Friday, June 1, 2012

President Putin Redux


PP Shukla,
Joint Director, VIF

Even with the North Atlantic orientation of today’s
European policy, we cannot forget that NATO and
Europe are not one and the same thing. And I’ve already
said that Russia is a country of European culture, not
NATO culture.

- Vladimir Putin, First Person

On 7 May, as has been happening every four years since 2000, a President was sworn into office on the Kremlin in Moscow. Vladimir Putin took the oath of office for the third time – actually for the fourth time, since he had been acting President since late 1999. It must have been quite a contrast for him. When he took office duly elected in May 2000, he told the Russian people that his predecessor, Boris Yeltsin, had handed over power to him with one plea: “Save Russia”. And at that time, it was a big ask. Russia was going through fresh convulsions, economic and political, and the ailing Yeltsin was demonstrably unequal to the task.

It is to the credit of Putin that he did indeed save Russia. He did more: he restored it to the level of a great power. He brought stability, he ended the free-for-all that Russia, including even its capital city had been reduced to. And he oversaw a revival of the country’s economy as well. As a result, by the early 2000’s, Goldman Sachs had identified it as part of the BRIC economies whose future was to become one of the major economies in the world. True, not all of this was Putin’s doing, but in large measure it was, and he had created the stability that was so essential for the economy to take advantage of the commodity boom that was to follow. And a grateful populace indicated its recognition of his role by giving him a degree of support that - even after discounting for some exaggeration in the opinion polls – most democratic leaders can only dream of.

But time marches on, new events occur, the stability and other basics begin to be taken for granted. Memories fade, and new ideas emerge. Above all, a new President had to be elected as the Russian Constitution allows only two consecutive terms to an incumbent. Medvedev held the job for four years, starting in 2008, and in both tone and substance, his approach to governance was markedly different. Some degree of popular impatience with the “sovereign democracy” that was the flavour of the Putin-Medvedev era was clearly manifest, especially on the streets of Moscow and St Petersburg. The irony was that these were the cities that had gained the most from the policies of Putin, and he himself is a native of St Petersburg.

This would explain why the return of Putin as President has not been welcomed with the enthusiasm that he certainly feels entitled to. Public opinion has clearly shifted in the four years of the Medvedev Presidency, and this has targeted both the leaders, as well as their Party, the United Russia Party [URP]. This would also explain why there have been street demonstrations against both the Parliamentary elections that were held last December [won by URP of course, though with a diminished mandate], and the Presidential elections in March.

Anyway, Putin is in power now for six years – the term of the Presidency was increased to six years by Medvedev in one of his early acts as President, and it is important to try and understand his [Putin’s] persona and current strategic views. It would be important to recognise that the situation in Russia – indeed all of Europe – is fluid, and there are few certainties, including of politics in the continent.

A look at his views as they have been since his first term as President suggests that he sees Russian interests best served in a strong European tie-up. This is coupled with an understanding [right or wrong] that Europe and America are distinct cultures, as the quote given at the opening of this article indicates. This is coupled with a strong personal German exposure during his career in the KGB, with the result that he speaks fluent German, and is well acquainted with the culture. In his early book – a long interview actually – “First Person”, he describes with feeling how he was impressed by Helmut Kohl of Germany, and observes: “And it was especially gratifying to hear him [Kohl] say that he couldn’t imagine a Europe without Russia”. This view has been only reinforced over the years, and German Chancellors like Schroeder have been particularly close to Russia and to Putin. [It would be fair to say that Medvedev is more exposed, and sympathetic, to the Anglo-Saxon world and culture.]

Putin has revealed his attitude very early in his new stint as President. He blamed the street disturbances on the Americans even before he took office; and he has declined to attend the G8 Summit in America. The message clearly is that America is not to be his first visit outside the CIS. In fairness, President Obama also did not help matters by declaring that Putin had one leg in the Cold War era, and demonstrating a clear preference for dealing with Medvedev. Nonetheless, the fact that Putin has retained Medvedev as Prime Minister and sent him to the G8 Summit, suggests that he [Putin] is pragmatic enough to see that the American relationship is important enough not to be damaged just in order to make a point. Of course, this move to stay away may also play into the American Presidential elections, and Putin would not mind that either, for he is not one to forget a slight.

On present indications, the first country Putin is likely to visit outside the CIS will be China. It is reported that there is to be an SCO [Shanghai Cooperation Organisation] Summit, and he will be going for that. This makes it doubly significant, for he is also signalling the importance he attaches to SCO, in contrast to his attitude towards the G8. In turn, China has welcomed Putin’s return to the Presidency. An article in the People’s Daily, under the title “A stable prosperous Russia under Putin is good for China” hailed his electoral success, adding that he rode “a wave of popularity for his no-nonsense incorruptible image” – just the sort of message that would please him.

