Don Putin

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Two iconic moments in television and film come to mind as I read Putin’s acceptance to be Prime Minister if his protege Dima becomes President. The first is the affable Gomer Pile ironically declaring as he often did, “Surprise, surprise, surprise.” Yes, a list Gomeric surprises since no one was really shocked by Putin taking Medvedev’s offer even though the news over the last week was full of speculation whether he actually would. The second, and probably more apt to Russian politics than Pile’s signature line, is a scene from the Godfather. (Yes, Godfather references seem to work well when thinking about Russia’s Presidential “transition.”)

The scene takes place in Vito Corleone’s office where he and Michael are informing their capos Clemenza and Tessio about the Family’s future move to Nevada. “Forgive me, Godfather, but with you gone — me and Pete’ll come under Barzini’s thumb sooner or later…,” Tessio asks. “And I hate that goddamn Barzini! In six months’ time there won’t be nothing left to build on . . .,” Clemenza declares. “Do you have faith in my judgment?” the ailing Don asks. “Yes.” “Do I have your loyalty?” “Yes — always, Godfather…” “Then be a friend to Michael, and do as he says.” Michael, now seated in the Don’s chair explains, “There are things being negotiated now that are gonna solve all your problems and answer all your questions. That’s all I can tell you now…”

I think this classic scene says more about the fabled “Operation Successor” than the typical analysis spewing from the pens and mouths of so-called experts. Putin as PM has immediately elicited declarations of a “weak” Medvedev with a “strong” Putin pulling the strings behind the scene. Others have noted that Prime Minister is a step down for Putin, speculating that he will use his new position to embolden it and atrophy the Executive. Still others see the move as a way to allow Putin to wait in the wings so he can run for President again. What all of this speculation says to me is that better sense could be gotten from divining chicken bones. Kremlinologists are so obsessed with the future that it diverts their attention from the present.

So what does this present entail? It’s a present where the Russian political elite is jostling for position. The first outbreak of open clan warfare occurred in late October when Russia’s Federal Narcotics Control Service (FSKN) head Viktor Cherkesov publicly denounced FSB-Entrepreneurs in Kommersant. The article was seen as a knock against FSB head Nikolai Patrushev. The real target, however, was Presidential Administration Deputy and Rosneft Chair Igor Sechin. Things seemed to have died down after Putin publicly admonished (then promoted) Cherkassov for airing Chekist dirty laundry. Then the Cherkesov-Patrushev/Sechin war seemed to have calmed down, outside of a few strange murders in St. Petersburg. That is until Finansgroup head Oleg Shvartsman dropped a bomb in an interview in Kommersant in late November. There, he stated that his company managed the assets of certain government officials. “Not the leaders of the Presidential Administration, but members of their families and high up people . . . [that are] all close to the FSB or Foreign Intelligence Service,” Shvartsman explained. But the real revelation in Shvartsman’s interview was what he called “velvet re-privatization”. As Jonas Bernstein of the Eurasian Daily Monitor summarized:

Shvartsman detailed a new project: the development of a structure that will be transformed into a state corporation called “Social Investments.” The project “is based on the concept of ‘velvet re-privatization’ that we developed together with the Russian Academy of State Service and the Academy of National Economy,” he said. “We are also doing this in the interest of ‘Rosoboroneksport’ [Russia’s state arms exporter]. It is a market form of absorbing strategic assets in regions that are dependent on state subsidies.” Explaining how such assets are absorbed, Shvartsman said: “We don’t seize enterprises; we minimize their market price using various instruments. As a rule, these are voluntary-coercive instruments.”

Asked how the state helps him fulfill these tasks, Shvartsman answered: “We have unclaimed resources, for example the council of veterans of the MVD [Interior Ministry], former employees of OBEP [the Interior Ministry’s anti-economic crimes directorate], RUBOP [the Interior Ministry’s now-defunct anti-organized crime directorate]. Six hundred thousand [such people] across the whole country!” Such veterans are involved in “steadfast” analysis of regional enterprises, determining, among other things, whether it is possible “through greenmail [buying a corporation’s stock, threatening to take control, and then demanding that those shares be purchased back by the corporation], or through joint actions with minority shareholders, to force out owners who are not loyal to the government and so on,” he said. “Together with them we are now building … a collective structure which, according to our plans, will occupy no less than 30-40% of the market in all regions of the country. It will be involved in measures against financial delinquency – that is, the problem of non-payment of loans. [There will be] ‘hard collection.’ When it is understood that a person is not paying back a credit, that they have to be visited, they will be visited not by people with truncheons, but by former MVD employees with great experience in investigative actions … The program to create this, the most powerful collection agency in the country, has already been approved by the head of the council of MVD veterans, retired Gen.-Col. Ivan Shilov. Our task … is to prevent the flow of former MVD employees into criminal structures, to contribute to placing them in jobs.”

