Jamestown Foundation
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Eurasia Daily Monitor
Volume 4, Number 84
April 30, 2007
IN FAREWELL ADDRESS, PUTIN DISTRIBUTES OIL MONEY
By Pavel K. Baev
It was the “moratorium” on implementing the Conventional Forces in Europe (CFE) Treaty, a largely symbolic gesture of little practical consequence, that captured Western attention in Putin’s address to parliament on Thursday, April 26. The 72-minute speech (the longest in this genre) was, however, predominantly devoted to a wide spectrum of domestic issues addressed at apparently random length. The theme of reviving the network of libraries, including the creation of a presidential library named after Boris Yeltsin, was given about the same time as the issue of strengthening the armed forces. Putin refused to sum up the results of his two presidential terms, mentioning only that Russia had become one of the ten largest economies in the world, and he suggested that it was “not time yet for me to set out my political testament.”
Despite Putin’s claim that his eight addresses constitute “a fairly concrete and substantial conceptual program for Russia’s development,” it is rather difficult to discern any guidelines in the multitude of presidential requests and instructions. In fact, the main content of the latest address was in allocating extra funds above the already record-high budget for 2007 and even more generous budget proposals for 2008-2010. Finance Minister Alexei Kudrin calculated that these initiatives would cost about 750 billion rubles (or some $30 billion), but journalists found the sum total to be nearly twice as high, estimating that the tempo of distributing money during the speech reached 19,263 billion rubles per minute, including the many pauses for applause (Rossiiskaya gazeta, Vremya novostei, April 27).
Putin started with tackling social problems and his leitmotiv was breathtakingly simple: “First, we have the money.” This message was addressed first of all to pensioners, traditionally the most active political “class.” They were reassured that “there will not be any crisis in the pension system,” so it would not be necessary to raise the retirement age and it would be entirely feasible to increase the pensions on average by 65% over 2007-2009. Communal housing, the long-neglected problem that touches most Russian families, received particular presidential attention, with the promise of a special fund that should ease the burden of repairs for homeowners. Putin chose to express indignation about the “disastrous” situation where millions of people live in slums and declared that it “would be amoral for the state to ignore these problems.” Putin even suggested financing a special program for moving people out of houses “unfit for habitation” from the sale of assets belonging to the bankrupted Yukos (Gazeta.ru, April 26). Even if the money is indeed found, the aims are set so far beyond the capacity of the construction industry that Putin’s program fully deserve the sobriquet “Potemkin housing” (Nezavisimaya gazeta, April 27).
Putin’s “pragmatic” approach to eliminating “temporary difficulties” by allocating more money was so unmistakably Soviet that “Dear comrades” would have been a more appropriate opening of the section devoted to industrial policy than his rather false “Respected colleagues.” The main emphasis in this area was duly placed on establishing state-controlled monopolies that should generate new dynamism in depressed industries like shipbuilding and aircraft building, and also on a launching a Nanotechnology Corporation based in the Kurchatov Institute (Polit.ru, April 18). Putin was particularly enthusiastic about plans for the accelerated development of the nuclear industry and electric energy generation, promising spectacular achievements in the next decade (Gazeta, April 27). He conveyed in a pointedly reserved manner the news that Russia had become the largest oil producer in the world, but instructed the industry to increase the refinery capacity and threatened to fine it for flaring the “accompanying gas.” What was surprisingly missing from the speech was any mentioning of the gas industry, which left European consumers in doubt about the Gazprom investment program.
Putin’s speech was notable for its implicit anti-Western emphasis, even on seemingly neutral topics such as fisheries, where it was ordered to “stop allocating quotas to foreign companies,” or raising export duties on round wood. It was certainly more pronounced in the analysis of the domestic political situation presented in an upbeat tone with criticism reserved only for unnamed malcontents who “making skilful use of pseudo-democratic rhetoric, would like to return us to the recent past.” This historic reference was perhaps not very tactful, as Putin started his address with a moment of silence for the late president Boris Yeltsin, but he obviously could not suppress his irritation toward the protests of the “discontented.” The source of this “dirty technique” was established beyond possible doubt: “There has been an increasing influx of money from abroad being used to intervene directly in our internal affairs.” According to Kremlin rumors, a few explicitly anti-U.S. sentences had been dropped from the final version of the address, but the controlled outburst against NATO duly triggered a loud ovation (Kommersant, April 27).
There was a striking contradiction between the unmistakably electoral character of this address, with its rosy horizons and generous doling out of the accumulated wealth, and Putin’s re-stated decision to step down from the summit of power (Ezhednevny zhurnal, April 27). The key was perhaps in the small remark that revealed the second main leitmotiv of the speech: “We do not need any new revolutions.” Putin sought to convince the ruling elite that there was enough money for every bureaucratic appetite, so a compromise around a new “arbiter” was only a matter of timing. He emitted such a confidence that the general population remained under his spell and would vote accordingly (Vedomosti, April 27). The elites, however, know that the bottom in the oil barrel is near, while among the disfranchised voters that old pre-Yeltsin feeling of being fed up with lies is awakening yet again; enter new interesting times.