Putin is losing his grip on power

I. Putin's Twilight

Putin is losing his grip on power. His allies - not least former KGB and current FSB operatives - are deserting him in droves, put off by his recent economic failures, the deteriorating security situation, as much as by his clownish and narcissistic public conduct. Erstwhile faithful oligarchs are now hedging their bets, putting feelers to the West and even colluding with the banished Khodorkovsky and Berezovsky.

In January 2011, a Medvedev aide called upon Putin not to stand for re-election.Medvedev has also been assertive in various international issues, such as the dispute with Japan over the Kuril Islands.

Then, to add insult to injury, in February 2011, in an interview he granted to “Novaya Gazeta”, an opposition mouthpiece he co-owns, Mikhail Gorbachev, an extremely unpopular former Secretary-General of the Communist Party who is widely perceived to be the author of the demise of the USSR and the Communist Bloc, warned about an “Egyptian scenario” if the ruling elites don’t shape up. Indeed, Gorbachev is not the only one who is comparing Putin to Mubarak.

In June 2010, Mikhail Kasyanov, A former Russian prime minister, offered a spirited defense of incarcerated tycoon and Putin nemesis Mikhail Khodorkovsky. In a packed court in Moscow he labelled new charges against the disgraced oligarch “absurd”.   The week before, Russian President Dmitry Medvedev criticized Prime Minister Vladimir Putin's government for suppressing information or ignoring environmental problems. He threatened to get the presidency involved, encroaching on Putin’s turf, hitherto strictly off-limits.  

Yury Shevchuk, a Russian musician and Kremlin critic of renown challenged Putin for his brutal mistreatment of peaceful protesters. With elections looming, Putin was forced to dissimulate: "protests don't hinder but, on the contrary, help" the government. "If I see that people are pointing to crucial issues that the authorities should pay attention to, what can be wrong with that?" he exclaimed, unconvincingly. "One should say, 'thank you.'" Following this tacit admission of defeat, Russian opposition activists rallied in Moscow on May 1, shouting slogans comparing Prime Minister Vladimir Putin to Soviet dictator Josef Stalin. The authorities licenced the demonstration.  

 German Gref,  general manager of Russia's banking behemoth, state-controlled Sberbank and the architect of Putin’s economic policies while he was President of Russia, said that “the first stage of economic reform, which had required a tightly held political system to push through change, was nearing an end. Russia must carry out sweeping political reforms to safeguard future economic growth” (Reuters).

As dictators the world over have learned to their detriment, a totalitarian regime is an all-or-nothing proposition. Cracks in the monolithically repressive state tend to grow into fissures and lead to a loss of power. The surest way to regime change is via political reform. Soft concessions yield harsh consequences and the overthrow of potentates and their cronies. Putin is repeating the mistake that the Shah and Gorbachev and a myriad other tyrants have committed: they hung themselves by giving the people a little rope. Putin’s days are numbered. His successor - not necessarily Medvedev - is sharpening the knife. This time, the transition may not be pretty.

II. Putin's Background

Being a KGB officer was always a lucrative and liberating proposition. Access to Western goods, travel to exotic destinations, making new (and influential) friends, mastering foreign languages, and doing some business on the side (often with one's official "enemies" and unsupervised slush funds) - were all standard perks even in the 1970's and 1980's. Thus, when communism was replaced by criminal anarchy, KGB personnel (as well as mobsters) were the best suited to act as entrepreneurs in the new environment. They were well traveled, well connected, well capitalized, polyglot, possessed of management skills, disciplined, armed to the teeth, and ruthless. Far from being sidetracked, the security services rode the gravy train. But never more so than now.

January 2002. Putin's dour gaze pierces from every wall in every office. His obese ministers often discover a sudden sycophantic propensity for skiing (a favorite pastime of the athletic President). The praise heaped on him by the servile media (Putin made sure that no other kind of media survives) comes uncomfortably close to a Central Asian personality cult. Yet, Putin is not in control of the machinery that brought him to the pinnacle of power, under-qualified as he was. This penumbral apparatus revolves around two pivots: the increasingly fractured and warlord controlled military and, ever more importantly, the KGB's successors, mainly the FSB.

A. The Military

In 2001, Russia announced yet another plan to reform its bloated, inefficient, impoverished, demoralized and corrupt military. Close to 200,000 troops are to go immediately and the same number in the next 3 years. The draft is to be abolished and the army professionalized. At its current size (officially, 1.2 million servicemen), the armed forces are severely under-funded. Cases of hunger are not uncommon. Ill (and late) paid soldiers sometimes beg for cigarettes, or food.