Asked who assigned him this task, Shvartsman answered, laughing: “The party! For us, the party is embodied by the power bloc [silovy blok], which is headed by Igor Ivanovich Sechin.” Asked whether he writes reports directly to Sechin, Shvartsman replied: “There are other people — for example, Valentin Ivanovich Varennikov. He is a State Duma deputy, president of the board of the Union of Heroes of Russia and holds lots of other posts. For us he is the transmission link for contact with Mr. Sechin.” Shvartsman also called Varennikov “a very principled person” and the “spiritual leader” of the Union of Social Justice of Russia. “He supports our idea of ‘velvet re-privatization’,” Shvartsman said. “Completely.”

Remember what Cherkesov wrote in Kommersant in October: “We must not allow warriors to become traders.” Umm . . . too late!

But that wasn’t the end of the siloviki saga. A week after Shvartsman’s interview, Deputy Finance Minister Sergei Storchak was arrested for corruption and embezzling $43 million. Storchak denied the charges, but a raid of his Moscow apartment turned up about $1 million in cash. But as the Moscow Times I think rightly pointed out, Storchak’s arrest, which was spearheaded by Sechin client and Investigative Committee head Alexander Bastrykin, was retaliation at the Cherkesov clan. Cherkesov responded by mobilizing his people in the Prosecutor’s Office to look into whether the Investigative Committee’s activities were on the up and up. It appeared that things were beginning to spin out of control.

Then Putin chose Medvedev as his successor and Medeved, Putin as his PM. All this now hinges on the former being elected. Medvedev is currently leading opinion polls by a decent margin and no one doubts that opposing candidates stand any real chance of beating him.

But the big questions are: Why Medvedev as President? Why Putin as Prime Minister?

If the current turmoil in Russian elite politics is taken into consideration, it has little to do with Putin’s future as it does with the future of the Family. Recent clan warfare suggests that the Presidential election has little to do with the future course of Russia. It has to do with which victors will get the spoils after a new Don is appointed, ahem, elected. Contrary to what many seem to believe, Medvedev is a “consensus candidate.” Having no real clan ties except to Putin, his nomination functions as a way to either placate or keep the peace between the rival factions. As Andrei Ryabov wrote in

The need for a consensus candidate was felt most acutely in recent months, when the conflicts between opposing clans, during which the means of warfare against opponents were expanded substantially, started chipping away at the stability of the ruling stratum and, consequently, the entire system of government. This began to arouse increasing anxiety in the political and business communities in Russia and abroad. If we add the increasingly confrontational tone of Russian foreign policy, which was beginning to irritate the country’s Western partners, the future did not look positive for Russia or its power elite. To relieve this tension, to restore the balance after it had tipped in favor of one side — the side of the siloviki, to calm the excessively agitated players in this game, and to let the West know there was no cause for concern, Putin put Medvedev, his consensus candidate, in the most prominent position.

It seemed to have been a sound move. The tension was relieved. Senators, deputies, governors, and people who cannot be described as anything but professional political sponges simultaneously began praising the future head of state, just as they had recently praised the other potential candidates — Sergey Ivanov and Viktor Zubkov. While they were at it, they also praised the president for making such a wise decision. The consensus did not seem to be complete, however, and this forced Medvedev to resort to a petty political move, asking Putin to fortify the new composition of government with his personal participation. (Translation JRL#257)

Some think that Medvedev was hardly the consensus, but more a hard blow against Sechin. As the Moscow Times noted yesterday, Medvedev’s nomination “was a catastrophic defeat for Sechin’s clan, but the President has no other choice.” Storchak’s arrest by Sechin’s people and Cherkesov’s subsequent investigation into the Investigative Committee pushed things to the brink.

Putin becoming Prime Minister should be seen in the same light. And Putin is quite serious when he says that he’s “ready to continue our joint work as prime minister, without changing the distribution of authority.” He knows better than anyone that any disruption or dilution of Presidential authority, or the power vertical as they call it, might break the weakening threads that bind the Kremlin’s clans. This isn’t so much about Putin’s personal power. It’s about elite survival. And like Don Corleone, he’s telling his lieutenants “Do you have faith in my judgment? Do I have your loyalty? Then be a friend to Dima, and do as he says.”