Putin's Hard Turn: Ruling Russia in Leaner Times

Putinism used to represent a not-quite-real form of soft authoritarianism, but the time to pretend is over. Unlike in the first decade of Putin’s rule, when opposing the policies of the Kremlin made one simply a freak, now it makes one an enemy of the state, a person on the wrong side of a historic struggle.

For many who arrived in Moscow in recent decades, the city had an almost narcotic effect. In the vacuum created by the Soviet collapse, unabashed opportunism and a limitless sense of the possible became the closest thing the wounded country had to a collective ideology. There were few consequences and everything was pretend—except, of course, for the massive sums of money. And as long as Russia, after Vladimir Putin took power in 2000, kept up its winking nod toward modernization and democracy, it was easy enough to play along without too much of a drag on your conscience.

For Bill Browder, the American-born investor turned human rights campaigner, the high started early. Not long after the end of communism in eastern Europe, he came across his first “ten bagger,” an investment that delivers a ten-times return. “For those who don’t know,” he writes in his memoir Red Notice, a tale of financial braggadocio and moral outrage, “the sensation of finding a ‘ten bagger’ is the financial equivalent of smoking crack cocaine.” As the years went on, Browder began to scoop up shares in Russian companies and use his position as a shareholder to try to make them more efficient and transparent. He went on to build his investment company, Hermitage Capital Management, into one of the best-performing emerging-market funds in the world, which at its peak delivered returns of 1,500 percent and managed a total of $4.5 billion.

Around the same time that Browder was racking up ten baggers, Peter Pomerantsev—a Soviet-born, British-educated television producer—turned up in Moscow. In Nothing Is True and Everything Is Possible, his tale of descending into and eventually emerging from Moscow’s hallucinogenic reality, he writes of encountering “speeding Maybachs on the roads, swirling faster and faster in high-pitched, hypnotic fairground brilliance.” As Pomerantsev set to work, his specialty became producing reality shows on such topics as the mating rituals of “Forbeses” (rich Russian men, named after Forbes magazine’s most wealthy list) and “tiolki” (literally, “cattle”—the young, beautiful women who chase those men). He filmed the two species in Moscow nightclubs and came to realize that they were less hunter and prey than kindred spirits. They were equally adrift in post-Soviet Russia, sending each other “sweet, simple glances” that “seem to say how amusing this whole masquerade is.”

For Browder, the party ended in 2005, when, for reasons still unclear, but surely having something to do with his efforts to expose corruption at state-owned companies, his Russian visa was revoked. The air of inauthenticity that characterized the first decade of Putin’s rule allowed all sorts of characters to exist: Browder, the shareholder-activist who spoke approvingly of Putin, seeing something common in both his and Putin’s efforts to rein in the oligarchs of the 1990s; Pomerantsev, the Londoner Russians simultaneously fawned over and disparaged for his Western tastes; and various creative professionals who produced work that in theory presented a challenge to the ruling system but was left alone because it posed no real threat. Everything from political parties to youth movements was fake, designed to create the image of civil society rather than the real thing. Behind the façade of a formal political system, replete with elections, candidates, and party platforms, lay a much more powerful network of relationships and understandings. Oligarchs and managers of state-owned corporations aspired to the respectability of Davos, even if their enterprises had barely moved beyond the legacy of the Soviet command economy, with all the inefficiency and corruption that entailed.

Soviet-era doublethink, whereby people had no qualms about saying one thing and believing another, was updated for the twenty-first century, fueled by high production values and slick PR. In such a climate, to believe in anything with sincerity was to be naive, which is why Pomerantsev writes of so many of his colleagues and friends having the confidence of feeling at once “cynical and enlightened.” Politics and culture took on the feeling of a lived game. But over time, the game grew harder, and the complications of real life began to push themselves onto Browder and Pomerantsev, and onto Russia more broadly. By the end of their books, both have ended up in London, disillusioned and racked with guilt for having participated in something so grotesque.

