To secure his power at home, Russia's President is testing its limits abroad. Sooner or later the west will have to stop himby / December 11, 2014 / Leave a comment
Published in January 2015 issue of Prospect Magazine
What does Vladimir Putin want? Russia’s President’s annexation of Crimea in the spring, and continued aggression since then, have made this one of the world’s most urgent questions. We need to understand what he wants if we are to figure out how much of a threat he poses and how to contain him. So far, most efforts to answer this puzzle have taken their cue from the 19th century, seeking to explain Putin either as a player of Metternich-style realpolitik, or else as a Greater Russian nationalist. Both versions miss what is new about Putin and the political problems he is trying to solve.
In analyses of what Russia will do next, there is a lot of discussion of the strategic interests of the Russian state. But to frame the question in that way is fundamentally to misunderstand political power in Putin’s Russia. Putin is the ruler of an authoritarian regime, but he has no revolutionary party or ideology to secure his hold on power—for this KGB apparatchik, it really is the case that l’état, c’est moi.
Putin poses a novel challenge to the world order because his political objective is new, too. His goal, since he first entered the Kremlin in 2000, has been to work out how to be an authoritarian ruler in a middle-income country and in a post-Cold War world in which the technology revolution has wired the global middle class. This is a project he shares with the world’s other authoritarian and would-be authoritarian rulers, which is one reason countering Putin is so important.
Looking at Putin through the lens of personal power is unfamiliar partly because so many foreign policy analysts prefer the abstractions of geopolitical chess to the messy, complexities of domestic politics. Nor does the Kremlin encourage us to understand its actions abroad as an exercise in shoring up its authoritarian regime at home—Moscow’s preferred explanation for its aggression is a reanimated Russian nationalism, whose emotional punch helps to compensate for its internal contradictions. (For instance, we are told that Russia should control Ukraine because there is no difference between Russians and Ukrainians, and also that Russia should control Ukraine because Ukrainians are fascists with a genetic animosity towards Russians). But viewing Putin as a neo-authoritarian ruler whose principal goal is staying in power is the best way to understand his seemingly erratic course over the past 14 years, and the necessarily improvised nature of the path he is charting now.
Putin rose to power, and began to build the authoritarian regime over which he now presides, in the wake of the failure of Russia’s experiment with democratic capitalism. In the 1990s, Russia made progress in that direction—much more than we often remember today. But the effort ultimately foundered. The turning point was 1996, when then-President Boris Yeltsin and his team, panicked by the political strength of the communists, gave the lion’s share of Russia’s natural resources to a handful of men in exchange for their support in the upcoming presidential elections. As a result, Yeltsin was re-elected, but both democracy and capitalism were deeply discredited. As Russians at the time liked to joke, “Everything Marx told us about communism was false, but everything he told us about capitalism was true.” Russia’s faltering democracy, if you could still call it that, was further weakened in 1998, when commodity prices plunged and an emerging crisis in the financial markets forced the country to default on its debt and devalue the rouble.
Enter Vladimir Putin. By the end of the 1990s, Yeltsin and his intimates had given up any grand ambitions for the country. Their goal was to stay alive, to stay out of jail and to stay rich. Putin, whose KGB background promised toughness and whose political biography demonstrated loyalty, seemed like a man who could deliver on these objectives. And so, in a deal brokered by one of the oligarchs who was enriched in the 1996 loans-for-shares privatisation pact (in which the government traded control of the country’s natural resources for political support), Putin was annointed President.
Having arrived in the Kremlin, Putin needed to figure out how to stay there. He faced some immediate problems. The machinery of the Russian state was weak. The Russian Federation itself was fraying at the edges, most notably in the Caucasus, where the Chechen drive for independence had not been fully quelled. And, while the undisguised handover of power to Putin showed that the Yeltsin clan had given up on the idea of democracy, not everyone else had. The educated, westernised middle class had found its economic footing during the 1990s, and it was starting to look for a voice. It had powerful allies in some of the oligarchs, particularly Mikhail Khodorkovsky, who was starting to use some of his wealth to build up Russia’s nascent civil society.
