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12-13-2007, 10:58 AM
Americans Imagine a World without Putin


Dec. 13, 2007

A report called “Alternative Futures for Russia” will be issued in Washington today by the authoritative nonprofit Center for Strategic and International Studies. Besides the usual criticism of democracy in Russia, some parts of the report are downright fantastic. The most scandalous of them is the suggestion that Russian President Vladimir Putin could be assassinated on January 7, 2008, in Moscow. Kommersant Washington correspondent Dmitry Sidorov has read the report.

The authors of the 59-page report are director of the CSIS Russia and Eurasia program Andrew Kuchins, former senior director for Russian affairs at the National Security Council Thomas Graham, Assistant Professor of International Affairs at George Washington University Henry Hale, senior fellow at the Peterson Institute for International Economics Anders Aslund and others. On the report's cover are five photographs: Russian President Vladimir Putin with the G8 leaders, Putin with the Chinese President Hu Jintao, the recent arrest of Other Russia leader Garri Kasparov, snow falling on oil wells and children in a computer class.

Although the scenarios for Russian development suggested by the American experts differ noticeably from each other in accordance with their personal points of view, they hold unanimous positions on a number of principle points. The authors are certain that Russia will not become a mature democracy in the next ten years. They do not consider the current political stability durable. One reason for that is that the political course of the country depends too heavily on a single figure, rather than on institutions of authority. In addition, as Aslund explains, the tension between the centralized political system and the market economy based on private enterprise will not abate. Aslund identifies “aggressive rationalization” as one of the main problems in the Russian economy, which, he says, has a negative effect on corporate management and economic effectiveness.

The most scandalous part of the research is a discussion of the future of Russian politics and its leader. Graham thinks Putin will hand over power smoothly to the successor he chooses and will begin to fade from the political scene as that successor consolidates his position. Eight years later, according to Graham's scenario, a new successor will calmly take over.

Kuchins has an entirely different vision. He predicted that Putin will be assassinated at the exit of the Cathedral of Christ the Savior after midnight mass on January 7, 2008 (Russian Orthodox Christmas). The killer will not be caught and Russia will be thrown into immediate chaos. The stock market will collapse, mass strikes and demonstration will begin and, on January 20, a state of emergency will be declared. The murder of Putin will prevent a peaceful transfer of presidential power to Sergey Naryshkin, with Dmitry Medvedev as prime minister, and the enforcement bloc in the Kremlin will gain power, that is, Igor Sechin, Sergey Ivanov and Nikolay Patrushev. By naming Naryshkin, not Medvedev, Putin's successor, Kuchins has already erred by that much.

As it continues, Kuchin's scenario starts to sound more and more like a suspense novel. After the imposition of the state of emergency, he posits, Vladimir Yakunin, now head of Russian Railways, becomes president and orders the shooting of striking oil worker in Surgut. St. Petersburg Governor Valentina Matvienko and Moscow Mayor Yury Luzhkov are sentenced to death for the embezzlement of billions of dollars. Nationalism will rise significantly along the way. But, after a series political and economic shakeups, there will be a happy ending in 2016, when Boris Nemtsov will become president with the help and funding of the again free Mikhail Khodorkovsky.

Kuchins, the former head of the Carnegie Fund in Moscow, is one of the best-informed and authoritative Kremlinologists in the United States. He participates in practically all major international conferences on Russia. Before the July 2006 G8 summit in St. Petersburg, Kuchins sent a personal letter to Putin in which he explained to him how to observe democratic principles and assured him that America does not need a weak Russia, as the Kremlin believes. In spite of his continuing criticism of “sovereign democracy,” Kuchins is in the small circle of Western experts who meet annually with Putin at sessions of the so-called Valdai Club. At this year's meeting, which took place in the president's Sochi residence, Kuchins asked whether the “Putin plan” wasn't for United Russia to win in the parliamentary elections and become the ruling party for decades to come.

12-13-2007, 11:05 AM
Mapping Out Russia’s Future
A Recent Report Sketches Out Interesting Possibilities for the Post-Putin Years



“Predicting is hard, especially the future.”

This statement by Yogi Berra opens a new report by the U.S. Center for Strategic and International Studies (CSIS) entitled “Alternative Futures for Russia to 2017”.

Andrew Kuchins, Director of the CSIS Russia Program, who authored the report, humbly admits that “when it comes to Russia, prediction has proven to be a particular perilous endeavor. For the last 20 years, not only have we failed to predict what has happened (in Russia), but we have failed to seriously consider the possibility of what did happen.”

True indeed! Who could have mapped out the Russia of today in the fall of 1999?

That year, Russia was reeling from the aftershocks of the financial meltdown of 1998 and a terrorist attack in Dagestan. The country was barely governable and its ailing president was increasingly unpredictable. The war in Kosovo destroyed the pretense of U.S.-Russia partnership and the U.S. Embassy in Moscow was fired upon in broad daylight.