For Browder, the party ended in 2005, when, for reasons still unclear, but surely having something to do with his efforts to expose corruption at state-owned companies, his Russian visa was revoked. (Even after being exiled, he continued to praise Russia, telling anyone who would listen that it represented a fantastic investment opportunity.) Like the one-time oligarch Mikhail Khodorkovsky, Browder knowingly went up against powerful interests in the state apparatus and lost, which makes him less an innocent victim than someone who played a high-stakes game until the game’s masters decided his time was up. But what began as a commercial defeat turned personal: in 2009, his former lawyer Sergei Magnitsky died from neglect and abuse while in pretrial detention in Moscow, sending Browder on a years-long search for justice and revenge. “Guilt coated me like tar,” Browder writes of the weeks leading up to Magnitsky’s death. His lobbying efforts led the U.S. Congress to pass the 2012 Magnistky Act, which bars those connected to the case and to other Russian human rights abuses from entering the United States and freezes their assets.

At first, Pomerantsev saw the constant transformations of the Russians around him as the celebration of a society “pulling on different costumes in a frenzy of freedom.” Over time, however, he came to see these “endless mutations not as freedom but as forms of delirium.” But as long as that delirium didn’t require too much of Russia’s citizens, there seemed little harm—for Russians and for those making money off them in London and New York—in going along for the ride. Pomerantsev describes one advertisement, for a high-priced Moscow real estate development, that was designed in the style of a Nazi poster. The ad is neither humorous nor serious, Pomerantsev writes, but something else: “It’s saying this is the society we live in (a dictatorship), but we’re just playing at it (we can make jokes about it), but playing in a serious way (we’re making money playing it and won’t let anyone subvert its rules).”

The first iteration of Putinism came to a true finish sometime early last year, when Putin, faced with the prospect of seeing Ukraine move toward the West, reacted by annexing Crimea and propping up an armed rebellion in eastern Ukraine.

THE PARTY'S OVER

That era—the fun-house years chronicled by Browder and Pomerantsev—has come to a definitive close. The beginning of the end came in late 2011, when urban professionals took to the streets to protest Putin’s decision to return to the presidency and a fraudulent parliamentary election. At the same time, the economy was reaching the end of its oil-fueled boom. By the time Putin returned to formal power in the Kremlin in 2012, the country’s unwritten pact—whereby citizens stayed out of the state’s business and the state largely left them alone to live increasingly middle-class lives—was no longer tenable. Putin had no choice but to reinvent his own style of rule, turning to a mishmash ideology of anti-Americanism, social conservatism, Orthodox Christianity, and Russian exceptionalism. The state grew harder and less flexible.

The first iteration of Putinism came to a true finish sometime early last year, when Putin, faced with the prospect of seeing Ukraine move toward the West, reacted by annexing Crimea and propping up an armed rebellion in eastern Ukraine. The resulting standoff with the West isolated Russia from Western governments and institutions and unleashed a repressive impulse at home, as the Kremlin tried to mobilize society in response and blame the country’s woes on external enemies. Suddenly, Putin’s turnaround was complete: now, instead offering material well-being, the state was promising historical purpose. The Kremlin has portrayed the hardships of this new course, whether in the form of economic sanctions or global opprobrium, as signs of its virtue. The politics of confrontation have taken on their own momentum, with the many arms of the state becoming more reactionary as the costs of the new Putinism mount.

Most of the private spaces that allowed Browder and Pomerantsev to flourish have disappeared. Whereas for the first decade of Putin’s rule, the state preferred a passive and disengaged population, over the last year, it has sought to keep society antsy and militarized, on something approaching a war footing—even if the war itself remains technically undeclared. The faction in the Kremlin that long wished for more control, over everything from the newspaper business to the agricultural sector, has found its excuse in the arguments of geopolitics and national security. Examples of the more suffocating atmosphere abound. Nearly all the start-up journalistic outlets that flourished in Moscow in recent years have been shuttered or taken over by pro-Kremlin interests. (It is no accident that the most promising new Russian media venture—Meduza—is based in Riga, Latvia.) What were meant just a few years ago to be a collection of new, innovative state-run “centers of culture” to showcase modern art in smaller Russian cities have been reimagined as educational institutions designed to promote “traditional moral-spiritual values,” operated in coordination with the Orthodox Church. Suspicion is in the air, with the security services using a new and more flexible law on treason to arrest Russians with foreign contacts. The message is clear, and with obvious precedent in Russia’s history: be afraid of the West, and don’t involve yourself in the state’s business.

