Putin’s (un)happy new year

By William E. Pomeranz
December 31, 2013

Russian President Vladimir Putin has bid farewell to 2013 with his state of the nation address, followed closely by his annual 4-plus-hour marathon news conference. He even managed to appear magnanimous, notably in his decision to pardon the imprisoned oligarch Mikhail Khodorkovksy.

He is setting the stage for the main event: the Sochi Olympics.

But as Putin subtly warned in his final 2013 appearances — and as the Volgograd bombings so graphically confirmed — major changes must come in the new year. Putin virtually admitted in his December speeches that the current path is not sustainable, while the Volgograd bombings have increased the urgency to face up to Russia’s problems.

The president particularly vented a growing frustration with Russia’s status quo. In his address, for example, Putin returned to the issue of Russia’s crippling capital flight and prevalent use of offshore structures to avoid Russian taxes. He emphasized that he raised this matter a year ago, but “since nothing significant has been achieved,” he proposed new measures to ensure that Russian-owned offshore companies pay their fair share in taxes for the privilege of conducting business in Russia.

Putin displayed exasperation with other aspects of his stalled agenda. We are “always discussing” the question of how to make more land available for home construction, Putin insisted, yet no progress is made. He blamed bureaucratic incompetence and corruption, demanding that this be resolved in the next few months — though he provided no immediate solutions.

Putin also complained about his reforms in healthcare and education. A year and a half had passed since he had issued executive orders, he insisted, yet “things are done in a way that elicits a negative reaction among the public, or nothing is done.”

Putin has used other controversies to express his irritation with the pace of reform. He lashed out, for example, when several ministers complained about his unilateral decision to return some tax investigatory powers to regular criminal investigators without necessarily requiring them first to consult with tax authorities and to confirm that a tax violation had occurred. Such a process previously had led to prosecutorial abuse and the excessive filings of tax claims against Russian business.

Even Prime Minister Dmitry Medvedev felt compelled to object here, since the former president had been responsible for removing this authority from criminal investigators in the first place. In response, Putin loudly complained about members of the government discussing confidential matters in the media and warned that if they persisted, they could follow former Finance Minister Alexei Kudrin’s example and join the non-profit world.

Putin’s scattershot complaints often manage to rebound against him — though he does not seem bothered by this. Notably, his state-of-the-nation address criticized the existing legal mechanisms for resolving business disputes and called for improving Russia’s system of third-party arbitration. Yet it is Putin’s own inexplicable decision to merge the commercial courts with the courts of general jurisdiction that has put Russia’s ability to handle basic economic disputes in question.

Putin’s criticisms reflect his own vulnerabilities. It is, after all, under his 14-year reign that government has grown more corrupt and the economy has floundered. He must also be looking over his shoulder to the Ukrainian crisis — where economic collapse has again endangered a post-Soviet regime’s stability.

Putin has already gathered enormous legal authority to respond to any potential challenge inside Russia. Within months of returning to office in 2012, Putin pushed through a series of laws — on public protests, NGOs, treason — open to broad interpretation. These can be used at any time to crack down strongly on the opposition. The Duma recently approved legislation that would give Russian prosecutors the unilateral right to block any website calling for mass unsanctioned protests.

Putin looks ready to defend his grip on power, and has selectively used the courts over the past year to deliver this message. Moreover, while Putin’s state-of-the-nation address talked about the importance of open government, his support of nonpartisan public oversight stops well short of actual competitive politics. So a liberal political solution does not appear to be in the cards for 2014.

In fact, the major check on Putin today appears to be the Winter Olympics. The world is coming to Sochi in February, and Putin does not need another anti-gay law to spotlight Russia’s controversial policies. His pardon of Khodorkovsky — along with the recently announced amnesty for Pussy Riot, the Bolotnaya demonstrators and the Greenpeace activists — demonstrates his desire to resolve these difficult political issues before the games start.

Come the end of February, however, the Olympics will be a memory. Regardless of whether the Volgograd bombings portend more short-term security crises, they are symptomatic of what awaits Putin in 2014. Indeed, no matter how the games turn out, either an emboldened or a weakened Putin will need to address Russia’s mounting economic and social problems.

A new prime minister and ministerial shuffle may be in the offing — if only to give Putin some political separation from the country’s messy realities. Putin probably also needs to do something more dramatic to jump-start Russia’s stagnant economy and revive his stalled domestic agenda. His natural inclination might be to squeeze the current system even harder — but as Putin’s own comments suggest, that system has already exhausted itself.

For Russian politics, 2014 promises to be an interesting year.

 

PHOTO (TOP): Russian President Vladimir Putin takes part in a meeting on social and economic development in Moscow’s Kremlin, December 23, 2013. REUTERS/Mikhail Metzel/RIA Novosti/Kremlin

PHOTO (INSERT): Pussy Riot members Nadezhda Tolokonnikova (R) and Maria Alyokhina walk outside Yemelyanovo airport in Krasnoyarsk, December 24, 2013. REUTERS/Ilya Naymushin

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