Five years ago, when then-Prime Minister Vladimir Putin announced that he would be taking back the Presidency from Dmitry Medvedev, Russian intellectuals fell into despair. They saw no end to the Putin regime, and prophesied that Vladimir Vladimirovich would once again “castle” with his junior partner in 2024 to become Prime Minister after his fourth term expired—yet another rokirovka, as the chess move is known in Russian.
Then, two years ago, when Putin annexed Crimea and invaded Ukraine, many of Russia’s intellectuals realized it was the beginning of the end for Putin. What the majority of Russians saw as Russia’s dance of triumph on the world stage, the liberal minority saw as the regime’s death agonies.
Very few dared to voice such thoughts aloud at the time, however. Russia’s liberals have been bitterly disappointed over and over again since the fall of the Soviet Union, so caution prevailed in their public analyses. But many did whisper. “Putin won’t last past the end of 2015,” a prominent Russian writer and journalist would insist to me off the air, often just moments after we had finished recording an interview segment during which he had been more circumspect about the likelihood of regime change.
Alas, 2015 came and went and Putin is still in the Kremlin. But what previously were only whispers is now a lively public debate about what will need to happen after the Tsar has been deposed. What laws will need to be repealed? What should be done with Crimea? Does Russia need a thorough lustration campaign to clean its Augean stables once and for all? And if so, just how unforgiving should such a campaign be? The excited discussion is based on the assumption that change is coming, and sooner rather than later. People disagree, however, on just how the change might come.
Foreign observers tend to want to focus on signs of civil unrest as hopeful signs. George Soros’ latest diagnosis is emblematic of the approach: Given currently low oil prices, Soros foresees the Putin regime facing bankruptcy in 2017 when a large percentage of its foreign debt comes due. Economic collapse, the thinking goes, will usher in political change. Soros says that Putin’s “popularity, which remains high, rests on a social compact requiring the government to deliver financial stability and a slowly but steadily rising standard of living.” With money in short supply, the Russian people will get testy—a dangerous proposition for a government with parliamentary elections scheduled to take place in September.
Western news outlets are always on the lookout for evidence of grassroots discontent. Trucker protests across Russia (in response to a tax benefitting one of the sons of Putin’s close friend and judo sparring partner Arkady Rotenberg) were a favorite subject for a while. Protests by holders of mortgages denominated in foreign currencies—people who have seen their payments skyrocket as the ruble has tumbled—are currently a favorite subject of attention, despite the fact that the absolute number of those affected is relatively small.
Russian observers, on the other hand, tend to look for signs of how Russia’s elites might fracture and split. Maria Snegovaya, a columnist for Vedomosti and a TAI contributor, recently penned an excellent, provocative column outlining one such scenario. Comparing the Putin regime to the mafia-like Assad regime in Syria, Snegovaya claims that Putin may in fact be more vulnerable than Assad. Russia’s populist authoritarianism is grounded not in a sense of belonging to an ethnic and confessional minority (as is the case in Syria), she argues, but rather in the regime’s ability to redistribute monopoly rents to its various stakeholders: Putin’s inner circle of elites, the security forces, bureaucrats, and state employees. Unlike in Syria, there is no particular group in Russia whose members’ physical survival would depend on Putin. Thus, she concludes, since the Russian regime fully depends on access to rents, an abrupt reduction of these would inevitably destabilize it: economic collapse would cause different groups to scramble for access to the shrinking pool of resources. Political instability at the top would open the door for protests, with business owners and the middle class joining in over time. Putin would have to go in short order.
The Putin regime’s days certainly are numbered, and smart observers like Snegovaya are right to look at the elites for signs of a shake-up. What is less certain is that the revolt will be broad. Russia’s history shows that palace coups almost always happen first. The people’s revolution comes later.
Access to resources in Russia belongs exclusively to a minority: Putin’s inner circle—which consists of the aforementioned siloviki (mostly his former KGB colleagues) and a number of businessmen whom Putin calls his personal friends.