It is also instructive to examine Putin’s inaugural speech. It is a short speech, as all his inaugural speeches have been, but there is this significant passage: “We must all understand that the life of our future generations and our prospects as a country and nation depend on us today and on our real achievements in building a new economy and developing modern living standards, on our efforts to look after our people and support our families, on our determination in developing our vast expanses from the Baltic to the Pacific,and on our ability to become a leader and centre of gravity for the whole of Eurasia.” [Emphasis added].

This idea of Eurasia is very much part of Putin’s persona, and embraces both a strong tie-up with Europe and Germany as its anchor, and with China at the other end of the Eurasian land-mass. In the same speech, Putin also praised Medvedev for the work he did as President. The latter also spoke at the inaugural ceremony and hinted that the civil and social changes he introduced need to be preserved. This could contain the seeds of future trouble between the two men.

On the same day that he took office, Putin signed a number of Executive Orders, some five in number; of these, three are of immediate interest, as they also tell us something about the priorities that he will follow. They concern Demographics, the Economy, and Foreign Policy. Each of them is worth considering in some detail. The Russian population has been in steady decline for some decades now, particularly the Slavic part. Despite Governmental efforts, this trend has not been arrested. There is not only the question of maintaining the population growth at a level that would be enough to replenish the labour force, important though that is, there is also the problem of depopulation – over time – of the Siberian region. A very small part of the population lives in these regions, no more than 7 million in the Far East. Facing them across the border is a Chinese population that is some 120 million, if not more. At the moment, the problem has been contained, despite scare stories to the contrary in Russian lore, and the number of Chinese settlers, registered and unregistered, in the area are not more than half a million at the most. But the potential imbalance is too serious to be ignored. The Order issued by Putin calls for more incentives to all families that have three or more babies; nothing really new here. The important element is the suggestion that migration is to become a serious effort to address the labour shortage. Again, this is not entirely new, and there are migrants from the CIS in large numbers. But the intent here appears to be to cast a wider net, something that has been bubbling under the surface for some years now. The document is short on substance, but this is a thought that has found high-level expression, and will need to be followed carefully.

On the foreign policy side, there are a number of important indications of what we may expect. The order in which issues are taken up may be taken to reflect their importance. The list of tasks begins with international issues like terrorism, proliferation, drug-trafficking, etc. Then comes the regional prioritisation, and the first area listed is the CIS. Next comes the European Union, where the most important subject is Energy cooperation and the need to develop a common space in this sector. Asia-Pacific is the next and there is the following formulation used to define priority tasks: “deepening equal, trust-based partnership and strategic cooperation with China, strategic partnership with India and Vietnam, and developing mutually beneficial cooperation with Japan, South Korea, Australia, New Zealand and other key nations in the Asia-Pacific region.”

Until recently, India and China were mentioned on par with each other, but here the standing of China is clearly enhanced. There is a suggestion that the two countries are not only trusted partners, but that they also cooperate at the strategic level. This is a trend in Russian thinking and action that needs to be watched carefully. China is the only major power that has shown some understanding of Russian concerns over Western policies towards it, notably Ballistic Missile Defence deployments in East Europe, and NATO expansion, and this has been well-received in the Russian elite policy circles.

The US is the next to be mentioned, and has the distinction of being only one of four countries mentioned in a stand-alone formulation. There is nothing unexpected in the details of policy priorities but it is important to note that there is an explicit reference to the threat Russia perceives from the American plans for a global missile defence system. This is one of the major Russian concerns, as mentioned above, and will continue to bedevil relations. Obama was overheard asking Medvedev to ask Putin to give him some time to work through this issue after the election, but Russia will clearly not cut any slack on this one.

The other countries that get a stand-alone mention are Afghanistan, Iran, and North Korea – all problem areas that concern Russia deeply. There is nothing remarkable in the formulations, though it is worth noting that on Afghanistan, the Order mentions the importance of SCO and of CSTO [Collective Security Treaty Organisation – a grouping of some former Soviet states], and of the Russia-NATO Council. But there is no direct mention of NATO itself, which is odd considering that the Russians at various times have indicated their desire for ISAF not to pull out prematurely from the country.
The economic policy contains some of the expected targets, such as on ease of doing business. But the most significant hint is that concerning the main State monopolies on aircraft manufacturing and ship building. There is a hint that the monopolies hae not performed as expected, and they are to be audited for their performance. These were monopolies from the Soviet times, which were broken up in the 1990’s, then re-consolidated under Putin himself. They have clearly not performed up to the mark, and it is not surprising that their functioning is to be examined. But the approach is still decidedly statist, and it would be fair to say that this is not the thinking that guided Medvedev in his policies as President.

