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Books on Russia
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Update No: 326 (03/03/08)
The ides of March
There is no doubt what the big event was for Russia - the presidential election
on March 2.
It was for all that a foregone conclusion. Putin's nominee, Dmitry Medvedev, who
won 70% of the vote, beat the communist candidate, Gennadi Zhuganov, who trailed
on 18%, also the licensed buffoon of Russian politics, Vladimir Zhirinovsky, who
won 9%,and a barely known politician on 1%, Andrei Bogdanov, who happens to be
the Grand Master of the Grand Lodge of Russia. But what then?
Putin becomes prime minister and continues to be the real power in the land. So
everybody is supposing - and doubtless rightly so. But what will he do with his
power?
'The Putin plan'
In a vital speech on February 8, perhaps the most important of his extraordinary
career, Putin laid out his vision for Russia.
He heralded a wealthy country able to compete in a new "arms race,"
setting long term priorities for his hand-picked successor ahead of the
presidential election, indicating who is really in charge. Putin used the
televised address in an ornate Kremlin hall before Russia's ruling elite,
including the full government, parliamentary leaders and top generals, to
outline a roadmap up to 2020 no less.
Putin said his "plan to bring Russia out of systemic crisis" meant the
country was again "respected" and that "lawlessness is
over." There is no doubt that this is not idle boasting. Putin has proved
to be a remarkable ruler. He took over a country on the rocks, pulverised by the
crash of 1998, in which the rouble lost 400% of its value and the Russian middle
class were wiped out.
He has presided over an extraordinary resurgence, with GDP growing by 7% or more
per year. There is a new middle class – and a new entrepreneurial one at that.
Russia now has one of the most vibrant economies in the world. He was of course
extraordinarily lucky here, in the wake of the hike to oil prices given by the
events of 2,000-01.
However, more must be done in coming years to pull the economy from
"extreme inefficiency" and to guard against Western pressures, said
Putin, whose eight year presidency has seen a flood of energy export revenues
and the return of military clout. "There is a new turn in the arms race....
Russia will always respond to this new challenge," Putin said, promising
"new weapons that are qualitatively the same or better than those of other
countries."
The far-ranging nature of the speech underlined that Putin -- barred by the
constitution from seeking a third consecutive term in the presidential vote and
due to step down in May -- remains Russia's dominant leader. His close ally
Dmitry Medvedev, a career lawyer and bureaucrat who has never held elected
office, is Putin's chosen stand-in. Medvedev's main campaign message,
underlining this fact, has been a promise to continue what he calls "the
Putin plan."
Putin has said he may serve as prime minister if Medvedev is elected, prompting
widespread speculation that the Kremlin master will retain significant influence
in years to come -- possibly returning for a third, non-consecutive Kremlin
term.
Putin listed booming foreign investment, the crushing of the Chechen
independence rebellion, and rising salaries as among his main achievements since
taking power eight years ago. "I know there is a lot left to do, but the
course has been set," Putin said.
Domestically the biggest problems named by Putin were the need for a more modern
economy and an end to widespread corruption. "You have to go to every
agency with a bribe: to the firemen, the health inspection, the gynaecologists.
Whom don't you have to go to? It's just terrible."
Putin also directed fire at NATO and the United States for their own military
build-ups and accused unnamed Western forces of "interference in domestic
political fights (which is) not only immoral but also illegal." Putin went
on to accuse Western governments of using "dishonest competition... to get
themselves access to our resources."
Opinion polls give Medvedev 63 - 80 % support. Critics say that state-controlled
resources, including national television, are being heavily manipulated to
ensure that Medvedev faces no real difficulty in securing a landslide victory.
The legitimacy of Medvedev's likely election suffered a blow, however, on
February 7 when Europe's top democracy body, the Organisation for Security and
Cooperation in Europe (OSCE), announced a boycott. Both the OSCE's elections
monitoring wing, the Office for Democratic Institutions and Human Rights (ODIHR),
and its Parliamentary Assembly said they would not send observers, citing
obstruction by the Russian authorities.
The ODIHR also boycotted December's parliamentary elections, in which Putin's
United Russia won by a landslide, for similar reasons.
The underside?
There is indeed a more dubious, ominous side to Putin's new Russia. It is not
clear, to put it bluntly, that he is an honest man himself. This may be all vile
calumny. Let us hope so.
But there are those who claim the contrary.
The claims over the president's assets surfaced in December when the Russian
political expert Stanislav Belkovsky gave an interview to the German newspaper,
Die Welt. They have since been repeated in the Washington Post and the Moscow
Times, with speculation over his vast fortune appearing on the internet.
Citing sources inside the president's administration, Belkovsky claims that
after eight years in power Putin has secretly accumulated more than $40bn (£20bn).
The sum would make him Russia's - and Europe's - richest man. There is no way,
if true, that he could have amassed such a total honestly, while performing his
public duties.
The temptation for any Russian ruler to feather his own nest must be massive.
The media are generally subservient, the functionaries obsequious and the
opportunities immense.
In an interview with the Guardian, Belkovsky repeated his claims that Putin owns
vast holdings in three Russian oil and gas companies, concealed behind a
"non-transparent network of offshore trusts".
Putin "effectively" controls 37% of the shares of Surgutneftegaz, an
oil exploration company and Russia's third biggest oil producer, worth $20bn, he
says. He also owns 4.5% of Gazprom, and "at least 75%" of Gunvor, a
mysterious Swiss-based oil trader, founded by Gennady Timchenko, a friend of the
president's, Belkovsky alleges.
Asked how much Putin was worth, Belkovsky said: "At least $40bn. Maximum we
cannot know. I suspect there are some businesses I know nothing about." He
added: "It may be more. It may be much more.”
"Putin's name doesn't appear on any shareholders' register, of course.
