A rebalancing act

Vladimir Putin’s annual televised Q&A session last week revealed more about the present state of affairs in Russia and Putinism in general than it was obvious at first sight. The Russian president has made several moves suggesting that he wants to return to “business as usual”, which, however, will require further tightening of screws and several replacements. The European Union has one month to decide what it wants to do with the new normal in Russia. Here is why.

Last week, Vladimir Putin held his annual Q&A session: Russia’s favourite reality show, a lengthy flow of pre-approved questions and well-choreographed answers, or, as the president himself called it, “the best possible opinion poll” – a statement that tells more about the nature of Putinism than most Kremlinologists ever will. One year ago, less than a month after the annexation of Crimea, the program was a triumphal march. This time around, however, Putin was sitting on a visibly rotten economy. The crisis may not be as seismic as many predicted, but it could spread out to several years, bringing about stagnation and gradual deterioration. Still, Putin was in his element. He was jovial, he quipped a lot, he showed both strength and sympathy, he even took jocular questions and told a bizarre story about sipping beer with Gerhard Schröder in a Russian sauna, or banya.

Sometimes the twist that he took on delicate issues was simply brilliant. For example, Putin was asked why state-owned enterprises did not, after all, have to publish data on the income of their leaders. Putin’s answer was:

“I think that this decision of the government is related to the fact that numerous foreign nationals, foreign experts work in the management bodies, on the boards of our largest domestic companies. They don’t occupy leading positions, as, say, in Ukraine, which is practically entirely under foreign management; even their minister of finance and all other ministers of key importance are foreign nationals, as if there were no decent, honest and professional people among Ukrainians. Our companies employ many of these experts in roles of secondary or tertiary importance, as board members. We cannot oblige them, we cannot personally force them to publish data about their income. Creating discrimination between our citizens and foreign nationals – forcing our citizens to disclose these data while releasing other board members – would also be incorrect.”

In an answer to a supposedly tough question – CEOs of state-owned companies like Russian Railways or Rosneft literally threw tantrums to fight the initiative that Putin himself championed at his press conference in December last year – the Russian president managed to shift responsibility for the failed initiative from himself to the government, allude that Ukraine was colonised by the West, state that the present Ukrainian authorities were not interested in honest people and blame greedy, dishonest aliens for corruption in Russian government circles. Not bad, even considering that none of these (or an honest journalist, for that matter) was there to raise doubts.

Old scenes were back on popular demand: Putin used his long-term ally, former finance minister, Alexei Kudrin as a punching bag: a clever man who is nonetheless a heartless nerd, unlike Putin, who “has the heart” for politics, not only the numbers. “We have the answers, we’re competent”, the president seemed to say, “the only reason we’re not putting the plan in motion is that we feel sorry for you.”

Questions of foreign policy did not come up until well into the program. Crimea – turned into a symbol of Putin’s third term by the state’s propaganda machinery – was mentioned after more than an hour into the program, and only indefatigable viewers heard about Eastern Ukraine, after more than three hours of instant, televised problem-solving. Most of the show was dedicated to domestic policies. Business as usual. Move along, there’s no such thing to see here. All this parallel to reports about a looming Russian offensive in Ukraine.

What we have seen on TV was part of Putin’s big rebalancing act. Not only Kudrin got his previous role reassigned: the Russian president is trying to re-establish balance among his proxies, after the turf war that started last year in the Russian political elite threatened to set ablaze the Kremlin.

A rebalancing act

The relative quietude of the past couple of weeks – no large-scale skirmishes in Ukraine, stabilising global oil prices, a deal with Iran – allowed Putin to recreate some sort of order in the Russian elite’s ragged legions. Goodies were assigned to influential players: Dmitry Rogozin, a deputy Prime Minister in charge of arms procurements but on close terms with the oil industry was assigned to head the state commission for Arctic development, a role with potentially serious benefits. The arms industry got a nod for a head start on arms sales to Iran, as soon as the tentative deal on the latter’s nuclear capabilities was signed. Meanwhile, the government initiated “active talks” with OPEC in order to placate the oil industry – the only power group that is, presently, genuinely interested in mending fences with Europe.

Meanwhile, rumours keep surfacing about an even stronger tightening of the screws, the total demise of liberals or the replacement of hardliners like Alexandr Bastrykin, the head of the Investigative Committee, the government’s iron fist, with someone even tougher. Putin is acting more and more carefully, partly because the clan war is still on. Last month, a Moscow Court demanded the arrest of a high-ranking official of the powerful Defence Ministry on corruption charges, the first scandal that hit the ministry since Sergei Shoigu took over as minister in 2012 and became one of the most powerful members of the Russian political elite. Ramzan Kadyrov, the president of Chechnya who got entangled in the assassination of Boris Nemtsov, reminded the government last week of his unique position in the Russian power vertical in his own peculiar way: he ordered Chechen security forces to open fire on any other armed force that forgets to ask for permission to enter Chechnya – even Russian security forces.