Let’s name some names. The siloviki feature such officials as Putin’s Chief of Staff Sergei Ivanov, Security Council Secretary Nikolai Patrushev, Foreign Intelligence Service head Mikhail Fradkov, and FSB head Alexander Bortnikov. These are the people at the very top who, along with Putin, exclusively determine Russia’s foreign policy and military strategy. The members of the cabinet responsible for economics and finance are never consulted in these matters. Their access to the decision-making process is limited to making speeches at economic forums in the hope of being heard and heeded by Putin himself—which seems to rarely happen.
The other part of Putin’s inner circle are businessmen, whom Putin publicly identifies as friends: the aforementioned Rotenberg family, Yuri and Mikhail Kovalchuk, Gennady Timchenko, and the Shamalov clan (the son, Kirill Shamalov, 33, whose wealth is estimated to be around $3 billion, is married to Putin’s younger daughter Katerina).
Both the siloviki and the business friends feel strong bonds to their benefactor Putin: they fully owe him both their standing in Russian society and their staggering wealth. Gennady Timchenko was not even in the Forbes richest Russians list nine years ago. In 2008 Timchenko premiered at the 43rd position, after his energy shipping conglomerate Gunvor started to rake in billions by shipping oil and petroleum products out of Russia. Arkady Rotenberg, who founded a major federal contracting company, first appeared on Forbes’ Russian list in 2010 at number 99. In 2014, Rotenberg was sitting at number 27, his net worth estimated at $4 billion; Timchenko, who managed to sell Gunvor for an undisclosed sum a day before landing on the U.S. sanctions list, was the sixth richest man in Russia with a net worth estimated to be $15 billion.
The siloviki, on the other hand, are less open with their wealth—fortunes that are largely built in the shadows. It is said that the distinguishing feature of Boris Yeltsin’s rule was that businesses were shaken down by bandits, whereas under Putin, they were shaken down by the siloviki. It is, unofficially, their official work.
A second tier of the hyper-rich sits under this elite group. These people, who amassed their fortunes during the Yeltsin era, today don’t enjoy the same guarantees as Putin’s inner circle. In the 1990s and early 2000s, people like Oleg Deripaska, Roman Abramovich, Boris Berezovsky, and Mikhail Fridman were at the top of the oligarch pile, awash in both wealth and political influence. Under Putin, many of these oligarchs—the so-called “Yeltsin family”—have multiplied their wealth many times over, but at the cost of forfeiting their political influence.
The first prominent casualty from this group at Putin’s hands was media tycoon Vladimir Gusinsky, who claims he was forced to sell his assets (including the formerly independent NTV television channel) under duress before being made to leave the country. For those who did not quite get the message, Mikhail Khodorkovsky’s ten years’ imprisonment was meant to underline the point: keeping your wealth is completely contingent on your renouncing political ambitions. Most of them fell in line.
Then, in the fall of 2014, Putin rattled the old guard’s cages once again: Vladimir Yevtushenkov, who was at that time number 15 on the Forbes Russia list with an estimated net worth of $8.3 billion, was arrested for fraud and stealing the shares of one of the biggest oil companies in Russia, Bashneft. After Yevtushenkov transferred his shares of Bashneft over to the government, he was released. He is still said to be worth some $2.8 billion.
Putin’s rationale for doing this was likely twofold. First, Medvedev’s comparatively liberal stint at the Russian presidency during the rokirovka had culminated in massive political protests in 2011-2012 in Moscow. The opposition leader Alexei Navalny in particular was enjoying a surge in popularity, and by 2013 he had done better than almost anyone expected in challenging Putin favorite Sergei Sobyanin for the Mayorship of Moscow. I personally know of several Russian multi-millionaires who financed Navalny’s campaigns discreetly—by spreading moderate sums of money among their friends and having them donate to the cause. Putin needed to send a strong signal that this kind of behavior was not welcome or condoned. The Yevtushenkov case served that purpose.
And second, Yevtushenkov was used to demonstrate beyond a reasonable doubt that property rights in Russia are neither valued nor protected—including those of the “Yeltsin family”. This part of the message was received loud and clear by many. For example, the owner of Alfa Bank, Mikhail Fridman (worth $14.6 billion, number 2 on Forbes’ list), along with almost all of Alfa’s top management, have fled Russia for London. The only person who remains in Moscow is Alfa Bank’s CEO Petr Aven. As his friends and allies privately whisper, “Aven stays as a hostage.”