There is a non-transparent scheme of successive ownership of offshore companies
and funds. The final point is in Zug [in Switzerland] and Liechtenstein.
Vladimir Putin should be the beneficiary owner."
Putin has not commented on Belkovsky's claims. The Guardian put the allegations
to the Kremlin, but was told Putin's chief spokesman, Dmitry Peskov, was not
available.
The inner party struggle
Discussion of Putin's wealth has previously been taboo. But the claims have
leaked out against the backdrop of a fight inside the Kremlin between a group
led by Igor Sechin, Putin's influential deputy chief of staff, and a
"liberal" clan that includes Medvedev.
The Sechin group is made up of siloviki - Kremlin officials with
security/military backgrounds. It is said to include Nikolai Patrushev, the head
of the Federal Security Service (FSB), Russia's KGB successor agency, his deputy
Alexander Bortnikov, and Putin's aide, Viktor Ivanov.
Those associated with the liberal camp include Roman Abramovich, the Russian
oligarch and owner of Chelsea football club, who is close to Putin and the
Yeltsin family. Other members are Viktor Cherkesov, the head of the federal drug
control service, and Alisher Usmanov, an Uzbek-born billionaire.
Insiders say the struggle has little to do with ideology. They characterise it
as a war between business competitors. Putin's decision to endorse as president
Medvedev - who has no links with the secret services - dealt a severe blow to
the hardline Sechin clan, they add.
Some analysts have said Putin would like to retire but has been forced to carry
on to shield Medvedev from siloviki plotting. Others disagree and say Putin
wants to stay in power. On February 4 Putin confirmed he intends next year to
become Russia's prime minister.
"The siloviki are not at all nice," Yulia Latynina, a Russian
political commentator said. Latynina, who hosts a political talkshow on the
liberal radio station Ekho Moskvy, was one of the first journalists to draw
attention to Putin's reported links with Gunvor. The company is based in Zug, a
picturesque Swiss canton known as a bolthole for publicity-shy international
businessmen. Gunvor has neither a website nor a Moscow office - but in 2007
posted profits of $8bn on a turnover of $43bn, an astronomic figure, according
to industry experts. Like Putin, its reclusive owner, Timchenko, worked in the
KGB's foreign affairs directorate. He is said to have met Russia's president in
the late 1980s through KGB circles.
Gunvor, which has its head office in Geneva, failed to comment.
Critics say the wave of renationalisations under Putin has transformed Putin's
associates into multimillionaires. The dilemma now facing the Kremlin's elite is
how to hang on to its wealth if Putin leaves power, experts say. Most of its
money is located in the west, they add. The pressing problem is how to protect
these funds from any future administration that may seek to reclaim them.
"There's no point in having all this money if you can't travel to the
Maldives or Paris and spend it," Elena Panfilova, the director of
Transparency International in Russia said.
The first hints of the intra-clan warfare gripping the Kremlin emerged late last
year, when the FSB arrested General Alexander Bulbov, the deputy head of the
federal drug agency, and part of the liberal group. His arrest saw a surreal
standoff, with his bodyguards and FSB agents pointing machine guns at each
other.
Earlier Russia's deputy finance minister, Sergei Storchak - another
"liberal" - was also arrested and charged with embezzling $43.4m. He
is currently in prison. His boss, Russia's finance minister, Alexei Kudrin, part
of the liberal clan, says he is innocent.
But the liberal group - one of several competing factions inside the Kremlin -
has struck back. Oleg Shvartsman, a previously obscure businessman, gave an
interview to Kommersant newspaper claiming he secretly managed the finances of a
group of FSB officers. Their assets were worth £1.6bn, he revealed.
The officers were involved in "velvet reprivatisations", Shvartsman, a
fund manager, said - in effect forcibly acquiring private companies at
below-market value and transforming them into state-owned firms. These assets
were redistributed via offshore companies, he said.
According to Panfilova, the "randomised" corruption of the 1990s has
given way to the "systemic and institutionalised corruption" of the
Putin era. Members of Putin's cabinet personally control the most important
sectors of the economy - oil, gas and defence. Medvedev is chairman of Gazprom;
Sechin runs Rosneft; other ministers are chairmen of Russian railways, Aeroflot,
a nuclear fuel giant and an energy transport enterprise.
The summing up
There is a summing up with a vengeance here – the sums always go up.
Putin has created a new, more streamlined oligarchy, his critics say. "The
crown jewels of the country's wealth have ended up in the hands of Putin's inner
circle," Vladimir Rzyhkov - a former independent MP - wrote in the Moscow
Times.
Belkovsky - who published a book about Putin's finances last year, and who is
the director of the National Strategic Institute, a Moscow thinktank - claims he
is confident of his assessment of Putin's hidden wealth. "It's not a secret
among the elites,' he said. "But please pay attention that Vladimir
Vladimirovich [Putin] has never sued me."
Belkovsky adds that the West has misunderstood Putin and has been distracted by
his "neo-Soviet" image. Putin, Belkovsky claims, is ultimately a
"classic" businessman who believes money can solve any problem, and
whose psychology was shaped by his experiences working in the St Petersburg
mayor's office in Russia's crime-ridden early 1990s. "He is quite sure of
this. A problem that can't be resolved with $1bn can be resolved with $10bn, and
if not with $10bn then $20bn, and so on," Belkovsky said.
In an interview with Time magazine, which named Putin its person of the year,
the president vehemently denied that those inside the Kremlin were corrupt.
Asked whether "some of the people closest to you are getting rich",
Putin said: "Then you know who and how. Write to us, to the foreign
ministry, if you are so confident. I presume you know the names, you know the
systems and the tools. I can assure you and everyone who would listen to us,
watch us and read us, that the reaction would be swift, immediate, [and] within
the prevailing law."
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