Putin has still not stabilised his situation fully, and it is unlikely that he will in the foreseeable future. However, he is on his way to establishing a mechanism that will help him weather the next year and a half – until the Duma election – or even more. A constant play for survival.

Putin has not lost the war in Ukraine. Although there is substantially less talk about Novorossiya than even months ago, subtle threats before and during Putin’s TV show that Russia could, in any moment, invade Ukraine “if the people so demanded”, indicated that Putin still had the option to raise hell abroad in case his domestic position weakened – or if external conditions took a sudden turn for the worse.

For if external circumstances do not deteriorate substantially, Putin can survive until 2018, even if the economy enters a period of permanent stagnation, as many (including Kudrin) predict. He has a collection of statistical data, massaged enough to signal a fake conjuncture, supported by the wishful thinking of the Ministry of Economy, and power to sack officials that can be made responsible if these are proven wrong by realities on the ground, be they governors or the minister of agriculture. “Two years”, Putin told his people in December, “and everything will be fine.” Last week, again, he promised a recovery in “two years”. I wonder how many times we will hear about these “two years” in the next months or years.

Power is based on acceptance of superiority, which in turn is based on fear and trust. Putin has never lost the trust of the majority of Russian voters, and he is doing what he can to ensure that he is trusted or feared by just enough of the Russian elite to be accepted as their superior. This trust first dwindled last year, when the EU introduced harsher-than-expected sanctions against Russia, following the downing of Flight MH17. Since then, though the system remained shaky, neither the elite, nor the population had any serious reason not to continue trusting or fearing Putin.

What we have seen in the past weeks, and especially last week, is the new normal.


The European Union has less than a month to decide whether it wants to accept or contest this new normal. That is when the summit of the EU’s Eastern Partnership is held in Riga. If the EU wants to contest this state of affairs, it will have to act. If the antitrust case that the European Commission initiated this week against Gazprom is anything by which to judge, we may be in for a surprise. Judging from the almost apologetic manner in which Federica Mogherini, the EU’s foreign policy chief launched the consultation on a renewed Neighbourhood Policy in March, however, we are more likely to be disappointed. But let’s indulge in some wishful thinking and imagine that the EU offers a membership perspective to Ukraine, as it did to Moldova last week – a perspective tied to conditions that Ukraine is unlikely to fulfil in the foreseeable future, perhaps, but a perspective nevertheless. Let’s imagine that the EU pushes for an agreement with Armenia on the back of scrambling to recognise the Armenian genocide last week; an agreement that thus helps to expose Russia’s false arguments about trade in the region.

Now let’s get back down to Earth and meet the ever-growing group of Putin’s friends in the European Union.

This is worrying, because the EU will have to lead a more active and assertive policy towards Russia in the future that encompasses several elements going beyond the classical toolbox of foreign policy, or even seeking energy independence – just as Russia is already conducting a complex and active policy towards Europe, through buying parties like the National Front in France and keeping governments dependent on cheap Russian energy or aid – like the governments of Greece or Hungary.

Money will return to Russia as global oil prices rise and sanctions are withdrawn or run out. The emergence of the Russian economy may be sluggish – the past eighteen months did great damage to such vital elements of investment and cooperation as trust and existing networks – but there will be a recovery. For the EU, it does matter who benefits from this recovery. Admittedly, most of the money to be made in Russia is still in the energy sector. But that is a sector with the heaviest presence of the state, and this presence is likely to get even more accentuated as the sector gets reoriented towards China, a partner that the Russian elite fears much more than they do Europe.

On the other hand, the present economic and the simmering political crisis may offer an opportunity for novel industries, independent of the Russian state, to emerge. The EU should actively support investment into these sectors and initiatives, whatever they are and wherever they pop up, while also actively seeking to build relations with the liberal-minded, pro-Western opposition: not only Alexei Navalny and PARNAS, Boris Nemtsov’s party, but all groups and officials suspected of having a stake in normalising relations with the West.

Forget the flawed argument that this is direct meddling in the domestic affairs of another country and is therefore inexpedient or dangerous. In fact, both of the other solutions: leaving things as they are – and giving rise to a potentially worse leader in Russia than Putin – and making concessions to Russia – and thus emboldening Putin – are more dangerous than an active and assertive foreign policy.

This, however, will need more than Schröders sipping beer with Putin in the banya.

This entry was posted in Kremlinology, Policies and tagged , , , , , , , , . Bookmark the permalink.