Will Moscow Turn Its Back on ‘Systemic Liberals’?

Recently, the so-called “national-patriotic” elite in Russia have intensified their attacks on the government’s financial and economic bloc. On April 21, well-known Russian propagandist and economist Mikhail Khazin revealed, “Liberals remaining at their posts in the Central Bank and Ministry of Finance significantly contribute to the worsening of the economic situation in the country.” As such, the propagandist proposed a large-scale purge to “put an end to the damage” (Deita.ru, April 21).

Some of Khazin’s colleagues go even further, repeatedly calling for the repression of “systemic liberals” on the main propaganda show in Russia, “Evening With Vladimir Solovyov.” In their words, the current management of the Russian Central Bank sabotages the orders of President Vladimir Putin and takes money out of the country, as, according to these officials, what is happening in Ukraine is “not their war” and they want it to end (YouTube, April 18).

In the past, open attacks on the leadership of Russia’s economic and financial bloc had continued until Moscow’s full-scale invasion of Ukraine in February 2022. In 2014, one of the best-known ideologues in modern Russia, Aleksandr Dugin, characterized this group as a “sixth column”—that is, traitors in power close to Putin (Vzglyad, April 29, 2014). Since then, representatives of the “radical patriotic” movement and the Russian security services have regularly referred to the members of this bloc as “vermin” (Km.ru, December 23, 2021).

The idea that the Russian Central Bank is acting against the country’s interests on behalf of the West has become one of the components that, today, dominates the myth of “the neo-colonialist yoke” from which Russia can free itself only thanks to the war in Ukraine (see EDM, February 22, 2022). Independent journalists have correctly pointed out that the guise of ideological confrontation conceals a banal struggle for power and access to budgetary resources (1line.info, March 28, 2019). This is logical considering that the ambitions and influence of the security forces in Russia are growing steadily; nevertheless, they still cannot determine the country’s economic policies.

Since the beginning of Russia’s all-out aggression against Ukraine, attacks of the “radical patriots” on the so-called “systemic liberals” have increased. Not only propagandists but even State Duma deputies have accused the Ministry of Finance of “funding the enemies of Russia” (Rodina.ru, May 23, 2022). Putin himself has added more fuel to the fire with his constant repetition of the idea that war against “the neo-colonial West” was unavoidable (Kremlin.ru, October 27, 2022) and his calls to “ensure the economic sovereignty of Russia” (Regnum, March 29).

For their part, independent experts emphasize that the shortcomings in the Russian Central Bank’s policies have nothing to do with foreign influence. According to Russian economist Vladislav Inozemtsev, Central Bank management is sometimes too cautious in increasing the money supply domestically. On the eve of Russia’s re-invasion of Ukraine, he pointed out that the economic sovereignty of Russia was not threatened by the United States, but rather by China (see EDM, February 22, 2022).

For nearly a year after the beginning of the war, Inozemtsev stated that the Russian Central Bank actually saved the domestic economy after the imposition of Western sanctions. Additionally, according to the Russian economist, without the limitations on the movement of capital and orders for the mandatory sale of foreign exchange earnings of exporters, an economic catastrophe would have been inevitable (Newizv.ru, December 18, 2022). Russian economic observer Sergey Shelin also suggests that the Russian economy is much more effective than the former Soviet system. He says that saving it will allow the Kremlin to wage a long war in Ukraine and weather the current wave of massive military expenditures (Svoboda, February 1).

As an alternative to the current leaders of the financial bloc, Russian security services have considered Putin’s former advisor and current Minister for Integration and Macroeconomics of the Eurasian Economic Commission Sergei Glazyev, who has the reputation as a “fiery statesman” and “anti-Westernist.” At the same time, Glazyev is one of a few who openly admitted that it is “the number of victims among the Ukrainian population that consolidates public consciousness on the basis of hatred for Russia,” and the prolongation of the war leads to the actual “de-Russification” of Ukraine. However, for all these problems, including losses on the frontlines and the mass departure of technology specialists from Russia, Glazyev lays total blame on the Russian Central Bank (Tsargrad.tv, October 17, 2022).

The former presidential advisor suggests only “administratively fixing the ruble exchange rate” and buying goods from China that are inaccessible to Russian business (Lenta.ru, August 24, 2022). He also recommends the introduction of elements of the Soviet planned mobilization economy “with extensive market tools” (Vedomosti, August 24, 2022). At the same time, independent experts note that it is precisely the restoration of a Soviet resource-squeezing scheme that will crush the domestic economy (Svoboda, February 1), and a further increase in the role of the security forces in government will deplete the Putin regime’s resources and lead to its ultimate demise (Novayagazeta.eu, March 27).

The Kremlin also understands this aspect. Despite his “anti-colonial” rhetoric, Putin clearly has no intention of abandoning the “systemic liberals” who seemingly keep his regime alive. However, the radical patriots will continue to demand “genuine sovereignty” and “fight against vermin.” Even against the backdrop of demonstrably cruel sentences against dissidents, it is becoming clear that the machinery of repression is also beginning to affect Russian officials themselves as well as the security forces (Zona.media, April 17).

For example, on April 20, the Moscow City Court arrested former Deputy Prime Minister of Culture Olga Yarilova. Media reports say that she has been charged with embezzling 125 million rubles ($1.5 million) (Gazeta.ru, April 20). Around the same time, the Russian Federal Security Service began investigating almost all the police detachments in the center of Moscow, searching for leaks of important information to Ukraine (RBC, April 19). The recent ratification by the State Duma of life sentences for treason also demonstrates that the search for “enemies of the people” will continue (Svoboda, April 18).

It seems that, for the time being, Putin will be able to contain the attacks of the Russian security services on the government’s economic and financial bloc by “paying them off” through stealing funds from other officials and dissidents. However, judging by current trends, the growth of the Russian security services’ collective power within the government will continue, and their ambitions will grow larger. This means that, eventually, those who today preserve the Putin regime may soon find themselves on the chopping block.