Friday, November 21, 2014


The Power Vertical

License To Steal -- A Bug Or A Feature?

President Vladimir Putin meeting with supporters in Moscow on December 10.
President Vladimir Putin meeting with supporters in Moscow on December 10.
In a meeting with supporters on December 10, President Vladimir Putin insisted the Kremlin's anticorruption campaign was the real deal and not just for show. Arrests would be made, he added, and punishment for crooked officials was "inevitable."

Should we believe him? There are, of course, plenty of reasons for skepticism. First among these is the fact that corruption is not a bug in Putin's operating system but a feature.

And an essential feature at that.

First and foremost, it's a feature that holds together the power vertical. As the Moscow Carnegie Center wrote in a report released last week, the unwritten contract among the ruling class can be summarized as follows: Officials pledge "fealty toward the Kremlin in exchange for a license to grow super-rich."

Put another way, loyalty buys you a license to steal. Take away that license and what else is there to compel loyalty?

The corruption feature also provides the Kremlin with an invaluable tool to control potentially wayward officials. If everybody is dirty to some degree, then everybody is vulnerable to a veiled threat -- or, if necessary, a targeted prosecution -- if they step out of line politically.
 
A true anticorruption campaign, Gazeta.ru wrote in a recent editorial, "could follow an unpredictable trajectory and overtake practically any member of the current or former political elite."

That, of course, would change the elite contract dramatically and make it increasingly difficult for Putin to remain above the fray.

"The campaign against corruption -- with or without high-profile resignations and imprisonments of high officials -- has enormous costs for the regime, despite all the popularity of anticorruption rhetoric among the masses," Gazeta.ru opined.

"After all, all these outrages did not simply take place before Putin's eyes but were carried out by his subordinates within the framework of the system created by him."

And yet despite this, something has changed. The rules of the game are suddenly different.

In a recent column in "Novaya gazeta," Yulia Latynina illustrated how different by contrasting two corruption cases that broke out back in 2007 to the situation today. (You can read the abridged English-language version from "The Moscow Times" here.)

The first involved Semyon Vainshtok, who resigned as head of Transneft after the Audit Chamber compiled a dossier on his shadowy business dealings. The report was, of course, made to order. The siloviki, the security service veterans surrounding Putin, had long wanted to remove Vainshtok and replace him with their preferred candidate, FSB General Nikolai Tokarev. But Putin insisted that this be done quietly, with no public scandal.

And it was. The Audit Chamber report wasn't made public at the time (although it was later leaked to anticorruption blogger Aleksei Navalny). And Putin rewarded Vainshtok for going quietly, naming him head of Olimpstroi, the state corporation in charge of building Olympic venues for the 2014 Winter Games in Sochi.

First the stick, then the carrot. And the license to steal remained intact.

"Tokarev didn't go public because Putin sent a clear signal: I decide everything and anybody who goes public will lose and will be smacked down immediately," Latynina wrote.

Another 2007 case, one that resulted in the so-called siloviki war, illustrates the costs of breaking this code of "omerta." When Viktor Cherkesov, a KGB veteran and longtime Putin ally who then headed the Federal Antinarcotics Service, went public with a "kompromat war" against other siloviki -- publishing a scandalous article in the daily "Kommersant" -- it eventually cost him his high-profile job (although he later resurfaced as head of a state corporation).

In contrast to five years ago, a whole slew of corruption scandals has gone very public and has gotten very nasty in the past few months -- apparently with Putin's blessing.

The most spectacular of these have been the sacking of Anatoly Serdyukov as defense minister over defense-procurement shenanigans, the firing of Yury Urlichich as head of the Glonass Global Satellite Navigation system over embezzlement allegations, and the documentary on state-run Channel One television about financial machinations involving former Agriculture Minister Yelena Skrynnik.

"The rules of the game have not just changed quickly, but with blinding speed," Latynina wrote.