Many in Washington were dismissing Russia as a viable international player and some even entertained the idea of “a world without Russia.”

The largest direct U.S. investment in Russia was a $500 million plutonium storage facility under the Nunn-Lugar program.

Today Russia has one of the best performing economies in the world. It sits on the world’s third largest reserves of hard currency and has largely repaid its foreign debt ahead of schedule. Its viability as a state is beyond any doubt. Russia’s nominal U.S. dollar GDP has grown by a factor of more than five to exceed $1 trillion, making it the ninth largest economy in the world. Incomes have grown by a factor of four and the Russian stock market has become a stellar performer among emerging markets. Those who invested slightly more than $20,000 in Gazprom or Sberbank shares in 1998 are millionaires now.

GM and Ford are hard pressed to satisfy Russians’ growing demand for cars. Boeing, Microsoft and Intel have all opened major research centers in Russia’s regions and Campbell’s Soup and Starbucks have finally landed here. And there are several upscale restaurant chains catering to Moscow’s upper middle class.

If current economic growth continues at 25 percent a year in nominal dollar terms, Russia will be the largest economy in Europe by 2017, with a GDP of $5 trillion.

Thomas Graham, former Senior Director for Russia in the Bush White House and one of the principal authors of the CSIS report, (who is also responsible for coining the phrase “The World Without Russia”) notes in a special Appendix that the Russia watchers in the United States have failed to grasp how brittle the Soviet system was in the late 1980s and then how quickly the Kremlin would be able to restore centralized state control over the country once oil revenues begin flowing in waves.

The CSIS report is humble in its predictive power. It begins with a list of consensus points about Russia that are quite optimistic. Russia will not be a failed state. Russia’s economy is too diversified to describe it as a “petrostate.” Russia’s territorial integrity over the next ten years is secure. Demographic challenges remain significant but they should be manageable. Russian foreign policy will remain independent and promote Russia’s great power status in a multi-polar world. The 2008 succession is manageable, and the most likely outcome is for Putin to step down in favor of his selected successor.

All of these findings reflect a more enlightened Washington consensus that takes seriously the changes that have occurred in Russia on Putin’s watch.

The report maps out three very different scenarios for Russia’s future. After this week’s nomination of Dmitry Medvedev as a presidential candidate who received Putin’s public endorsement, at least one of those scenarios is already in play.

Putinism without Putin
Putin steps down in 2008 as promised and his chosen successor Dmitry Medvedev (the authors of the report initially speculated that it would be Sergei Naryshkin) is elected to the Presidency in a landslide. Putin becomes chairman of United Russia and is elected to the boards of Russia’s biggest state companies, including Gazprom and Rosneft. Putin also gets to chair a multibillion dollar hedge fund set up with start-up capital from Roman Abramovich and Oleg Deripaska and some other oligarchs who reportedly staked him to a 25 percent equity position.

The Russian economy continues to roar. Medvedev’s authority grows while Putin gradually slides more into the political background. The political system becomes more pluralistic with the Duma and the parties taking on greater independence and the Russian media, primarily TV, becoming more politically independent in response to the increasing competition from the Internet. Vladislav Surkov successfully manages the political transition from Medvedev to Igor Shuvalov in 2016.

The Medvedev and Shuvalov administrations deftly steer the Russian economy through a period of falling oil prices due to a global economic slowdown. Russian economic growth decreases to 4 percent a year in 2011-2012 but rebounds to a more normal 7 percent in 2014.

Russia’s cooperation with NATO increases due to a new security environment with the restoration of the Taliban government in Afghanistan and the spread of Islamic jihadism from to the North Caucuses, which will lead to Ramzan Kadyrov’s assassination in 2010. Russia and NATO and local forces agree to joint base in Azerbaijan, Kyrgyzstan and Uzbekistan in order to contain the growing terrorist threat while NATO and the Shanghai Cooperation Organization hold their first joint military exercise in Tajikistan in 2010.

This is an optimistic scenario built around the ability of Putin’s team to manage the emerging internal and external challenges pragmatically and continue “muddling upwards” as opposed to “muddling downwards.” It portrays a gradual transition from the Russia of “illiberal internationalism” of today towards a more liberal, open and increasingly competitive Russia plugged into the globalized international system.

A True Dictatorship
Another scenario projects the emergence of a KGB-driven nationalist dictatorship after Putin is assassinated on Christmas night, Jan. 7, 2008. Sechin, Patrushev and Viktor Ivanov take over the country’s leadership as the caretaker, President Zubkov, virtually disappears from the scene. The siloviki, never quite happy entirely with Putin’s Plan for Russia, put forward Vladimir Yakunin who takes leadership of the United Russia Party (which is renamed Glory to Russia) and easily wins the presidential election.

