16 January 2018 – San Francisco, US
by Kseniya Kirillova
Instead of showing positive economic indicators, the Russian economy at the end of the last year and the beginning of this year is going through another slowdown and a decline in economic growth. As noted in the summary report for 2017 “Where is money?” by the Russian opposition politician and economist Vladimir Milov, even according to Rosstat’s official data, the growth rate of the Russian economy in November dropped to almost zero. According to him, Russia is increasingly sliding to the periphery of the world economy, while the authorities completely ignore the main problem – lack of money among the population, which leads to extremely low purchasing power and a drop-in consumer demand.
The same opinion is shared by the professor, Doctor of Economic Sciences, Evgeny Gontmakher.
“In short, the situation is described as the degradation of the Russian economy … the degradation of all institutions, all the mechanisms on which the economy is built. To me, since I am engaged in social issues, it’s especially important to note the official statistics that show that the average income of the population has been dropping for four consecutive years “the economist said in an interview with Radio Liberty.
Another “achievement” of Putin’s economy in 2017 was the final depletion and liquidation of the Reserve Fund of Russia. Officially, all the surplus revenue in the Russian budget will henceforth be channeled to the National Welfare Fund, but economists note that with the budget deficit planned for 2018, no surplus revenue should be expected.
Meanwhile, the release date of the financial intelligence report to the US Congress about the assets of “influential political figures, oligarchs and leaders of state companies of the Russian Federation close to the regime in the Kremlin” is approaching – the same “prodigal trillion” of criminal money that the Russian elite is desperate to repatriate.
Some Russian oligarchs, without waiting for the outcome of the “battle for the trillion”, are gradually moving away from the most “toxic” spheres of the Russian economy. For example, even Alfa-Bank, widely regarded as one of the main agents of Russian influence abroad, announced that it will no longer service enterprises of the Russian military-industrial complex due to the threat of the United States sanctions. Of course, this does not mean that the management of Alfa ceased to be loyal to the Kremlin. However, it is obvious that it hopes to “out live” Putin and stay afloat even in the event of the collapse of the current system. By the way, such sentiments were heard even before the Kremlin’s Crimean adventure. For example, one of Aleksei Navalny’s associates, Vladimir Ashurkov, while talking about his decision to join the opposition, does not hide the fact that the co-owner of his former workplace, Alfa Bank, Mikhail Fridman approved his decision in a private conversation.
Thus, in the current situation, Putin and his entourage do not have much wiggle room. Let’s try to trace the main provisions of his strategy against the backdrop of the current situation, both inside and outside the country.
- Creating the image of a winner. As political scientist Lilia Shevtsova rightly noted, this image is the cornerstone of the Russian “autocracy”. However, unlike in 2014, we are no longer talking about military victories. Rather, Putin is trying to regain the image of the “founder” by focusing on his “victories” on “peaceful” fronts:
- First of all, in the economy, which, according to Putin himself and his faithful propagandists, “is experiencing unprecedented growth” in spite of Western sanctions;
- In politics, especially in elections. That is why this time the Kremlin created an unprecedented illusion of “democracy”, which in practice is only intended to demonstrate the “overwhelming victory of the national leader” not just over alternative candidates, but over certain types embodying an alternative course of the country’s development.
One such type is the “oligarch-communist” Pavel Grudinin. Putin’s loyal media and bloggers have already begun actively spreading information that Grudinin is a billionaire and an oligarch who has plundered the “national treasure”, and is supported by the “liberals and the US.” Such a maneuver with the nomination and subsequent “repudiation” of Grudinin is a good tactic for discrediting leftist ideas among the general public, since, despite the manipulation of the image of the Soviet past, Putin and his entourage are incapable of creating a real social state in today’s Russia.
Of course, the second “whipping boy” was “the personification of evil and nationalism” in the person of Ksenia Sobchak. It is not by chance that Putin let her say things for which ordinary people go to jail. Sobchak is extremely unpopular among ordinary Russians, and many representatives of the “liberal camp” also do not trust her, and therefore she is an ideal person to discredit even the most correct things;
- An attempt to twist the story with the “prodigal trillion” in Putin’s favor. As Andrei Piontkovsky noted, “the Kremlin’s propagandists, unable to deny the phenomenon of the robbery of the millennium, clumsily try to disassociate the leader of the “Russian world” from any connection to this crime.” Similarly, the Kremlin is trying to use any anti-corruption revelations in its own interests, stressing that Russia is being robbed by the “surviving” corrupt officials of the “Yeltsin era”, while the head of state is trying to fight corruption with all his might.
