Tuesday, August 30, 2016


The Power Vertical

So You Wanna Be A Mafia Accountant

Reformer or enabler?
Reformer or enabler?
By Brian Whitmore

Alfred Kokh didn't exactly mince words.

Just hours after fresh reports surfaced that his old friend Aleksei Kudrin was considering a triumphant return to the halls of power to save the Russian economy, Kokh let rip with a brief and blistering post on Facebook.

"Go on Lyosha, return and buy them some more time to build their gulag. And then in that same gulag they'll turn you into dust," Kokh, a liberal economist who served as deputy prime minister in the 1990s and is now living in exile in Germany, wrote.

Ever since Kudrin resigned as finance minister back in September 2011, speculation about his return has been frequent -- and just as frequently wrong.

Vladimir Putin has reportedly offered him a variety of posts, including head of the Central Bank; and rumors have periodically surfaced that he might replace Dmitry Medvedev as prime minister.

But so far, Kudrin has remained on the sidelines, running his think tank, the Committee for Civic Initiatives, and making dire predictions about the state of the Russian economy.

The latest round of Kudrin-mania was sparked by a report by Bloomberg claiming that he was in negotiations with Putin and Medvedev to rejoin the government, and "the talks are the most advanced" since he quit the cabinet more than four years ago.

The report, which cited unidentified officials, said Kudrin could be appointed either a senior Kremlin adviser on economic policy or a first deputy prime minister -- and his return could come early next year.

So is it real this time? Who knows.

But Putin certainly does love end-of-the-year surprises. Remember his pardon of jailed oil tycoon Mikhail Khodorkovsky two years ago?

Kremlin spokesman Dmitry Peskov didn't exactly deny the report. "He’s not being appointed to anything yet," he said.

The sagging ruble staged a bit of a mini rally on the news -- before resuming its decline.

But if a Kudrin return is imminent, what would it mean?

Well, given that he has persistently called for the kind of structural economic reforms everybody knows Russia needs, it would certainly cheer investors. 

And given that Kudrin is seen as a liberal and has -- at least since leaving government -- advocated pluralism and political reform, it would be welcomed in Western capitals.

It would also probably spark headlines claiming that Putin was reorienting Russia's course.

But guess what? Those headlines would be wrong.

"Kudrin symbolizes the hope that the current system might reform itself, rather than collapse through a radical break with the past," Kremlin-watcher Donald Jensen, a fellow at the Center for Transatlantic Relations at Johns Hopkins University, wrote in June 2013.

"But despite Kudrin’s glittering reputation for prudent fiscal management and his commitment to tax and budget reform and the free market, he is also an architect of Putinism. His policies fostered the development of crony capitalism during the Putin years."

Indeed, they did. And the comprehensive structural economic reform that Kudrin now advocates would be impossible under the regime he helped create.

It would threaten too many powerful and entrenched interests in Putin's inner circle.

Putin cronies like Rosneft CEO Igor Sechin, Gazprom chief Aleksei Miller, and construction magnate Arkady Rotenberg like the current arrangements -- which allow them to seek rents to their heart's content -- just fine thank you. 

Truly reforming Russia's economy would require gutting and upending the existing political system. It would probably require regime change. 

And Putin, of course, is never going to willingly allow that to happen -- regardless of how much he likes and respects Kudrin.

At best, Kudrin would only be able to make changes on the margins. At worst, he would simply make the existing kleptocracy a little bit more cost efficient

Either way, he would become an enabler. He would become the functional equivalent of a mafia accountant.

And, as Kokh suggested, he would be just buying Putin's autocratic syndicate a little more breathing space so they can continue doing what they do best.

NOTE: The Power Vertical is now taking a short sabbatical for the holidays. The blog and all related products will return on January 11.

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by: Christine Marie Fajardo
December 31, 2015 18:48
I'm so corrius

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The Power Vertical is a blog written especially for Russia wonks and obsessive Kremlin watchers by Brian Whitmore. It offers Brian's personal take on 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