Putin decisively and brutally crushed these threats—he battered Chechnya into submission, in a war which killed tens of thousands; he brought the oligarchs to heel, starting with Khodorkovsky, whom he imprisoned and whose assets he confiscated; and he used some of Russia’s petro-wealth to rebuild the state. These crackdowns laid the foundations for the soft authoritarianism which Putin built in the early years of his rule.
In a country that had never been a democracy, establishing an authoritarian regime was the easy part. What was harder was seeing how to ensure that the regime, and its ruler, endured. In the 21st century, there is no easy answer to that riddle, and no obvious template.
Putin first tried what you might call “authoritarianism-lite.” Mass media, particularly television, came under his control, as did big business, especially in the natural resource sector. Foreign travel and private dissent were permitted, but any critic who seemed to pose an actual political threat was beaten, arrested or exiled. Putin’s state was firmly in control and no meaningful challenge was allowed to emerge. But as long as you didn’t threaten Putin’s monopoly on power, you could live a free personal life. And private business, outside the industries that the Kremlin deemed strategic, was at least nominally encouraged.
The Russians described this as the Pinochet or Asian model. The hope was that Putin’s authoritarian state could provide sound macro-economic management and stable government. These, in turn, would stimulate economic growth. The idea was to offer Russians a trade-off between democracy and prosperity. A lot of people, including western investors and western leaders (these were the days when George W Bush gazed into Putin’s eyes and claimed to have seen his soul), were convinced. The Yeltsin era had been intermittently democratic, but it had also been chaotic and corrupt. It seemed plausible, therefore, that a firm hand might be what Russia needed to become rich.
For a while, it seemed to work. Russia’s Gross Domestic Product (GDP) grew by an avergae of more than 5 per cent a year for the first decade of Putin’s presidency, and the country was named as one of the “Brics,” the four emerging markets whose explosive growth the investment bank Goldman Sachs predicted would transform the world economy.
But when you looked at those GDP numbers in a little more detail—as, for example, Mike McFaul, a future United States Ambassador to Russia, did in an influential 2008 essay in the journal Foreign Affairs—you saw that most of that growth came from high commodity prices. The problem for Putin was that the seemingly attractive trading of democracy for prosperity contained two large internal contradictions.
The first was that Putin and his inner circle wanted more than unchallenged political power. They wanted to get extremely rich, too. As the Russians put it, Putin wanted to rule like Joseph Stalin, but live like Roman Abramovich. You couldn’t amass that kind of wealth if you ran Russia like Singapore—you had to build a kleptocracy.
The second contradiction was even more troubling. Building an economically successful Russia in the 21st century both required and created an affluent, wired and empowered middle-class. The authoritarian-lite regime of the early Putin years rested on the hope that Russia’s rising middle class would attribute its prosperity to Putin, and that those who didn’t would leave.
For a while, that calculation seemed to work. But in 2012, when Putin, who had been serving as Prime Minister since May 2008, returned to the Kremlin in what many saw as a mockery of the very idea of democracy, the urban middle classes rebelled. Their protests were easily crushed and their leaders marginalised. But the demonstrations exposed, for Putin and his inner circle, the fatal flaw in authoritarian capitalism—if your system worked, you were sowing the seeds of your own destruction. Putin’s economic achievements were creating exactly the kind of wired middle class that would want to oust him.
That realisation was a turning point. If authoritarianism-lite didn’t guarantee Putin’s survival, the regime would need to find other sources of support. The obvious choice was nationalism. As the Soviet experience had shown, ideology can help to prop up authoritarian regimes that don’t deliver the goods economically.
Compared to communism, a fully developed social, political and economic system brought to power in Russia by a disciplined revolutionary party, or to the religious ideology that has kept the authoritarian regime in Iran in power for decades, Russian nationalism was a weak tool. But it was all Putin had. And so, over the past couple of years, the Kremlin propaganda machine strengthened its already extensive control over Russian mass media and civil society—today, for example, even bloggers need a government permit. It promoted a sense of Russian national identity which was at once injured and aggressive, and often closely tied to a sense of Russian ethnicity and to the Russian Orthodox Church.
