Putin The Rational Actor?

Things are moving quickly in Ukraine, and it seems that everyone has an opinion.  Many of the long-time Russia watchers have been saying “I told you so”, but as usual, that is annoying and unhelpful. 

At this point, the question must be asked, “What if Putin is not a rational actor?”  And if he is not a rational actor, what happens then?  Does Russia’s Defense Minister, Sergei Shoigu, follow through anyway?  My gut says yes.  And after the heights of pandering that were reached at the Federation Council on Saturday night [http://www.youtube.com/watch?v=mlc4-VMDlOM&feature=youtu.be], it is safe to say that there are no checks on Putin’s power.  And who can or will challenge Putin at this point?  It is becoming clear that the West will not or cannot act in a meaningful way.  There were rumours floating around last night about Germany dragging their feet on revoking Russia’s membership in the G8.  And NATO’s statement last night echoed support for Ukraine’s sovereignty [http://www.nato.int/cps/en/natolive/official_texts_107681.htm], but gave no consequences for what would happen if Russia did not honor it.

Lithuania and Poland reportedly called for consultations according to NATO’s Article 4 [http://www.lithuaniatribune.com/64476/lithuanian-polish-presidents-call-for-nato-treaty-article-4-consultations-201464476/], but the Rasmussen denied this at a press conference last night.

Even the option where Tymoshenko goes to Moscow and hands over Crimea to Putin, but heroically averts World War 3, is off the table.  But I would not exactly discount that at this point.  Maybe it would not be Tymoshenko, but another Ukrainian politician.

So the answer lies with Dmitry Medvedev’s government.  But it has been declawed and defanged.  The final humiliation in September 2011 was… well, it was final.  Former Finance Minister Alexei Kudrin threatened dire economic costs for taking Russia to the brink of war [https://twitter.com/Aleksei_Kudrin/status/439774457453092864], but he is not even in the Government anymore.  The current Finance Minister, Anton Siluanov, is probably also unhappy, but he doesn’t have much clout either.

The Ministry of Defence is probably eating this up. I imagine that they have dreamed of this for years.

And who else is there?  There isn’t anybody.  There is no respected voice of reason in the Russian establishment who is willing to speak up and call this a massive miscalculation.

Even if there were a group large enough or powerful enough to oust Putin, who would or could they replace him with?  How do you reconstitute Putinism without Putin [https://twitter.com/MarkGaleotti/status/440015534533660672]? You cannot.  It is impossible.  The whole system (and all that lovely money) would collapse.  But it may do so anyway.

In the end, Putin has fractured his own elites to such an extent that a coup is nearly impossible.  They could not coordinate an overthrow because they’d be too busy bickering over who got what and how much.  And forget an agreement on a replacement.  They had a compromise figure in Medvedev, and that completely failed. 

So where does this leave us?

Putin sits down for talks, pushes the Western powers as far as he can (everything east of the Dnipro?), and declares himself “satisfied”.  Then whatever is left of Ukraine becomes a kind of buffer state with Polish and Lithuanian troops protecting it.  And this becomes the status quo until something else goes wrong. 

 

Kudrin vs Sechin

There has been a story floating in and out of Russian politics for a while regarding former Finance Minister and Deputy PM Alexei Kudrin.  It went like this: Kudrin was the leader of the economic liberals, and a counter-balance to Deputy Prime Minister Igor Sechin, and his clan, the siloviki.

And, the narrative continued, Alexei Kudrin was the only person preventing the siloviki from dipping into the pot of money called the Stabilization Fund (a kind of rainy-day investment portfolio created for when oil prices dropped). The siloviki, the rumour mill alleged, wanted to use the money to improve infrastructure.  Finance Minister Kudrin, however, wanted to keep that money safe for its intended use: riding out any future financial crisis.

After Kudrin’s dramatic exit on Monday (video here; and English transcript here), I’ve started to wonder if the story was all fake: something that Kudrin made up and then leaked in order to make himself seem more powerful in the eyes of the West.

We may never know, but it will be interesting to see if Putin ends up authorising any withdraws from the Fund in the coming months.

P.S. I do have some reactions to the decision of the Tandem to swap, but after poring over so many others’ reactions, I may just end up doing a summary.

Retirement

Alexei Kudrin & Co (Deputy Finance Minister Shatalov, specifically) are still pushing for a gradual increase in the retirement age.  Shatalov was on Ekho Moskvy on Tuesday trying to promote this among the population that listens to EM (any ideas on their demographic?).  Apparently, Alexei Leonidovich is getting frustrated with the lack of movement on this issue.  Of course, in an election cycle, the subject is the 3^rd rail, as we like to say in the US, and why would a person with a populist agenda (Putin, in case you were wondering) want to touch it?

