Publication: Prism Volume: 8 Issue: 3

By Aleksandr Tsipko

In recent days, practically the whole of Russia’s expert community has once again become preoccupied with the problem of Putin, assessing him both as an individual and as the nation’s president. Every high-profile gathering of the elite in Moscow, including a seminar run by the Moscow office of the Carnegie Endowment, and the Politika-93 Club, has attempted to answer the same question: Where do we go from this quasi-democracy?

This heightened interest in the Putin regime is based not on any threat to democracy or freedom of speech to which he might be perceived as presenting as an authoritarian figure, but on something quite different. In recent weeks, Russia has been growing increasingly anxious about Putin’s Hamlet syndrome, whereby he cannot decide how to deal with the problems facing him. Amongst these is the struggle between the Family and the new Petersburgers. Then there is the need to formulate a response to U.S. military expansionism in the post-Soviet space. And there is also the response to his proposed liberal reforms. At the moment, almost every serious political analyst and sociologist is writing or saying that Putin is not actually the man we thought him to be, that his image as a tough, statist former spy, capable of taking responsibility for unpopular decisions and capable of dragging Russia out of the quagmire of Yeltsinism, is no more than a fabrication. In recent weeks, everyone seems suddenly to have noticed that nothing is actually changing in Russia at all. The economy is stagnating again. Crime is on the increase, prices are rising again, and the backlog of unpaid wages is piling up, just as in Yeltsin’s time.

Even liberally inclined experts are beginning to accuse Putin of Gorbachevism, of inconsistency, of trying to stand aloof from the infighting until a winner emerges. On that point, it was observed at the Carnegie seminar that Putin is not only standing aloof, but distancing himself dangerously from everyone involved–left-wingers, liberals, the siloviki from the security and armed services, and big business. Putin is seen as losing his support both in the security structures and in the regions–everywhere, in fact. His high rating persists only out of inertia and because of the absence of any credible contender. But this cannot last long. At any moment the whole thing may come tumbling down, just as Gorbachev’s popularity did before. And, with the possible exception of Berezovsky and Gusinsky, the overwhelming majority of the political elite is extremely alarmed by this prospect.

Underlying these attempts to reassess Putin’s image is a fear of growing political uncertainty. It has suddenly become clear that Putin himself does not have any special role to play, that he is a product of the times and of the existing balance of forces. It is being suggested with increasing frequency that the era of stability which accompanied Putin’s rise to power in 2000 may soon be at an end.

What Russia fears most of all, though, is the state of the economy. Inflation is eroding recent increases in earnings and pensions, and once again there is persistent talk of rising levels of nonpayment of wages to public sector workers. The country has almost no resources to deliver Putin’s promised wage increase for the doctors, teachers and municipal employees who get their salaries from the state budget. As became clear in February, there were no real resources to underpin the government’s plans to index-link pensions and earnings. And the regions, which in 2000 forfeited to Moscow a significant proportion of their tax revenue, simply do not have the funds to pay their 50-percent share of these increased wages and pensions. Even the pro-Putin Federation Council was forced in its February session to raise the subject of a new redistribution of tax revenues. The main effect of this situation is to undermine Putin’s electoral base, which consists for the most part of those paid from the state budget, employed in the state sector. The new wave of underfinancing has now hit the Defense Ministry. When the deputy speaker of the State Duma, Georgy Boos, announced at the beginning of February that the government was covering up a huge deficit in the budget for financing the army, the scandal had widespread repercussions. Even Defense Minister Sergei Ivanov, during a recent visit to troops in Leningrad Oblast, admitted that the state of the army was unsatisfactory. The army wants Putin to provide them with better allowances, new accommodation and improved status for men in uniform. But all Putin can do is to award them new banners, insignia and titles.

The truth is that Putin can do nothing about the negative trends developing in the economy. In 2001, the investment climate worsened noticeably: Direct foreign investment fell in absolute terms by 10 percent and, as a proportion of that year’s overseas capital investment in Russia, it fell from 40.4 percent to 28 percent. Overall, the dominant financial trend has been towards a flood of portfolio speculations. In other words, the world’s speculative capital has once again begun to pour into Russia. Ordinarily this might be considered a sure sign of an imminent financial crisis, since saturation of the market with portfolio investments and credits generally foreshadows a subsequent outflow of capital from a country, to be swept away into the world’s financial oceans through speculative transactions involving shares in leading Russian companies and the payment of interest on credits. It is significant that last year–thanks to a sharp increase in activity by foreign financial capital, with portfolio investors and banks raising the credit ratings of Russian borrowers–the total volume of investment rose by 30 percent, which was exactly the same percentage as the fall in the country’s tax revenues in February this year. In other words, an influx of portfolio investments is by no means indicative of the economy’s health.

One gets the impression that in this complicated economic situation, the Putin team is being tossed back and forth between two conflicting approaches, with no clear strategy on any single serious problem. In his annual address to the Federation Council in April 2001, Putin spoke of a new liberal revolution, involving the future commercialization of the housing and utilities sector and the need to pay for communal services in full. But by the beginning of 2002, under pressure from popular disapproval, Vladimir Putin and his economic development minister, German Gref, were already saying the exact opposite, announcing that reform of this sector would take a long time and that the introduction of 100 percent payments for communal services was not a top priority objective for the government. But literally a few days ago a high-ranking government official reaffirmed that Cabinet ministers intend to make the switch to full payment in the next two years, and he stressed that only 21 percent of families could expect to receive any housing subsidies.

