Institute of Modern Russia

1. Putin’s Path

The outline: As the domestic (and international) crises pile up, wiping Putin’s electoral success from the public memory, the question arises: How will this inform his decisions going forward?

Discussion:

• Andrei Kolesnikov, Moscow Carnegie Center: The emerging conflict between the two dimensions of the Russian political reality will be at the center of Putin’s fourth term.
• The “gigantic numbers” of the pro-Putin vote have been devalued in the weeks after the election: they are the measure of Russian indifference, compliance, and mechanical voting.
• As Putin became the only constant of the country’s political life, his image was split into a public, largely symbolic part and an invisible, private (or real-life) part.
• A similar splitting took place in the psyche of the Russian people. In the symbolic dimension, both ordinary Russians and the elites act as hardcore patriots and haters of the West; but in real life they only care about their personal interests. [Carnegie.ru]
• Dmitry Travin, political scientist: Putin’s system shows a visible “bipolar split” between the siloviki and the bureaucrats. The widely discussed theory of the struggle between “the Kremlin's towers” (various interest groups) remains valid, but as the Kremlin’s resources shrink, two policy approaches are being adopted by the elites—strongman-like and bureaucratic.
• The bureaucratic approach mostly relies on propaganda; while the strongman-like approach can involve an aggressive military act. The presidential elections were conducted (and won) based on the former.
• With TV propaganda still going strong and the majority believing that Putin is a “good tsar” surrounded by “bad boyars,” the bureaucrats are the current winners in the feud with the siloviki. For Russia, that is the better option, because after Putin’s personalist regime inevitably falls, the bureaucrats are more likely to negotiate through democratic institutions. [Republic].

A telling sign: Sociologist Anton Oleinik looks at Putin’s motives using the tools of discourse and political psychology analysis. He concludes that the key concepts driving Putin’s policies are “power” and “achievement.” [Vedomosti]

Meanwhile, Alexei Kudrin’s Center for Strategic Research released a brief version of its program of economic reforms proposed for Putin. [RBC]

• The program outlines seven priorities, including: improving quality of life, doubling the number of entrepreneurs, increasing productivity, expanding the non-commodities sector of the economy, introducing new governance methods, plus urban development and court and military reforms.
• About 1,700 experts worked on the Kudrin program, which is in competition with another program prepared under the supervision of Russian business ombudsman Boris Titov.
• Putin hasn’t committed to either program yet. His preference will likely serve as a telling signal as to which course he’ll choose for his fourth term.

2. How U.S. Sanctions Hurt Russia

• The story: On April 6, the U.S. Treasury announced its latest round of anti-Russian sanctions under the CAATSA requirements, targeting 24 individuals and 14 entities.
• The list includes Russian oligarchs (notably Oleg Deripaska, Viktor Vekselberg, Andrei Skoch, Kirill Shamalov, Igor Rotenberg), officials (such as Vladimir Ustinov, Viktor Zolotov, Alexei Miller), and companies, among them Deripaska’s Rusal UC, En+, Gaz Group, and Vekselberg’s Renova Group.
• Moscow called the U.S. sanctions “outrageous” and offered support to the affected companies [Kommersant]. The Kremlin is currently mulling over its response options, but the specifics are still undecided [RBC].

Details and implications:

• Reacting to this development, on April 9 Russian stock markets and the ruble exchange rate went down as foreign investors started selling stakes in Russian companies now considered “toxic.” Metal producers were hurt the most, with shares in Deripaska’s Rusal UC (sanctioned by the U.S.) losing about 50 percent of their value. [Vedomosti]
• In just a few hours, Russia’s richest businessmen collectively lost $11.7 billion, including $1.3 billion by Deripaska, $1.3 billion by Vladimir Potanin (who was not sanctioned), $908 million by Vekselberg, and $813 million by Suleiman Kerimov. [RBC]
• To comply with OFAC rules, by May 7 all foreign investors will have to dispose of their stakes in the sanctioned companies. Deripaska, linked to former Trump campaign chief Paul Manafort, has been called “the biggest loser” in this round of sanctions.  The Bell has full details of the sanctions’ implications here. 

What’s Next?

• Igor Nikolayev, economist: The worst problems for the Russian economy are still ahead. Sanctions have hit Russia’s demand, which is key to economic development. Still, the authors of the economic reforms shy away from acknowledging the damage caused by the sanctions since 2014, whether they are Western or Russia’s own counter-sanctions. It’s time they be brave and state the obvious. [Ekho Moskvy]
• Denis Sokolov, Cushman & Wakefield: Russia will pay with a lower growth rate. The latest sanctions are similar to those imposed previously on Iran. Judging by the reaction of the Russian elite, which is preparing to “purge” the markets of the remaining foreigners and make room for the “right players,” one should expect that economic conditions will further deteriorate. [Republic]
• Vladimir Frolov, international affairs expert: The further course of U.S.-Russia relations will largely depend on Trump’s meeting with Putin. The U.S. sent a very harsh message to the Kremlin: stop all destabilizing “malign activities.” The message will be interpreted by the Kremlin as a demand for total capitulation on the foreign policy front (which is clearly unacceptable for Russia); therefore more defiance and confrontation should be expected, unless Trump and Putin do strike a deal. [Republic]
• Andrei Movchan, Moscow Carnegie Center: Russia will respond with more domestic pressure, “foreign enemy” narratives, and anti-American propaganda. The blow against Deripaska and Vekselberg was the only new development in the latest round of the sanctions policy. Both oligarchs have large stakes in the aluminum business—something the Trump administration is very interested in.
• The U.S. shows a profound misunderstanding of the nature of the Putin regime if it expects that Russian oligarchs can distance themselves from the Kremlin, since the latter treats oligarchs’ businesses as a temporary lease by the state. Any sign of rebellion can be punished by the Kremlin to the great satisfaction of the younger, hungrier members of the elite.
• To sum up, contrary to the popular view, both sides should be happy about the results: the U.S. because it sent a publicly supported, political message and helped the American economy; the Kremlin because it got another excuse to rally people round the flag and restrain the elites. [Carnegie.ru]

Refresher: watch “Rybkagate,” Alexei Navalny’s investigation into one particular aspect of Deripaska’s business.

