Thursday 29 September 2011

The Kremlin has castled and Putin is still king



Long live the king? You can’t hold it against the Russian people for wondering just how long Vladimir Putin intends to remain in power with the recent announcement that he plans to return himself to the presidency and swap his partner Dmitri Medvedev into the prime minister slot. The electoral game Putin is playing is being compared to “castling” in chess– a rook and a king swapping places, in order to shore up the defense.

There might be defense at the heart of the strategy, but Putin’s ruling party, United Russia, despite some recent murmurings, is still the only game in Moscow. Which is to say that Vladimir Putin is by all reckoning the most powerful man in the world. What other leader, leaving aside third-world strongmen, has so completely consolidated his rule over a country, as Putin has? His success is all the more venerable when one considers that Putin is leader of a country of nearly 150 million people — and at the helm of the one of the world’s most important economies. Attention must be paid to him. Sure, other leaders around the world may have more people or even larger economies, but they don’t have as full a grip on the reins of power as Putin.

(And few have ever been reverently photographed riding horseback shirtless, petting a tiger, or playing piano in tux and tails.)

Even with this switcheroo, little will change about Russia’s, which is to say Putin’s, stance on foreign domestic affairs. Despite years of inspired reformist speechifying from President Medvedev, little has changed in the ossified Russian bureaucracy. That speaks to his true, limited, authority. The civil service system he declaims remain inefficient and antiquated, and presents ample opportunity for the kind of low-level corruption that greases the wheels of local politics across the world. Medvedev has been a friendly face for the Western world, someone who says the right things on its grand stages; but he has had little influence, as president, over the country’s true direction. As the prime minister in waiting, look for that trend to continue.

It’s hard to believe the public pronouncements that the decision to castle was made years ago, as Putin has told the press. Medvedev’s recent statements simply don’t bear that out. Nor does the sudden ouster of Economics minister Alexei Kudrin. Kudrin was upset because he wasn’t given advance warning of the decision. That speaks volumes about who is important at the Kremlin — power there is controlled by Putin’s tiny circle and those on the periphery, titles aside, are kept completely in the dark.

Having said all this, one reason Putin’s not afraid to pull such a brazen stunt is that the swap will have little to no impact on foreign investment or the Russian domestic economy. A recent move towards an improved investment climate in Russia’s strategic sectors (facilitating, among other things, ExxonMobil’s recent mammoth joint venture with Rosneft) is the natural outcome of lower oil prices and limited inbound investment. Again, some of the signals coming out of Russia may change — Putin as president may once again show something like disinterested contempt towards the West and its demands of his regime in terms of human rights or international conventions, but as in his previous terms, such talk will be just that. The Kremlin has strategically opened itself up to smart money in foreign direct investment and will continue to let Western money in on its own terms. That won’t change.

There’s not much more else to see here from a policy perspective, or a political one. The parliamentary “elections” after all, will be between Putin’s United Russia, the ever-weakening Communist Party, and an “opposition” party that is actually financed by the Kremlin. When Putin eventually leaves the scene, which might not be for decades, the extraordinary centralization of power in his Kremlin and weakness of the bureaucracy will be a profound mess for whoever tries to succeed him. But, until that time, for any pretenders to the Russian throne, it’s checkmate.

read more: Olympus Wealth Management

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