Conscripts, in what resembles slave labour, are "rented out" by their commanders to economic enterprises (especially in the provinces). A host of such "trading" companies owned by bureaucrats in the Ministry of Defense was shut down last June by the incoming Minister of Defense (Sergei Ivanov), a close pal of Putin. But if restructuring is to proceed apace, the successful absorption of former soldiers in the economy (requiring pensions, housing, start up capital, employment) - if necessary with the help of foreign capital - is bound to become a priority sooner or later.

But this may be too late and too little - the much truncated and disorientated armed forces have been "privatized" and commandeered for personal gain by regional bosses in cahoots with the command structure and with organized crime. Ex-soldiers feature prominently in extortion, protection, and other anti-private sector rackets.

The war in Chechnya is another long standing pecuniary bonanza - and a vested interest of many generals. Senior Russian Interior Ministry field commanders trade (often in partnership with Chechen "rebels") in stolen petroleum products, food, and munitions.

Putin is trying to reverse these pernicious trends by enlisting the (rank and file) army (one of his natural constituencies) in his battles against secessionist Chechens, influential oligarchs, venal governors, and bureaucrats beyond redemption.

As well as the army, the defense industry - with its 2 million employees - is also being brutally disabused of its centralist-nationalistic ideals.

Orders placed with Russia's defense manufacturers by the destitute Russian armed forces are down to a trickle. Though the procurement budget was increased by 50% last year, to c. $2.2 billion (or 4% of the USA's) and further increased this year to 79 billion rubles ($2.7 billion) -  whatever money is available goes towards R&D, arms modernization, and maintaining the inflated nuclear arsenal and the personal gear of front line soldiers in the interminable Chechen war. The Russian daily "Kommersant" quotes Former Armed Forces weapons chief, General Anatoly Sitnov, as claiming that  $16 billion should be allocated for arms purchases if all the existing needs are to be satisfied.

Having lost their major domestic client (defense constituted 75% of Russian industrial production at one time) - exports of Russian arms have soared to more than $4.4 billion annually (not including "sensitive" materiel). Old markets in the likes of Iran, Iraq, Syria, Algeria, Eritrea, Ethiopia, China, India, and Libya have revived. Decision makers in Latin America and East Asia (including Malaysia and Vietnam) are being avidly courted. Bribes change hands, off-shore accounts are open and shut, export proceeds mysteriously evaporate. Many a Russian are wealthier due to this export cornucopia.

The reputation of Russia's weapons manufacturers is dismal (no spare parts, after sales service, maintenance, or quality control).  But Russian weapons (often Cold War surplus) come cheap and the list of Russian firms and institutions blacklisted by the USA for selling weapons (from handguns to missile equipped destroyers) to "rogue states" grows by the day. Less than one quarter of 2500 defense-related firms are subject to (the amorphous and inapt) Russian Federal supervision. Gradually, Russia's most advanced weaponry is being made available through these outfits.

Close to 4000 R&D programs and defense conversion projects (many financed by the West) have failed abysmally to transform Russia's "military-industrial complex". Following a much derided "privatization" (in which the state lost control over hundreds of defense firms to assorted autochthonous tycoons and foreign manufacturers) - the enterprises are still being abused and looted by politicians on all levels, including the regional and provincial ones. The Russian Federation, for instance, has controlling stakes in only 7 of c. 250 privatized air defense contractors. Manufacturing and R&D co-operation with Ukraine and other former Soviet republics is on the ascendant, often flying in the face of official policies and national security.

Despite the surge in exports, overproduction of unwanted goods leads to persistent accumulation of inventory. Even so, capacity utilization is said to be 25% in many factories. Lack of maintenance renders many plant facilities obsolete and non-competitive. The Russian government's new emphasis on R&D is wise - Russia must replenish its catalog with hi-tech gadgets if it wishes to continue to export to prime clients. Still, the Russian Duma's prescription of a return to state ownership, central planning, and subsidies, if implemented, is likely to prove to be the coup de grace rather than a graceful coup.

B. The FSB (the main successor to the KGB)

NOTE:

The KGB was succeeded by a host of agencies. The FSB inherited its internal security directorates. The SVR inherited the KGB's foreign intelligence directorates.

With the ascendance of the Vladimir Putin and his coterie (all former KGB or FSB officers), the security services revealed their hand - they are in control of Russia and always have been. They number now twice as many as the KGB at its apex. Only a few days ago, the FSB had indirectly made known its enduring objections to a long mooted (and government approved) railway reform (a purely economic matter). President Putin made December 20 (the day the murderous Checka, the KGB's ancestor, was established in 1917) a national holiday.

But the most significant tectonic shift has been the implosion of the unholy alliance between Russian organized crime and its security forces. The Russian mob served as the KGB's long arm until 1998. The KGB often recruited and trained criminals (a task it took over from the Interior Ministry, the MVD). "Former" (reserve) and active agents joined international or domestic racketeering gangs, sometimes as their leaders.