"Five years ago, each of these scandals would have been resolved behind closed doors, just as the Transneft affair was. Putin would have been the sole arbiter and no compromising information would have been released to the public. This is a major change in Putin's behavior and that of his elite."

So why is Putin changing the rules? Why would he give up both a carrot and stick to control the elite? Why would he unleash potentially debilitating chaos among his subordinates? And why would he potentially put himself at risk?

One reason could be that there simply isn't enough money for servicing the elite's corruption habit to continue to be, for all intents and purposes, a line item in the budget.

And as the Moscow Carnegie Center pointed out in its report, this puts the entire Putin system in a bind:

Beneath the surface, the socioeconomic system of rent-based capitalism is developing cracks. World oil prices are still reasonably high but stagnant and possibly falling, putting the Russian economy at risk. With the economic pie shrinking, there is no more property to redistribute among new members of the elite. The government’s massive social obligations create economic tensions if they are honored and threaten a mass popular backlash if they cannot be met. The Kremlin’s attempt to reconsolidate the elite on the basis of “patriotic self-limitation” changes the rules of the game for those on whom the 'vertical of power' -- the structural hallmark of the Putin presidency -- rests.
 
In other words, economics dictates that the rules of the game for the elite must change. But the politics of the Putin system dictate that they cannot change.

-- Brian Whitmore

Tags: Vladimir Putin,Russia corruption

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Comment Sorting
Comments
     
by: Robert from: Prague
December 12, 2012 14:41
It seems to me that a good sign of a real anticorruption campaign would be if corrupt officials went to prison and the money they stole was returned to the state. What you are describing here is just a bunch of musical chairs. What kind of punishment is it to go from heading Transneft to heading Olimpstroi? Until that happens, I think all these incidents are a lot more about political infighting than they are about corruption.
In Response

by: Brian Whitmore from: Prague
December 13, 2012 12:44
Nobody, least of all me, is calling this a "real" anticorruption campaign. The point of the post is that since corruption in Russia is a feature, and not a bug, then a real anticorruption campaign is next to impossible without crashing the system.

As for the infighting aspect, I addressed that aspect here: http://www.rferl.org/content/a-kompromat-war-of-all-against-all/24785193.html

And here:http://www.rferl.org/content/podcast-anti-graft-campaign-clan-war-chaos/24786086.html

by: Ray F. from: Lawrence, KS
December 12, 2012 19:41
Nice article, although I have a different take on what has prompted this corruption-fight madness. Putin is smart and he can read the banners at the protests and listen to the chatter on the social media. Average Russians are increasingly sick of the rampant corruption, and hoping to take some of the wind out of the opposition’s sails, Putin has launched a campaign to prove that he’s serious about cleaning up the system. Who knows, maybe by targeting some of the more flagrant cases, other bureaucrats will get the message and become less greedy. Legal consciousness could be an evolutionary process, and as modern China appears to indicate, may not be dependent upon democratic elections.
In Response

by: Robert E. from: Arcata, CA
December 13, 2012 20:18
Ray F is on the right track. It is surprising to me that so called "analysts" have not connected the dots of the creation of a "superlative organ" to the FSB, SVR and GRU last year and the serious anticorruption campaign it is now engaged in. The Investigative Committee is only starting to clean house. Using the same forensic accounting procedures it runs on political opposition characters (looking for a money trail back to Virginia), they are taking on large scale corruption. The reason is that corruption has now become an actual existential threat to the State. Wake up, boys. You seem to be asleep at the switch !
In Response

by: Andras Toth-Czifra from: Brussels
December 14, 2012 13:17
I don't think that the two cannot be true at the same time. Putin clearly sees possibility of redefining his image through the fight against corruption. The problem is that he is not the only one to have the keys to the drawers any more. I called this the "kompromat bubble" a week ago in my detailed comments following a line of arguments similar to Brian's:

http://www.noyardstick.com/?p=140

by: Ben
December 17, 2012 20:37
Universal corruption bla bla : Latynina,the royal pirate disturb the Israeli Vainschtein dust as Frenkel`s in the past.And grave "developing cracks" from Carnegie....As always.

