Analysis5 Jun 201617 Jul 2017

Putin Removes Medvedev Appointees in Security Shakeup

Russian president Vladimir Putin speaks with his prime minister, Dmitri Medvedev, at his country residence outside Moscow, January 25 (Presidential Press and Information Office)

Nine top security officials lost their jobs in Russia this week, five of whom had been appointed by the previous president, Dmitri Medvedev, between 2008 and 2012.

Among those were the head of Russia’s witness protection program and two police chiefs in the regions of Omsk and Tomsk.

The changes come only weeks after Vladimir Putin, who returned to the presidency in 2012, replaced the long-time head of the Federal Protection Service (FSO), Evgeni Murov.

The organization is somewhat comparable to America’s Secret Service in that is responsible for the protection of federal officials and property, but its full purview is ambiguous.

Health problems were said to play a role in the removal of the septuagenarian Murov, but Russia watchers also saw his agency getting the short end of the stick in a contest with the Federal Security Service (FSB), the successor to the KGB spy agency Putin himself served in.

Murov’s replacement came only a month after Putin created a brand new paramilitary service, the National Guard, which answers directly to the Kremlin as opposed to any minister. With an avowed Putin loyalist, Viktor Zolotov, at its head, this new organization has all the trappings of a Praetorian Guard. Read more

Opinion14 Feb 201629 Nov 2018

Russia Shocked, Shocked That West Is So Unfriendly

Russian prime minister Dmitri Medvedev said on Saturday he feared Russia and the West were spiraling into another Cold War.

“NATO’s political stance toward Russia remains unfriendly and isolated,” he said at an international security conference in Munich, Germany. “One can say even more harshly, we have slid into the times of a new Cold War.”

Except the two sides didn’t “slid” into anything. Nor, as Medvedev suggested, is the tension due to an unfriendly Western attitude. If there is a new Cold War, it is Russia alone that must be blamed.

Given Russia’s flagrant violations of the postwar order in Europe, the West’s response has if anything been remarkably restrained. Read more

Free Market Fundamentalist13 Aug 201429 Nov 2018

By Promoting Autarky, Russia Condemns Its People to Poverty

Downtown Moscow, Russia, June 3, 2010 (Mispahn)

Following Russian sanctions banning the import of most farm products from Europe and North America, Prime Minister Dmitri Medvedev on Tuesday suggested the country should become agriculturally self-sufficient. This foolish longing for autarky does not bode well for the country, already teetering on the brink of recession. Read more

Analysis29 Nov 20122 Jul 2017

Russia Fails to Diversify Economy Away from Energy

Gazprom managing chairman Alexei Miller speaks with Russian prime minister Dmitri Medvedev in Moscow, June 2012 (Gazprom)

President Vladimir Putin and his deputy Dmitri Medvedev have talked for years about the need to reduce the Russia’s dependence on oil and natural gas exports but progress in this area is lacking. Indeed, they have recently taken steps that run contrary to their stated goal.

Despite the economic reforms that were enacted during Putin’s first eight years in the Kremlin, including dramatic income tax cuts, sound fiscal consolidation and education and infrastructure investments which helped fuel economic expansion, corruption and entrenched interests block further growth. The state maintains a heavy hand in key industries, most recently evidenced by Putin’s intervention in a dispute between the European Commission and Russian energy giant Gazprom when he shielded the latter from an antitrust probe.

The Kremlin is a majority shareholder in Gazprom which alone accounts for 12 percent of Russian exports. The company still reported a $44 billion profit last year but exports are falling and domestic gas production in Europe is on the rise. Economy minister Andrei Klepach has warned that Gazprom could find itself under pressure from shale gas competition as early as 2014.

Nevertheless, at the government’s behest, the company continues to pursue hugely overpriced projects for political ends that are unlikely ever to pay for themselves. According to The Washington Post, “Gazprom executives have been very slow to recognize the competition. Their company is large and sprawling and, with a seemingly eternal income stream, had no need to be innovative or especially adept at what it did.”

