POTEMKIN POLITICS
Following his rise to power in the last days of 1999, Putin set about consolidating Russia’s then unruly political scene. A key element of that effort was the creation of United Russia, a pro-Kremlin political faction built upon the Unity Party that dominated the country’s 1999 parliamentary elections.
In the years that followed, United Russia became a dominant force in Russian politics, securing commanding majorities in Russia’s 2003 and 2007 parliamentary elections as well as in various regional and local political contests. Recently, however, the bloom has come off United Russia’s political rose. In the 2011 Duma elections, it failed to win even half of the popular vote—a testament to the party’s flagging popularity. 3
As a result, Putin has begun to think bigger. Since 2010, his administration has attempted to build a broader political coalition—one that rehabilitates United Russia while simultaneously diminishing its opponents. The result, unveiled by Putin in May 2011, is the “All-Russian National Front,” a grand coalition of parties, organizations, and “non-affiliated United Russia supporters” designed to help the president’s political faction formulate a political platform and seed its candidates throughout parliament. 4Today, the “National Front” unites hundreds of national and regional political and social groups under a pro-Kremlin umbrella. 5That bloc is closer than ever to becoming the unquestioned hegemon in Russian politics. Russian experts have projected that, by the fall of 2013, the National Front will become the dominant force in the Russian Duma. 6
The Kremlin has similarly sought to transform the workings of Russian politics. In May 2012, a series of reforms championed by Dmitry Medvedev during his time as president were signed into law. Kremlin supporters contend that these steps—which include, among other things, a lowering of the political bar on the registration of political parties—reflect a new reality in which the Russian government is increasingly forced to take into account the views and wishes of the electorate. 7
But more objective observers are not so sure. They point to the fact that the Putin government continues to wield broad discretion over the legitimacy of political candidates and parties. As such, they say, Putin’s recent policies—however pluralistic they appear at first blush—are simply more of the same heavy-handedness. 8
The Kremlin’s treatment of Russian civil society groups tends to confirm the latter view. Worried over the “color revolutions” that have taken place in the post-Soviet space in recent years and wary of the prospects of something similar occurring in Russia, the Russian government has assumed a dramatically harder line toward nongovernmental organizations.
Among the measures enacted by the Kremlin is a notorious “foreign agent law” that forces nongovernmental organizations that receive funds from abroad to register with the country’s Justice Ministry as “foreign agents” and provide quarterly accounting of their activities. 9The move was seen by civic activists as a concrete step designed to silence dissent. 10These fears appear to have been realized: using the law as justification, the Russian government in recent months launched what observers call an “unprecedented” campaign to investigate the activities of thousands of NGOs active in the Russian Federation. 11
The end result is that Putin’s Russia, while on paper nominally more free, is functionally less so. Rather, it is a modern-day political version of a Potemkin village: an artificial construct designed to mollify the masses with the form of pluralism but without the substance of it.
ROTTEN TO THE CORE
In the heady early days of post-Soviet Russia, President Boris Yeltsin spoke out publicly against the economic and political disorder plaguing his country. Russia, Yeltsin said in 1994, had become “the biggest mafia state in the world . . . the superpower of crime that is devouring the state from top to bottom.” 12Fast-forward almost two decades, and the situation in principle is substantially different—but in practice is eerily similar.
Over the past dozen years, the Putin government has focused on consolidating and centralizing power, transitioning first to a system of “managed democracy” and from there to a highly hierarchical authoritarian state. This has, by necessity, entailed a reining in of Russia’s ubiquitous and powerful criminal entities.
Today, organized criminal groups, once unaccountable, operate under a new code—one in which they are mindful of, and in return receive exceedingly soft treatment from, the Kremlin. 13Putin’s government likewise has clamped down on Russia’s powerful oligarchs, conveying to them in no uncertain terms that they enjoy their wealth and freedom at the pleasure of the Kremlin, and that political cooperation is the key to preserving both. The result is a micromanaged investment climate deeply hostile to entrepreneurship and dominated by capricious government policies.
International business has taken notice. Capital flight from the Russian Federation has surged as multinational corporations and investors have abandoned the country’s uncompromising economic atmosphere. In 2010, for example, $33.6 billion left Russia. In 2011, that figure more than doubled, totaling $84.2 billion—and leading to a notable weakening of the Russian ruble. 14In 2012, that figure dipped to $56 billion, but experts maintain that Moscow has made little real progress in addressing the underlying socioeconomic conditions fueling such flight. 15
These conditions include organized corruption on a staggering scale. According to a February 2013 study by research group Global Financial Integrity (GFI), Russia lost more than $200 billion in illicit financial outflows stemming from crime, corruption, and tax evasion between 1994 and 2011. All told, the study estimates “the size of Russia’s underground economy—which includes, among other things, drug smuggling, arms trafficking, and human trafficking—at a massive 46% of GDP” over that period. 16These figures are a tragedy for ordinary Russians. “Hundreds of billions of dollars have been lost that could have been used to invest in Russian healthcare, education, and infrastructure,” GFI Director Raymond Baker points out. 17
On the surface, the Russian government seems to be addressing the issue. During his presidency, Dmitry Medvedev called it “one of the most dangerous and most serious problems” in the country and took steps to destroy Russia’s culture of corruption. 18One move was the 2008 creation of an advisory body known as the Anti-Corruption Council; another was the 2012 launch of the Open Government Initiative—a “roadmap” for stemming corruption and increasing governmental transparency. 19These initiatives ostensibly have been inherited by the Putin administration.
The Kremlin’s initiatives have claimed a number of casualties. In November 2012, long-serving Defense Minister Anatoly Serdyukov was publicly sacked by the Kremlin over his purported role in the speculative sale and illegal transfer of government assets totaling millions of dollars. 20Subsequently, in early 2013, Vladimir Pekhtin, a lawmaker from United Russia, was forced to vacate his seat in the Russian Duma after an opposition blogger disclosed that Pekhtin possessed multi-million dollar properties in Florida. 21Pekhtin was the second Duma deputy to be stripped of his parliamentary immunity in less than a year. 22
But these high-profile examples, observers caution, do not reflect a broader commitment by the Kremlin to eradicate corruption. 23Indeed, the very foundations of Putin’s state—and, by extension, his hold on power—rely on loyalty that is secured through informal dealings and graft. Without them, the Putin government’s hold on power would quickly loosen.