Take a peek at David Cay Johnston’s latest piece:
http://blogs.reuters.com/david-cay-johns ton/2011/12/13/wheres-the-fraud-mr-presi dent/

Russia has a shadow economy worth approximately 44% of their GDP! This is much higher than in any other major industrialised economy. Virtually every company in Russia has a dual accounting system: “white” and “black”; “above” or “below” the table… And virtually every major transaction in Russia (including peoples salaries) has a “white” and a “black” component. Corruption is absolutely pervasive in Russia. Companies that do everything above-board find it very hard to compete in Russia.

Now think… Does this black economy make the Russian government MORE or LESS powerful, relatively speaking? Would the Russian government not be much more powerful if (say) 80%-95% of their GDP was taxed and above-board? The only possible power-advantage gained by government officials from the perpetuation of the present situation is that they may safely presume that their personal enemies are engaging in corrupt shadow accounting tricks; and turn them over for prosecution in full confidence that wrongdoing will be discovered. But why would Putin or Medvedev need such pervasive corruption, just to handle a few personal rivals, if they’re already at the top of the social order, and on balance, they would be made far more powerful by a reduction in corruption than by a perpetuation of it? It doesn’t make any sense.

If Putin had an iron grip on everything that happened in Russia, do you think that Russia’s black economy would be so big? NO WAY! It’s like saying he’d shoot himself in the foot… I think we would all agree that the man is intelligent enough not to do that. That’s probably what scares some people in the West: he’s actually intelligent enough to sit on the other side of the negotiating table and get a good deal for Russia.

So if we’re going to criticise him (and I have no doubt whatsoever that valid criticisms are possible); can we at least make our criticisms self-consistent?

a) to get rid of Putin?
b) to change because there is a strong, united, political block ready to take power, backed by a large share of population and we are certain this new block will do good things for Russia?

If by any amazing miracle you find a) to be the answer you should further ask yourself why. To spare you the effort i’ll hint that you should look for that answer in the latest UN Council positions taken by Russia.

I would be surprised if the Kremlin staged both of these rows in anticipation of current events. If they had, then they would have done a better job of concealing election fraud. The sense here in Moscow now is that Putin is definitely on the back foot. It’s no revolutionary Arab awakening, as declining demography, emigration and economic growth have combined to create relatively abundant jobs for Russian youth (usually unburdened by rent or mortgages), but perhaps Vladimir Putin is no longer the most powerful individual on the planet.

It is of course possible that Kudrin and Prokhorov have been subtly co-opted by the Kremlin, though I get the sense that Kudrin is genuinely a liberal and that Prokhorov is “pro-business.” Whether or not the Kremlin is behind this or not is a moot point: even if Kudrin and Prokhorov were really independent, they would still be perceived as being too close to Putin. Again, what matters are personal relationships in this system of manual control, and Kudrin is a close friend of Putin’s, and Prokhorov has depended for so long on his benevolence. Furthermore, with the Communists being the strongest opposition party, it is highly unlikely that an oligarch (reviled for perceived theft of national natural resources) protected by Putin and a long-serving minister under Putin could ever set up a credible opposition party. But change might just come from within . . .

So the Kremlin may be toying with reform, but it doesn’t have much of a choice: whether it co-opts liberals or not, something has to give, as Russians refuse to continue being treated like cattle. The good days are over for Mr. Putin.