September 14, 2012

TSG IntelBrief: Political Decision-Making in Putin's New Politburo

As of mid-September 2012, at least one truism about democracy continues: it is, perhaps, above all about the rotation of power. In Russia, relatively weak political institutions made it possible for Vladimir Putin to return to power once again, this time marking a transformation of his rule into a highly personalistic regime.

Mr. Putin is now legally eligible for two six-year terms, which create the very real possibility that he could rule until 2024 — almost a quarter of a century after he first became president, in 2000 — at which point he will be 71 years old. If he stays in power that long, he would have held the country's top job for longer than Leonid Brezhnev, who led the Soviet Union for 18 years. Only Stalin was in power for a longer period.

As Russia enters a politically sensitive autumn period, there are conflicting accounts of how decisions are made at the highest level of government. A report by Yevgeniy Minchenko, president of the Minchenko Consulting Communication Group in Moscow, portrays Mr. Putin as presiding over a nine-man "politburo" that represents the key sectors of economic and political life in the country. Other analysts, including a noted sociologist, Olga Kryshtanovskaya, have challenged this interpretation of the decision-making model and the personalities who comprise the inner circle. However, there is plenty of common ground among the pundits regarding the nature of Mr. Putin's authority, the most influential people in the country — and the threat of rising conflict among the elite.


Competition for Power

During Dmitry Medvedev's term as president (2008-2012), the tandem between him and Mr. Putin, who served as prime minister during that period, was a consistent element of Russia's political scene. However, with Mr. Putin's return to the presidency, the tandem concept has clearly fallen out of favor. How the tandem actually operated during Mr. Medvedev's presidency is not well understood, nor which elements of it might remain now that Mr. Putin is once again president.

In mid-August, the aforementioned Minchenko Consulting Group produced a study that examined the political situation that has emerged since the March 2012 presidential election. He identified eight individuals as members of Mr. Putin's "politburo" who represent distinct economic and political spheres: Mr. Medvedev, Igor Sechin (a presidential aide and former deputy prime minister), Sergei Chemezov (the head of state corporation Rostekhnologii), Sergei Sobyanin (the mayor of Moscow), Gennadiy Timchenko (an oil trader with growing interests in gas production), Yuri Kovalchuk (the leading shareholder in Rossiya Bank), Sergei Ivanov (the Kremlin's chief of staff) and Vyacheslav Volodin (the government's chief of staff). Beyond these eight, Mr. Minchenko identified two dozen so-called candidate members of the politburo who are regularly employed by Mr. Putin — in true Machiavellian fashion — to check the power and ambitions of the elite eight. This latter group includes technocrats, politicians, businessmen and senior security sector officials.

The key findings of the Minchenko report make for interesting reading. Mr. Medvedev is portrayed as having the greatest resources at his disposal given his position as prime minister (partly because of the support he receives from other politburo members seeking to check their rivals' advancement), and of being the politburo member closest to Mr. Putin. In Moscow's political circles, informal status matters more than formal position; hence Mr. Sechin is more influential than his notional superior, Mr. Ivanov. Furthermore, the inner circle includes several people — Messrs. Timchenko, Kovalchuk and Chemezov — who do not hold official positions within the government.

The new politburo began to take shape in the 2000s, according to Mr. Minchenko, when security sector officials consolidated the assets of minor oligarchic groups under their control and then used access to budgetary flows and state orders to build their business empires. Mr. Putin's support for state champions to foster economic development assisted this process. Today, it is alleged that no foreign investor can launch a major project in Russia without the support of one of these groups.

Mr. Putin manages the elite by playing divide-and-rule, and then arbitrating in disputes between the key players. Mr. Minchenko mentions the struggle for control of the financial segment between Anatoliy Serdyukov, the defense minister; Igor Shuvalov, a deputy prime minister; and a team led by the former finance minister, Alexei Kudrin. A similar division is apparent over the fuel and energy complex, where Mr. Sechin's ambitions are checked by an alliance between Messrs. Timchenko and Kovalchuk, plus Arkadiy Dvorkovich, a deputy prime minister, and the Lukoil CEO, Vagit Alekperov.


An Alternative View

Other analysts have criticized Mr. Minchenko's description of how decisions are made and who the key players are. Russian political scientist Vyacheslav Nikonov rejects the notion of clear lines of sectoral responsibility within the inner circle; rather, he claims, Mr. Putin arbitrates between clans that have competing interests. Gleb Pavlovskiy, a former Kremlin political technologist, broadly agrees.

Another interpretation of decision-making processes and personnel has been advanced by Ms. Kryshtanovskaya, who serves as a deputy in Putin's United Russia party. She argues that Mr. Putin does not take decisions alone, but rather with an inner circle that is smaller than the eight-man politburo identified by Mr. Minchenko. Membership in this inner circle depends primarily on an individual's relationship with Mr. Putin, rather than his or her status as representative of a sector.

There is nonetheless plenty of common ground among these observers. Principally, there is agreement on the broad notion that Mr. Putin is the arbiter of elite interests, rather than an autocrat passing decisions down a vertical stovepipe of power. With regard to influence, personal ties to the president seem to matter at least as much as formal position. Mr. Medvedev, by virtue of both his post — with its attendant financial authorities — and his personal ties to Mr Putin, is evidently still a key figure. However, his status is in no way secure given the continuing speculation that he will be dismissed.


An Evolving Process…and Potential Problems

A synthesis of the pundits' arguments leads to the conclusion that the elite system is in flux — and is potentially unstable — for at least three reasons. Firstly, Mr. Putin is seeking to introduce new players into the political elite who are not aligned with clans but who are personally loyal to him, such as the new interior minister, Vladimir Kolokoltsev, and the new economic development minister, Andrei Belousov. Secondly, as the economy slows it is becoming more difficult to allocate resources among incumbent and new interests. Finally, the system depends on Mr. Putin's ability to manage the clans, but that, in turn, rests on his popularity and legitimacy.

That legitimacy has been tarnished by electoral fraud and the rise of middle-class opposition. In August, according to the Levada Center, a non-governmental sociological research organization in Moscow, Mr. Putin's approval rating fell below 50% for the first time, reaching 48%, compared with an average of 65% during his first two presidential terms. At the same time, his unfavorable rating currently stands at 25%, compared with an average of 15% in 2000-08. The perception that he controls the situation in the country is also under some challenge: it stood at 56% in August, down from 66% in May, and from 76% when his second presidential term ended.

Overall, another Putin presidency means that possible parallels between the Arab Spring and future developments in Russia could become apt. There are several similarities. Corruption is rampant, small elites control the bulk of the nation's assets, institutions have been corroded by the effects of minerals-based development, and governance and social provision are poor. In the Middle East and North Africa (MENA) periodic protests preceded an upsurge in anti-regime activity. Similarly, in Russia there have been significant protests following the parliamentary election.

However, there are also important differences between Russia and MENA. With the exception of the deep slump in 2009, over the past decade the Russian economy has been more dynamic than most in MENA. Generally higher levels of development in Russia provide authorities with the means to buy off the population, and the incidence of absolute poverty is lower. And, perhaps most importantly, the Arab world has a young and restless population while the Russian population is aging and in decline.



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