Yakunin’s rule is heavy on Chinese-style anti-corruption measures that visibly shake up the Russian elites after Moscow’s former mayor Yury Luzhkov is found guilty of corruption and sentenced to death. Following an increase in nationalist rhetoric, drastic anti-immigrant measures are implemented and guest workers from Central Asia and China are strictly quarantined and are not allowed to hold ownership in any business.

Having dismantled most of what remained of Russia’s democratic institutions, Yakunin, however, maintains much of the liberal economic policies instituted under Putin and welcomes increasing flows of foreign investment. The economic and political system he develops is modeled on Lee Kuan Yew’s Singapore, and it is quite successful in ensuring Russia’s rapid economic growth. By 2017, Russia is a $6 trillion economy and the ruble is traded at 10 for the euro.

Despite the nationalist rhetoric Russia’s foreign policy does not turn anti-Western, but rather acquires a brutally pragmatic character that seeks to maximize Russia’s self-interest. Yakunin consolidates the post-Soviet space by driving Turkmenistan, Uzbekistan, Kazakhstan and Azerbaijan into a confederation with Russia, with Belarus falling into Russia’s fold even earlier. The new confederation becomes a market maker in international energy markets competing and cooperating with OPEC.

Moscow’s ties with Washington actually strengthen as successive U.S. administrations welcomed increased stability and improved business environment due to anti-corruption measures while recognizing Russia’s role in containing the political instability and rising radical Islam in Central Asia. Washington resigns itself to the failure of its previous policies to block Russian reconsolidation of the former Soviet Union.

With Russia’s economy roaring, incomes rising rapidly and political opponents purged, Yakunin lengthens the presidential term to seven years and is reelected with 95 percent of popular the vote in 2015.

This scenario debunks two popular Western myths – that a more prosperous Russia would become more democratic (still a possibility, but clearly over a much longer time period), and that a more authoritarian and nationalistic Russia would pursue an aggressive anti-Western foreign policy and should be contained. As Kuchins emphasizes, the scenario also underscores the fragility of Putin’s system today, when a single shot by a sniper could change the country’s entire trajectory. It was intended as a warning.

Democracy Rising
The final scenario emphasizes the role of incompetence and mismanagement in destroying the great accomplishments of the Putin era.

The political transition in 2008 proceeds smoothly with Sergei Ivanov elected president. But Ivanov’s luck soon runs out in late 2008, as a political revolution occurs in Washington where climate change is propelled to the top of political agenda resulting in a landslide election of Al Gore as president and an unlikely coalition of Democrats and fundamentalist Christian Republicans devoted to developing a new energy policy for the United States that emphasizes energy efficiency and alternative fuels. Oil prices nosedive in 2009 and stabilize at $20 per barrel by 2011.

By 2010, Russia’s budget is thrown into deficit and its economic growth turns negative. Ivanov’s administration is unable to offer an effective policy response to the new external environment. Russia sees a new wave of terrorist attacks in Moscow and other major cities that unsettle the population and Western investors who vote with their feet, leaving the Russian stock market. By 2011, the RTS is only 40 percent of its 2007 high.

Corruption and Ivanov’s ineptitude lead to massive public calls for a swift return of Putin to the presidency, and he is elected president in 2012.

But this time around, Putin’s fails to reappear. His tenure is marked by increasing misfortune and growing unrest. Russia’s influence in the former Soviet Union weakens and in 2013, Turkmenistan refuses to sell gas to Gazprom at below market prices, while Kazakhstan and Azerbaijan increasingly fall under the sway of the West. Russia’s gas production falls by 10 percent a year, resulting in continuous power failures in Russia and occasional failures to meet European contracts. An outbreak of multi-drug resistant TB leads to a virtual quarantine of several major Siberian cities, destroying the nation’s confidence in the new Putin leadership.

The redemption comes with a new alliance of Nemtsov and Yavlinsky re-emerging from the political wilderness and offering the Russians a united liberal front and democratic reformist agenda to carry the 2016 presidential election. Russians, tired of the corrupt “managed democracy,” take to the streets while the Kremlin is too weak to prevent demonstrations. Nemtsov is elected president in 2016 with a liberal Duma embarking on an extensive economic reform and anti-corruption agenda.

The scenario demonstrates that bad governance and incompetence can destroy the legitimacy of Putin and his chosen successor if they fail to ensure a steady increase in the incomes of the people. For the Putin system, despite its authoritarianism, the “consent of the governed” is essential, and measures to manage that consent through propaganda and state-controlled media are effective only to a point, as the Soviet experience shows. It is impossible to know how long people will put up with such mismanagement, but misfortune and incompetence are known to overcome political apathy.

We do not know if any of these scenarios or some of their elements materialize. But it is always a good thing to be issued a warning.