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With Vladmir Putin soon out of the picture, what is next for the changing state of Russia?

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Russia’s Struggle for its Soul

With Vladmir Putin soon out of the picture, what is next for the changing state of Russia?

From the outside it looks like that Russia is in an obvious tag of war between the conservative siloviki, that have apparently won almost all battles in the last few years and the “liberals” headed by the minister of trade and economic development, German Gref and, presumably, the tight-lipped man that would be president, Gazprom’s chairman Dmitry Medvedev. The struggle is not just because of the upcoming elections next year to replace President Vladimir Putin but what is at stake is Russia’s economic and civic soul. What country is Russia going to be?

Gref now calls for increasing investment from outside, assuring investors that their money is safe, that “property rights remain intact,” that his government will adhere to the liberal economic policies of the new Russia.

Perhaps. But to say that Gref’s ability to live by his statements are stretched may be an understatement at the heels of the brutal takeover of Yukos (the “robbery of the century” according to the government’s own economic advisor at the time), the forced wrestling of Shell’s control from Sakhalin and the continuous gnawing at BP’s subsidiary at the giant Kovykta field, incredulously after the Russian government suddenly discovered environmental violations by the two multi-nationals.

Investors may actually be lured. Russia is a huge country with enormous needs and it beckons with opportunities. But it is also a country just below Iraq in killings of journalists and in the rankings by Transparency International it is below Uganda and just above Zimbabwe.

Minister Gref is in the tradition of liberal technocrats, a distinct minority that can lose anytime, a process that started with Yegor Gaidar in the Yeltsin era. Before them it was none other than Mikhail Gorbachev, the man of glasnost and perestroika, who must be the poster child of the worlds apart in which foreigners and Russians think and live.

Gorbachev, the darling of the West is reviled by most in Russia for destroying the Soviet Union.

Russia’s conflict is not a new thing and has dominated its internal predicament and its vision of itself for much longer than the time since the Soviet collapse. Indeed this conflict is what, to a large extent, led to those auspicious events which for Putin amounted to the “greatest geopolitical catastrophe of the twentieth century.”

It may not be pretty but it is clear that Putin has understood Russian yearnings better than his two previous predecessors and perhaps more than any Russian leader since Stalin. For Putin the need to project Russian power and prestige is tantamount to religion. “Stalin’s organs”, brute military power that was unleashed on Europe, exacting revenge from Nazi Germany while substituting the previous order by Russian prowess, have been replaced by “energy imperialism”. Putin’s Russia, far from being integrated or wanting to be integrated in the world or European economy, as Gref and his ilk would like, is far more content to be powerful, to be respected and even feared.

That is why the early experiment by Boris Yeltsin of offering oil and gas concessions to foreign companies or Russian entrepreneurs, working in the international traditions, was not to be tolerated by Putin, no mater how retrogressive it may appear to westerners. The dominance of energy resources on Russian economy but, especially, the importance they have on foreigners make them an irresistible weapon in Putin’s quest for what he perceives as Russia’s rightful place in the world. Giving control of them away was un-Russian.

Putin, mystifying to western observers, is now riding a wave of adulation in his country. He has struck a very sensitive chord in a Russia that has gone through traumatic changes after the Soviet collapse and views him as the angel of the resurrection of national pride.

Russian style patriotism is brute and vindictive towards what it perceives as its enemies, external and, especially, internal. Protest of any kind is treasonous, often deserving death. There is little difference, only shifted in time, between Lavrenty Beria’s Gulag, the persecution of the refusnicks in the Brezhniev era, the widespread killings of journalists in recent years or the trial of Mikhail Khodorkosvksy. The overwhelming part of the Russian public clearly does not revolt and, if anything may look at these events with glee, a satisfying macabre penalty to pay for greatness. Foreign reaction to Soviet Union and Russia clearly has varied over the decades, colored by ideology and the geopolitics of the era.

Unable to absorb modernity, other than the ostentatious spending by oligarchs or pretenders, Russia is boosting its image, presented as patriotism and not devoid of an element of inferiority complex covered by the total control of energy sources, so dear to others. Power, not economic strength, is the ultimate Russian aphrodisiac and Putin is the provider.

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Written By

Mr. Economides is editor-in-chief of the Energy Tribune.

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