After 1986 (and more so after 1991), many KGB members were moved from its bloated First (SVR) and Third Directorates to its Economic Department. They were instructed to dabble in business and banking (sometimes in joint ventures with foreigners). Inevitably, they crossed paths - and then collaborated - with the Russian mafia which, like the FSB, owns shares in privatized firms, residential property, banks, and money laundering facilities.

The co-operation with crime lords against corrupt (read: unco-operative) bureaucrats became institutional and all-pervasive under Yeltsin. The KGB is alleged to have spun off a series of "ghost" departments to deal with global drug dealing, weapons smuggling and sales, white slavery, money counterfeiting, and nuclear material.

In a desperate effort at self-preservation, other KGB departments are said to have conducted the illicit sales of raw materials (including tons of precious metals) for hard currency, and the laundering of the proceeds through financial institutions in the West (in Cyprus, Israel, Greece, the USA, Switzerland, and Austria). Specially established corporate shells and "banks" were used to launder money, mainly on behalf of the party nomenklatura. All said, the emerging KGB-crime cartel has been estimated to own or control c. 40% of Russian GDP as early as 1994, having absconded with c. $100 billion of state assets.

Under the dual pretexts of "crime busting" and "fighting terrorism", the Interior Ministry and FSB used this period to construct massive, parallel, armies - better equipped and better trained than the official one.

Many genuinely retired KGB personnel found work as programmers, entrepreneurs, and computer engineers in the Russian private sector (and, later, in the West) - often financed by the KGB itself. The KGB thus came to spawn and dominate the nascent Information Technology and telecommunications industries in Russia. Add to this former (but on reserve duty) KGB personnel in banks, hi-tech corporations, security firms, consultancies, and media in the West as well as in joint ventures with foreign firms in Russia - and the security services' latter day role (and next big fount of revenue) becomes clear: industrial and economic espionage. Russian scholars are already ordered (as of last May) to submit written reports about all their encounters with foreign colleagues.

This is where the FSB began to part ways with crime, albeit hitherto only haltingly.

The FSB has established itself both within Russian power structures and in business. What it needs now more than money and clout - are respectability and the access it brings to Western capital markets, intellectual property (proprietary technology), and management. Having co-opted criminal organizations for its own purposes (and having acted criminally themselves) - the alphabet soup of security agencies now wish to consolidate their gains and transform themselves into legitimate, globe-spanning, business concerns. The robbers' most fervent wish is to become barons. Their erstwhile, less exalted, criminal friends are on the way. Expect a bloodbath, a genuine mafia gangland war over territory and spoils. The result is by no means guaranteed.

III. Putin: Historical Precedent

France's Empire is very reminiscent of Vladimir Putin's reign in post-Yeltsin Russia.

Karl Marx regarded Louis-Napoleon's Second Empire as the first modern dictatorship - supported by the middle and upper classes but independent of their patronage and, thus, self-perpetuating. Others went as far as calling it proto-fascistic.

Yet, the Second Empire was insufficiently authoritarian or revolutionary to warrant this title. It did foster and encourage a personality cult, akin to the "Fuhrerprinzip" -but it derived its legitimacy, conservatively, from the Church and from the electorate. It was an odd mixture of Bonapartism, militarism, clericalism, conservatism and liberalism.

In a way, the Second Republic did amount to a secular religion, replete with martyrs and apostles. It made use of the nascent mass media to manipulate public opinion. It pursued industrialization and administrative modernization. But these features characterized all the political movements of the late 19th century, including socialism, and other empires, such as the Habsburg Austro-Hungary.

The Second Empire was, above all, inertial. It sought to preserve the bureaucratic, regulatory, and economic frameworks of the First Empire. It was a rationalist, positivist, and materialist movement - despite the deliberate irrationalism of the young Louis-Napoleon. It was not affiliated to a revolutionary party, nor to popular militias.  It was not collectivist. And its demise was the outcome of military defeat.

Like the French Second Empire, it follows a period of revolutions and counter-revolutions. It is not identified with any one class but does rely on the support of the middle class, the intelligentsia, the managers and industrialists, the security services, and the military.

Putin is authoritarian, but not revolutionary. His regime derives its legitimacy from parliamentary and presidential elections based on a neo-liberal model of government. It is socially conservative but seeks to modernize Russia's administration and economy. Yet, it manipulates the mass media and encourages a personality cult.

Like Napoleon III, Putin started off as president (he was shortly as prime minister under Yeltsin). Like him, he may be undone by a military defeat, probably in the Caucasus or Central Asia.

The formative years of Putin and Louis-Napoleon have little in common, though.