VTsIOM Poll

VTsIOM conucted a poll recently on the members of the Government, and I was kind of surprised by the results.

First of all, Sergei Shoigu has the highest approval rating of anyone in the government (people were not asked about Putin).  I have mixed feelings about Shoigu.  He has held the post of Emergency Situations Minister since Boris Yeltsin came to power.  On the one hand, I feel like he must be doing something right, and his approval rating has always been pretty high.  But then yesterday’s incident makes me pause to think.  His solution to the Bulgaria tragedy is to put black boxes in all boats.  What?  That’s his response?  Quite frankly, the man has never been good in an “emergency” (Beslan, Dubrovka, etc.), and I’m still not sure where he is getting such high numbers.  Unless people are just saying that they like him because they know who he is (he has been in the Government since 1991, after all).  That’s the only thing I can come up with anyway.  Also, presumably, the poll was conducted before the Bulgaria tragedy.

Here are some more numbers:

• Sergei Lavrov — 47% approval rating.  Okay, I’ll buy that.  He’s one of the most public figures of the Government since he is the head diplomat.
• Sergei Ivanov — 32% approve of the job he’s doing (or have heard of him, anyway).

And the lows are:

• Andrei Fursenko — 50% disapprove of the job he is doing.  Hardly suprising since he’s the face of education “reform”, and most teachers are upset about it.
• Tatiana Golikova — 41% disapprove of the job she is doing.  What is she doing, anyway?  I don’t even know.
• Alexei Kudrin — 34% disapprove of the job he is doing.  Well, he’s not exactly populist, is he?  And I doubt he’s really out to win any popularity contests.  But then none of these people are, are they?  Their job doesn’t depend on what the general populace think of them.  It only depends on what Putin and Medvedev think of them, and their work.

Some other numbers:

• 75% of people don’t know who Igor Sechin is;
• 72% don’t know who Vyacheslav Volodin is; and
• 71% have never heard of Igor Shuvalov.

I was a little shocked when I saw those numbers, but I bet if you asked Americans the same questions about their Government, they would say the same thing.

Kudrin for PM?

This WSJ article showed up in my Google Reader this morning (several days late), and since I am following the so-called elections pretty closely, I thought it would be an appropriate lead in to some things I’ve been thinking about.

Here is what the article claims:

Several members of Moscow’s elite business and economic circles have suggested that Mr. Putin may run for president and, when he’s inaugurated, select longtime Finance Minister Alexei Kudrin as the country’s next prime minister.

I can see why this alternative would be attractive to people, particularly investors (as the article says later).  I personally am a huge fan of Alexei Leonidovich.

But here is why this is wrong: first of all, the qualities that make Kudrin a good excellent MinFin are not necessarily the qualities that are needed for PM: “…he is seen as a fiscally conservative, clearheaded technocrat with an almost single-minded focused on reining in budget spending.”

If Kudrin were PM under Medvedev, it would be more believable (you need someone conservative to kind of hold Medvedev back, I think).  But as a balance to Putin, which is this author’s premise, Kudrin would not be a good choice.

Also, lest we forget, Igor Sechin is the counter-balance to Kudrin, and putting Kudrin over Sechin would not really mesh with the way VVP “leads”.

So that’s where I am going with this.

P.S. I really am going to write the piece about the Presidency, I swear!

Kudrin vs Naibiullina?

Roland Oliphant’s article in The Moscow Times on if Russia needs to increase the tax base caught my eye because he sort of implied that Elvira & Alexei have had a bit of a falling out.  And actually over some ideology/economic points rather than it just being a power struggle (though that may also be part of this).

I know I don’t get econ very much, but I understand budgets because everyone has to keep one.  Also, I am something of an expert on the way VVP’s mind works (not bragging, just stating a fact).

So, a few things here: I don’t think that it is fair to say that one of these ideas is better than another.  Elvira & Alexei Leonidovich are coming at this from two different positions because that is what their jobs dictate.  Alexei is supposed to create a budget, and manage it, and keep everyone else on it, too.  And Elvira is supposed to figure out how to grow the economy and sustain long-term growth.  So, combine the two, and work it out.  The retirement age definitely needs to be discussed.  The gap between men and women needs to be evened out somewhat, if nothing else.  Also, since both men and women of retirement age work in the shadow economy anyway, I don’t think that increasing the age would be that bad.  They’d still be paying in, and you’d decrease the number of people who are pensioners.

