Is A Slow Putsch Against Putin Under Way?

A quarter century after the fall of the USSR, Kremlinologists sense a putsch in the air, despite Vladimir Putin’s overwhelming approval ratings. The tea leaves say that the Kremlin elite, dubbed by some as Politburo 2.0, is currently deciding whether Putin should go before he makes a bad situation worse. 

The founder of the respected daily Kommersant predicts that a dramatic change is about to take place and advises Russians who have the means to leave the country for a month or so and take their children with them.

Putin’s failures are becoming more evident on a daily basis. No one denies that Russia is a kleptocratic state whose leaders have stolen much of the national wealth. But Russia has also become a pariah that breaks rules of the international order, engages in official lies, and owes huge damages in international courts. Putin’s Kremlin promotes and supports a view of the world that causes world leaders to scratch their heads in dismay.

Putin’s economic policies are a disaster. Despite promises of diversification, Russia remains a petro state at the mercy of the price of oil. Struck by a perfect storm of falling oil prices, international sanctions and self-imposed embargoes, the Russian economy is in its sixth quarter of recession with only miserly growth in sight. Living standards are falling despite Putin’s promises of stability and prosperity. The investment collapse has served to mortgage Russia’s economic future. Only Putin’s bureaucracy seems to be surviving unscathed. The vaunted reserve funds are close to being depleted. Little is left for a rainy day, and Putin’s handouts are ceasing even to his friends.

Unlike the Russian people, Russia’s Politburo 2.0 understands the true state of  the economy, including that Russia’s economists, contrary to earlier claims, are no Houdinis. The Russian economy, which stopped growing well before Crimea, will be mired in recession until oil prices recover, possibly many years hence. Russia’s highly indebted companies cannot borrow, and China will not and cannot come to their rescue. The Kremlin embargo of food imports raised inflation above 15%, more than triple any indexation of wages and pensions. In his annual direct line with the Russian people, Putin could only express hope for a recovery of the world economy but that they should not worry, his economic team has everything under control.

Nor can the Politburo 2.0 find much positive in Putin’s foreign policy. It did annex Crimea without firing a shot, but Crimea costs billions of dollars and is sinking into a swamp of corruption. Although Western support for Ukraine has been less than effective, the West has not abandoned Ukraine and seems willing to supply it with funds to keep it going. Putin’s war has at long last created a united Ukraine that will hate Russia for generations to come.

The war in southeast Ukraine has solidified the positions of pro-Russian rebels who want independence rather than the Kremlin’s disrupting Ukrainian politics from within. As the Kremlin arms separatist forces, it is risking a heavily armed and unpredictable force on its own border. In the so-called lull following the Minsk 2 accords, the Ukrainian army has strengthened its forces, so there is no assurance that the pro-Russian rebels could defeat them even were they to be unleashed.

The Politburo 2.0 must therefore ask itself: What is Mr. Putin’s next step, and can we afford to go along?

None of Putin’s options are good. If he pulls weapons, troops and support from the pro-Russian rebels, Ukraine will retake the Donbass, and Putin and his Politburo 2.0 will be labeled losers. If he approves a new offensive against Mariupol or to gain a land bridge to Crimea, the West will impose sanctions that will demolish the moribund economy and put the assets of the members of Politburo 2.0 at risk. Sanctions may include the “nuclear option” of expelling Russia from the SWIFT banking transfer system and bring Russian financial transactions to a standstill. Those who benefited from Putin’s kleptocracy would face ruin.

Many predict the eventual end of the Putin regime, but it remains unclear how this could come about. As the nominally elected president, Putin would have to either resign or cease to exist. Indicators suggest that the process would begin with an assault on Putin’s closest associates, which appears underway.

First, Putin’s press secretary, Dmitry Peskov, was outed by opposition blogger Alexei Navalny for renting a yacht in Sicily for $500,000 a week. Peskov’s denial was shot down by photos on social media. Navalny’s scandal reportings are often ignored, but this story went viral on Russian mainstream media sites, including RBC, Pravda.ru and others. Peskov was already under attack by Vedemosti for owning a $620,000 watch on his civil servant’s salary.

Second, Putin insider and target of Western sanctions, Vladimir Yakunin, in the first year of a five-year contract, announced he was resigning as head of the Russian railroad monopoly to become a senator for Kalingrad province. According to a source for Forbes Russia, “If the resignation is really taking place, this means that something very serious has taken place in the last few days.” Russian press reports emphasize that Yakunin has refused to disclose the sources of his income because such matters are not discussed in polite company. Anti-corruption blogger Navalny has filled in the blanks with a 14 page inventory of Yakunin’s properties, including his castle.

Third, “longtime (Putin) acquaintance (from childhood) businessman Gennady Timchenko” is the subject of a vicious hit job in the semiofficial newspaper Vedemosti. The article reports that Timchenko, “isolated from the Western world by sanctions,” can no longer visit his villa on the shores of Lake Geneva” in his Gulfstream G650 and has been reduced to living in the residence of former head of state Nikita Khrushchev. The Vedemosti article then runs through a long list of shady business partners doing business through nontransparent trading companies with Russian giants such Rosneft, Surgutneft and Transneft with which one “cannot deal without good relations at the highest levels.” The oil trading colossus Gunvor, half owned by Timchenko before the sanctions were imposed, plays a recurring role in the narrative. Notably, Putin’s clandestine ownership of Gunvor is purported to be the main source of his billions of dollars of wealth. Open discussions of Timchenko and Gunvor have previously been out of bounds in the mainstream Russian press.

Fourth, Putin’s former personal body guard and head of internal troops of the Ministry of Internal Affairs, Victor Zolotov, has been subject to a media attack entitled “All Garbage in One Hut,” by a publication with strong ties to the security services. As in other cases, Zolotov’s extensive land, apartments, and other forms of wealth are disclosed in painful detail. The article ends with what is close to an indictment of his boss, Vladimir Putin:

“If Putin’s former bodyguard managed to get rich in the civil service by more than a billion, what can we say about whom he was guarding? This is the case when silence–is gold.”

Note that it is the internal affairs troops that would be in charge of putting down riots and street demonstrations – a rather critical post, one can say.

Some analysts explain these events as Putin’s tiring of his cronies and wanting to revamp his inner circle. Such an explanation is unlikely. With a collapsing economy and at a dead-end in Ukraine, Putin needs all his friends, especially those under attack for corruption who may know the details of his own corruption. Dictators do not stay in power by abandoning their allies, especially during hard times.

At a minimum, some kind of power struggle is going on that seems to have Putin as its target. The pattern of attack is classic: bring down the big guy’s supporters first.

Although some argue that any new leadership coming from Politburo 2.0 would be as bad as Putin, Russian commentator Andrei Piontovsky begs to differ. He makes the claim that members of the Russian elite have been sending signals to the West that “everything will be resolved in the coming weeks.”

We have had false alarms before. This may be another one, but at least we can now see a path to the end of the Putin regime. We should note that Putin spent the anniversary of the August 19 coup against Mikhail Gorbachev in Crimea. It is also worthy of note that he took with him the four key members of his government who would likely choose his successor. Remember: Keep your friends close and your enemies closer.

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