The Power Vertical Feed

In this space, I will regularly comment on events in Russia, repost content and tweets I find interesting and informative, and shamelessly promote myself (and others, whose work I like). The traditional Power Vertical Blog remains for larger and more developed items. The Podcast, of course, will continue to appear every Friday. I hope you find the new Power Vertical Feed to be a useful resource and welcome your feedback. More

19:16

POWER VERTICAL PODCAST: A YEAR OF LIVING DANGEROUSLY

On this week's Power Vertical Podcast, we use the one-year anniversary of the Euromaidan uprising to look at how it changed both Ukraine and Russia. My guests are Sean Guillory and Alexander Motyl.

09:11

AND AS TENSIONS RISE IN THE BALTICS...

09:09

MORNING NEWS ROUNDUP

From RFE/RL's News Desk:

UKRAINE MARKS START OF EUROMAIDAN PROTESTS WITH NEW HOLIDAY
By RFE/RL
Ukrainians are marking a new national holiday on November 21 -- the anniversary of the start of Kyiv’s Euromaidan protests that led to the ouster of the country’s former pro-Kremlin regime.
Ukrainian President Petro Poroshenko signed decree on November 13 that declared the holiday for annual “Day of Dignity and Freedom” celebrations.
The protests began with a few hundred people who met spontaneously on a vast square in central Kyiv of November 21, 2013 – disappointed by then-President Viktor Yanukovych’s rejection of a landmark deal with the European Union in favor of closer ties with Russia.
After that first night, as the protests quickly swelled to tens of thousands of demonstrators, brutal police efforts to disperse the crowds with batons and teargas backfired.
As the crowds got bigger, the protesters began to call for Yanukovych’s ouster – which came in February 2014 after more than 100 people were killed in clashes with police that failed to end the demonstrations.

BIDEN TO MEET UKRAINIAN LEADERS, ANNOUNCE NONLETHAL U.S. AID
By RFE/RL
U.S. Vice President Joe Biden was expected to announce an increase in nonlethal U.S. military assistance to Ukraine on November 21 as he meets in Kyiv with Ukrainian President Petro Poroshenko and Prime Minister Arseniy Yatsenyuk.
The talks come on the first anniversary of the start of the Euromaidan protests in Kyiv that toppled Ukraine's former pro-Kremlin regime.
As Biden arrived in Kyiv on the evening of November 20, U.S. officials told reporters that he will announce the delivery of Humvee transport vehicles that are now in the Pentagon’s inventory of excess supplies.
They said Biden also would announce the delivery of previously promised radar units that can detect the location of enemy mortars.
The U.S. officials, who spoke on condition of anonymity, did not specify a dollar value for the assistance. 
Russia on November 20 warned the United States not to supply weapons to Ukrainian forces.
Russian Foreign Ministry spokesman Aleksandr Lukashevich cautioned against "a major change in policy of the (U.S.) administration in regard to the conflict" in Ukraine. 
He was commenting on remarks by U.S. President Barack Obama's choice to fill the number two spot at the State Department, Anthony Blinken, who told a congressional hearing on November 19 that lethal assistance "remains on the table. It's something that we're looking at."
The U.S. State Department's Director of Press Relations Jeffrey Rathke on November 20 told reporters that "our position on lethal aid hasn't changed. Nothing is off the table and we continue to believe there's no military solution."
He added, "But, in light of Russia's actions as the nominee mentioned [on November 19] in his testimony, as he indicated, this is something that we should be looking at."
The aid expected to be announced by Biden on November 20 falls short of what the Ukrainian president requested during a visit to Washington in September when he appealed for lethal aid - a request echoed by some U.S. lawmakers in response to what NATO allies say is Russia's movement of tanks and troops into eastern Ukraine.
In September, Washington promised Ukraine $53 million in aid for military gear that includes the mortar detection units, body armor, binoculars, small boats, and other nonlethal equipment for Ukrainian security forces and border guards in the east.
The United States and its European allies have imposed several rounds of economic sanctions on Russia for its seizure of Crimea and incursion into eastern Ukraine.
(With reporting by Reuters, AP, AFP, dpa, and TASS)