The recent sale by oil company BP of its 50 percent stake in TNK-BP to Russia’s state-owned Rosneft seems to follow a similar trend. Putin was even publicly squeamish about the deal which will make Rosneft responsible for nearly half of Russia’s oil production. “Both the government and I had mixed feelings when the idea of this project appeared,” he said. “This is not in line with our trend to reduce the growth of the state sector.”

Prime Minister Medvedev echoed the president’s concerns in an interview with French media this week, saying, “We don’t need a state-owned economy. We don’t need the majority of companies to be state owned.” He described the TNK-BP deal as “exceptional” and said that while “Rosneft is a state-owned company, this doesn’t mean that this will last forever.”

“However,” he added, “the state has the right to maintain its presence in key and important sectors, including the nuclear power industry and the defense sector.”

In the same interview, Medvedev, who switched places with Putin to become prime minister again in May, admitted that his government had “failed to achieve any real progress” in diversifying the Russian economy. “We rely too much on hydrocarbons, on crude oil and natural gas,” he said before arguing that advances were being made in aerospace technology, bioengineering, pharmaceuticals and nuclear power. “We consider these directions to be quite promising and we have positive experience in these areas from the past.”

For now, taxes and income from fossil fuels still provide up to 60 percent of state revenue and, writes Robert A. Manning in The National Interest, the TNK-BP deal will only “reinforce Russia as a petrostate” while discouraging reformers.

The problem is that moving in the direction of more economic modernization and less tight political control would likely put Putin’s power network at risk. Instead, as financial pressures from slow oil demand growth limit Moscow’s ability to deliver the goods to the Russian middle class, Putin appears to be keeping his focus on tight political control of the middle class and keeping oil at the center of Russia’s economy.

That may preserve political stability, Putin’s paramount concern, but, writes Manning, “it is difficult to see how Russia can become a globally competitive modern economy without a concerted effort to move toward a modern diversified knowledge economy, a more credible judiciary confronting corruption and political reform.”

It is also difficult to see how it will keep the Russian middle class satisfied in the long term. Even if there is no credible political opposition at present, a liberal candidate could well pose a challenge to Putin if he runs for reelection in 2018 unless significant improvement is made in the meantime.

Analysis26 Nov 201222 Nov 2014

Medvedev Criticizes France’s Recognition of Syrian Rebels

Russian prime minister Dmitri Medvedev speaks with members of the French media in his residence outside Moscow, November 23 (AFP/Natalia Kolesnikova)

Russian prime minister Dmitri Medvedev criticized France’s decision to formally recognize the Syrian opposition, telling reporters on the eve of a visit to Paris, “not a single state, not a single government should undertake any action directed at the forcible replacement of an acting government in any other country.”

However, he condemned the Syrian government for the violence it has deployed against civilians as well as rebel fighters and added, “Right now, I don’t want to say who is right and who is wrong.”

In spite of existing perceptions, Russia supports neither the Assad regime, nor the opposition. We are neutral.

President François Hollande was the first Western leader to recognize the opposition movement as the “sole legitimate representative” of the Syrian people when most rebel groups organized under an umbrella movement at a conference in Qatar earlier this month. The more Islamists factions notably refused to submit to the new regime while they constitute the backbone of the resistance against President Bashar al-Assad’s loyalist forces on the ground.

Vladimir Putin, who swapped places with Medvedev to become president again this year, referred to these very Islamist factions in an interview with RT in September to explain Russia’s policy of neutrality. “Some want to use militants from Al Qaeda or some other organizations with equally radical views to achieve their goals in Syria,” he said before comparing the situation to the United States backing mujahideen rebels during the Soviet invasion of Afghanistan in the 1980s. Putin predicted that propping up Islamic extremists in Syria will similarly backfire.

Medvedev echoed his warning, saying, “The last thing we want to see is Syria falling apart, something that will lead to yet another source of tension in the Middle East.”