By the autumn of 2013, the authoritarian capitalist economic model was faltering—growth was just 1.3 percent—and the state was promoting an increasingly strident version of Russian nationalism. Putin’s regime wasn’t wildly successful, but it was firmly in charge at home and preparing to celebrate its place on the world stage when it hosted the 2014 Winter Olympics at Sochi on the Black Sea coast.
What upset that fragile balance was Putin’s multiple miscalculations over Ukraine. They began with his view that Ukrainian President Victor Yanukovych had the authority to overturn his longstanding promise, which commanded wide domestic support, to sign a treaty that would formalise political and economic “association” with the European Union (EU).
In exchange for $15bn from Moscow, and possibly additional private inducements, in the autumn of 2013, Yanukovych announced that instead he would join Putin’s Eurasian Customs Union. At first, everyone, Putin included, hailed that volte-face as a Kremlin masterstroke. What no one counted on was the strength of Ukrainian civil society and its support for the European values that Ukrainians believed the EU deal upheld.
Putin’s next miscalculation was to believe that the “Maidan” uprising could be repressed by state force. Instead, each escalation of government violence against the demonstrators in Kiev exponentially increased public support for them. That dynamic culminated in mass violence in February 2014, when state snipers killed dozens of protestors in the centre of the Ukrainian capital. The resulting public revulsion was so great that even Yanukovych’s remaining supporters in the government abandoned him, and he chose to flee the country.
Denied his strategic objective in Ukraine—securing the country as a vassal state, ruled by a friendly fellow authoritarian—Putin took a strategic gamble which transformed the political map of Europe, and its geopolitics. He invaded Crimea by stealth, then formally annexed it. The west imposed economic sanctions, but not military ones, and strongly discouraged the Ukrainians from responding with force, too.
Rebuffed in his political efforts in Ukraine, but successful in his military ones, Putin took the obvious next step—he tried to replay the Crimean scenario throughout the vast swath of land in south and east Ukraine he has taken to calling Novorossiya. Again, the Ukrainians surprised him, and that effort was largely scuppered. The Russian-armed separatists only succeeded in taking control in the Donbass region in eastern Ukraine, and even there, throughout the spring and summer of 2014, Ukrainian forces steadily pushed back the insurgents. With Kiev on the verge of winning, Putin again escalated, directly sending in equipment and what Nato estimated to be around 4,000 Russian troops. The immediate result was a stalemate—a wobbly ceasefire, with the Russian-armed insurgents in effective control of about a third of the Donbass.
The nationalist underpinning to Putin’s power has grown stronger. He has expanded Russia’s borders for the first time since the collapse of the Soviet Union, and has faced down the west. That brought him, at least at the outset of the campaign in Crimea, a surge of popularity at home.
However, aggression against Ukraine has had severe implications for the Russian economy. Western sanctions started soft and came gradually, but they are now starting to bite—the European Central Bank estimates that $221bn in capital fled Russia in the first quarter of 2014, and according to calculations by UBS, the Swiss financial services company, Russian firms need to refinance $157bn in debt in the coming months, which will be well nigh impossible to do in western capital markets. Economists are predicting that, on current trends, the Russian economy will go into recession next year.
The consequence for Putin is that the old formula for shoring up his power no longer works in a new world of his own making. Previously, Putin had secured his rule through a combination of coercion, some measure of positive economic performance and rising nationalism. That equilibrium has been shattered. He must now decide whether to try to recreate it, or else to seek to build something else, with the new forces that he has unleashed.
In theory, one option would be to try to wind the clock back to February 2014. To do that, Putin would need to keep the peace with Ukraine and work to restore Russia’s standing as a reliable player in the global economy. And for all the harsh rhetoric from the west, Putin knows that such a rollback is achievable. That was the lesson of events in Russia’s smaller southern neighbour Georgia in 2008. In August that year, in response to a Georgian attack on separatists in South Ossetia, which had effectively been controlled by Russian proxies since the early 1990s, Russia blockaded a Georgian port, openly invaded Georgia and briefly occupied four Georgian cities. The western rhetorical response was fierce, but the political and economic reaction was muted. By 2014, Russia was enjoying global attention as the host of the Sochi Olympics.
