Thursday, December 18, 2014


The Power Vertical

A 'Kompromat' War Of All Against All

President Vladimir Putin (left) and Prime Minister Dmitry Medvedev meet in the Kremlin in May.
President Vladimir Putin (left) and Prime Minister Dmitry Medvedev meet in the Kremlin in May.
Is it an anti-graft campaign? A purge of the elite? Or the start of a clan war?
 
When police raided and searched the home of Rostelekom CEO Aleksandr Provotorov last week, it marked yet another chapter in what the Russian media has been describing as a Kremlin-backed war on corruption.

The search was part of a probe into Marshall Capital, where Provotorov was a partner before becoming head of the state-run telecommunications giant in July 2010.
 
Investigators are looking into whether Russagroprom, a now bankrupt subsidiary of Marshall Capital, fraudulently received -- and then defaulted on -- a $225 million loan from the investment bank VTB Capital in 2007.
 
The home of Konstantin Malofeyev, current head of Marshall Capital, was also searched. For the time being, prosecutors are describing Provotorov and Malofeyev as "witnesses" in the case.
 
With all the other corruption probes out there -- from the procurement scandal that brought down former Defense Minister Anatoly Serdyukov to the probes into financial malfeasance in the Regional Development Ministry and the Global Navigation Satellite System (Glonass) -- what makes the Rostelekom case so noteworthy?
 
Well, for one thing, Provotorov is considered a close Putin ally. He served as his protocol chief, he was made head of Rostelekom with Putin's support, and in July the Kremlin leader awarded him a Medal of Honor.
 
"This is in fact an attempt to replace the manager of one of Russia's largest companies, who is under the Kremlin's political patronage," Tatyana Stanovaya, head of the analytical department for the Moscow-based Center for Political Technologies wrote in Politcom.ru.
 
Moreover, Russian media has reported that Prime Minister Dmitry Medvedev has been trying to remove Provotorov at Rostelekom and replace him with Vadim Semyonov, the head of state telecoms holding company Svyazinvest and an old law-school classmate of the premier's.
 
"The conflict is reaching the very top, splitting the vertical. The battle line is passing between the government and the Kremlin," Stanovaya wrote.
 
Additionally, the assault on Provotorov comes on the heels of the dismissal of Serdyukov, which some commentators interpreted, at least in part, as retribution against the former defense minister for cozying up to Medvedev late in his presidency.
 
"In the last two years of Dmitry Medvedev's presidency, Serdyukov increasingly sought and found support specifically in the Kremlin rather than the White House, where Putin was installed at the time," Yevgenia Albats recently wrote in "Novoye vremya."

Most notably, Albats wrote, Serdyukov used Medvedev's backing -- over Putin's objections -- to increase spending on armaments from 2011-20 from 13 trillion rubles to 20 trillion rubles ($409 billion to $630 billion).
 
So is it that neat and clean? Simple tit-for-tat?
 
I'd be very cautious of interpreting the Rostelekom case as Medvedev's answer to Serdyukov's dismissal.
 
First of all, with his political obituary being written almost daily in the Russian press Medvedev is politically very weak right now and I doubt he would be able to launch such a frontal assault on a close Putin ally.
 
Moreover, although Serdyukov did in fact use Medvedev to get his defense budget hike back in 2011, it would be a bit of a stretch to call him an ally of the prime minister. He simply played one side of the tandem against the other to get what he wanted -- and probably paid the price for it with the famously vindictive Putin. He also had many enemies within the military. (It also probably didn't help Serdyukov that he lost an important political patron when his marriage to the daughter of Putin crony and Gazprom Chairman Viktor Zubkov broke up.)

Moreover, the battle for control of Rostelekom is a complex game with numerous powerful players and many moving parts -- and not a straightforward battle between "Putin's people" and "Medvedev's people."
 
What the case does indicate, however, is that the campaign against corruption -- which Putin may have intended to be a public relations trick, a purge of the ruling elite of disloyal elements, or both -- is perilously close to spinning out of control with unpredictable consequences.
 
"What happened largely indicates the beginning of ferment within Russia's ruling class, an escalation of the fight for resources and of uncontrollable conflicts that the Kremlin is unable to regulate without damaging its own reputation," Stanovaya wrote in Politcom.ru.
 
"Wars of all against all are being waged and their causes have absolutely nothing to do with the Kremlin's intentions and are most likely developing in spite of the regime's priorities."
 
-- Brian Whitmore

NOTE TO READERS: Be sure to tune in to the Power Vertical podcast on Friday November 30, when I will discuss the issues raised in this post with co-hosts Kirill Kobrin of RFE/RL's Russian Service and NYU professor Mark Galeotti, author of the blog "In Moscow's Shadows."

NOTE: THIS POST HAS BEEN UPDATED

Tags: Vladimir Putin,Russia corruption,Dmitry Medvedev,Rostelekom,Aleksandr Provotorov,Russian clan warfare