RUSSIAN OLYMPIAN CHARGED WITH SPOUSAL ABUSE IN UNITED STATES
Russian Olympian hockey player Slava Voynov – who plays with the Los Angeles Kings NHL hockey team – has been charged with felony domestic violence against his wife.
Voynov faces one felony count of spouse abuse with a maximum penalty of nine years in prison. If convicted, he also could be deported.
Prosecutors say Voynov “caused his wife to suffer injuries to her eyebrow, check, and neck” during an argument at their home in October.
Voynov has been suspended from the NHL since his arrest early on October 20 at a California hospital where he took his wife for treatment.
Voynov’s attorney, Craig Renetzky, says his client didn’t hit his wife.
Renetzky blames the charges on a misunderstanding between police and Voynov’s wife, who speaks very little English.
Voynov – who played on Russia’s team at the 2014 Sochi Winter Olympics -- faces arraignment on December 1.
(Based on reporting by AP and Reuters)

NATO: RUSSIAN ACTIVITY IN BALTICS POSES RISK
NATO says Russia's growing military presence in the skies above the Baltic region is unjustified and poses a risk to civil aviation.
NATO Secretary General Jens Stoltenberg said in Tallinn on November 20 that the aircraft regularly fail to file flight plans or communicate with air controllers and also fly with their transponders off.
Speaking at the Amari air base, he said alliance fighters have intercepted planes more than 100 times in the Baltic region alone so far this year, a threefold increase over 2013. 
He did not say how many of the intercepted aircraft were Russian.
Stoltenberg also said that, overall, NATO aircraft have conducted 400 intercepts to protect the airspace of its European alliance members in 2014 -- an increase of 50 percent over last year.
(Based on reporting by AP and AFP)

 

16:55 November 19, 2014

MORE ON THE SOURCES OF RUSSIAN ANTI-AMERICANISM

Konstantin Eggert has a commentary in "Kommersant" on Russia's anti-Americanism. He opens like this:

"Sometimes I have this feeling that there are only two countries in the world - Russia and the United States. Of course, there is Ukraine, but it either to join us or the Americas. Russian politicians and state television are constantly in search of the 'American hand' in all spheres of our life. In Soviet times, the United States was formally considered to be our number one military and ideological enemy. But even then it didn't occupy such a large space in the minds of the political leadership and citizens. And the paradox is that, on one hand, officials and the media regularly talk about the decline of America as a great power, and on the other declare it to be the source of all evil in the world. This contradiction does not seem to disturb anybody."

And closes like this:

We still have not been able to use the opportunity that we were given with the collapse of the communist regime - to arrange our lives based on liberty and civic virtue. And today, we, as a people, want to go back to the starting point, to beat everyone. And the Soviet Union, with its absence of sausage and freedom, again suddenly seems sweet and dear. But it won't happen. I will put it banally: you can't go into the same river twice.

Read the whole thing here (in Russian, with audio)

15:53 November 19, 2014

UNDERSTANDING THE INFORMATION WAR

MIchael Weiss, editor-in-chief of The Interpreter magazine, appearing on Hromadske TV to talk about Russia's information war.

Michael and Peter Pomarantsev recently co-authored an excellent report "The Menace of Unreality: How the Kremlin Weaponizes Information, Culture, and Money." Both also appeared recently on The Power Vertical Podcast to discuss the report.

15:42 November 19, 2014

WHY IS PUTIN PICKING A FIGHT WITH THE U.S.?

Oleg Kosyrev has a snarky and clever blog post on the subject up on the Ekho Moskvy website. 

1) The United States is the ideal opponent. "It is big and strong and your self-esteem increases when you fight somebody really influential."