Putinism used to represent a not-quite-real form of soft authoritarianism, but the time to pretend is over. Unlike in the first decade of Putin’s rule, when opposing the policies of the Kremlin made one simply a freak, now it makes one an enemy of the state, a person on the wrong side of a historic struggle. Putin has warned of the dangers of a “fifth column” of “national traitors” working to destabilize the country, a paranoid notion that has received full airing on state-run television. It was in this environment that Boris Nemtsov, a former deputy prime minister and high-profile opposition politician, could be gunned down on a bridge across from the Kremlin in February. In the new climate, people like Nemtsov are not political opponents to be mocked but enemies to be destroyed, whether by the Kremlin itself or by hard-line elements within its orbit. By covering for those who killed Nemtsov—allegedly fighters linked to Chechnya’s strongman leader, Ramzan Kadyrov—the state risks losing its monopoly on violence.

Reuters / Stringer

Pro-Russian fighters in Donetsk, May 2014.

No longer is Russia interested in putting forward the simulacrum of a democratic state that aspires to equal membership in the Western-led order. If anything, it prides itself on its pariah status; it would rather upend Western institutions than join them. To do so, Putin needs to fracture them, whether by testing NATO’s willingness to deliver on its promises of collective security or playing on divisions within the EU.

Yet it is misleading to suggest, as Pomerantsev does, that unlike the Soviet Union, Russia under Putin has no ideology. In fact, it has become a pole for the world’s most potent one: anti-American and anti-Western frustration. Often, that ideology can be found within the West itself. In Europe, for example, Russia is allying itself with individuals and parties that feel dissatisfied with the European consensus. Appealing to this sizable audience is what has made RT, the Kremlin-funded cable television channel, so popular. It serves as a home not so much for pro-Russian propaganda as for an unwieldy coalition of conspiracy theorists and marginal academics, from far-left antiglobalization activists to far-right xenophobes.

Putin cannot afford to simultaneously fund a large security state and an ambitious military modernization program, provide rising wages and social benefits to state workers and pensioners, and funnel lucrative contracts to loyalists and favored oligarchs. At the same time that the state is tightening the country’s political and social culture, the easy money has run out. Nearly all at once, the spare production capacity that allowed for the oil-fueled consumer frenzy dried up, U.S. and EU sanctions choked off Russian companies’ access to foreign capital, and the global price of oil dropped below $50 a barrel. The combined effect has been disastrous, and unlike Russia’s financial crisis in 2008–9, this one is the result of Russia-specific factors, not global ones, so there is little hope that things will turn around quickly. The ruble lost half its value last year, and the Russian economy is projected to enter into a recession this year, with GDP growth falling to negative five percent. Inflation is expected to top 15 percent, which could have grave implications for social stability.

This new reality will force Putin to make some uncomfortable economic choices. He cannot afford to simultaneously fund a large security state and an ambitious military modernization program, provide rising wages and social benefits to state workers and pensioners, and funnel lucrative contracts to loyalists and favored oligarchs. Something will have to give. As the pool of resources to be shared among the elite dwindles, its members will likely turn on one another. Last fall, authorities placed Vladimir Yevtushenkov, the billionaire head of the holding company Sistema, under house arrest and ordered that an oil company he owned, Bashneft, be nationalized. Bashneft may well end up in the hands of Igor Sechin, the head of the state oil giant Rosneft and one of Putin’s closest allies. With production declining at Rosneft and sanctions making exploration at new fields in the Arctic nearly impossible, Sechin needed to find new output somewhere. The affair is a harbinger of future fights: with less cream to skim off, the politically connected will have to start stealing their share from one another.