Consequently, the Kremlin has to take special measures designed to hide from people the truth about who was it that robbed and continues to plunder the country. For this purpose, on the one hand, the myth that the country was plundered not by an informal union of the former KGB and the Mafia, but by young democrats of the 1990s continues to be actively reinforced. On the other hand, new laws are being introduced, which make it possible to conceal the property and commercial operations of a number of legal entities and individuals, which can be extremely useful for Putin and his entourage after February 2.
- Continuation of anti-American rhetoric, which, in principle, is fairly logical, since the “winner” needs an external enemy. This tactic is carried out along with constant pejorative and often fake messages about Ukraine, the United States and other countries, so Putin and Russia look more noble than their opponents.
- While putting their best efforts into creating a strong, winning image, the Kremlin is not averse to the intensification of repression, not only against the oppositionists, including underage school children, but also against certain nationalities, for example, Crimean Tatars.
The primary object of the Kremlin’s tactics on the international stage is to lift the sanctions and to return to the conditions of the initial “bargain” with the West, in which Putin used the resources and democratic institutions of the West to strengthen his power and to integrate Russian corrupt oligarchs into the Western elite. Here you can identify the following methods to achieve this goal:
- “Forcing Europe to accept peace,” including through the creation of numerous fakes on the topic of how “the EU seeks to improve relations with Russia at all costs.” The Kremlin is struggling to impress on European leaders that “sanctions did not work,” and therefore it is necessary to begin preparations for the resumption of cooperation.
- Continuing to support forces in the West that are loyal to Moscow, including Donald Trump. In contrast to the anti-American hysteria created “for domestic consumption,” where for simplicity the US actions are often equated with its president, Russian media that have the status of “business” or “official” publications still support Trump in his struggle against political opponents and free media. In particular, the business newspaper “Vzglyad” regularly quotes Trump’s passages regarding CNN as a source of “fake news”, translates his Twitter messages about “fake media out of control”, and also prepares its own “analytics” of how “CNN is on the verge of collapse”, after being “trapped in an anti-trump propaganda and negative personnel selection.“
- In early January, the same newspaper printed an article titled “What are the chances of establishing relations between Russia and the US in 2018,” listing specific conditions of the deal that Moscow tried to impose on Washington. This includes the demand for the US to stop any support of Ukraine, abolition of all sanctions without exception, cessation of all accusations of interference in the US elections, which the Russian side continues to call “delusional” despite all the published evidence, and a promise not to interfere with the activities of Russian propagandists, etc. The purpose of this deal is to present Putin as a winner, in line with the image that he created for himself inside Russia, and therefore Kremlin’s offer to the West presents conditions that are physically impossible. At the same time, the authors of the article themselves admit that for many of the listed items, “no compromise is possible”.
- That is why one of the main tactics of the Kremlin is the blackmail of America with the North Korean nuclear threat as an instrument of coercion in order to force America to accept the deal described above. I personally happened to attend the speeches of the Russian Ambassador to the US Anatoly Antonov in Northern California, during which the Russian envoy tried to convince the audience that the United States could not do without Russia’s help in resolving the North Korean crisis. By the way, Andrei Piontkovsky explicitly called this tactic “the Kremlin’s nuclear offshore.”
The success of the new Putin’s tactics depends on several factors: actions of the civil society, the depth of the divisions among the Russian elites and, above all, the position of the West with regard to the Russian threat. Nevertheless, it is obvious that the tactics described above are in any case short-term in nature and cannot solve any of the real problems in Russia. Obviously, no games and manipulations can replace the absence of a real economic program and development prospects or truly reduce the growing discontent of the population. However, these games are still able to extend the life of the Russian regime for at least several years.
Feature Photo: President Vladimir Putin at the World Economic Forum, c. 2009 – Wikimedia Commons, 2018
Inset Photo: Putin riding horseback – Kremlin.ru, 2018
Inset Photo: Russian-backed rebel in Eastern Ukraine – Wikimedia Commons, 2018
DefenceReport’s Analysis is a multi-format blog that is based on opinions, insights and dedicated research from DefRep editorial staff and writers. The analysis expressed here are the author’s own and are separate from DefRep reports, which are based on independent and objective reporting.
Kseniya Kirillova is a Russian journalist that focuses on analyzing Russian society, political processes in modern Russia and the Russian-Ukrainian conflict. She writes for Radio Liberty and other outlets and is an expert of the Ukrainian Center for Army, conversion, and disarmament studies and the Free Russia foundation.