MOSCOW: Being president of Russia is often caricatured as being like a tsar, but the powers of President Vladimir Putin are more constrained than the Kremlin’s former autocrats and Politburo chieftains. An obvious sign of this is the amount of time Putin spends on foreign trips with little diplomatic justification. Diplomacy, however, allows a president opportunity to enhance his authority for future domestic battles.
The constraints Putin faces are not constitutional but are formed by the three factions that make up his government. One is a group of FSB (the successor agency to the KGB) men from St. Petersburg, headed by Security Council Secretary Sergei Ivanov. The second consists of liberal economists and lawyers from Putin’s home town of St. Petersburg, with Minister of Finance Alexei Kudrin and Minister of Economy German Gref the leading lights. The third faction is an “oligarchic” business-oriented group led by Putin’s chief of staff Alexander Voloshin, Prime Minister Mikhail Kasyanov and the secretive oil and aluminum tycoon Roman Abramovich, perhaps Russia’s richest man at age 33.
Because of these three very visible fault lines, some Russians describe their country as having distinct security, economic, and political/business governments. The FSB people naturally focus on security, law, and order. The St. Petersburg liberals pursue market economic reforms. But, as under Yeltsin, it is the oligarchic faction that dominates, for it controls the Presidential Administration, the Council of Ministers, two centrist parliamentary factions, and much of Russia’s oil, aluminum, railways and nuclear industries.
So far, Putin has compromised with the oligarchic force, which has reduced his personal imprint on policies. It is too powerful and skillful to be challenged head-on. Kremlin policymaking is largely an interplay between these three factions.
The institutional checks and balances built into Russia’s constitution have been neutralized. Rampant corruption has discredited regional governors as a counterweight. Indeed, the financial crash of August 1998 was provoked in large measure by governors issuing big subsidies to friendly local enterprises and demanding kick-backs in return. By slashing subsidies from regional budgets, federal revenues increased from 9% of GDP in 1998 to 17% of GDP this year. Not a surprise, then, that the governors cannot mobilize popular support as federal authorities impose accountability standards on them.
The State Duma has also faded. Under Yeltsin, deputies’ votes were routinely purchased; now the Kremlin’s FSB faction pressures deputies by reminding them of their past bribe-taking. Parliamentarians complain about “KGB threats,” but honesty doesn’t seem a lot to ask of Duma members.
Access every new PS commentary, our entire On Point suite of subscriber-exclusive content – including Longer Reads, Insider Interviews, Big Picture/Big Question, and Say More – and the full PS archive.
Subscribe Now
The real problem in policymaking is forging agreement between Putin’s three factions. Take the example of the Kursk disaster. The politics of the sunken submarine were handled by Sergei Ivanov. The other factions thought that he deserved the hostile criticism that followed in the wake of the Kremlin’s bumbles, and the liberals hoped that this debacle would reinforce independent media. As no faction embraces the military, an expected rise in defense expenditures has been insignificant; indeed, Putin is slashing 600,000 men from Russia’s military.
All three factions applaud the downfalls of media oligarchs Boris Berezovsky and Vladimir Gusinsky, but for different reasons. The FSB favors keeping the media under the Kremlin’s thumb. Abramovich, brought to the fore by Berezovsky, is eliminating his competitors. Liberals see Berezovsky and Gusinsky as the main practitioners of corruption and responsible for the demise of market reform in 1997. Thus, the outstanding issue is media freedom, with the FSB faction and the liberals opposing one another.
Neither the FSB people nor the oligarchs focus on economic policy beyond their immediate interests, abandoning that field to the liberals, who radically reformed taxes, cleaned up the state budget, and monetized the economy by curbing barter. Pension reform with private savings accounts and land reform leading to private ownership of land seem within reach. Prospects for economic reform have never been brighter than in 2000. The main problem is producing well-designed reforms backed by key officials.
Here a big problem arises from the fact that industrial ministers continue to interfere because they represent business interests or are even in business themselves. Last September, Minister of Communications Leonid Reiman, a key member of the St. Petersburg FSB group, deprived two leading Russian mobile phone companies of their frequencies so as to benefit a company favored by him. Fortunately, his decision was reversed by the government after public uproar.
