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Monday, May 21, 2007

Aron on Russia's Succession Crisis

Resident Scholar Leon Aron (pictured below) of the American Enterprise Institute describes Russia's coming "succession crisis":

Resident Scholar Leon Aron


After Boris Yeltsin died on April 23, all Russian television networks waited for almost three hours to break the news. They were afraid to say anything before the Kremlin did. Three days later, in the state-of-Russia address to the Duma, Vladimir Putin announced the unilateral "suspension" by Russia of the 1990 treaty governing the size and positioning of conventional forces in Europe. A few days before, an estimated 4,000 policemen set upon a few hundred protesters in Moscow with a ferocity that shocked even some government officials and legislators.

Even by the standards of Mr. Putin's Russia, these episodes stand apart in the shrillness of their authoritarian insolence and disregard for public opinion inside and outside the country. While Secretary of State Condoleezza Rice is in Moscow for talks, she might see for herself the reason for the increasingly tense relations between the two countries, and the increasingly harsh climate inside: the jitters that next year's presidential succession is already generating in the Kremlin.

Despite an official propaganda barrage daily proclaiming orderly change after the presidential election in March 2008, the succession is far from a done deal. The erosion or outright eradication of what might be called shock-absorbers of democracy that endow the process and the result of a transition with legitimacy--elected local authorities, independent parliament and mass media, and genuine opposition--has ushered in uncertainty and risk. The foundation of the much-touted "vertical of power," as the new system of the Kremlin's dominance over the country's politics and key sectors of the economy is known, is shallow. The stairs going down are gnarled and perhaps unable to bear much weight.

To these generic handicaps to succession in an authoritarian regime, today's Russia adds two serious complications. The first is the tradition of Russian and Soviet political culture--which Mikhail Gorbachev and Boris Yeltsin tried so hard to overcome, but which Mr. Putin (who has bemoaned the collapse of the Soviet Union as "the greatest geopolitical catastrophe of the 20th century") seems to admire and emulate. Successions were hardly smooth even under the tsars, with quite a few legitimate claimants to the throne (or even those already sitting on it by right) strangled, drowned, stabbed or forced to retire into monasteries. In the Soviet era, not one putative heir apparent came to power. Lenin never wished for Stalin to succeed him; Stalin would not have wanted Khrushchev; Khrushchev, ousted by a coup, did not anoint Brezhnev; Brezhnev, Andropov; Andropov, Chernenko; and Chernenko, Gorbachev.

The other obstacle to a smooth transition is the sheer enormity of the stakes. Even after the centuries of the patrimonial state, in which political power has translated into ownership or control of much of the country's natural wealth, never has the jackpot been so huge: Every day more than 19,000 barrels of oil flow through the pipeline for sale abroad, bringing $500 billion a year.

No matter how many promises are being made to presidential hopefuls and their salivating retinues about sharing in the riches, the vertical of power is a sparse, even austere piece of political architecture. There are simply not enough top rent-generating offices in Russian politics, and in the daily expanding state-controlled sector of the economy, to be handed over to all current claimants: not enough Duma committee chairmanships (where the going rate for introducing a law reportedly is $1 million), regional governorships, top positions in the extremely lucrative tax police and customs, company chairmanships and directorships in the oil, gas, metals, armaments, automotive and aviation industries.

In the winner-take-all regime Mr. Putin has forged, his probable decision to hand over the power hardly presages a period of certainty and tranquility. In the words of one of the most astute Russian political observers, Mark Urnov, "those who have failed to become heirs will have nothing to lose. The bets have been placed, the only thing to do is to fight."

There are no lame ducks in Putin's Russia--only dead ones. Thus, the appointment of the successor must be withheld for as long as possible, to prevent those passed over from coalescing and perhaps even reaching out to the pro-democracy opposition. Such an alliance would be the Kremlin's worst nightmare: a potentially escalating popular movement for unmanaged, free and fair elections, akin to the Ukrainian "Orange Revolution" of 2004-05. The succession games may last well into this fall, and one could do worse, investment-wise, than betting a modest amount in rubles, steadily appreciating against the dollar, that neither of the current front-runners, First Deputy Prime Ministers Dmitry Medvedev and Sergei Ivanov, will get the nod.

Yet managing the succession by keeping the elites off balance is only one source of the Kremlin's nervousness. The other is a slew of potential economic and social crises stemming from subverted, frozen or entirely abandoned structural reforms to redress the commodity dependence, the neglect of "human capital" and the disrepair of the worn-out industrial infrastructure. Camouflaged by the oil wealth and passed over in silence by the re-nationalized or intimidated mass media, these political time bombs are ticking louder and louder.

