April 7th, 2011

Kremlin’s top dogs tussle for poll position

Russian politics, Churchill said, is like watching two dogs fighting under a carpet. Lately, however, Russia’s top political dogs have shed the rug and are nipping openly at each other’s heels.

First, Vladimir Putin, the prime minister, likened western military action in Libya to the crusades, before Dmitry Medvedev, the president, told him, in essence, to hold his tongue.

Then, last week, Mr Medvedev ordered ministers to leave the boards of state-controlled companies. That struck at the heart of “Kremlin Inc” – the intertwined political and economic system Mr Putin created. Putin loyalists were affected, including Igor Sechin, a close ally for two decades and linchpin of a planned alliance between Rosneft, the oil company he chairs, and Britain’s BP.

Deep in the corridors of the Kremlin, it is clear the starting gun has been fired for presidential elections just under a year from now. Less clear, with Mr Putin expected to decide which man will be the presidential candidate – and to remain Russia’s most powerful figure, whatever position he holds – is what the dogfights are really about.

They may be an attempt to stimulate interest among Russians who are wearying of tightly controlled politics: Russians are unlikely to erupt into Middle East-style unrest. But a sense of popular disillusionment is adding to nervousness in business and political elites over the looming election, which is stifling domestic investment and contributed to $21bn of capital flight in the first quarter of 2011, despite a buoyant economy.

The jostling may be an attempt to prevent either figure becoming a lame duck. Mr Medvedev’s assertiveness could be a pitch to keep his job or it could be another feint. The Kremlin spent much of 2007, before the last elections, building up the conservative Sergei Ivanov as presidential heir apparent – until Mr Putin chose Mr Medvedev.

Neither side wants to be outdone. Mr Medvedev has positioned himself as the “modernisation” candidate, calling for Russia to develop high-tech industries to reduce reliance on oil. A liberal think-tank, the Institute for Contemporary Development, whose trustees Mr Medvedev chairs, has urged radical reform, including more democracy.

Mr Putin has formed his own task force of freethinking economists, including Vladimir Mau, an academic who worked with post-Soviet reformers Yegor Gaidar and Anatoly Chubais. Their conclusions resemble those presented to the president, minus democratic reform, an area people involved say was kept outside their remit.

Yet the worry for the powers that be is that voters seem jaded. Russian media have reported young professionals emigrating, fleeing the prospect of the same figures remaining in power for years to come.

Opinion polls show support for both men, still high by western standards, has fallen to its lowest for years. The dominant pro-Kremlin United Russia party performed comparatively poorly in regional elections last month.

Pollsters suggest support is waning, above all, among the growing urban middle class, perhaps 15 per cent of the electorate. Blog-reading, property-owning Russians are finally demanding a system responsive to theiraspirations.

A think-tank originally set up by German Gref, Mr Putin’s first economy minister, warned last week of a looming crisis because of the “fast-growing delegitimisation” of today’s leadership among many Russians. The only solution was to introduce more competition and new faces into the system.

The Kremlin has reacted in typical fashion, by toying with turning the shell of a 1990s-era party into a “tame” liberal group that could enter the ossified parliament in elections in December and champion middle-class interests. Talks have reportedly been held with liberal-leaning officials including Igor Shuvalov, a deputy prime minister, about leading the party.

Fringe pro-democracy politicians, outside the Kremlin-approved system, suggest this savvy new middle class would never fall for another “fake” party. They are targeting this electorate themselves.

One leading intellectual, echoing Russians at all levels, agrees that rampant corruption, now at the level of a “kleptocracy”, is a central issue. High natural resource revenues may see the leadership through the next elections, and buy support for a while yet. But within five or six years, he says, “change must come. If it doesn’t come from the top, it will come from below.”

The Financial Times Limited 2011

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