Meanwhile, VVP is totally playing the two off each other, and I can only conclude one of two things.  Either it makes Alexei Leonidovich work harder & better (i.e. he is motivated by the negativity), or VVP just gets a perverse pleasure out of doing it.  I would go for the latter, but I do kind of wonder about Alexei Leonidovich…

Davos Attendees

I searched all over to find out this info.  For some reason, the Finance Ministry has not published it.  However, I persevered, and found it on a news website called “The Voice of Russia”.  For the record, the main Russian representatives at Davos this year are: Alexei Kudrin, German Gref, and Elvira Nabiullina.  Kudrin is also scheduled to give a speech “on the chronicle of new growth to a forum session.”  I am not sure what that means, but I will find and post the speech as soon as I find it.

Kudrin’s Deputies

I am not sure why Putin feels the need to add additional people to the Government structure, but he has done so again.  According to The Moscow Times:

Prime Minister Vladimir Putin appointed Alexei Savatyugin to be a deputy finance minister, the government said in a statement Thursday.

Putin signed an order at the end of last year creating an additional deputy position for Finance Minister Alexei Kudrin, giving him an eighth.

Savatyugin has headed the ministry’s department of financial policy since 2004 and has board seats at Rosgosstrakh, Sberbank, the Mortgage Lending Agency, Rosselkhozbank and the Deposit Insurance Agency.

Surkov & the Civiliki

As you may or may not have noticed, I am a bit obsessed with Slava Surkov.  It has gotten to the point where even I wonder if I have imbued him with more qualities than he actually possesses.  So, I was surprised to discover myself a little sceptical of Stratfor’s breakdown of the clans within the Kremlin.  I do not disagree with the essence of what Friedman says, but with certain facts, and his interpretation of those facts.

George Friedman

on the issues facing Medvedev, Putin, and the Tandemocracy.  According to Friedman, Putin is setting up Medvedev, and Kudrin to take the fall should the new policy of selling off state-owned corporations fail.  Interesting stuff.

Kudrin vs Luzhkov

For awhile I thought that Kudrin was the weakest man in the Government.  I revised that point of view a few months ago for several reasons.  First of all, Igor Sechin has gone after him several times over the past few years, and Kudrin has stayed on.  At first I could not figure out why.  But I thought about it, and I realised that Kudrin has shown that he is basically loyal.  Plus, Kudrin gave Putin a place to stay when the latter first moved to Moscow.

It is a reciprocal relationship.  Putin values loyalty above all else.  He expects it.  At the same time, he is perfectly willing to reciprocate.  And he will, as long as the other person remains loyal.  But the minute there is a hint of disloyalty, you can kiss your job good-bye.  So, for the time being, it appears as though Kudrin is safe.

I have discussed Yuri Luzhkov several times over the past week or so.  Rumours abound as to his position (and the election last weekend did not appear to make him any safer).  However, I still maintain that he is safe, though considerably weaker than he was a year ago.

In light of all that, this story seems kind of weird.  I am not really sure what is happening here.  The article makes it sound like the two supposed weakest people are attacking each other.  I am more inclined to believe that Kudrin is acting as attack dog for the Government in an effort to further weaken Luzhkov.

Classic Quote from Yuri Luzhkov: “Kudrin will achieve in 2010 what not even the Germans managed to do in 1941 — to halt the works at the metro”.

In Other News

that may or may not be related to the clan wars, the Head of the National Banking Council was fired yesterday.  Of course, the article never used the word “fired” because people are not fired in Putinania.  They are “removed” or “transferred” (or they die, which may be the same as “removed”, but I am not sure).

According to the article in The Moscow Times, Anatoly Aksakov was “removed” because he “…drew widespread criticism for suggesting that the ruble should be devalued.”

Boris Gryzlov (whom I have nicknamed “Boris the Boring” because of his droning voice) apparently led this attack.  However, I doubt that is the full story.  Boris would never actually do anything without prior approval from someone higher.

The other thing I find interesting about this story is that there were three abstentions.  You will note, of course, that not one person on the 11 person committee voted against removal.  They may have thought that this attack was unprovoked, and silly, but not one of them actually stood up and said so.  Instead 3 people (we are not even allowed to know who) abstained.  Abstaining is, of course, the wimpy way of saying “no”. If you are going to say “no”, you should really go all out.  On the other hand, the individuals representing the Government and Presidential Administration are all at risk of losing their jobs should they step out of line, so you can hardly blame them.  It would just be nice to see Alexei Kudrin (or anyone really) take a stand for once.