#7 - JRL 7211
June 5, 2003
Is the president's shirt shrinking?
By John Helmer
MOSCOW - In 1927, as the benefits of Lenin's market reforms were fast running out, and the Soviet Politburo debated whether to use markets or force to industrialize the economy, the satirist Mikhail Zoshchenko told the tale of a man who bought a shirt to wear to a party. He managed to find one, he said, "a bit special, some kind of fantasy shirt", that was bound to "have the ladies throwing themselves at me".
Because he was a fanatic about cleanliness, and imagined the number of people who had rummaged through his shirt before he had bought it, he sent it off to the laundry. Imagine his shock when, on recovering it and trying it on for the party, he discovered "some kind of tiny shirt: the collar wouldn't fit, and the cuffs were where the elbows had been".
When he protested to the laundry woman that the shirt had shrunk from 38 to 32, she said he should count his luck. All shirts shrink nowadays, she told him. "The other day I washed one for an accountant, it started off at size 40 and now he'll be lucky if it's a 5."
The man had threatened to smash in the laundress's face, though the shrinkage was hardly her fault. But there wasn't time to do even that before the party, so he put on the new shirt, and then over it, he squeezed his old shirt. The story ends at the party. "It went well," Zoshchenko's character says. "No one noticed. It was OK."
These days in Russian politics, if President Vladimir Putin is hoping no one will notice his shirt change, he doesn't have much time.
It has been the conventional wisdom until now that Putin would remain more or less a prisoner of the compact he made to succeed Boris Yeltsin as president at the end of 1999. That provided Yeltsin and his family with immunity from prosecution for any and all of the potentially criminal acts for which they had been responsible since 1991. In addition, it installed Yeltsin's extended political circle, known as the Family, in power throughout the presidential staff, the government and the commanding heights of the economy to ensure that Putin stuck to his obligations, and to block him whenever Putin's expanding coterie threatened them. It is customary to treat this rivalry between the Yeltsin Family and the Putin loyalists - mostly recruited from St Petersburg and from the old KGB - as the driver of Russian political decision-making throughout Putin's first term.
When he was campaigning for his first election, Putin said in March 2000 that all the Russian oligarchs, the dominant owners of the country's economic wealth, should be equally distant from the state. He didn't say whether he meant that distance to be close or far. He also claimed that the oligarchs should not be what their name implies - bigger than the market. And so he promised that the role of the state should be to "guarantee compliance with [market] rules, without offering any advantages or privileges or preferences to anyone". The president, he went on to say, "should stand above this influence and not pile up all the interests only in favor of the big companies and monopolies. We should not allow this."
The pragmatic, the charitable, the optimistic interpretation of Putin's failure to make good on those promises in his first term is to believe that, once he is re-elected to his second term in the early months of next year, Putin will be free of the Yeltsin Family for the first time, and thus independent and secure enough to do what he has been saying he means to do. This should become obvious from the early decisions he will be required to make to carve up (read reform) Russia's electricity- and gas-producing assets; and to redistribute the economy's wealth from its dependency on oil. Expressed in simple personnel terms, if Putin keeps Alexander Voloshin as his chief of staff and Anatoly Chubais as head of United Energy Systems, and allows Mikhail Khodorkovsaky and Mikhail Fridman to dictate the national energy strategy, he will have dishonored his promise. He may put one shirt over another, but that won't hide the embarrassing shrinkage.
The political problem cannot be resolved so straightforwardly, however. In the spring of 2004, Putin will have his second term ahead of him, but after that, what? From the first day after re-election, the president and his closest advisors must calculate their options beyond the four years allowed by the constitution. One option would be to change the constitutional rules, either to extend the term, or allow the president to run for a third term. Yeltsin thought of both. Perhaps if he had been less sick, and if the Family had no alternatives, he might have tried the constitutional - that's to say - non-constitutional option.
Putin will be healthy enough, but it's already plain in the remarks of such oligarchs as oilman Khodorkovsky and metalman Vladimir Potanin that they have their own candidates in mind to succeed Putin in 2008. Khodorkovsky has himself in mind, while Potanin has his onetime employee, currently governor of Krasnoyarsk, Alexander Khloponin. For Putin to have any hope of staying in office beyond 2008, he will have to strike a bargain with them. Alternatively, he could seek the support of the organized political parties in the country, starting with the communists. Their price is likely to rule out a deal with the oligarchs. Putin could spend his second four-year term trying to appeal to both sides, and bridge the gap between them. But the commodity price cycle, corporate profits, capital investment, wage levels, inflation and unemployment aren't going to be so easy to bend to the president's will, or muddle convincingly. It's also likely that Putin will have to deal with a string of major Russian corporate debt defaults, and they will allow him a lot less room for maneuver than the most recent period of oil price boom.
If the non-constitutional option isn't a goer, Putin will discover what all second-term presidents learn - that he's a lame duck just when he thought he was at the apogee of his power, on the very day after his re-election. In Russia this has an especial sharpness because of the ruthlessness of the tactics that are used; the scope for revenge and gang-fighting; and the weakness and corruption of the police and courts to regulate conflict. In short, Putin and his supporters will have to start worrying about their legal immunity and about their sources of future income. It won't take long before the president will have to bargain with those with the resources to dictate the succession. The terms of that bargain are unlikely to make Putin feel any freer than he's felt regarding his 1999 pact with the Family. He might contemplate a deal with the parliamentary left, backed by the security services, although that could trigger a showdown with the oligarchs as fierce as any Yeltsin ever dealt with. If, as Norilsk Nickel's recent intervention in the Norilsk municipal poll showed, Potanin won't tolerate a union critic as mayor of Norilsk, and aborted the entire municipal election rather than accept defeat, is that oligarch likely to submit meekly to a hostile takeover of the Kremlin between now and 2009? And what of the other oligarchs in their fiefdoms?
Putin could opt to take the St Petersburg governorship in 2009, thereby acquiring much of the immunity he would want, and at the same time conserve the political base he would need for a return to presidential power later on. For that strategy to work, Putin could place a trusty like Valentina Matviyenko in the governorship for the next four years. But he would need a better deal with his Kremlin successor than Putin himself has given the current and outgoing governor of St Petersburg, Vladimir Yakovlev. But again, for there to be a stable deal with the Kremlin, Putin would still need protection from all of the oligarchs equidistantly, or some of them over the others.
Splitting the oligarchs is an option Putin forswore during his first term, although he did pick off the two weakest ones, Vladimir Gusinsky and Boris Berezovsky. The tactic may look more promising in the second term, especially because some of the oligarch-owned corporations and banks are much closer to default than others. Almost all of the president's political options are an example of Zoshchenko's character having to put on his old shirt, and to hope that no one will notice. But splitting could prove to be a new shirt pre-shrunk to cover the old one. In Zoshchenko's satire, at a time when Russia's leaders were coming to the conclusion that market reforms would either be too slow or too ineffective for the economy's needs, that shirt was a fantasy.