Oct 30, 2009 | 00:09 GMT

9 mins read

The Kremlin Wars (Special Series), Part 5: Putin Struggles for Balance

Russian Prime Minister Vladimir Putin is at a decision point. After spending a decade consolidating political and economic power, he has to choose how to deal with Russia's troubled economy. Amid tensions between the Kremlin's two powerful clans, Putin's decision could leave Russia's political structure in tatters. Editor's Note: This is the final part of a five-part series examining the Russian political clans and the coming conflict between them.
Click here to download a PDF of this report Russian Prime Minister Vladimir Putin has spent a decade gaining control over the Russian political and economic system. However, economic difficulties are affecting Russia's political structure, and the remedy could break the whole system apart. After coming to power in 1999, Putin spent five years getting a firm grip on the Russian political system. During the next five years, he focused on managing the balance between the Kremlin's rival power clans — one led by Vladislav Surkov, currently Putin's first aide and Russian President Dmitri Medvedev's deputy chief of staff, and the other led by Igor Sechin, currently deputy prime minister — while recentralizing the economy. In consolidating the economy, Putin granted these clans the unchecked ability to put many of Russia's largest and most important firms under state control. This consolidation generally was more about giving the state control over Russia's vast strategic resources and purging influence from abroad or from those hostile to the Kremlin than about making economically sound decisions. The benefits of high energy prices and a surge of foreign investment into Russia made up for shortcomings in economic planning. But those good times have ended. Energy prices are considerably lower now, and foreign investment has dried up. Furthermore, many of those put in charge of the firms now managed by the Russian state did not know how to run a business. These firms collapsed during the ongoing global economic crisis, deeply damaging the Russian economy. Putin has not been blind to the mismanagement and overextension in the economic consolidation, or to the long-term outlook for the Russian economy. Finance Minister Alexei Kudrin has presented Putin with a proposal to partially liberalize the economy, remove the poor managers, and put business-minded people in charge of the firms in the hopes of returning those firms to functionality and possibly profit. Putin might be considering these reforms, but he is not putting himself in a position to spearhead them. Though any real reforms inside Russia will require his approval, Putin has made sure that Kudrin and Medvedev are the public faces of those reforms. That way, if the reforms work, Putin could take the credit for approving them; if they fail, Kudrin — and possibly even Medvedev — would take the fall. But beyond the chances of success or failure for Kudrin's proposed economic reforms is another problem: The reforms could compromise the balanced political system Putin has worked so carefully to construct and maintain.

Putin's Dilemma

Almost all of the managers that need to be purged under Kudrin's plan are members of the same power clan — the siloviki, run by Sechin. Their removal would overturn the balance of power that has allowed Putin to rule for the past decade. It would leave Surkov's clan nearly unchecked in the Kremlin, and Surkov is already a powerful figure. He has been diversifying his power and, in addition to ruling over the Military Intelligence Directorate (GRU), now holds the loyalty of the liberal economic reformers called the civiliki, including Kudrin. This is not the first time Putin has faced competing factions. During the first few years of Putin's presidency, he secured a landslide victory in 2003 Duma elections that gave his party, United Russia, dominance in the government. But Putin had to purge competing elements in the Yeltsin Family, the oligarchs, the security services and the St. Petersburg liberals. He wiped out some of these factions, like the Yeltsin Family and the oligarchs. He purged the non-loyal forces from the security services and St. Petersburgers and molded them into new factions. It is this second move that led to the rise of the clans led by Sechin and Surkov. Putin's reign in Russia has always depended on balance, and now one of his top lieutenants is in a position to gain more power than Putin is comfortable with. Surkov knows he can never officially control Russia, but his ambition is to run it from behind the scenes. He has been fairly successful in this so far, but rival clan leader Sechin and his followers in the Federal Security Service (FSB) have always kept him and his GRU power base in check. Kudrin's plan, along with a few more changes to the system, would remove most of Surkov's obstacles. Moreover, Surkov is starting to garner a cult-like loyalty inside Russia that would make any Kremlin leader nervous. Putin knows Surkov is not trying to lead Russia officially, but his concern is that with Surkov's growing power, Putin could be displaced as Russia's chief decision-maker. Besides Putin's desire to remain in control, the other concern is the response from the siloviki — mainly made up of former KGB and current FSB personnel — to a tip in the balance of power. The siloviki have never a secret of their loathing toward Surkov, his GRU and the civiliki. They would not stand for Surkov making the major decisions in the Kremlin. Russia can remain powerful only under authoritarian control, and that is something Surkov could never accomplish. Over the last decade, Putin managed to gain the loyalty of all the different Kremlin factions. Surkov could destroy that delicate balance.