(The last time Mikhail Fridman publicly showed up in Moscow was Boris Nemtsov’s funeral last year. Fridman and Nemtsov were close friends, and Nemtsov’s assassination was a personal blow to Fridman. His appearance at the funeral of a former Russian Vice Premier and sitting member of a regional parliament, which neither Putin nor Medvedev attended, was noted and appreciated by Nemtsov’s family, his friends, and by the liberal opposition. Since then, if Fridman has left the UK, he has mostly gone to visit his hometown of Lviv, in Ukraine’s pro-Western heartland, where he sponsors the annual Jazz Festival.)
Two main things distinguish Putin’s inner circle from the Yeltsin-era oligarchs. Putin’s people are the only ones who are guaranteed property rights by Putin himself: they actually own things and not just temporarily possess them. Furthermore, Putin’s people make their fortunes in a unique way: they are directly milking the federal budget. They are usually the sole beneficiaries of grossly inflated federal contracts for everything from infrastructure development to energy exporting. The first generation of oligarchs also looted the state using murky deals during the era of privatizations, but they no longer have that privilege.
When Russian analysts hopefully talk about elites beginning to squabble over the spoils of the state as the economy turns sour, they sometimes bring up the example of Ukraine. Several of the Ukrainian oligarchs sided with the idealistic young protesters on the Maidan back in 2014, and they betrayed their crooked president, Viktor Yanukovych. If it happened next door, these analysts’ argument implies, surely the same could happen in Russia.
The comparison is, unfortunately, misguided in several ways.
Since its independence from the Soviet Union, Ukraine has been carved up into a de facto federation by a set of rapacious oligarchs. These oligarchs not only managed to extract rents from their domains, but also in large part controlled and ruled over them politically. Whoever was President would have to cater to the various oligarchs’ interests, both on domestic and international matters. Squabbles between the oligarchs and the central government have always been the norm in Ukraine. So when President Yanukovych failed in his job to cater various oligarch interests, many of them were happy to use the Maidan protesters to get rid of Yanukovych.
In Russia, Putin has ensured that this dynamic can’t be replicated. In 2004, he abolished the direct election of governors, and although he restored indirect election of governors in 2012, over the course of his fifteen years in power he has replaced all of them. Regional elites in Russia do exist, of course: a regional governor will end up cultivating a set of people under him who will end up controlling whatever resources are within their purview. But once a governor is dismissed by Putin (which can happen often and quite unexpectedly), all the governor’s people are dismissed as well. Regional Russian elites do not own anything. They are only allowed to enrich themselves for a set period of time, until Moscow says otherwise.
The aforementioned Yevtushenkov case also happens to cast light on how Moscow has reined in the regions. The oil company Bashneft, which is at the heart of the Yevtushenkov episode, was created in the 1990s under Yeltsin, when ownership of the state-run oil interest in Bashkortostan was transferred to the regional government. Yeltsin’s pal Murtaza Rakhimov, who ran Bashkortostan as his personal fiefdom, privatized Bashneft in 2003 and transferred a controlling stake in it to a holding company run by his son, Ural. In 2009, Yevtushenkov’s company bought a controlling stake in Bashneft. When Yevtushenkov was arrested in 2014 and forced to hand over his shares, Ural fled Russia and was convicted in absentia for also stealing Bashneft shares, as well as for money laundering. Murtaza Rakhimov, Ural’s father, had ruled the oil rich Bashkortostan from 1993 until he was replaced by Putin in 2010. Owning the region’s major oil resources had made Rakhimov’s family a regional power. Rakhimov had won his clout long before Putin came to power and owed no special allegiance to him. This could not stand. Ultimately, Putin took care of it.
One Russian governor does break the mold to a certain degree: the Chechen leader Ramzan Kadyrov. Kadyrov appears untouchable. He has his own private army of some 25,000 well-trained troops (there are videos floating around of Kadyrov’s combatants, wearing uniform without any insignia, being trained by a special forces “Alfa” commander). In December of last year, Putin handed control over an oil company located in the region, originally run by Rosneft, to the Chechen regional government. Several of the people arrested in connection with the Nemtsov murder were Kadyrov’s soldiers, and several of Kadyrov’s close associates who have been accused of planning and ordering Nemtsov’s murder have successfully been kept from investigators. Several times in the last few weeks, Kadyrov took it upon himself to publicly threaten the lives of Russian opposition members without official sanction, or official condemnation, from the Kremlin.
