Europe

Russia

Putin's Dictatorial Streak

Angelique van Engelen
October 11, 2007

Russian President Vladimir Putin (C) greets local residents of Ufa, in southwestern Russia, on Oct. 11 while Bashkiria's leader Murtaza Rakhimov (R) looks on. (Photo: Vladimir Rodionova / AFP-Getty Images)

Russian president Vladimir Putin isn't anywhere near as funny as his predecessor Boris Yeltsin, yet his actions are far more outrageous. His dictatorial streak is in dire need of assessing. Just over a week ago, Putin shocked both domestic onlookers and the international community by announcing plans to hold on to power, at the end of an address of the country's United Russia party. Even the most informed analysts were surprised. What to make of this?

Apart from Putin's controversial way of dealing with imprisoned oil magnates, there is hardly anything else that makes a potential dictatorial streak in his psyche in any way predictable, most observers say. Fyodor Lukyanov, editor of Russia in Global Affairs, sort of summed it all up when told the Moscow News: "When a person insists on doing things in a way so that no one can understand anything until the last minute, why spend time on analysis?"

That's definitely the background to the lack of an international outcry over Putin's latest move. Outrageous and all, he seems to just get away with it. To give him his due, he enjoys a popularity that is unprecedented for a semi-democratic Russian leader. This was illustrated during a rally of the Young Guards, described in the Western press as being similar to the Hitler Jugend, which is a slight exaggeration, even though there is evidence that they attract skinhead elements.

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A day after Putin's announcement, some 7,000 Young Guards gathered on Moscow's Manezh Square, armed with life-size cardboard Putin cut-outs. It was not clear who organized the rally, but it's not unthinkable that it was Kremlin-sponsored. It is common knowledge that in recent years the Kremlin has founded a few "youngster" organizations to create Soviet-style buzz meetings.

Putin's popularity seems to be, by and large, the only measure justifying his extended stay in power. During the conference, several people called for him to find a way to remain president. However, some observers branded those calls as scripted. Putin made a public gesture indicating that he would not immediately facilitate that wish, but that he'd do his best to honor the Constitution and still serve Russia's people as best he could by becoming prime minister.

"To head the government is a realistic proposal, but it is too early to think about it, because two conditions first have to be met," Putin told his audience. "The first is that United Russia must win the State Duma elections on Dec. 2. Second, the elected president should be a decent, effective, modern-thinking person who I could work with. But what we can and must talk about today is that your party can and must become an instrument of social stability. That is why I gratefully accept your proposal that I head the federal list of United Russia."

Putin's handling of the crisis in Chechnya and a few other issues are mostly cited for his current popularity. What is directly impacting on the Russian mindset is his involvement with Russia's largest gas provider, Gazprom. Putin has put the Kremlin pretty much directly in charge of the company. This stands him in good stead among the average Russian.

"No matter what the world thinks, the 800-pound gorilla of gas is central to Putin's popularity and Russia's new swagger on the world stage," wrote Jason Bush and Anthony Bianco in the July 26, 2006 edition of BusinessWeek.

People working for Gazprom are considered lucky. Wages paid to staffers are significantly higher than what other companies pay their personnel. Gazprom is believed to be Putin's main ploy to conduct power plays both at home and abroad.

"Putin [...] relies on Gazprom to solidify his broad popular support, even as he stifles opposition," stated the writers of the aforementioned BusinesWeek article. "His subordinates determine which small towns get connected to Gazprom's pipelines and then court voters based on this largesse." The article contends that Gazprom generates 8 percent of national tax revenue.

As news of Putin's bid for remaining in power broke, more attention was leveled at his oil industry dealings. One delicate issue is Putin's recent arrest order for a private Russian oil magnate, Mikhail S. Gutseriev, a former owner of Russneft.

This issue shows a darker side to Putin and is reminiscent of his controversial 2003 imprisonment of one of Russia's richest men, Mikhail Khodorkovsky — then-president of Yukos Oil. Khodorkovsky was an outspoken critic of Putin's government and was sent to a Siberian jail for eight years. Gutseriev, fearing he might also be sentenced to a multiple year prison term, has either gone into hiding or has been successful at leaving the country. Sources say he has deliberately maintained a low profile since the summer; after the warrant was issued at the end of August, Gutseriev's whereabouts are unknown.

Just like Khodorkovsky, Gutseriev is accused of tax evasion and fraud. Gutseriev published a letter in a Russian business newspaper and on his corporate Web site defending himself. He wrote the letter a few months ago, after he was told by Moscow police to stay within city limits. Gutseriev posited that the police and Russia's tax officials had forced him to sell out to rival companies and singled out a close Putin ally, Oleg Deripaska, as a buyer. In the not-so-distant past Gutseriev himself was also a close confidant of the president.

To date, Russian opinion leaders are still very subdued when it comes to speaking their mind about public figures or supporting Putin's opposition financially in an open manner. The cases of Khodorkovsky and Gutseriev highlight exactly why. The former's hopes for an early release faded with Putin's decision to hold on to a high profile political role.

Despite the general belief in Russia that Putin is the bringer of good fortune to the country, real freedom is not necessarily materializing.

"[Gutseriev's] predicament sheds light on the capriciousness of the judicial system here, as well as the imperative for business executives to show loyalty to the leadership of President Vladimir V. Putin," said an article in The New York Times, quoting Russian analysts.

Investors in Russia have long pointed at Russia's shaky judicial setup as the country's biggest downside. The imprisonment of Khodorkovsky and the arrest warrant for Gutseriev show a degree of lawlessness that is extreme. Foreigners frequently are suffering as well, due to preferential treatment by the Russian authorities of Gazprom. But in contrast to Russia's private oil magnates, at least foreigners can leave the country.

An example of a case that has virtually gone unnoticed by the world community is last June's departure of BP's local joint venture, TNK-BP. The company's fortunes turned sour when Moscow regulators nudged it to give up major portions of its rights. TNK-BP ended up selling its controlling stake in a natural gas project it had explored to Gazprom at a price that was well below the market rate.

A similar thing happened to Shell, the Anglo-Dutch oil giant. Its chairman Jeroen van der Veer found himself thanking Putin publicly during a Kremlin ceremony for "resolving" a dispute in which the company had lost out in a major way.

"As everybody in the world knows, you don't fight City Hall, and in Russia you don't fight the Kremlin," Chris Weafer, the chief analyst at Alfa Bank, commented in the International Herald Tribune. "When the Kremlin comes calling and says 'we want to buy your business,' the only talk is about price and terms."

Russneft, which was incorporated in 2002, became one of Russia's largest privately-held oil companies in a very short time. It is valued at $6 billion, and was fully owned by Gutseriev.

"People are fighting over assets with no limits or rules, not within the law or within reason but just out of greed," said Yulia L. Latynina, a commentator on a Moscow radio station.




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