2) The United States is not fighting with Russia. "They aren't really interested. They have enough of their own problems and dreams. It's nice to fight somebody who is not fighting you."

3) It is a substitute for the authorities' inability to benefit Russians. "How convenient. Who is to blame for rising food and gas prices? The U.S.A.. Who is to blame for the fact that Russian has political prisoners? The U.S.A. Who is to blame for people demonstrating on the streets? The U.S.A. Who is to blame for the fact that independent international courts denounce the Russian court system? The U.S.A. You can even blame the U.S. for the fact that the light doesn't work in the entrance to your apartment building."

Read it all (in Russian) here.

15:23 November 19, 2014

UKRAINE SAYS MHI7 SHOT DOWN BY RUSSIAN CREW

14:47 November 19, 2014

AFTERNOON NEWS ROUNDUP: THE SEQUEL

From RFE/RL's News Desk:

KYIV, WEST SAY RUSSIA CANNOT BAR UKRAINE FROM NATO

Ukraine says it will not tolerate pressure from any other country over whether or not it seeks to join NATO.

Foreign Ministry spokesman Yevhen Perebyynis spoke made the remark to reporters in Kyiv on November 19, after the BBC quoted Kremlin spokesman Dmitry Peskov as saying in an interview that Moscow wants "a 100 percent guarantee that no-one would think about Ukraine joining NATO."

Hitting back with a reference to Russia's annexation of Crimea and support for pro-Russian separatists in eastern Ukraine, Perebyynis said Kyiv would like guarantees that Moscow will not interfere in Ukraine's internal affairs, send in troops, or annex Ukrainian territories. 

The U.S. Ambassador to Ukraine, Geoffrey Pyatt, told journalists on November 19 that any decision on seeking to join NATO could be made only by the Ukrainian people, not by Russia, Europe, ar the United States.

The Canadian Ambassador to Ukraine, Roman Waschuk, made a similar statement on November 19.

(Based on reporting by UNIAN and Interfax)

PUTIN TELLS U.S. ENVOY TIES MUST BE BASED ON EQUALITY

President Vladimir Putin says that Russia is ready for cooperation with the United States as long as Washington treats Moscow as an equal, respect its interests, and refrains from interfering in its affairs.

Putin spoke November 19 at a Kremlin ceremony during which he received the credentials of foreign envoys including John Tefft, the new U.S. Ambassador to Moscow.

Putin said, "We are ready for practical cooperation with our American partners in various fields, based on the principles of respect for each other's interests, equal rights and non-interference in internal matters." 

The remark echoed a formula Putin set out in a foreign policy decree at the start of his third term in 2012.

Tefft, 64, is a career diplomat who previously served as U.S. ambassador to Ukraine, Georgia and Lithuania. 

His posting starts at a time when ties are badly strained over the Ukraine crisis. 

Tefft replaces Michael McFaul, who was ambassador from January 2012 until February 2014. 

(Based on reporting by Reuters and TASS)

RUSSIA SAYS 2010 NUCLEAR ARMS PACT STILL IN RUSSIA'S INTERESTS

By RFE/RL

Russian Foreign Minister Sergei Lavrov has signaled that a landmark nuclear arms treaty with the United States is not in jeopardy despite severe tension over Ukraine.

Speaking to Russian lawmakers on November 19, Lavrov said the 2010 New START treaty "meets our basic strategic interests and, on condition of its observance by the United States, we are interested in its full implementation."

The treaty, one of the main products of President Barack Obama's first-term "reset" of ties with Russia, requires Russia and the United States to have their long-range nuclear arsenals under specific ceilings by 2018.

But Lavrov said the Conventional Armed Forces in Europe (CFE) treaty, which President Vladimir Putin suspended in 2007, is "dead" for Moscow. 

NATO has refused to ratify a revised version of the CFE treaty without a full withdrawal of Russian troops from Moldova and Georgia.

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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