But despite all that, even Kadyrov is in reality contained. For one, it is an open secret that Putin’s siloviki are deeply opposed to Kadyrov’s rule. While Kadyrov has relatively free reign within Chechnya itself, he has no chance of leaving his republic or expanding his reach beyond its borders. He can have an opposition leader murdered in Moscow, and his people can intimidate an official in Krasnoyarsk, but those kinds of moves are probably close to his limits.
Furthermore, Kadyrov is not popular among Chechens. A wealthy Chechen diaspora exists all around the world, and in December and January a number of anti-Kadyrov rallies were held in Vienna, Berlin, Stockholm, Oslo, Istanbul and even in Kyiv. The 1.4 million Chechens living in Chechnya are even less fond of Kadyrov due to his harsh and oppressive rule. The Chechen leader demands an extraordinary “mandatory donation” from every working inhabitant of the republic to the Akhmad Kadyrov Foundation, an NGO (named after Ramzan’s father) that is understood to serve as Ramzan’s own personal slush fund. Public employees are said to be tithed at least 10 percent of their monthly salaries, private sector employees are forced to give up as much as a third of their paychecks, and business owners are told to cough up as much as half of their profits.
Finally, Kadyrov has earned the enmity of hundreds of Chechens fighting under the banner of the Islamic State in the Middle East. Several newspapers ran unconfirmed reports that one prominent IS commander in Syria, Abu Omar al-Shishani (Omar the Chechen) put a $5 million bounty on Kadyrov’s head after Kadyrov threatened to kill the “bandits” who “threaten Russia and pronounce the name of our President Vladimir Putin” on his Instagram account. Kadyrov’s often-professed solidarity and love for Putin doesn’t just earn him the hatred of Islamist militants, however. Few Chechens, outside of Kadyrov’s inner circle who directly profit from the federal funds that the Kremlin sends to Grozny, can forgive Russians for the two bloody wars they waged on their territory. Most are infuriated by Ramzan’s constant pledges of loyalty to the Russian President, who is blamed for having starting the second, incredibly cruel and bloody war.
Many analysts, and most Russians, assume that Kadyrov and his army are meant to be Putin’s personal bodyguards in case of political turmoil and popular protests. In exchange, Putin keeps the siloviki off Kadyrov and keeps sending Ramzan billions of rubles in subsidies from the federal budget. But should Putin for some reason go, the very next day Kadyrov is likely dead. His mercenary army will not have time to get to Moscow. Its members will be all too busy trying to fend for themselves.
There is a Russian saying that goes something like this: “Why is it impossible to share everything with everyone? Because there are too many of everyone and there is too little of everything.” When oil prices were well above $100 per barrel, as they had been for most of Putin’s reign, that saying was not strictly true for the elites: there was plenty for everyone to steal. But as oil prices continued to plummet—blowing through $100 in August 2014 and hitting the mid-forties in January 2015—the energy export-dependent Russian economy began to contract. The pie is shrinking, and there are fewer and fewer opportunities for elites to get their unfair share around.
Case in point: as this piece was being written, news broke that Putin had proposed creating a regular “dialogue” between business and law enforcement organs, mediated by the Kremlin. Two days later, Dmitry Kameshchik, the owner of the second largest airport in Russia (Domodedovo), was arrested in connection with the investigation into the 2011 terrorist attack on the airport, and charged with not providing adequate security. In the the weeks and months after the attack in 2011, the siloviki had tried to take Domodedovo from Kameshchik. But Medvedev was President at the time, and Kamenshik, who had invested over $1 billion in the airport, was able to make a deal with the government. Russian observers are unanimous in their analysis: this is another Yevtushenkov-like shakedown—Putin’s friends taking from those not in the inner circle.