Similar inconsistencies can be seen in Putin’s line on the country’s natural income and the allocation of licenses for the exploitation of mineral resources. It was not so long ago, in 2001, that Putin was speaking directly about supporting big capital and big business. At that time, in Putin’s inner circle at least, nobody wanted to hear anything about the problem of the natural rent and the deplorable fact that huge profits earned from the export of mineral resources were going straight into the off-shore accounts of corporate managers. But this year Putin’s stance changed. In conversation with the Chairman of the Union of Industrialists and Entrepreneurs, Arkady Volsky, Putin unexpectedly raised the subject of who Russia’s natural income actually belongs to. At the same time, a question was raised in the State Council about the granting of licenses for the extraction of precious minerals. Yet the matter got no further than the discussion stage. And in fact, in recent weeks the position of the oil lobby, for which Prime Minister Mikhail Kasyanov is a prominent spokesman, has grown considerably stronger within the government. The fact is that the super-profits continue to fill the coffers of the oligarchs. In 2001, according to Forbes Magazine, the assets of Sibneft chief Roman Abramovich grew by over a billion dollars. Seeing this, Russians cannot see the sense of Putin’s economic policy.

What is especially damaging is that the inconsistency in Putin’s policies is sensed not only by the elite but also by the ordinary people, his electors. Russia is confused, unable to understand what the aims and values of the authorities actually are. During the recent Winter Olympics, all the media and TV channels ran a loud, almost hysterical patriotic campaign in defense of our sportsmen and women, who were supposedly slighted by the Americans. The President himself joined in the campaign: He was sharply critical of the judging of the ice-hockey match between Russia and the Czech Republic. Even Patriarch Aleksy II came out in support of the Russian athletes. Yet just a few days later, the Russian authorities took fright at the anti-American sentiment they had stirred up and began to present the situation in a completely different light. Now it seems that the real issue was not the judging at all, but the dire state of Russia’s sporting infrastructure, which prevents our sportsmen from preparing adequately for the Olympics. Such a change of tack by the media and TV, which is traditionally trusted by the public, causes confusion and undermines confidence in the authorities. And all this, of course, works against Putin, who is regarded in Russia as the personification of authority.

Moscow’s official reaction to the presence of American instructors in Georgia has been exactly the same. Initially there were indignant protests both against U.S. expansion into the Caucasus and against the proximity of American forces to our border. Politicians were saying almost unanimously that the American presence in Georgia is a threat to our national interests, and that we should take control of Abkhazia and North Ossetia. A declaration is being drafted on these lines in the Duma. But two days later, while attending the CIS summit in Almaty, Putin was saying that we should not overdramatize the situation, and that nothing untoward has happened. Moreover, he began to defend Shevardnadze’s decision and to say that the Georgian leader has the same rights as the leaders of Kyrgyzstan and Uzbekistan, who have made their air bases available to the airborne forces of the United States and NATO. Of course, no one was seriously expecting Putin to announce that Russia was going to annex Abkhazia and South Ossetia, although he was clearly obliged to affirm his positive attitude to Russia’s territorial integrity. But he was generally expected to declare at least that the Caucasus was a region within Russia’s national and state interests. Yet as usual he fudged the issue, muttering something incoherent.

Not so long ago, Putin won Russia and the Russian people over with his determination to defeat Chechen terrorism once and for all. Now the policy he is offering Russia is one of vacillation and reconciliation, smoothing the sharp corners and edges. Perhaps this new, non-confrontational Putin is what Russia really needs. Everyone appreciates that a Russia that is weak, especially in economic matters, is in no position to make demands or fine gestures. People are starting to see that Putin cannot in reality make a decisive break with the Family, since the list of candidates from which he can pick his team is extremely limited, and that today stability takes precedence.

But there is still that unique Russian psychology to reckon with, which swept Gorbachev, and the USSR with him, from the political scene. Russia does not like and will not tolerate complicated, equivocal, hesitant leaders with Hamlet complexes. The people cannot understand how, on the one hand, Putin can permit his prosecutor general Vladimir Ustinov to launch an investigation into the president’s chief of staff Aleksandr Voloshin, while leaving Voloshin in charge at the Kremlin, free to take retaliatory measures and to defend the interests of the Family. Even more exasperating to the ordinary citizen is the TV-6 saga. He understands that Yevgeny Kiselev’s team lost their broadcasting rights chiefly for political reasons. But he cannot understand why the Kremlin oligarchs, all of them closely linked with Putin, should then come to Kiselev’s aid, effectively boosting his standing and authority, despite the general perception that he is an opponent of Putin. All this is regarded by the average Russian as patent weakness on the part of the President, and as evidence of his inability to uphold his authority and maintain his dignity. Such are the realities of Russian political life, as a result of which Putin is losing face.

It is hard to explain why Putin is doing nothing to protect his reputation as the country’s leader. After all, unlike Gorbachev, Putin does understand the Russian psychology perfectly, and understands perfectly that the people are looking to him for unambiguous decisions and unambiguous policies. But they can only see what they see. And in contrast to a floundering Putin, what they do see is a self-assured Kasyanov. In recent days, it has been noticed that the TV channels are dominated by the Prime Minister. And rumors are creeping around Moscow that Putin will only be allowed one term in office, to be replaced by Kasyanov as President. Rumors are rumors, and probably should not be taken seriously, but facts are facts, and the fact is that there is a growing mood of uncertainty and lack of confidence in Russia’s future.

Aleksandr Tsipko is a senior associate at the Russian Academy of Sciences’ Institute for International Economic and Political Research and a columnist for Literaturnaya Gazeta.