3. The Skripal Debate

The Skripal affair will stay at the center of Russia’s relations with the West in the foreseeable future. The poisoning of the former GRU officer is being heavily discussed in the Western media based on the UK government claims, while the investigation is still ongoing. Meanwhile, the Kremlin is pushing its own version of events.

• The story from Russia’s point of view: London refuses to listen to Moscow. On April 3, the Russian Prosecutor General’s Office sent a request regarding the Skripal investigation to the British Ministry of Internal Affairs, voicing its concerns, but has yet to receive a response.
• The Kremlin refers to the potential connection to the case of the late Boris Berezovsky, who could have benefited from Skripal’s death (while traces of poison were found in his office, this version was rejected by the British).
• Russia also accused the UK of refusing to hand over its criminals. Over the last 15 years, the Prosecutor General’s Office has submitted more than 2,000 requests to its British counterparts, including 80 extradition requests. 60 of them were denied, with 55 receiving refugee status or political asylum in the UK. [Kommersant]
• Elsewhere, Russia’s ambassador to the UN Vassily Nebenzya called the prospect of Russian involvement in the attack “absurd,” while spokeswoman for the Foreign Ministry Maria Zakharova diverted attention to inquire about the wellbeing of Skripal’s now deceased pet guinea pigs and cats.
• Meanwhile, a Russia-based relative of Yulia and Sergei, Viktoria Skripal, is rocketing to fame on Russian television, pegged as a victim of the ruthless British bureaucracy, which has refused to grant her a visa.

Debate: Science vs. Political Science

• Vil Mirzayanov, former head of the Department for Countering Foreign Intelligence at State Research Institute of Organic Chemistry and Technology, on the “Novichok” poison: No country has as much experience creating this type of nerve agent as the Soviet Union and Russia.
• Specialists in the British Defense Ministry cannot pinpoint the nerve agent’s country of origin. While Mirzayanov doubts that any more than ten countries could produce this type of weapon, Russia very well may be one of them.
• Vladimir Uglyov, one of Novichok’s developers and a colleague of Mirzaynov, says that while identifying the formula isn’t a reason to suspect any country in particular, there’s reason to trust the British version of events given the culture of lies in Russia. [Novaya Gazeta]  
• Political scientist Vladimir Pastukhov on the Kremlin’s defense: it is algorithmically complex and part of a long-term strategy—one that encompasses not only Skripal and his daughter, but also the murders of Anna Politkovskaya, Boris Nemtsov, Sergei Magnitsky and Alexander Litvinenko.
• As the Kremlin prepares the most plausible alternative version of events—counterpropaganda to imitate hysteria at home that keeps the assassination shrouded in mystery—access to British intelligence is vital. But the UK will keep the murder enveloped in a fog, in an attempt to force the truth out of Moscow. [Republic]

Other stories this week (in Russian): Syria crisis special

• In the light of the imminent response by the Western coalition to the chemical attack in Syria, Russia, unprecedentedly, claimed it would strike back if any Russian gets hurt in the punitive bombing. Vladimir Frolov argues that Moscow raised the stakes to assert the new international status quo: the U.S cannot act unilaterally any longer without the approval of “another great power”—Russia. Another reason is to spark an international crisis in order to force the U.S. to enter a new level of dialogue with Moscow. [Republic]
• Military journalist Alexander Golts calls the current tensions over Syria “Cuban Missile Crisis 2.0,” pointing out that Russia and the U.S. are extremely close to a direct military confrontation. Clearly, Moscow will not win a conventional war; therefore the next step would be to threaten nuclear strikes. [New Times]
• Alexander Khramchikhin of the Institute of Political and Military Analysis compares the current tensions to the Berlin Crisis (of 1961), and notes that the crucial difference is that both the Russian and Western elites have “degraded”—morally and intellectually—since the Cold War. Anything can be expected today. [MBK Media]
• This week in the Russian Duma, General Yuri Yevtushenko denied multiple reports on the use of chemical weapons by the Syrian government troops in eastern Ghouta. Coupled with Western reports that Skripal’s poison was produced in a closed town in Russia’s Saratov region, Russia clearly is taking great strides in the field of chemical weaponry. But to Andrei Kolesnikov of the Carnegie Moscow Center, Russia’s most powerful chemical attack was mental and aimed inward: the annexation of Crimea, which, ever since 2014, has infected the brains and souls of Russian citizens. [New Times]

Also worthy of your time:

• Foreign policy expert Fyodor Lukyanov on Russia’s relationship with Iran [Rossiyskaya Gazeta]
• Putin aide Vladislav Surkov on Russia’s “geopolitical solitude” after a final breakup with the West [Russia in Global Politics].