The religious extremists are certain to take advantage of this, which is not good for any country, be it Syria, France or Russia.

Russia, which maintains a naval facility in Syria at Tartus and fears that the toppling of Assad will embolden Muslim separatist movements in its own Caucuses frontier region, has blocked efforts in the United Nations Security Council to isolate Assad. The European Union and the United States have nevertheless imposed sanctions on the Ba’athist regime which prohibit Syrian oil exports.

Western nations that support the uprising suspect that Russia continues to supply the regime with weapons. Medvedev argued that his country is merely honoring existing contracts. “We don’t know how long a given political regime will exist,” he said before promising: “We would cease any supplies only in the event of international sanctions.” Russia previously suspended weapons sales to Iran when United Nations sanctions prohibited them.

Analysis27 Mar 201219 Dec 2014

Medvedev Predicts Eurasian Union by 2015

Outgoing Russian president Dmitri Medvedev has given impetus to the Eurasian Union by declaring that it will be up and running in three years.

An idea that has been around the block several times, the union would encompass Belarus, Kazakhstan, Kyrgyzstan and Tajikistan and have as observer countries Armenia, Moldova and Ukraine. The union would be one of a myriad of regional initiatives set up in the post-Soviet space. Whether there will be meaningful integration remains doubtful.

Analysis

The question is, can it work? For this economic union to be more than just a space through which goods pass and resources are extracted, meaningful economic liberalization is necessary and the issue of corruption and nepotism must be aggressively tackled. Many regional groupings have been set up and swiftly forgotten about. Will this be different?

Russia’s vision for the Eurasian Union is to forge itself as an economic land bridge at the center of major global supply chains, linking production and consumption. In so doing, Russia stands to become Asia’s window to the West and Europe’s gateway to the East. If successfully implemented, Russia would gain significant geopolitical clout and the opportunity to capitalize from economic diversification and technology transfers from firms seeking to maximize production and distribution efficiencies in Russia.

Russian minister of economic development Elvira Nabiullina laid out this vision when she said, “The Customs Union and Common Economic Space on this map are a block with economically and geographically advantageous location between the traditional production and consumption centers (Europe) and the main centers of the promising global growth.”

Forming an effective economic union between countries of the former Soviet Union will be hamstrung by domestic networks of corruption and nepotism. To avoid the domination of Russian interests, Central Asian countries will play Russia against Chinese economic interests and Eastern European countries will continue to vacillate between Russia and Western European interests.

Furthermore, it may prove to be a tough sell to non-Russian populations, in the post-Soviet space, that their countries will not simply be junior partners in orbit around Kremlin interests. Very likely, the Eurasian Union will begin primarily as an energy infrastructure bloc with limited customs liberalization, and some regulation of migrant workers’ visas into Russia.

The European Union has been floated as a possible model for the Eurasian Union but this ignores the fact that the European Union was founded by a few states of roughly equal strength. The simple physical and economic dominance of Russia means that it will want to play the leading role — an unappealing idea to the other members. Establishing a free-trade zone, which could be a possible first step toward unification, raises the specter of Russian products being dumped on less developed markets.

Of course, this analysis assumes that the idea actually goes anywhere. Belarus and Russia are technically in a union but there is precious little evidence of it. The possible benefits are clear for Russia but it is difficult to see what the other prospective member states would gain from the Eurasian Union. Indeed, some states, such as Turkmenistan, have been pursuing policies at odds with the Kremlin. Their freedom may well be limited by a tighter Russian embrace.

Additionally, the kind of liberalization required for global economic integration (with Europe and China, for example) may prove to be destabilizing for several of the Central Asian regimes and turbulent for Russian domestic society. Integration necessitates legal reform and the entrenchment of transparent institutions that can facilitate economic and social activities. This may partially explain the seeming lack of enthusiasm on the part of Central Asian authoritarian regimes to the idea of a union.