The western, and particularly the European, response to the invasion of Ukraine has been much firmer. But after just a couple of months of an intermittently violated ceasefire, some European leaders are already calling for sanctions to be softened. The war against Islamic State in the Middle East and the tentative rapprochement with Iran give western chiefs another incentive to welcome Russia back into the global community.
All of which means that Putin can safely assume Russia and Russian companies could be reintegrated into the global economy with few, if any, concessions being demanded of the Kremlin. As long as fighting stops in the areas of Donetsk and Luhansk currently controlled by the separatists, and Russian-backed forces make no fresh forays into Ukraine, Putin could expect, after a decent passage of time, to return to his seat at the G8 table (Russian membership was suspended in March 2014), and Russian companies could start raising finance on western capital markets once again.
This choice would mean giving up on most of Ukraine—at least for now. Ukraine’s “association” agreement with the EU was ratified in September. The country has been radicalised by the Maidan revolution and the subsequent Russian invasion and is firmly behind President Petro Poroshenko’s declared intention eventually to join the EU. Pro-western parties dominated in October’s parliamentary elections, while both the far right and communists were routed.
Nevertheless, a Kremlin which opted for returning to the status quo now could hope eventually to bring Ukraine to heel. Russia has an arsenal of soft power tools for undermining Ukraine’s pro-western reformers, ranging from the time-honoured tactic of cutting off energy supplies, through blocking imports of manufactured and agricultural goods to transforming the separatist enclave in the east into a source of chronic destabilisation and corruption.
What is more, the Ukrainians themselves are pretty good at undermining their own revolutions. The leaders who came to power in the wake of the 2004 Orange Revolution were so ineffective in office that Yanukovych, a pro-Russian leader who had tried to steal the 2004 ballot, was elected President in 2010 in a free and fair vote. Today, Ukrainians are united behind Poroshenko, determined to resist Russia and confident in their decision to throw their lot in with the EU. But it is all too easy to imagine how a combination of Russian subversion and Ukrainian incompetence could, as it did in 2010, bring another pro-Kremlin leader to power in Kiev—particularly given the magnitude of the economic challenges that Ukraine faces.
For Putin, meanwhile, pressing on is the more dangerous route, but it promises a more substantial dividend. While the Russian upper-middle class is already feeling the squeeze of the sanctions, these measures are some way from affecting Putin’s own standard of living. And continued aggression, particularly when the west’s stomach for the fight is uncertain, offers Putin the potential prize of a presidency underpinned by nationalist fervour and military victory.
If Putin chooses this option, the imperfect calm in the Donbass will be our generation’s phony war, a period of respite before further aggression. Putin’s great tactical strength is his
fearless opportunism—he pounced on South Ossetia after then-President Mikheil Saakashvili’s ill-judged campaign; he snatched Crimea before Ukraine’s post-revolutionary leaders had found their new offices.
The outlines of such an aggressive approach are easy to discern. Abroad, Putin would fan the grievances of ethnic Russians outside the Russian Federation and look to build their domestic political capacity through his proxies. This work has, in fact, already begun. In September, Anatoly Makarov, head of the Russian Foreign Ministry’s Department for Relations with Compatriots Abroad, told a Russian-language Baltic publication that Russia would “do everything possible to defend the rights and interests” of ethnic Russians in the region. “We are pursuing a policy so that regardless of where Russian compatriots live they are guaranteed all rights and freedoms,” Makarovsaid, “and have the chance to preserve the culture and traditions of their historical motherland.”
The Kremlin fired another shot across western bows a few weeks earlier. Two days after US President Barack Obama visited Tallinn, Russian agents crossed the border into Estonia and abducted Eston Kohver, an Estonian counter-intelligence officer. As of this writing, he was still imprisoned in Russia.