THE SURREAL RUSSIA

It is only natural that Pomerantsev spends much of his book writing about Vladislav Surkov, the Putin adviser who was most responsible for the rules and motifs of Russian politics throughout the first decade of this century. Surkov is a postmodern Machiavelli: he has put his brilliance in the service of autocracy, all the while listening to Tupac and writing dystopian fiction under a pen name. It was Surkov who coined the term “sovereign democracy” to legitimate the Putin system, a neologism whose true meaning, Pomerantsev writes, is a “postmodern dictatorship that uses the language and institutions of democratic capitalism for authoritarian ends.” Pomerantsev recounts watching Surkov deliver a political sermon to an audience of Russian students, journalists, and politicians in Moscow, a speech that blended “democratic rhetoric and undemocratic intent.” Surkov’s genius, he explains, is to “marry authoritarianism and modern art, to use the language of rights and representation to validate tyranny, to recut and paste democratic capitalism until it means the reverse of its original purpose.”

It is also no accident that Surkov ended up as one of Putin’s chief advisers on Ukraine over the course of 2014. For what is Russia’s policy in Ukraine if not a war on reality? The so-called people’s republics in the rebel-held Donetsk and Luhansk regions began as fictions thought up by oligarchs in Ukraine’s eastern regions and propagandists in the Kremlin and over time morphed into entities real enough to hold territory, send representatives to international negotiations, and inspire young men to die for them. Similarly, Putin and other Russian nationalists have resurrected the term “Novorossiya,” or “New Russia,” a tsarist-era geographic construction that includes much of eastern and southern Ukraine. In a fitting detail, Igor Girkin, also known as Strelkov, the most famous rebel commander who has fought in eastern Ukraine, is a former Russian intelligence officer with a hobby of dressing up for historical reenactments of the Russian Civil War.

The Kremlin’s ability to turn imaginary territories into quasi states represents the ultimate success of what Pomerantsev observed at a Moscow television studio not long after joining a Russian production company, where he sat in on a meeting of Russian broadcasting executives discussing what to show on that week’s news programs. The images they decided on would be the “incense” to bless the actions of the state. To these men, Pomerantsev writes, “reality was somehow malleable.”

The West is not without its own illusions. One of them, shared by Browder, who was himself susceptible to the charms of money, is that cash rules everything around the Kremlin. PUTIN'S WAY

The West is not without its own illusions. One of them, shared by Browder, who was himself susceptible to the charms of money, is that cash rules everything around the Kremlin. Under Putin, Browder writes, Russia’s national interest is “now guided by money, specifically the criminal acquisition of money by government officials.” Here, Browder is a somewhat unreliable narrator, given that his discomfort with corruption and shady business practices is, at best, relative to the situation. One of two main initial investors in Hermitage was Beny Steinmetz, an Israeli billionaire who has been under investigation by the FBI and the U.S. Justice Department for alleged bribery in the acquisition of mining rights in Guinea. (In the wake of an earlier Russian financial crash, Steinmetz pulled his money out of Hermitage. “Losing Beny as a partner was unfortunate,” Browder writes.)

A decade ago, when his business in Russia was thriving, Browder was a very public supporter of Putin. “We want an authoritarian—one who is exercising authority over mafia and oligarchs,” he told The New York Times in 2004. Putin, he said, “has turned out to be my biggest ally in Russia.” Browder cheered the 2003 arrest and prosecution of Khodorkovsky, hoping that it would presage a larger campaign against the oligarchs who made their fortunes in the 1990s. As he writes in Red Notice, if Khodorkovsky “miraculously stayed in jail and this was to be the beginning of a crackdown on the oligarchs, it meant that Russia had a chance at becoming a normal country.” In other words, Browder wanted more politically directed prosecutions to clean up Russia, and whatever Putin was doing to consolidate control over the media, dismantle any prospects for genuine political opposition, and give near-total impunity to law enforcement and the judiciary didn’t really matter.

Reuters / Maxim Shemetov

A rally in support of the annexation of Crimea in Red Square, March 2014.

