Talks of a purge by Putin are wrong

Putin’s Team is United: Talk 

of a Purge is Wong

by Alexander Mercouris for the Duran

Vineyard of the Saker,

25 May, 2016

As the Russian government weathers a period of unpopularity caused by the recession, there is talk that Putin is about to purge his cabinet, but this is almost certainly wrong.

An article has recently appeared in The Huffington Post which discusses rumours of an imminent purge of liberals from Russia’s government.

According to this view Russia’s President Putin is coming under increasing pressure from hardliners within Russia’s political elite to carry out a thorough purge of Atlanticists and liberals within the government.

The hardliners are also supposedly demanding a thorough overhaul of economic policy. They want Putin to jettison the current liberal oriented free-market policy in favour of an economic mobilisation of the country to withstand the challenge of the West. The details are sketchy but undoubtedly what is being talked about involves the reintroduction of capital controls and of forms of central planning that go far beyond what Russia has now.

The first point to make about this article in The Huffington Post is that it essentially repeats something that was said a month ago in an article by The Saker published by the Unz Review and on his own website. The similarity is in fact so great that I find it impossible to put it down to mere coincidence. There are clearly rumours circulating and both The Saker and the historian Stephen Cohen (the main source for The Huffington Post article) are picking up on them.

What however are the prospects of a purge of liberals happening in Russia?

The short answer I am sure is none.

The Saker and Crooke are both right to say that the Russian government headed by Dmitry Medvedev is coming under fierce criticism in Russia, with strongly expressed demands by many people for a radical change of direction.

They are also both right to say that Putin is not the target of this criticism and that his popularity is unaffected. Those who criticise the government are not challenging Putin. Rather they want him – as they think – to be himself by sacking the liberals in his government.

It is also the case that in discussion programmes on Russian television criticisms of the government are being increasingly and fiercely made and that some of these criticisms are being taken up by officials like Bastrykhin, the tough-minded head of Russia’s elite crime-busting agency, the Investigative Committee.

None of this however in my opinion points to a purge being in the works. It is a fallacy that the media in Russia is tightly controlled and that no unauthorised criticism of the government is allowed on it. On the contrary the media in Russia – including the television media – is full of debate and criticism, not just of the government but of virtually everything in Russia.

Russia nowadays has an active and diverse public opinion which is no longer afraid to express itself, and it is a mistake to make assumptions about what is happening inside the Kremlin from the things it says.

I have to say that I get no impression that Putin is thinking of sacking the government or any of the senior officials who are currently being criticised. On the contrary he repeatedly goes out of his way to signal his support for them. He did so for example at some length during his recent television marathon. Moreover his meetings with his officials as reported by his website give every impression of being supportive and cordial.

As for the conduct of the officials themselves, I get no impression from the behaviour of people like Medvedev, Ulyukaev, Siluanov or Nabiullina that they feel themselves to be under pressure or that they consider themselves to be at serious risk of losing their jobs.

There is no reason to think Putin disagrees with the current direction of economic policy. That can be summarised as an overriding emphasis on inflation reduction (with the aim being to bring inflation down to 4% next year), strict budget discipline and work to improve the business climate, all done in order to foster an increase in the economy’s investment rate.

All this goes along with a willingness to embrace planning in industrial policy, for example in the aircraft building industry.

I would add that I have seen and heard nothing that suggests the officials and ministers who are being criticised are disloyal to Putin or oppose his foreign or defence policies. Not one of them has so much as hinted at disagreement with policy towards Crimea, Ukraine or Syria.

The supposed tension within the government over the size of the military budget looks to me to be overstated and may be a myth. As I have said before claims Kudrin resigned from the Finance Ministry over this issue are wrong. Claims of disagreement over the size of the military budget are anyway based on the theory Russia is experiencing a budget crisis. That is simply wrong, just as claims Russia was facing a credit crunch were.

The one major area of disagreement between Putin and his ministers has in the past been over pension policy.