In the coming year, Putin’s big test will be over control of gas monopoly Gazprom, now co-owned by its managers and the state. Its long-time CEO Rem Vyakhirev departs next May. Incredibly, Russia’s largest company - with one third of the world’s gas reserves - is unprofitable because of poor management and theft. Billions of dollars are siphoned off each year through companies allegedly controlled by Gazprom managers.
Clearly, Putin wants to end this robbery of state assets, and minority shareholders are up in arms, but the insatiable Abramovich wants Gazprom, and Voloshin yearns to become its next CEO. Will Putin stand against them?
A smaller drama concerns Russia’s railways. Railway Minister Nikolai Aksenenko, who belongs to the oligarchic family, wants to turn the rail system into a monopoly akin to Gazprom, while the St. Petersburg liberals want to divide the rail network into competing private companies. The outcome remains unclear.
Beside Gazprom, the banking system is Russia’s economic black hole. No sensible person keeps money in a Russian bank. Here, the stumbling block is the old-style apparatchik Viktor Gerashchenko, Chairman of the Central Bank of Russia, who thrives on the mess. Because he is not involved in the power struggle, and since banking reform is a huge task, nobody seems prepared to take him on.
Daily, each of Putin’s three faces can be seen. The future of his presidency will depend on which two ever will join into a unified faction.
To have unlimited access to our content including in-depth commentaries, book reviews, exclusive interviews, PS OnPoint and PS The Big Picture, please subscribe
Iran’s mass ballistic missile and drone attack on Israel last week raised anew the specter of a widening Middle East war that draws in Iran and its proxies, as well as Western countries like the United States. The urgent need to defuse tensions – starting by ending Israel’s war in Gaza and pursuing a lasting political solution to the Israeli-Palestinian conflict – is obvious, but can it be done?
The most successful development stories almost always involve major shifts in the sources of economic growth, which in turn allow economies to reinvent themselves out of necessity or by design. In China, the interplay of mounting external pressures, lagging household consumption, and falling productivity will increasingly shape China’s policy choices in the years ahead.
explains why the Chinese authorities should switch to a consumption- and productivity-led growth model.
Designing a progressive anti-violence strategy that delivers the safety for which a huge share of Latin Americans crave is perhaps the most difficult challenge facing many of the region’s governments. But it is also the most important.
urge the region’s progressives to start treating security as an essential component of social protection.
MOSCOW: Being president of Russia is often caricatured as being like a tsar, but the powers of President Vladimir Putin are more constrained than the Kremlin’s former autocrats and Politburo chieftains. An obvious sign of this is the amount of time Putin spends on foreign trips with little diplomatic justification. Diplomacy, however, allows a president opportunity to enhance his authority for future domestic battles.
The constraints Putin faces are not constitutional but are formed by the three factions that make up his government. One is a group of FSB (the successor agency to the KGB) men from St. Petersburg, headed by Security Council Secretary Sergei Ivanov. The second consists of liberal economists and lawyers from Putin’s home town of St. Petersburg, with Minister of Finance Alexei Kudrin and Minister of Economy German Gref the leading lights. The third faction is an “oligarchic” business-oriented group led by Putin’s chief of staff Alexander Voloshin, Prime Minister Mikhail Kasyanov and the secretive oil and aluminum tycoon Roman Abramovich, perhaps Russia’s richest man at age 33.
Because of these three very visible fault lines, some Russians describe their country as having distinct security, economic, and political/business governments. The FSB people naturally focus on security, law, and order. The St. Petersburg liberals pursue market economic reforms. But, as under Yeltsin, it is the oligarchic faction that dominates, for it controls the Presidential Administration, the Council of Ministers, two centrist parliamentary factions, and much of Russia’s oil, aluminum, railways and nuclear industries.
So far, Putin has compromised with the oligarchic force, which has reduced his personal imprint on policies. It is too powerful and skillful to be challenged head-on. Kremlin policymaking is largely an interplay between these three factions.
