite direction that the President seems to have decided to take.
In short, I think the present dispute will highlight the limits of Putin playing his old role with the elite.
This brings us to the hot potato of the budget talks: the pension reform. By now, it has become obvious that Dmitry Medvedev, possibly fearing that drafting the pension reform – which, according to Alexei Kudrin, will only have losers – could be the swan song of a liberal-technocratic economic agenda and, personally, himself. Medvedev is painfully reluctant to take leadership over the issue, apparently leaving his ministers to battle it out between themselves.
Whether Medvedev is simply afraid of assuming responsibility for the pension reform or he is trying to play good cop / bad cop with the business elite and the population is not entirely clear. The initial plan of reducing or eliminating the so-called cumulative part of the pension system (basically postponing trouble by redirecting a part of pension contributions), coming from the so-called “social block” within the government, led by second-line conservatives, has received so much and so loud criticism that it’s very unlikely to pass. And if it doesn’t, Medvedev and the finance ministry could quietly come in and push through a real pension reform, containing a hike in the pension age, a long-time swearword in Russian politics.
Of course, this is a risky path: with all the fuss around the pension reform in the recent weeks, it’s unlikely that any reform now could pass “quietly” and detached from Medvedev. Also, it’s questionable whether the Prime Minister would have enough time to leave his ministers battle it out. I’m also sceptical because I don’t necessarily think that Medvedev has the wits or the courage to try to pull a double trick like this. However, in the past month, we’ve seen a number of occasions of Medvedev coming up with “impertinent” reactions to Putin’s statements, so I cannot just simply exclude the above possibility.
If Medvedev survives the pension reform, it will significantly raise his political value, even if it will still be shy of what I would call a comeback. But however the dispute turns out, keeping in mind its implications on the liberal vs. conservative narrative, it will be yet another example of the politicisation of elite competition.
If you cannot prevent something happening, you should take its lead
It will be impossible to keep competition within the framework of the existing system without substantially changing its rules and mechanisms. There are signs that the solution could ironically be a system of supervised pluralism, the same thing that Vladislav Surkov was experimenting with last year, the same thing the failure of which led to his fall.
This time, though, the puppet master is likely to be his successor, the ‘anti-Surkov’ Vyacheslav Volodin. Accordingly, the project may start up the other way around: instead of institutionalising the liberals in a new party, the project might take the shape of a populist catch-all party. According to articles published in the daily Nezavisimaya Gazeta last week, the weapon of choice would be a reorientation of Volodin’s creation, the All-Russian People’s Front. A renewed People’s Front would distance itself both from United Russia and Putin, in an attempt to speak to those who are disappointed in the “party of crooks and thieves” but would prefer less than a regime change.
Knowing the sociography of these people, a party like this would require a strong left-wing populist ideology and a frontman with a personality strong enough to allow him to show leadership – even if not strong enough to be independent from those standing behind the project. It’s probably not a mere coincidence that the nationalist Rodina party, a former political project of Dmitry Rogozin was resurrected from its ashes last week by a United Russia deputy.
A further proof of the focus shifting away from United Russia could be the suspected upcoming purge of “second-class” deputies from the party. By this the authorities mean to pretend that punishing Gennady Gudkov didn’t have anything to do with his political affiliation but was rather a consequence of Putin’s promises to clamp down on corruption.
Creating new parties in an attempt to pull the rug out from under the non-systemic opposition is, of course no big news. This is exactly why A Just Russia was created in 2006. Allowing new (pseudo-)players into the management of Russia Ltd. would nevertheless be a more momentous decision, as it would institutionalise the political nature of elite competition.
Probably this is exactly the goal. Instituting pluralism within the elite would push Putin to take up a more apolitical role, instead of a more political one. A reaction like this would reflect two processes. According to the latest Levada poll Putin’s resignation is not the primary goal of opposition supporters any more. Nevertheless, his core base is apparently eroding, so even if his presence is somehow tolerated, it wouldn’t be wise trying to rely on them.
This is a hard decision to take. However, Putin doesn’t have the time to think it through. The opposition is in limbo: street protests have apparently worn out, but opposition movements still fall short of becoming political. If there’s any time a part of them can be talked into becoming ‘systemic’, it is now.
Introducing institutionalised, politicised competition into the government proper would be the biggest change to the system for almost a decade. Moreover, there’s a big chance that it would only postpone problems. But it would also be the first serious attempt to handle an ongoing crisis before its components mix and detonate.