There is little doubt the government wants to see the pension age raised. Putin has until recently resisted that idea. However some months ago he finally signalled that he had come round to it. It is unlikely to happen before the Presidential election of 2018.

For the rest, Putin has consistently ruled out capital controls, price controls or proposals to raise income tax thresholds, and he undoubtedly supported the decision taken in 2014 to float the rouble.

Putin’s views on the vexed issue of privatisation also seem to be very similar to those of his ministers.

He is broadly sympathetic to the idea and has shown no wish to reverse the privatisations of the 1990s. However – to the exasperation of many in the Western investment community – he is no privatisation fanatic and clearly feels the government has a continued role to play in the direct management of key enterprises crucial to the economy.

Though he welcomes foreign investment in Russia he is clearly determined to keep key sectors such as energy, banking, national infrastructure and key enterprises important to the defence sector under Russian control.

He has specifically ruled out allowing Western banks from opening branches in Russia. Whilst Western banks are welcome to work in Russia – and many of them do – their operations have to be regulated by the Russian Central Bank in just the same way as those of Russian banks are.

Similarly, though Putin supports foreign investment in Russia’s energy sector, Gazprom and Rosneft – both state-controlled – remain the dominant players with Gazprom still having a monopoly on gas exports.

There is nothing to suggest that anyone in the government disagrees with any of this. As I have said previously, Kudrin as Finance Minister supported the project to create national champions in key branches of the economy.

Today when privatisation is again being discussed it is being proposed – as it was in 2009 – for purely functional reasons – to fill gaps in the budget – not out of some ideological quest to privatise everything. The government intends to keep blocking shares in all the enterprises involved, whilst Central Bank Chair Nabiullina opposes privatising Sberbank, the country’s biggest bank.

The overwhelming impression is of a united team essentially agreed on the main parameters of economic policy.

All of them believe in an open economy where prices are decided by the market through supply and demand. All of them believe in strict monetary and fiscal discipline. All of them agree that some elements of industrial planning and state control should be retained and are essential at this stage of Russia’s development.

If the team is united why then the talk of a purge?

The short answer is that Russia over the last two years has been in recession. It is entirely natural during a recession that the country’s government should come under criticism. It happens in every country.

Though the criticism is loud and strong that does not make it politically dangerous. There are none of the usual symptoms – mass demonstrations, sit-ins, walkouts, strikes – that point to widespread disaffection.

The reason for that is not because the Russian people have been zombified by mass propaganda – as the Western media likes to claim – but because of the form the recession has taken.

Strict financial discipline has paid dividends with a recession that has been relatively shallow with no significant layoffs, bankruptcies, plant closures or mortgage foreclosures. Though incomes took a heavy knock last year because of the inflation spike, employment has remained steady creating confidence that the recession is only temporary. Importantly the two most socially sensitive sectors – food and housing – continue to boom.

There are also political factors. The main political effect of the sanctions on Russia is that they lead to Russians blaming the recession not on Putin and the government but on the West. That in part explains Putin’s extraordinary popularity, though his exceptional political skill, the popularity of many of his policies, and the sense of authority and sheer competence he conveys, would surely have kept him popular anyway.

The fact of Putin’s popularity makes it even less likely he is going to purge his government of people who give every impression of being loyal to him, especially when all the indications are he agrees with them. His popularity means he is under no pressure to do so.

With all the indications pointing to the recession being close to its end, it makes no sense for him to carry out such a purge anyway.

This whole issue of the purge is interesting because of what it says about the nature of political debate in Russia.

It shows that when the government in Russia becomes unpopular the criticism of it that gains traction with the Russian public is that which comes from the patriotic “left” of Russia’s political spectrum rather than from its pro-Western liberal “right”. On that spectrum Putin and his government are significantly more to the “right” than most Russians would like them to be. The Western assumption that Putin’s “regime” is preventing Russians from pursuing their natural pro-Western liberal course could not be more wrong.

However those who look for or want a fundamental change in the Russian government’s present makeup or direction are likely to be disappointed.