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by: Russian Defense Policy from: USA
November 29, 2012 20:15
Some food for thought...don't know about the Albats argument re Putin getting back at Serdyukov. The 13 trillion which turned into 20 (22 actually, 19 for MOD and 3 for other power ministries) was for the State Armaments Program (GPV) 2011-2020, not for the defense budget. The 13 trillion was what Kudrin wanted. Otherwise, the White House and Kremlin seemed happy to have it higher. About this time, Putin became a real champion of domestic arms makers (over foreign suppliers), and of the GPV. Awaiting his return to the Kremlin, Putin played this hand very hard. Now, ensconced there again, perhaps he's tacking back against an expensive weapons procurement effort. Fighting corruption is popular. Russia might save money. Serdyukov takes the blame. Serdyukov and Medvedev can also take the blame for military reform (that Putin himself recognized was necessary when he appointed Anatoliy Eduardovich in February 2007 to come to grips with the MOD's "financial flows" -- he and his team did that, didn't they!). You are right, the game is definitely complex and anything but straightforward. Thanks for what you write, keep at it.
In Response

by: Brian Whitmore from: Prague
November 30, 2012 11:08
Thanks for the input. That is all indeed good food for thought, and possibly fodder for a future post (especially the bit about Putin and the GVP). Serdyukov clearly got sacked for a variety of reasons. The officer corps hated him b/c of defense reform;,he annoyed Putin by playing politics with the Tandem; and he lost Zubkov as a 'krysha' when his marriage to his daughter broke up. Should be an interesting discussion on all this in today's podcast.

by: Mark from: Victoria
November 30, 2012 06:42
When you have to cite Yevgenia Albats as a source for your conclusions, you're on shaky ground indeed.

In fact, Serdyukov was appointed by Putin. I would have said he, also, was a close Putin ally. This makes it sound as if he was Medvedev's man, and Putin took advantage of an opportunity to sack him, just to spite Medvedev. Do you think that's what happened, really?

In fact, there were a host of reasons for firing Serdyukov, not least of them being that the military hated him. But Putin not only installed him as Defense Minister, he said nothing when Serdyukov sacked a third of the military leadership in the Central Military Administration. I'd have thought that suggested not only that Putin trusted Serdyukov's judgment, but that Serdyukov felt free to do as he thought best without being second-guessed by the boss.

But by all means go ahead constructing yet another scenario which forecasts a dramatic split in the tandem. I'm just a little worried about the long-term effects of repeated disappointment; but if you're not, press on.

What time is it? Let's all say it together - Sunset for Putin!!
In Response

by: Brian Whitmore from: Prague
November 30, 2012 10:06
Probably a good idea to read the piece before commenting. Like this paragraph, for example:

"Moreover, although Serdyukov did in fact use Medvedev to get his defense budget hike back in 2011, it would be a bit of a stretch to call him an ally of the prime minister. He simply played one side of the tandem against the other to get what he wanted -- and probably paid the price for it with the famously vindictive Putin."
In Response

by: Mark from: Victoria
November 30, 2012 17:54
Probably be a good idea to read what you wrote before rebutting. Like that paragraph, for example.

"...although Serdyukov did in fact use Medvedev to get his defense budget hike back in 2011, it would be a bit of a stretch to call him an ally of the prime minister." Oh, I'm sorry - was Medvedev Prime Minister in 2011? I thought that was Putin. Are you talking about the Prime Minister then, or the Prime Minster now? I didn't say anything about Serdyukov being an ally of Medvedev, I said he was an ally of Putin, since he more or less owes his political career to Putin.

You don't think that "He simply played one side of the tandem against the other to get what he wanted" implies yet another split in the tandem?

Are you talking about the famously vindictive Putin who made time to offer to get Masha Gessen, one of his mouthiest critics, her job back although he really had nothing to do with her getting fired from it, she was fired for disobeying a directive to cover a story featuring Putin, and refused because she despises him? That Putin? Yes, he certainly does sound a vindictive bastard, I must say.
In Response

by: Sergio Meira from: the Netherlands
December 02, 2012 13:24
Mark, there you go again with your anti-sunset style. Sigh.

If political pundits and socio-political forecasts were really a science, we wouldn't have such a poor success rate in this area. It's not simply Brian here: it's a systemic problem. Nobody knows the future; we all have opinoins and wishes.

You have a problem with Brian's, clearly, since you spend so much time here doing something that will never, ever influence anything: trying to tell someone that the world may indeed evolve differently than s/he thinks.

But we all know that already. There are no news in that.

Brian likes sunset for Putin, and you don't. You think you're giving a better account of the situation than Brian, but frankly I'm willing to bet that your own personal success rate has not been any better than the typical average for the whole class of political analysts, be they professional ones, like Brian, or archair ones, like you.

So here's my advice: don't keep repeating the same message. We get it already: the world will maybe evolve differently than Brian thinks. That's on the record. Now why don't you start your own blog? You can leave a link here if you want. I'm sure Brian wouldn't mind.

by: Mark from: Victoria
December 03, 2012 01:49
Okay, Sergio. Sorry for boring you. You're probably right; I spend too much time here. See you around.
In Response

by: Andrew from: Auckland
December 04, 2012 07:11
Good riddance if you are leaving Mark. Nobody needs your one eyed defence of an authoritarian, repressive KGB thug who crushes dissent at home eg. killing 45% of the separatist population of a north Caucasus nation, while supporting separatists in neighboring former soviet republics, and conducting ethnic cleansing.
Not to mention his pardon of rapists and murderers from said wars, and his awarding them with medals for their "valor"
His so called economic success was built squarely on the economic reforms, painful as they were, of Yeltsins government, and on the increase in oild prices.
Aside from oil, the Russian economy and industry are a farce.
But hey, if you think his government is so great, why are you living in Victoria? Go to Russia, worship Putin, enjoy the great Russian life!!!
Or are you a hypocrite or useful idiot?

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The Power Vertical is a blog written especially for Russia wonks and obsessive Kremlin watchers by Brian Whitmore. It covers emerging and developing trends in Russian politics, shining a spotlight on the high-stakes power struggles, machinations, and clashing interests that shape Kremlin policy today. Check out The Power Vertical Facebook page or