Putin has been ruthlessly successful in consolidating power around a small set of people, both personally close and loyal to him. In fact, he has been so successful that even as the pie gets ever smaller, the chances of a broad-based revolt arising are tiny. Regional elites are at Putin’s mercy, while bureaucrats and civil servants have never had any political power—they merely collect their above-average paychecks cut by the Kremlin while preserving the corrupt machinery of the kleptocratic regime.
A palace coup, however, is still possible—and indeed may be increasingly likely. Putin’s inner circle comprises two distinct groups with ultimately differing interests and instincts. No matter how much the Rotenbergs and Timchenko may say they support Putin’s foreign policy, they are still primarily interested in making money. Meanwhile, the siloviki, who certainly enjoy the windfalls from their shadowy, lucrative businesses, have a fundamentally different way of thinking: a twisted, militaristic, zero-sum view of the world.
For example, the President’s Chief of Staff Sergei Ivanov, a KGB agent since at least the 1970s, has seen the West as a personal enemy for many decades, and continues to see foreign affairs in stark, Cold War terms. Working as a field officer, Ivanov appears to have been expelled from the UK for spying in the 1980s, perhaps when his cover was blown by a British double agent, Oleg Gordievsky. (Ivanov himself has tried to deny that it was he who was expelled, claiming implausibly that it was another agent with the exact same name as him but born a year earlier that got the boot; at least two sources close to the Kremlin, however, have insisted it was indeed him.) In the public interviews he has given, Ivanov merely channels a more intense and focused wariness of the West than Putin himself betrays. But at least on one occasion, he has let his guard slip: speaking to a conference of regional governors last year, Ivanov said that “Britain is our eternal enemy. She has always shat on us, and will continue to do so.”
A different kind of monomania afflicts the head of Russia’s Security Council, Nikolai Patrushev. Like some bizarre version of Dr. Strangelove’s Brigadier General Jack T. Ripper, Patrushev appears obsessed with the idea that the United States is out to steal Russia’s natural resources. The theory has some currency in the halls of the Kremlin: Putin himself has alluded to it at times in interviews, and Deputy Prime Minister Dmitry Rogozin wrote an editorial in 2012 that featured the argument as well. But no one has returned to it as often as Patrushev. For him, this theory explains everything from the real purpose of NATO to the eruption of protests on the Maidan, and even the Western sanctions regime that followed the annexation of Crimea.
In an interview with a major paper last year, Patrushev explicitly claimed that Secretary Madeleine Albright had complained that Russia unfairly owns Siberia and the Far East, and that she had proposed taking them over. Albright’s thinking on the matter, it turns out, was originally “unearthed” by a former KGB general who had worked for the organization’s special paranormal studies bureau. In 2006, the elderly general claimed on TV that his unit had telepathically connected with Albright’s thoughts in 1999—by carefully studying photographs of her—and found that she pathologically hates all Slavs, and had designs on Russia’s mineral wealth. Patrushev was clearly deeply influenced by this brilliant military research.
There is a story that has been circulating around Moscow for some time now: After the West imposed sanctions on various firms and individuals surrounding Putin in 2014, the Rotenbergs let the President know that they were feeling real economic pain. Putin reassured them: “Don’t worry,” he said. “I will make up all your losses.”
This conversation, if it really happened at all, would have coincided with crude oil prices starting their descent from highs of $110 per barrel. Today, oil is trading at around $30 per barrel, and the consequences of Russia’s various wars are contributing to the country’s economic pain. There is less and less of everything, but the number of people stealing is staying the same.
The siloviki like their wealth, but their particular paranoid mindset and militaristic worldview prevent them from taking steps which might at least stabilize the economic situation. They think their wars are necessary for the country’s long-term success in a hostile U.S.-led world set on Russia’s destruction.
For now, Putin appears fully on board with the militarism. But if his resolve wavers, perhaps in favor of the alleged promises he has made to his business friends, the siloviki will not hesitate to displace him. With broad control of the armed forces, they have the means to do it. And if the siloviki are already uneasy with Putin’s leadership, grassroots rallies fed by popular discontent with the failure of domestic policies could provide the ideal pretext for launching a coup.
How ironic it will be to see a military junta seize power in Moscow, made up of the same people who had falsely accused the Ukrainian Maidan uprising from bringing a “fascist junta” to Kyiv…