Many things that prominent Russia-watchers had expected didn’t happen in 2012. Most notably, the new opposition didn’t achieve a breakthrough in the regions, neither was Dmitry Medvedev dismissed, although in September these seemed all but imminent. Also, Vladimir Putin’s rating did not go steep downhill, but rather stabilised around 50% (47% according to FOM and 51% according to VTsIOM trusted Putin in December). Does this mean that nothing changed in the past year? Hardly. It does mean that Russia’s rulers avoided cathartic moments (and the opposition was unsuccessful in bringing such moments about), but there is ample evidence that the processes that should have driven the situation to the above extremes are still ongoing. This was the most important lesson of Vladimir Putin’s two speeches in December to the parliament and to the public.

The ’new’ opposition, indeed, didn’t achieve a breakthrough, but its leaders do seem to have understood the threats of radicalisation and started to consolidate the movement, still quite insignificant, from becoming nothing more than a motley crew. Some opposition leaders seem to have understood that at one point they must enter negotiations with the governing elite or at least a part of it. As Brian Whitmore rightly noted, Alexei Kudrin may be the perfect intermediary to do this, although the actual cooperation of the „two Alexeis” – Kudrin and Navalny – seems a bit of wishful thinking to me.

FOM - Putin's ratings in 2012 (courtesy of www.fom.ru)

Especially considering that Putin clearly doesn’t intend to negotiate with the opposition. For some time at the beginning of the year it might have seemed that the returning President would try to establish some new equilibrium, giving out balanced concessions to each side. But no: by letting the different elite groups off leash – either intentionally or unintentionally – the government started „tightening the screws” on the opposition. Even if we’re far from the arrogant remarks Putin made a year ago about opposition protesters wearing „condoms”, it’s because the Kremlin decided that it wouldn’t have to pay attention to these groupings just yet. Putin’s two speeches, especially his big press conference indicated, as Kirill Kobrin remarked it in the latest edition of the Power Vertical Podcast, that Putin had more or less abandoned „Russia A”, that is, the fairly wealthy, urban, educated part of Russia, and decided to concentrate on „Russia B” instead: regions, small towns, rural areas and lower classes, where he is still able to maintain his image. Statistics show that by pulling out his old weapons, so to say, returning to his „second brand”, that is, by coming down hard on the enemies of the state, let them be internal or external (i.e. American step-parents or „foreign agents”), by pretending to start a war on corruption, he has been able to prevent his ratings from further falling.

What’s more, the society seems to have put the blame for economic woes on the government. For the first time in many years, the ratings of Putin and Medvedev have greatly diverged, with the latter falling with a significant speed. Indeed, Putin has has provoked the government on numerous occasions: by letting Arkady Dvorkovich engage in an „energy war” with an increasingly powerful Igor Sechin, by reprimanding ministers for not fulfilling his campaign promises, by letting the power groups within the government engage in an embarrassing, unfruitful and inconclusive debate on the pension reform, etc. Dmitry Medvedev does not even appear to have put up a considerable fight. No matter that some political commentators in Russia are already contemplating on just how far Putin must go in order to force Medvedev to resign.

VTsIOM: Ratings of Putin and Medvedev (courtesy of www.wciom.ru)

At the same time, let’s not forget that with policies considerably shifted towards the so-called „conservatives”, in an increasingly unstable political environment, Putin cannot really allow himself to create an additional factor of instability by removing a powerful liberal from an important position and giving nothing in return. My guess is that Medvedev will leave his position later rather than sooner, most probably as a result of external pressure once Putin seems the situation fit to appoint what one would call „a conservative technocrat”. Again, this doesn’t include the prospect of negotiations with the „new opposition”, therefore, doesn’t include Alexei Kudrin. Ceteris paribus, of course.

Thus, Putin’s two speeches were evasive because they were meant to be so. Putin is seemingly confident that the situation will slowly stabilise once the clans have fought out their differences and the opposition is silenced, at least for Russia B. At this point, it would be difficult to tell whether this is vain hope or not. What’s clear is that Putin’s strategy has serious flaws that have to do rather with the elite than with the society.

Crackdown on corruption and capital flight? The problem is that the past decade has produced a new aristocracy that’s increasingly upset by attempts trying to limit their privileges. And, as I blogged earlier, the „kompromat bubble” might as well backfire on its initiators. Harsh sanctions against the ultimate scapegoat, America? Tough talk with Europe? Sure, these always work with „Russia B”. But things like the turmoil around the so-called „Dima Yakovlev Law” – that is, the one prohibiting Americans from adopting Russian children – shows that the elite is increasingly irritated by pointless chest-thumping. Background information shows that whenever the elite felt affected by a legislative project by the President, an increasing number of deputies revolted against it in the Duma. Sergey Ivanov, the head of the Presidential Administration allegedly had hard time convincing the parliamentary group of United Russia that formerly used to look more like a rubber stamp.

Not to mention image gaffes like that moment in Putin’s press conference when Maria Solovenko, a journalist talked back to a condescending Putin, calling him by his diminutive, Vova, used mostly when talking to children. This would have been impossible a couple of years ago – what’s more, „Vova” is also the name of the quintessential cheeky, stupid child of Russian jokes.

As Kirill Kobrin noted it in the said podcast, Putin is „too rigid to rebrand”- at least to his main constituency, the elite. This means that he will either be forced to do something new with an old team or something old with a new team. Neither of these seems to be executable. There is a chronic shortage of new, competent cadres in the elite, let alone ones that would be willing to do the same things as their predecessors. The problem is the same as with persuading old cadres to do anything new: the increasing shortage of distributable rents, both in an economic and in a political sense.  The falling commodity revenues, the need of privatisation, the narrowing political support of the government.

The only way out of this situation for Putin is to create more goods to redistribute. Rosneft’s takeover of TNK-BP is one example of one way to do this. This way, however, is not sustainable from many points of view. The biggest question of 2013 will be whether Putin finds a way to refill the gravy train, and whether he decides – against his apparent intentions – to promote Alexei Kudrin and his technocrats to this end.