The institutional checks and balances built into Russia’s constitution have been neutralized. Rampant corruption has discredited regional governors as a counterweight. Indeed, the financial crash of August 1998 was provoked in large measure by governors issuing big subsidies to friendly local enterprises and demanding kick-backs in return. By slashing subsidies from regional budgets, federal revenues increased from 9% of GDP in 1998 to 17% of GDP this year. Not a surprise, then, that the governors cannot mobilize popular support as federal authorities impose accountability standards on them.
The State Duma has also faded. Under Yeltsin, deputies’ votes were routinely purchased; now the Kremlin’s FSB faction pressures deputies by reminding them of their past bribe-taking. Parliamentarians complain about “KGB threats,” but honesty doesn’t seem a lot to ask of Duma members.
Subscribe to PS Digital
Access every new PS commentary, our entire On Point suite of subscriber-exclusive content – including Longer Reads, Insider Interviews, Big Picture/Big Question, and Say More – and the full PS archive.
Subscribe Now
The real problem in policymaking is forging agreement between Putin’s three factions. Take the example of the Kursk disaster. The politics of the sunken submarine were handled by Sergei Ivanov. The other factions thought that he deserved the hostile criticism that followed in the wake of the Kremlin’s bumbles, and the liberals hoped that this debacle would reinforce independent media. As no faction embraces the military, an expected rise in defense expenditures has been insignificant; indeed, Putin is slashing 600,000 men from Russia’s military.
All three factions applaud the downfalls of media oligarchs Boris Berezovsky and Vladimir Gusinsky, but for different reasons. The FSB favors keeping the media under the Kremlin’s thumb. Abramovich, brought to the fore by Berezovsky, is eliminating his competitors. Liberals see Berezovsky and Gusinsky as the main practitioners of corruption and responsible for the demise of market reform in 1997. Thus, the outstanding issue is media freedom, with the FSB faction and the liberals opposing one another.
Neither the FSB people nor the oligarchs focus on economic policy beyond their immediate interests, abandoning that field to the liberals, who radically reformed taxes, cleaned up the state budget, and monetized the economy by curbing barter. Pension reform with private savings accounts and land reform leading to private ownership of land seem within reach. Prospects for economic reform have never been brighter than in 2000. The main problem is producing well-designed reforms backed by key officials.
Here a big problem arises from the fact that industrial ministers continue to interfere because they represent business interests or are even in business themselves. Last September, Minister of Communications Leonid Reiman, a key member of the St. Petersburg FSB group, deprived two leading Russian mobile phone companies of their frequencies so as to benefit a company favored by him. Fortunately, his decision was reversed by the government after public uproar.
In the coming year, Putin’s big test will be over control of gas monopoly Gazprom, now co-owned by its managers and the state. Its long-time CEO Rem Vyakhirev departs next May. Incredibly, Russia’s largest company - with one third of the world’s gas reserves - is unprofitable because of poor management and theft. Billions of dollars are siphoned off each year through companies allegedly controlled by Gazprom managers.
Clearly, Putin wants to end this robbery of state assets, and minority shareholders are up in arms, but the insatiable Abramovich wants Gazprom, and Voloshin yearns to become its next CEO. Will Putin stand against them?
A smaller drama concerns Russia’s railways. Railway Minister Nikolai Aksenenko, who belongs to the oligarchic family, wants to turn the rail system into a monopoly akin to Gazprom, while the St. Petersburg liberals want to divide the rail network into competing private companies. The outcome remains unclear.
Beside Gazprom, the banking system is Russia’s economic black hole. No sensible person keeps money in a Russian bank. Here, the stumbling block is the old-style apparatchik Viktor Gerashchenko, Chairman of the Central Bank of Russia, who thrives on the mess. Because he is not involved in the power struggle, and since banking reform is a huge task, nobody seems prepared to take him on.
Daily, each of Putin’s three faces can be seen. The future of his presidency will depend on which two ever will join into a unified faction.