Can Washington undermine Russia’s elite from within?

Putin himself has said that he will step down; he has stated repeatedly that he holds the Constitution sacred. The elite is worried. Unlike ordinary citizens, the elite does have something to lose.

The principle of blaming everything on a new leader’s predecessor has been used in our country since time immemorial. Our recent history is no exception. Although President Vladimir Putin has treated Boris Yeltsin with honor and respect, there are numerous examples of politicians and experts lauding the present administration while condemning the Yeltsin era as a disgrace – although they had expressed quite different opinions when Yeltsin was in power.

Putin himself has said that he will step down; he has stated repeatedly that he holds the Constitution sacred. The elite is worried. At the level of human emotion, this is understandable: they’ve grown used to this system, adapted to it, fitted themselves into the tree of government – some as large branches, some as twigs, others as mere leaves. But the essential purpose is common to all: being in power.

The most officious of them have presented proposals to amend the Constitution, or to bypass it by establishing a Union State, claiming that this is necessary in order to maintain stability. Others – such as Alfa Bank, for example, in its much-discussed analytical report – have tried to argue that a third term for Putin is necessary in order to make the Russian market attractive to investors. The motivations may be different, but the essential point is common to all: the elite is scared. Unlike ordinary citizens, the elite does have something to lose. With each and every zig-zag in our country’s history, some people always get left by the wayside – and nobody wants to experience that.

All the same, there will be a fundamental difference in the forthcoming changeover of administrations, the departure of Putin, and (most importantly) Putin’s role after he hands over the helm to his successor.

Firstly, it’s hard to imagine that anything could bring down the high level of public confidence in Putin. Moreover, he will obviously remain popular over the next few years, well past 2008. Secondly, Putin’s political influence certainly won’t disappear as soon as Russia’s third president is inaugurated. The state administration system Putin has created requires the presence of Putin himself as the basic requirement for its functionality. Thirdly, even in the highly unlikely event that the opposition comes to power in 2008, any new administration would need Putin as its chief stability factor. Whether he would agree to play such a role in those circumstances is a different matter.

Thus, Putin could become Russia’s first ruler to cause a break in our long-standing tradition of blaming predecessors.

All this is so obvious that it probably wouldn’t be worth discussing, were it not for a number of circumstances.

First of all, some regional leaders seem to be in a great hurry to secure reappointment for another term in office. The latest example is President Murtaza Rakhimov of Bashkortostan. Why the rush? His term isn’t due to expire until the end of 2008. He has long since eliminated any substantial rivals and opposition movements. All he has to do is wait for the federal changeover to happen, and let the new president decide who will run Bashkortostan for the next five years. Of course, many arguments in favor of early reappointment could be found; still, all this points to the conclusion that some members of the regional elites doubt that Putin will retain his influence after leaving office.

The behavior of some private companies is also surprising. There’s Alfa Group, for example. On the one hand, it is integrated into the current regime; on the other, it’s quite politicized and has extensive contacts with the business community and the political class in the West. Of late, there have been some curious fluctuations in the strategy of Alfa Group’s telecommunications component.

For example, when Alfa Bank President Petr Aven met with Putin on August 9, he said that Alfa intends to establish a major telecommunications company, with Alfa (as represented by Altimo, its telecommunications subsidiary) as the chief shareholder, and “most assets located in Russia, or further afield in the CIS.” Regardless of its business value, this idea could become a substantial source of support for Russia’s policies in the CIS. This particularly applies to our efforts in problem countries such as Ukraine and Moldova.

Presumably, this line of strategy entirely contradicts the intentions Aven described to Putin. What does this mean? Does it reflect some confusion within Alfa Group’s management team? Or is it a policy of double standars – saying one thing and doing another?

This question can be answered if we look back at a report released earlier this year: “Russia’s future as seen by investors and international politicians.” This report was immediately attributed to Alfa Group’s analytical structures. Its essential argument is that the current policy course of Russia’s authorities will sooner or later lead to a reduction in foreign investment and Russia’s economic isolation. At the time, Alfa Group denied responsibility for the report. As I have noted in past articles, these denials involved a certain amount of duplicity. And now we have some indirect evidence that Alfa’s real strategy was indeed formulated back then.

A recent report entitled “A probable scenario for US actions with regard to Russia in 2006-08,” written by prominent Soviet-era diplomat Valentin Falin and former Foreign Intelligence Service leader Gennadi Yevstafiev, maintains that as Russia’s elections approach, the United States might “activate contacts with big business in Russia, in order to provide financial support for the Russian opposition and block counteraction by pro-government forces.” In effect, according to the report, implementation of this part of the scenario has already begun: “Resolution of Russia’s major corporate conflicts, including those on which Kremlin factions are divided, depends on the United States and the West, because most of the corporations are based offshore. There is every reason to fear that the White House may use smouldering conflicts (Alfa versus Sistema, LUKoil versus BP, the Megafon situation, and others) in order to undermine Russia’s political and business elite from within.”

Thus, 18 months before a new president takes office, our political, government, and business elite is facing a serious test of its national responsibility and maturity.