Tuesday, September 02, 2014


The Power Vertical

The Kremlin's New Deal

'Let me make you an offer you can't refuse.'
'Let me make you an offer you can't refuse.'
Tsar Peter I once proposed to his prosecutor-general that corrupt officials be either exiled to Siberia or executed.

"But then who will be left?" the prosecutor responded, according to the oft-repeated historical anecdote. "We're all thieves."

President Vladimir Putin repeated this tale during his press conference in December to illustrate how difficult it is to combat corruption. He was, of course, painting himself as the good tsar who, regretfully, had to discipline his bad boyars.

But if Putin wanted to be more honest, he could have chosen a popular Soviet-era joke about a minor bureaucrat imprisoned for graft:

"The poor guy. Why'd they pick on him?" one colleague asked.
"He stole too much for someone of his rank," another answered.

The second anecdote is more appropriate for the simple reason that it illustrates that official corruption is not a bug in Russia's operating system, but an essential feature. And it's a feature that Putin has used very effectively to keep the elite motivated and in line.

Putin's deal with the elite was always pretty straightforward: Steal (but not too much for your rank) and nobody will mess with you as long as you give unwavering loyalty to the national leader.

But now, one year after Putin won election to a third term in the Kremlin, he is rewriting the terms of the bargain. Putin's "New Deal" with the elite could turn out to be one of the riskiest and trickiest initiatives of his rule.

And it has nothing to do with fighting corruption. It's all about reestablishing control and ensuring loyalty -- both of which the Kremlin leader apparently believes are slipping.

This week, the State Duma is expected to pass the final version of legislation forbidding certain categories of officials from keeping their assets abroad. According to the daily "Nezavisimaya gazeta," the bill forbids officials from having a bank account abroad, keeping money in any foreign account, or holding bonds issued by any foreign entity. They will also be required to declare any foreign real-estate holdings.

The Russian media calls this the "re-nationalization" of the elite, and part of the logic behind it is the fear that Russian officials keeping assets abroad could turn out to be disloyal.

Such fears were redoubled by new legislation in the United States providing for visa bans and asset freezes against Russian officials who violate human rights. Some European countries are considering similar legislation, and Putin is clearly worried that this would give Western governments unacceptable leverage.

According to the respected political analyst Yevgeny Minchenko, Putin believes officials "should be completely independent of foreign countries and fully accountable to the president."

Additionally, the opposition's successful rebranding of the elite as "swindlers and thieves" has stuck in the public consciousness -- meaning the Kremlin will now need to more convincingly pretend to care about official graft. Some officials who thought they were untouchable will be vulnerable.

"This is a fundamentally new Putin with regard to the elite," political analyst Igor Bunin, director of the Center for Political Technologies, told the daily "Moskovsky komsomolets."

"Previously, he kept the balance between the interest groups; now he has decided to reformat the elite. It had lived comfortably in symbiosis with the regime, and suddenly it was told that it needed to be nationally oriented, and not have accounts abroad."
 
If Putin follows through with all this, it will change his relationship with the ruling elite pretty dramatically. Putin's elite support was largely based on two services he provided: He was the ultimate arbiter in disputes between warring factions and he was the protector of their wealth and privilege.

Both could now come under question.

"This law is about political, and not legal, control," Dmitry Gorovtsov, a Duma deputy from the center-left A Just Russia party, told "Nezavisimaya gazeta."

"It will be applied selectively and subjectively."
 
Putin, in essence, is asking the elite to give something up they had become accustomed to, while offering nothing in return. And this comes at a time when many of them are uncomfortable with the traditionalist and xenophobic line the Kremlin has recently adopted.
 
Whether this is an offer the elite can't refuse is still an open question. Lilia Shevtsova of the Moscow Carnegie Center told "The Washington Post" that Putin risks losing the support of key sectors of the ruling class, which could begin seeking ways to replace him.

Such fears may be the reason the Kremlin toned down an earlier, much stricter, version of the legislation now pending in the Duma.

Meanwhile, all this attention on the elite's property has been a godsend for oppositionists like anticorruption blogger Aleksei Navalny -- who appears to be delighting in stealing the Kremlin's thunder on the issue.