Despite regular, almost-ritual official calls to shift away from commodity exports to a knowledge-based, high-tech modern economy, the goal has been subverted by the ideologically-motivated turn toward greater state control and the fear of private initiative and wealth-creation. Instead, Russia's expanding economy (and thus the "stability" on which Putin's popularity is founded) remains extremely vulnerable to oil-price fluctuations. At least one-third of the Russian state budget today comes from oil revenues. A World Bank study has concluded that the GDP growth of 5% or higher was "realized in Russia only at times when the oil price has increased." It is widely assumed among independent Russian experts that a precipitous decline to $40 a barrel (not to mention, below) will have immediate and profoundly negative consequences for economy and the standard of living.

Apart from much-needed salary increases for teachers and doctors, the "national projects" on health and education, unveiled by the government with great fanfare in 2005, have done very little to reform the state-based, impoverished, rigid and backward health-care and education systems inherited from the Soviet Union. Amid the oil price boom, Russia spent less on health-care as percentage of GDP in 2005 (the most recent year for which data are available) than in the first year of the fragile post-Soviet economic recovery in 1997. In an August 2006 national survey, 70% of respondents said that they and their families could not count on getting "good" medical care.

The hydrocarbon windfall has done nothing to increase life expectancy, which at 65 years is still below that of China or India. Russia also is a world leader in industrial, aviation and traffic accidents. Crime is rising; over the past six years, there has been a 10% increase in the number of murders and a 73% rise in drug-related crimes.

With the number of working adults, especially males, diminishing precipitously, the worker-to-retiree ratio is estimated by Russia's leading economists to drop to 1 to 1 "in the very near future." Yet already today, the average pension is 25% of the average salary--the lowest proportion in Europe. Such a pension is 3,000 rubles ($115), whereas the minimal food expenditures ("just not to starve" as a Russian newspaper puts it) is 1,500 rubles. Some in the government have already begun to talk about raising the pension age as the only solution--something that the estimated 17 million men and women who expect to retire in the next 10 years are most likely to resent and protest, perhaps violently.

Yet the dwindling number of Russians who want to work and make a go of it are daily disheartened and handicapped by corruption. Both in its reach and the amount of money involved, the bribery and sleaze today makes the graft of the 1990s look like the child's play. In the ranking by Transparency International Russia is 121st out of 163 countries, behind Albania, Kazakhstan and Zambia, and on a par with Benin, Gambia, Honduras and Rwanda. The growing independence of courts, one of the most promising achievements of the 1990s, has been reversed by the travesty of the Yukos-Khodorkovsky and spy trials. Not just entrepreneurs, who are now fair game for shakedowns, but even ordinary Russians, are less and less capable of seeking protection in courts against rapacious and incompetent bureaucrats at every level.

Nor is the Russian state capable of providing broad and effective protection in a more immediate sense. While Chechnya is for now "pacified" by the former Islamic guerillas who switched sides, the multi-ethnic North Caucasus is virtually ungovernable, especially its largest "autonomous republic," Dagestan. The conventional armed forces are utterly incapable of dealing with new threats. A dysfunctional relic of the tsarist and Soviet past, for today's conscripts the Russian army is a combination of a prison and torture chamber.

With every family doing everything they can to shield their boys from the army, increasingly it is the bottom of the barrel that the army gets: the functionally illiterate and those with criminal records or a history of drug addiction. There is more than enough money to effect a transition to a modern, lean, mobile, well-equipped, well-trained and motivated force, supported by millions of Russians. President Putin himself promised in the beginning of his first term, but the reform has been abandoned.

Each of these simmering crises may quickly boil over. The prospect of several unfolding in concert is troubling. In combination with falling oil prices, they may cause a political equivalent of a "perfect storm." Yet with the deliberate weakening of the mediating institutions of democracy, the center of political gravity in Putin's Russia has shifted to the very top, making the Kremlin responsible for anything that goes wrong anywhere in the country.

Everything that the Russian authorities do in the next 12 months will be informed by this sense of vulnerability, and aimed at making sure that vagaries of succession are not multiplied or even made unmanageable by the corrupt state's obsessive quest for control in pursuit of ever greater share of the country's oil wealth.


1 comment:

David Essel said...

Thank you for this wonderfully succinct analysis which rings true from start to finish and will help me keep a clear mind.
As a result, I have just ordered your book Russia's Revolution - Essays 1989-2006 and am very much looking forwards to reading that.