The danger is that these are the preludes to a Russian effort to repeat, in those regions of Latvia and Estonia that are dominated by ethnic Russians, the hybrid war it fought in Crimea and the Donbass. The Kremlin has a lot to work with. Ethnic Russians account for a greater share of the population in Latvia and Estonia than they do in Ukraine, the linguistic and cultural differences between them and ethnic Estonians and Latvians is much greater, and they are already politically organised. In October, in parliamentary elections in Latvia, where Russian speakers make up more than a third of the population, a pro-Russian party supported chiefly by Russian speakers won more seats than any other party. Its leader is the Mayor of Riga, the Latvian capital. Toomas Ilves, the Estonian President, told me that Russian speakers in his country tend to accept the Kremlin version of events in Ukraine, because they get their news from Russian state television. Ethnic Russians make up about a quarter of Estonia’s population, and about 75 percent in one eastern county.
It is all too easy to imagine the Kremlin sending its “little green men”—the non-uniformed Russian armed forces seen in Crimea and the Donbass—into these communities and using them to break-up and destabilise Estonia and Latvia, as it has already done in Ukraine and Georgia. The beauty of this approach, from the Kremlin’s point of view, is that it disguises a Russian invasion as a domestic ethnic conflict. That sleight of hand, which helped to confuse the western reaction in Ukraine, would be even more significant in the Baltic states, which belong to Nato. In September in Estonia, Obama promised that Tallinn, Riga and Vilnius were as secure as London, Paris and Berlin. But would the west invoke Article 5 of the North Atlantic Treaty and come to the defence of the Baltic states if ethnic Russians living in Latvia or Estonia demanded autonomy and took up arms to achieve it?
Putin is already courting the allies in Europe who would take his side of that argument. Europe’s resurgent far-right parties are naturally sympathetic to his authoritarian politics, his emphasis on ethnicity as an organising political principle and his social conservatism. They also share his goal of weakening the EU. Russia has close ties, in some cases financial ones, with far-right parties in Europe. And far-right European politicians, including Marine Le Pen in France, supported Putin’s annexation of Crimea and sent observers to the referendum staged there in March.
Most importantly, Putin is tightening political control at home. He began his presidency by restricting the freedom and independence of the media, suppressing political opposition and making political loyalty a precondition for doing business in Russia. Things got worse in 2012, when Putin returned to the Kremlin and brutally repressed the Russians who protested that anti-democratic move.
But it was still possible to hope that Putin’s ambition was to be the kind of authoritarian ruler that the economist Mancur Olson has termed a “stationary bandit”—a tyrant who sought a monopoly on political power, but who also had an incentive to maximise national economic success because his own wealth depended on it. The release in December 2013 of Khodorkovsky, the oligarch who challenged Putin early in his presidency and was imprisoned, was one sign that the President might have decided he was politically secure enough to declare Russia open for business. Another was the Sochi Olympics, which were partly staged as a vast advertisement to attract foreign investment.
The Maidan changed all of that. The increase in political repression inside Russia was predictable—Putin’s first and biggest fear was democratic contagion. More surprising was his reaction to western economic sanctions. Since they were imposed, Putin has signalled two things—that his personal control over the Russian economy will be greater than ever, and that he wants Russia to become less connected to the economies of the G7 and more dependent on its own resources and its relationships with other authoritarian regimes, especially China.
Putin let Russia’s business leaders know they were on a tighter leash by ordering the arrest in September of Vladimir Yevtushenkov, one of the country’s richest men and the head of Sistema, a conglomerate with interests in oil and telecommunications. Yevtushenkov isn’t part of Putin’s inner circle: he made his fortune through his connections with Yuri Luzhkov, the Mayor of Moscow in the Yeltsin era. But his political loyalty had previously never been in doubt. In Russia, his arrest was widely seen as a warning to the country’s oligarchs that no criticism, however tempered or private, about the impact of the economic sanctions, and the foreign policy that had provoked them, would be tolerated.