The belief that Russia is about money—“making it, keeping it, and making sure no one took it,” as Browder puts it—is widely held, and it provides much of the rationale for the Western sanctions against Russia. Make aggression in Ukraine costly, the thinking goes, and Putin will give up. But the last several months have not borne out this hypothesis: in January, as the ruble flirted with historic lows, Putin increased his military involvement in eastern Ukraine, deploying Russian forces to spearhead a push for more territory. Similarly, a far-reaching round of U.S. and EU sanctions introduced after the shooting down of Malaysia Airlines Flight 17 over Ukraine in July 2014, allegedly by Russian-backed rebels, did not keep Putin from escalating the conflict with the direct use of Russian troops in August and September. Extreme wealth and corruption have indeed been defining characteristics of Putin’s system. But over the last year, Putin’s ultimate aims have come to look rather different: to weaken the West, expose U.S. hegemony as hollow, and reveal NATO to be toothless and unreliable. To Putin and those around him who see themselves as the guarantors of Russia’s historical destiny, material gain comes as an inherent right of their positions—but it is not their main goal.

Like Browder, Pomerantsev makes too much of his personal experience. The production of reality shows is a revealing and, at times, brilliant lens for understanding the theatrics of contemporary Russian political life. But the danger of looking at things this way is that it places all the blame on state television and the propaganda machine. Reading Nothing Is True and Everything Is Possible, one would think that Russia is a place devoid of history, national interests, or electoral pressures—that the country’s politics and society are nothing but the invention of Surkov-like figures.

Although the people in the television studios shape Russia’s reality, they do not invent it from scratch. To suggest otherwise is to deny agency to Russians, who have their own fraught and symbiotic relationship with the state. “You will always look for your compromise with the state, which in turn makes you feel just the right amount of discomfort,” Pomerantsev writes. “Whichever way, you’re hooked.” Putin’s approval rating of well above 80 percent is in no small measure a product of the state’s monopolistic control over mass media, but it is also an expression of buried historical grievances. Putin is less the country’s captor than the manifestation of its collective subconscious.

In the beginning of his rule, he could delay or avoid decisions, and the profits would flow all the same. Now there are thinner profits, and tougher choices. That leads to another, quite dangerous illusion of the West: that it faces a Putin problem and thus needs to come up with a Putin policy. Such a frame causes analysts to psychoanalyze Putin and explain Russian behavior by looking at, say, the size of his secret wealth. (Browder told CNN in February that he puts the number at $200 billion, a figure he admitted was essentially made up.) But at this point, 15 years into his rule, Putin is less a man than a system. Removing Putin would not repair the country’s many damaged institutions, undo the personalization of power, or heal the lingering trauma of the Soviet experience. Nor would it necessarily bring to power a superior individual leader: however tragic or frustrating, it is easier to imagine Putin being replaced by a figure such as Strelkov than by a Western-oriented liberal like Nemtsov. If there is anything good about the end of the era chronicled by Browder and Pomerantsev, it is that understanding Russia should be easier than ever: the state’s inclinations are on full display. That is no guarantee that a full-blown crisis can be avoided, however. As Magnitsky ominously tells Browder before he dies in jail, “Russian stories never have happy endings.”

The chief difficulty of the new era of Putinism is that, in a time of increasing scarcity, it requires ever more resources to maintain, whether they be money or force or political favors. Crimea needs billions of rubles in investment, and the insurgency in eastern Ukraine does not come cheap either—and that is before the Kremlin eases the financial pressures on Russian companies and households. Putin will have to decide which elements of his rule are essential to stability and which are expendable. He has already given some indication: the military-industrial complex seems to have avoided the ten percent cuts in expenditures facing other areas of the budget, and with pensions indexed to inflation, the elderly have kept their share, too.

But many camps are unhappy, from the oligarchs who see their profits declining to the nationalists close to the security services and the Orthodox Church who want a more direct intervention in Ukraine. Putin has long prided himself on serving as the system’s arbiter, parceling out morsels to various clans while never elevating one over another. He may not be able to maintain that balance forever, however, having to choose in a more decisive way between, for example, Sechin’s interests at Rosneft and those of other sectors of the economy, or between factions of the security services, such as the FSB and his Chechen proxy, Kadyrov. The danger for Putin is that weakening or removing one pillar of his ruling edifice could make the whole thing wobble. In the beginning of his rule, he could delay or avoid decisions, and the profits would flow all the same. Now there are thinner profits, and tougher choices.

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