Navalny was instrumental in detailing and publicizing the undeclared real estate in Miami owned by lawmaker Vladimir Pekhtin, which was initially exposed by the Spain-based blogger Dr. Z.
 
Pekhtin was forced to resign his seat in the Duma as a result. His departure was followed by the resignations of two more lawmakers with undeclared property issues, Anatoly Lomakin and Vasily Tolstopyatov.
 
And last week, Navalny turned his sights on Andrei Turchak, the governor of Pskov Oblast whose father was once Putin's judo partner. According to documents Navalny posted on his blog, Turchak is the proud owner of an undeclared villa, worth 1.27 million euros.

And as the whole thing plays out, a funk is settling in among the elite, according to Gleb Pavlovsky, a onetime Putin adviser.
 
"It seems that Vladimir Vladimirovich’s general idea is that only he should manage everyone, trusting no one. But this is impossible," Pavlovsky told "Moskovsky komsomolets."
 
"Officials at all levels perceive the president’s strange behavior as a signal: Remain silent, don't act, and don't stand out. Remain sitting, do not move, and be afraid. Stagnation is setting in."
 
-- Brian Whitmore

Tags: Vladimir Putin,Russia corruption,Aleksei Navalny

This forum has been closed.
Comment Sorting
Comments
     
by: Babeouf from: Ireland
March 11, 2013 21:26
Why bother with all the paragraphs. Just write 'Russian regime' its a bad thing. After all that's what you do in practice but more wordily. You run stories on the Regimes corruption 'Russian regime' its a bad thing. Then you run stories essentially about the regime actually trying to do something about corruption. Guess what. ' Russian regime' targets corruption, its a bad thing. Not exactly Russia Today is it. The US government should look for a refund for your amateurish productions.
In Response

by: Alik from: Lithuania
March 12, 2013 17:05
In fact, Putin's moves are not "about the regime actually trying to do something about corruption". They are about making the bureaucracy members isolated from any western ties and trying to even more control Russian MPs and other designated gentry, because there are little people elected, most of them are designated by Putin's ruling group.

by: Jack from: US
March 12, 2013 02:01
Ugh these corrupt Russian officials with Putin at the helm.. they clearly have a lot to learn from one freedom-loving syndicate called US federal government. For example how a fellow named Bernanke can print trillions of dollars out of thin air and give it out to his fellow tribesmen from Wall Street under clever disguise of "bailout funds". The fellows then safely stash the cash in their offshore accounts or launder through real estate purchases in Dubai, where property prices went astronomically high not because there is some "business activity" among sand dunes but because some poor fellow from US feel their money can be used better in Al Qaeda-run mid-eastern bank
In Response

by: Camel Anaturk from: Kurdistan
March 12, 2013 20:57
Thats right jackie,dear,its high time we scrape the hot thin air $$$ and use the mighty rouble instead-its backed with the iron clad stalin assurances of mother Russia-its enormous billion roubles` worth vodka and selyodka deposits guaranteed by the russian politicians`verbal assurances-and what else do we need for the recovery from the economic crisis-well a coupla Natashkas maybe,if not Eugenio and Jack will do!!!

by: Alex from: Baltimore, MD
March 12, 2013 20:15
Brian, welcome back, you've been missed. Nice piece, trenchant analysis, as always. You know you're doing good work when the pro-Putin/anti-American trolls come after you! Write on.

by: Dane from: Washington
March 12, 2013 22:08
Only on Radio Liberty would Russia combating corruption be a bad thing. Why must the American taxpayer fund such an organization?
In Response

by: Brian Whitmore from: Prague
March 13, 2013 08:00
Nowhere does this post say fighting corruption is a bad thing.
There are two main points:
1) The current campaign is about control and loyalty, not corruption
2) This is changing Putin's relationship with the elite, which has broader political implications.
It is probably a good idea to read the post carefully before commenting.

by: Ben
March 13, 2013 19:07
While "thinkers" like Minchenko discussed Putin`s successor,the late decided to lead the changes himself.Soviets pinched everything they managed to reach,Russian empire`s official has his post as kormlenie(feeding).Putin`s attempt was to change it for the private busines but Navalnys of allkindes spoil this happy practice.The answer can be- the communists in Duma, who will make Russians nostalgic about these days!

About This Blog

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

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