Even more striking is the broader shift in economic strategy. Putin abandoned Yeltsin’s policy of pell-mell democratisation early on, but he largely stuck with his predecessor’s haphazard effort to transform Russia into a capitalist economy integrated into the global market. Since March, however, Putin has been moving in a different direction. He wants Russia to do business with China, instead of trading with the west, and has done an energy deal with Beijing. Instead of growing by becoming more integrated in the world economy, he wants Russia to become more reliant on domestic producers—Putin responded to western sanctions by banning imports of many western foods. Russians, he says, must again learn to feed themselves.
This shift in economic policy matters because it marks the end of Putin’s pre-Crimea model for governing. His deal with the Russian people had been that they would suffer political repression, but in exchange enjoy economic prosperity. Western sanctions have made that unsustainable. But instead of backing down, Putin has chosen a new economic path. The country’s past experience shows that it will make Russians poorer. That means Putin needs a different source of political power. Part of the answer is repression—witness Yevtushenkov’s arrest. Another is nationalist fervour, which is why Russia’s neighbours should be nervous. As a Russian saying has it, eating increases the appetite.
Part of what makes Putin’s expansionist pivot so hard for the west to grapple with is that the values on which it is based are more or less unfathomable to those of us raised in the postwar era of peace and prosperity. That bafflement was evident this September at the Yalta European Strategy conference, an annual gathering which has become Ukraine’s equivalent of the World Economic Forum at Davos and which this year, for obvious reasons, was held in Kiev rather than its usual venue, the historic Levada Palace outside Yalta, on the Crimean peninsula. In an onstage interview with me there, former British Prime Minister Tony Blair explained that while Europe was certainly very keen to sign an association agreement with Ukraine, it would never have occurred to European leaders to compel Ukraine to join. “We don’t force countries to be our friends,” Blair said with an awkward chuckle. “That would be absurd.” A few weeks later, the Scottish referendum, and the option it offered Scots to peacefully dissolve their centuries old union with England, showed that Blair’s point wasn’t just rhetoric.
When it emerged from the ashes of the Soviet Union in 1991, Russia seemed to be about to join the European mainstream, alongside countries which had decided, for better or worse, that their political alliances would be consensual and that their borders inviolable. Putin has now made it clear that these are no longer the rules that Russia will be playing by.
Putin’s macho posturing can be so crude and his double-speak so transparent that it is easy to lose sight of how effective the Kremlin’s foreign communication strategy has been. All the talk of a mystic Slavic brotherhood, of feelings of national humiliation, of responding to the threat posed by Nato and standing up for a multi-polar world has done its job.
It has also obscured what it is that Putin really wants. That is quite simple. He is a dictator whose thirst for power has eroded the economic prosperity his rule had hitherto partly rested upon. Foreign conquest is an obvious distraction and substitute.
At a time when the west is grappling with the distinctive challenges of the 21st century—“secular” economic stagnation and the threat of climate change to name only two—this can all feel somehow less urgent than it should. That is what Putin is counting on. He is hoping that we will be too preoccupied with the unprecedented problems of a globalised, post-industrial world to challenge his attempt to return Russia and its environs to the 1950s.
Obama may have thought his description of Russia as a mere regional power that poses a purely regional threat was a clever snub. In fact, that is exactly how the Kremlin is seeking to frame its aggression in Ukraine—as a dispute among Slavic nations, of little consequence to the rest of us. Unfortunately, it is much more than that. Angela Merkel, the western leader who understands Putin best, appreciates this, and has begun to say so. In Australia for the G20 meeting in November, she insisted: “All of a sudden, we see ourselves confronted with a conflict that seems to be an attack against the very heart of our values. We have to prove that we’ve learned something from the past.”
After nearly a decade and a half of zigzags, Putin’s Russia has chosen its path. Today it is an authoritarian state, with expansionist ambitions, that does not consider itself bound by international treaties and norms. To secure his power at home, Putin has decided to test its limits abroad. Whether it is in Ukraine, or elsewhere, one day we will have to stop him.