An important aspect that deserves close attention going forward is the nature of the Defence cooperation between Russia and China. After some serious problems in the mid-2000’s, things appear to have got better lately. A recent statement by one of China’s Deputy Ministers emphasised the importance of this in the bilateral strategic partnership between the two countries. and the financial problems of the Russian Defence industry would make China an attractive partner. There are continuing problems over IPR issues, no doubt, but this is where the dynamic between the financial problems and the overall relationship on the one hand, and the IPR issue on the other will bear watching.

The early personnel changes have also been announced. There are some changes in the Government Ministers though the Ministers for Foreign Affairs, Finance and Defence remain unchanged. The most intriguing aspect of the change is the dropping of the powerful Deputy Prime Minister, Igor Sechin, who controlled the Energy and Fuel complex. It has now been announced that he is to become CEO of the State oil company Rosneft – a clear demotion. There were suspected differences between him and President Medvedev, but this looks like a concerted move by both the leaders in the new tandem, Putin and Medvedev.

The removal of Sechin from the post of Deputy Prime Minister opens the way for a Medvedev protégé – Arkady Dvorkovich – to take his place as the overall in-charge of the Energy and Fuel Complex. The retention of Igor Shuvalov as First Deputy Prime Minister, and the only such [there were two First DPM’s in the outgoing arrangement] is another indicator of a willingness to reach out to the West for deeper economic engagement. It is also worth noting that Vladislav Surkov seems to have been forgiven for the disappointing performance of the United Russia Party at the Parliamentary elections and is now to be the Head of the Government Staff, a powerful post. None of the three has any exposure to India, and this would suggest that we would have to continue to work at the top leadership levels in order to keep the economic relationship healthy.

Many of the Ministers who were in charge of economic and social portfolios in the outgoing Government have been moved to the Kremlin as advisers to Putin. This suggests that he will run the Government with tight control over decision-making, and with the help of the team that he had with him as Prime Minister. But perhaps the most important move from the old Government team is the complete rehabilitation and return to power and trust of Sergei Ivanov, who was earlier the Deputy Prime Minister. He was a candidate for the Presidency and very close to Putin in 2008, but Putin chose Medvedev over him then. Ivanov was brought in as the Head of the Presidential Administration in December last year, while Medvedev was still President. However, it was clearly a preparation for the new President, namely, Putin. The position of Head of the Presidential Administration is effectively the most important position after that of the President himself in the Kremlin. Ivanov, who speaks fluent English, knows India well and will be an important channel for developing ties between the two countries.

For India, it is important to take note of the changing overall outlook in the Russian establishment. Nothing drastic is expected in our bilateral ties, and the relationship is strong and stable, as is shown by the quality of the Defence and Hi-tech cooperation between the two countries. The importance of India is also reflected in the positive reference in the foreign policy priorities, even though it comes below China and the description is of a lesser order.

However, of late, our high-level dialogue has been losing the quality it had during Soviet times, or even early in the 2000’s, and is becoming formal and transactional. There is also the changing Russian attitude towards Pakistan. It is not as yet a cause of concern, but the pace of development of the relationship will bear careful scrutiny in the coming months and years. This is almost a Russian reflex: whenever they fear that India is getting too close to America, they reach out to Pakistan. While it may have been a viable approach in the 1960’s and 1980’s, it would be serious mistake in the current context, and it is to be hoped that those in Moscow who understand South Asia well will see the pitfalls of this policy.

All in all, this adds up to a very ambitious approach to Russian policy and ambitions. The big question is whether this is feasible. The Russian system has atrophied quite a bit since the days of the USSR. The kind of capabilities it had in science and technology, in defence, in space – all this has suffered attrition. Above all, their long-standing weakness in economic thinking and management, especially in the context of a market economy, and a probable slowdown in the commodity boom, is going to prove to be a serious challenge. There is also going to be unprecedented resistance to Putin’s vision and programme – it does not take much to see that. The street demonstrations after the Parliamentary and Presidential elections were among the largest since the fall of the USSR. The public mood is changing, and the media are reflecting a desire for more changes – once again in a liberal direction, after the control they accepted in the early period of this century. If the leadership is up to the challenge of adapting to the new circumstances, economic and social, Russia can look forward to another period of stability and economic growth. As a major power on the global scene, Russia will be an important factor in the emerging shape of the world, one way or another.

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