Putin's Options

Putin could disregard Kudrin's plan, leaving Sechin's people in their current positions and ignoring any plans for privatization. That would maintain the power balance, and contain Surkov to a degree, but the economic tools that Russia would have at its disposal would become far less useful. Or Putin could allow very limited business privatization and restructuring in order to keep the system stable in the short run, disregarding the long-term effects of the current economic model. This means that at any time, if Kudrin's plans start to destabilize Russia politically, those plans could be abandoned and Kudrin or Medvedev blamed for the effects. Putin would hardly be the first Russian leader to allow the economy to crumble in order to maintain political control. Putin could also implement Kudrin's reforms but politically hive off Kudrin and the civiliki from Surkov's clan and establish the civiliki as their own clan. Since Putin is an expert at creating balance, there has been some discussion that if Sechin's clan is about to lose some of its power and Surkov is about to become stronger, Surkov's clan could be split in two to make up for the imbalance. This looks very similar to Vladimir Lenin's tripartite system, which involved the creation of a system within the Kremlin in which three clans play off of each other to keep balance. In Lenin's system, the KGB was one clan, the GRU was another and the third was a non-intelligence group sometimes simply called the State. In Putin's model, the FSB under Sechin would continue as one clan, Surkov's clan would oversee only the GRU and then the civiliki would form the third group, led by either Medvedev or Kudrin. For Lenin, the tripartite system worked in the short term, but it ultimately failed as the intelligence groups infiltrated the State. Surkov has already thought of this option and knows Putin is considering it. However, he views the civiliki as being too dependent to form their own clan and feels they will always have some level of loyalty to him. Considering that the civiliki generally lack leadership and do not have a power base independent of Surkov, a successful application of the tripartite model would require greater management skills than Putin currently has.

Putin's Attention Span

Another problem for Putin is how much time and effort will be required to restructure Russia's economy, attempt to keep balance inside the Kremlin, and prevent a powerful Kremlin figure from threatening Putin's control. Putin and Russia have enough other concerns outside the country. Russia is currently consolidating its periphery by bringing former Soviet states back into its orbit. Russia is in the middle of purging Western influence in Belarus, Ukraine, the Caucasus and Central Asia. Moscow is also working to prevent states further out on its periphery — especially in Central Europe — from becoming more pro-Western and allowing countries like the United States to have a presence there. Russia has also been creating informal alliances with other regional powers like Germany, Turkey and Iran in order to counter the United States' global power and ability to work within Russia's sphere of influence. If Putin is faced with a crisis at home, whether economic or political, he could have to pull back on Russia's bold moves abroad. Recently, with Russia consolidated and stable and the United States bogged down in Afghanistan and Iraq, Moscow has been able to make some major regional shifts in Eurasia. If this situation changes and Russia has to deal with domestic strife, then by the time Russia is stable enough to be able to act abroad again, the United States could once more be free to counter Moscow's moves. It all hinges on Putin's decisions about managing Russia's faltering economy while maintaining control over those vying for power inside Russia. Putin has been successful when faced with such turmoil before, but it is unclear if that success can be repeated.

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