The former was a cosseted member of the establishment and witnessed, first hand, the disintegration of his country. Putin was a KGB apparatchik. The KGB may have inspired, conspired in, or even instigated the transformation in Russian domestic affairs since the early 1980's - but to call it "revolutionary" would be to stretch the term.

Louis-Napoleon, on the other hand, was a true revolutionary. He narrowly escaped death at the hands of Austrian troops in a rebellion in Italy in 1831. His brother was not as lucky. Louis-Napoleon's claim to the throne of France (1832) was based on a half-baked ideology of imperial glory, concocted, disseminated and promoted by him. In 1836 and 1840 he even initiated  (failed) coups d'etat. He was expelled even from neutral Switzerland and exiled to the USA. He spent six years in prison.

Still, like Putin, Napoleon III was elected president. Like him, he was regarded by his political sponsors as merely a useful and disposable instrument. Like Putin, he had no parliamentary or political experience. Both of them won elections by promising "order" and "prosperity" coupled with "social compassion". And, like Putin, Louis-Napoleon, to the great chagrin of his backers, proved to be his own man - independent-minded, determined, and tough.

Putin, like Louis-Napoleon before him, proceeded to expand his powers and installed loyalists in every corner of the administration and the army. Like Louis-Napoleon, Putin is a populist, travelling throughout the country, posing for photo opportunities, responding to citizens' queries in Q-and-A radio shows, siding with the "average bloke" on every occasion, taking advantage of Russia's previous economic and social disintegration to project an image of a "strong man".

Putin is as little dependent on the Duma as Napoleon III was on his parliament. But Putin reaped what Boris Yeltsin, his predecessor, has sown when he established an imperial presidency after what amounted to a coup d'etat in 1993 (the bombing of the Duma). Napoleon had to organize his own coup d'etat all by himself in 1852.

Napoleon III - as does Putin now - faced a delicate balancing act between the legitimacy conferred by parliamentary liberalism and the need to maintain a police state. When he sought to strengthen the enfeebled legislature he reaped only growing opposition within it to his domestic and foreign policies alike.

He liberalized the media and enshrined in France's legal code various civil freedoms. But he also set in motion and sanctioned a penumbral, all-pervasive and clandestine security apparatus which regularly gathered information on millions of Frenchmen and foreigners.

Putin is considerably less of an economic modernizer than was Napoleon III. Putin also seems to be less interested in the social implications of his policies, in poverty alleviation and in growing economic inequalities and social tensions. Napoleon III was a man for all seasons - a buffer against socialism as well as a utopian social and administrative reformer.

Business flourished under Napoleon III - as it does under Putin. The 1850's witnessed rapid technological change - even more rapid than today's. France became a popular destination for foreign investors. Napoleon III was the natural ally of domestic businessmen until he embarked on an unprecedented trade liberalization campaign in 1860. Similarly, Putin is nudging Russia towards WTO membership and enhanced foreign competition - alienating in the process the tycoon-oligarchs, the industrial complex, and the energy behemoths.

Napoleon III was a free trader - as is Putin. He believed in the beneficial economic effects of free markets and in the free exchange of goods, capital, and labour. So does Putin. But economic liberalism does not always translate to a pacific foreign policy.

Napoleon III sought to annul the decisions of the Congress of Vienna (1815) and reverse the trend of post-Napoleonic French humiliation. He wanted to resurrect "Great France" pretty much as Putin wants to restore Russia to its "rightful" place as a superpower.

But both pragmatic leaders realized that this rehabilitation cannot be achieved by force of arms and with a dilapidated economy. Napoleon III tried to co-opt the tidal wave of modern, revolutionary, nationalism to achieve the revitalization of France and the concomitant restoration of its glory. Putin strives to exploit the West's aversion to conflict and addiction to wealth. Napoleon III struggled to establish a new, inclusive European order - as does Putin with NATO and, to a lesser degree, with the European Union today.

Putin artfully manipulated Europe in the wake of the September 11 terrorist attacks on the USA, his new found ally. He may yet find himself in the enviable position of Europe's arbitrator, NATO's most weighty member, a bridge between Central Asia, the Caucasus, North Korea and China - and the USA.  The longer his tenure, the more likely he is to become Europe's elder statesman. This is a maneuver reminiscent of Louis-Napoleon's following the Crimean War, when he teamed up with Great Britain against Russia.

Like Putin, Napoleon III modernized and professionalized his army. But, unlike Putin hitherto, he actually went to war (against Austria), moved by his (oft-thwarted) colonial and mercantilist aspirations. Putin is likely to follow the same path (probably in Central Asia, but, possibly, in the Baltic and east Europe as well). Reinvigorated armies (and industrialists) often force expansionary wars upon their reluctant ostensible political masters.

Should Putin fail in his military adventures as Napoleon III did in his and be deposed as he was - these eerie similarities will have come to their natural conclusion.