Over the last two decades, many regional organisations have been set up in a sometimes overt attempt to tie Chinese influence into some kind of institutional framework. The Commonwealth of Independent States is the closest thing to a forebearer of the Eurasian Union but on occasion, member states don’t even bother turning up to its meetings. There is already a Eurasian Economic Community with freedom of movement and a common economic space.

On a practical level, there is thus no obvious need for a Eurasian Union. The proposed forms of integration can all be pursued through preexisting structures. The strength of the union as a concept lies in its political appeal.

The entire project encapsulates Vladimir Putin’s various ideas on Russian identity. While using some European institutions as a model, he is avowedly stepping away from greater cooperation. Putin has always opposed societal movements such as “Russia for the Russians,” preferring instead to conceive of Russia as a multiethnic, multinational state. This union firmly places Russia within the context of its previous land based empire, though claims of neo-Soviet expansionism are of course overblown.

Not just an economic land bridge, the Eurasian Union, if it ever gets off the ground, would be a powerful example of Russia as a third way between Europe and Asia. Facing public discontent on an unprecedented scale, Putin needs something compelling for his third term. This project helps to restore Russians’ sense of their place in the world, while also checking the growing nationalist trend by partially restoring Russia’s overt dominance. There will probably be few tangible results of this call for union, except for Putin.

Wikistrat Bottom Lines

Opportunities

Russia would increase relations over their former satellite states in an effort to improve their own economy and image abroad. There could be a potential for an increased market in Eastern Europe and Central Asia that wouldn’t typically be accessed through conventional means. It could certainly help shore up Putin’s domestic position and cut off nationalist opposition.

Risks

Belarus’ dictatorial style of government and Russia’s “managed democracy” may be a hindrance to progress within the proposed union.

Letting in the candidates Kyrgyzstan and Tajikistan, which have recently had problems with civil unrest, could be a stumbling block to their entry.

Europe may see a joining of the former Soviet states as a potential hostile environment, both in an economic and political context.

China could see the union as a threat to its influence in the region, e.g. gas purchases.

Having control of these territories was a burden to the USSR. Having an influence will also be costly.

Dependencies

The formation of the union will depend on Russia’s continued relationship with its former satellite states, especially Kazakhstan, which first proposed the idea.

Thomas Barrett, Michael Breen, Michael Moreland and Graham O’Brien contributed to this analysis.

News3 Dec 201123 Aug 2017

Medvedev Urges Russians to “Vote for the Future”

President Dmitri Medvedev urged Russians on Friday to vote “for the future” and stability in electing a majority for the ruling party. United Russia is expected to win the upcoming parliamentary elections which would clear the way for Medvedev to succeed Vladimir Putin as prime minister next year.

The Russian leaders announced their power switch in September. Putin, who served as chief executive for two consecutive terms between 2000 and 2008, is almost certain to win the presidential election in March although his party’s approval ratings have declined modestly, dropping from roughly 60 to over 50 percent in two years.

United Russia will retain its majority but it will be a less comfortable one. It will probably no longer be able to enact constitutional reforms without opposition.

President Medvedev tried to rally support for his party in a televised address, referencing the political chaos of the 1990s when the legislature was bitterly divided before United Russia surged. “Will this be a legislative body that is torn by irreconcilable differences and is unable to decide anything,” he wondered, “as we have unfortunately already had in our history?”

Or will we get a functioning legislature where the majority are responsible politicians who can help raise the quality of life of our people, whose actions will be guided by the voters’ interests and national interests?

Despite vocal opposition from political activist who accuse the ruling party of nepotism and corruption, Putin is still by far the most popular politician in the country with an approval rating north of 60 percent. United Russia dominates television coverage which is overwhelmingly loyalist but online and in newspapers, criticism of the Kremlin and the ruling party is regularly published. More than 30 percent of Russians have Internet access.

The communists will probably secure the second largest parliamentary faction in Sunday’s election. They currently poll at 20 percent. The social democrats could clear the 7 percent election threshold while minority liberal parties are unlikely to win any seats.