In Russia, Its Just Business Ronnie Smith

In Time magazines edition of February 20, Fareed Zakaria wrote briefly about the paradox that is Vladimir Putin and his performance as Russias strongman (How Oil is Propping Up Putin). I have a great deal of respect for Mr Zakaria but in his analysis of politics in Russia during the Putin era he, like many others, look at things from entirely the wrong perspective. Russian politics are not political as we understand the term, they are corporate in nature and Mr Putin is the CEO. The board of directors of Russia Inc, the real regime of ex-security services officers known as the Siloviki, appointed Mr Putin and supervise his work. They alone are Mr Putins constituency and his job is to ensure that they retain their power and their ownership of Russias vast mineral resources. Everything else that western commentators like to see and over-complicate is simply an interlinking network of smoke and mirrors. For example, Mr Zakaria points to a series of essays recently published in a leading Russian newspaper. They point to a growth in the importance of Russian civil society, of the need for the rule of law to be enforced at all levels of Russian society, of the need for the stranglehold of corruption to be broken. The articles are supposedly authored by Mr Putin himself and this is the paradox that Mr Zakaria struggles to deal with in his Time article because Mr Putin presides over a regime that crushes Russian civil society, obstructs the rule of law where necessary and encourages and uses extensive corruption to reward its supporters. Mr Putin certainly did not write these articles, they were produced by political advisors as part of his presidential election campaign and are as much for western consumption as they are for Russias electorate. Chief among his advisors is Vladislav Surkov, the man who delivers the smoke and mirrors and creates the impression that a near-normal democratic political system exists in Russia. Mr Putin has been CEO of Russia Inc. since 31 December 1999 and will certainly be re-elected as President at the elections to be held on 4 March this year. During his time in office, whether as President or Prime Minister he has protected the interests of his constituents in a number of ways. In the early days Mr Putin and his supporters faced a number of challenges from some friends of the previous President, Boris Yeltsin. These people had been allowed to buy ownership Russias mineral resources and utilities very cheaply and thus become extremely rich. They are, of course, known as Oligarchs and they became legends in the world of international business because of their absurd wealth. Some of them had political ambitions and posed a threat to the power of the Siloviki; in particular, men such as Boris Berezhovsky and Mikhail Khodorkovsky. .

Mr Putin either destroyed or neutralised each of these threats in the classic Russian way. Mr Berezhovsky is exiled in London in fear of arrest and imprisonment if he returns to Russia or of assassination if his criticisms of the Siloviki become too credible and dangerous, at the moment he remains a risible fantasist. Mr Khodorkovsky is in prison having been convicted of various crimes, secure in the knowledge that new crimes will be unearthed by diligent investigators whenever each current sentence approaches its end. Men such as Roman Abramovich and Oleg Derepaska have agreed to forget any political ambitions they may have had and have been allowed to live very comfortable lives in businesses that do not directly annoy the regime. Note that Mr Berezhovsky and Mr Khodorkovsky remain alive to provide Mr Putins regime with leading cast members in his narrative of protecting the motherland from traitors and external enemies. They are the black hats to Mr Putins John Wayne. There are others who we have not heard of who either simply disappeared or were lost in sundry terrorist attacks or plane crashes. In the mean time, Mr Putin has been able to restore most of the assets stolen by the Oligarchs to Russia Inc., ensuring his own and the Silovikis control of the country. Mr Putin has either closed down or taken control of most of the countrys media. A small number of independent companies are allowed to exist but they join the other black hats in giving the regime enemies to point to. They also act as a safety valve for the chatter of liberal opinion. Journalists who wander too far off-piste are simply killed in sub-contracted operations after which the murderers are never found or convicted. The Russian people are fed a daily diet of good news, by state-owned or friendly media, concerning Mr Putin and his presidential/prime ministerial colleague, Mr Dimitry Medvedev. When elections approach many independent media are shut down, suspended or increasingly intimidated. In some cases these companies are bought by friends of the regime after which, any independent-minded staff are encouraged to find alternative employment. For a short time the position of Regional Governor offered ambitious people the opportunity to obtain and flex some political power. This is how General Alexander Lebedev achieved his brief political leverage with the regime and allowed him enough national coverage to think of a presidential bid. However, Mr Putin understood the threat very quickly and passed legislation resulting in Regional Governors being appointed directly by the President him. The Russian Parliament (Duma) has been dominated by the United Russia party during the Putin era. United Russia was created after Mr Putins appointment to the Presidency precisely to support him in the Duma. It is not therefore a political party as we understand it. It simply gives Mr Putin political reach in the country and votes unanimously for everything he wants. In the same way, Mr Putins advisors created the related youth movement Nashi, to push Mr Putins nationalist agenda on the streets, as forcefully as possible.

Mr Putin is the movement, he is the ideology, the raison dtre. Neither he nor his supporters present a comprehensive range of public policy in Russia. Its either him - John Wayne - or the weak and discredited opposition. That is the only choice offered to Russians at each election since Mr Putin took office. And be clear, Mr Medvedev is Mr Putin. Day-to-day business in Russia is a difficult and stressful affair. Russian businessmen do not share and, if they find themselves working in partnership, either domestically or with an international company, they will seek to take the whole business by whatever means within three to five years. Ask British Petroleum about their experiences with BP-TNK. To be successful, a businessman in Russia needs a lot of cash to buy favours and a network of good connections that ultimately include a member of the Siloviki to provide protection. Without cash the necessary bribes that allow the quick resolution of government permit and certification problems, the business will never launch. Without the protection of good connections, the business can be closed or simply taken by someone in competition who does have the right connections. In this case there is no recourse to law because no investigator or judge will go against the senior member of the Siloviki who tops the connection network. Similarly major business contracts, in every economic sector, are only awarded to those with the appropriate connections and the Siloviki get a percentage of everything. Much has been made, in western media, about recent political events in Russia. We have been outraged by United Russia and the regime showing over-confidence by openly rigging the recent Parliamentary elections. There have been loud complaints about Mr Putin returning to the Presidency after one term as Prime Minister and about Mr Medvedev not standing up to him but simply accepting his continued role as useful side-kick in the Prime Ministers office. There has been a great deal of enthusiastic support for the hundreds of thousands of Russians seen on the street demonstrating against Mr Putin, without any real understanding of who these demonstrators are and what some of them want (scary doesnt cover it). There are little green shoots of hope among western commentators waiting for the liberal democratisation of Russia. Forget it! In the main Russians are not liberal democrats. Moscow and St Petersburg are not the only places in Russia and life beyond, both physically and intellectually, is very hard indeed. Russians fear chaos and love strength above all else and while they do have genuine issues with Mr Putin and his board of directors in the Siloviki, they see no credible or viable alternative among the fractured opponents of the regime. Given any kind of choice at the moment, they would simply vote for another Mr Putin if the current model was unavailable and he would only be unavailable if the Siloviki chose to remove him.

The regime holds all the cards in Russia and some international cards too, through its corporate foreign ministry at Gazprom. For as long as the world prices of gas and oil remain in the regimes favour and they can maintain levels of ridiculous comfort for themselves and their supporters, nothing is going to change in Russia anytime soon. Ill say it again, Russia is corporate not political. To understand what is going on there, always follow the money. For example, Russia does not appear to support the Assad regime in Syria because Mr Putin is a friend of Mr Assad. Russia has a very lucrative arms contract with the Syrian government and the Siloviki want to see it completed with full payment made and to sign other arms contracts with Syrias few remaining friends. Its just business.