Putin on the Rich

Russia is a mystery to many, often including the Russians themselves. Addicted to blaming the United States for as much as possible from decades of post-WWII Cold War mutual bashing, yet again, the Russian leadership is blaming America for the massive street protests alleging substantial election fraud as Prime Minister Vladimir Putin’s party claimed an overwhelming victory (but with lower margins than expected). Our Secretary of State castigated Putin and his President Dmitry Medvedev for what seemed to be easily documented (like cellphone videos of ballot administrators stuffing a ballot box with “votes”) and widespread fraud. Tens of thousands of Russians braved their “closely watched state” and protested.

To the amazement of almost everyone, Russian state television carried images of the protests without censorship: “Sweeping views of the tens of thousands of people who had crowded into a central Moscow square for a sprawling anti-Kremlin protest cut away to close-ups of groups of average citizens chanting, ‘New elections! New elections!’… ‘Tens of thousands of people came out to register their disagreement with the results of recent parliamentary elections, which they said were rigged in favor of United Russia,’ the ruling party, Aleksei Pivovarov, one of the evening news hosts on government-controlled NTV, announced at the top of the broadcast Saturday.” New York Times, December 10^th.

The anti-Putin bandwagon appears only to be accelerating, as a second massive protest on December 24^th pulled even more people into the streets: “The first such demonstration, two weeks ago [and noted above], was unprecedented for Mr. Putin’s rule, and there were reasons [the Christmas Eve] turnout could have been lower — among them, winter holidays and the onset of bitter cold… Instead, people poured all afternoon into a canyon created by vast government buildings, and the police put the crowd at 30,000, more than they reported on Dec. 10. Organizers said it was closer to 120,000. Hours later, as the protesters dispersed, they chanted, slowly: ‘We will come again! We will come again!’”

The anti-Kremlin protests were so significant that the government itself ordered an investigation of the fraud allegations, although no one really believes that the examination will actually produce a factual account: “Russian President Dmitry Medvedev ordered an inquiry into claims of electoral fraud after tens of thousands joined a protest in Moscow on Saturday… ‘People have the right to express their views which is what they did yesterday,’ Medvedev wrote on his Facebook page. ‘I don't agree with the slogans or the declaration that rang out at the meetings. Nevertheless, instructions have been given by me to check all information from polling stations regarding compliance with the legislation on elections.’ … However the attempt to pacify the protests appeared to have backfired, when thousands of Facebook users took to the page to attack the president.’” Huffington Post, December 11^th.

But for those who believe that strongman Putin is only picking on the masses, and that the power elite of that country are closely aligned with the incumbent, think again. Putin has long been associated with controlling the spigot of wealth – who gets what… and more importantly who gets to keep what. Rumors abound that those who have wealth but elect to ignore Putin’s dictates on who gets to share that wealth (purportedly including Putin himself) wind up in prison or wiped out by economic pressures from the government.

“Nikolai Maksimov, one of the richest men in Russia, was sitting in a grimy jail cell in the Ural Mountains… Through the murk, Mr. Maksimov saw his cellmate — a man, he says, who appeared ill with tuberculosis, a scourge in Russian prisons. ‘I had the feeling that I was put in this cell on purpose,’ Mr. Maksimov, now free on bail, recalled recently. …Mr. Maksimov, who was arrested in February on suspicion of embezzling hundreds of millions of dollars, is hardly the only Russian tycoon who has run into trouble. Among the six men who have topped the Forbes rich list here in the last decade, one, Mikhail B. Khodorkovsky, is in prison, and another, Boris A. Berezovsky, is in exile. They, like Mr. Maksimov, maintain their innocence.” NY Times, December 10^th.

Russia is wildly rich with a solidly educated population and lots of natural resources, including vast oil and gas reserves and some of the most significant holdings of precious metals and rare earths on the planet. Most of the wealth controlled by individuals came from an “allocation” of government-controlled wealth that was privatized when the Soviet government fell. To get “allocated,” you had to be an insider, pretty high up in the former Soviet hierarchy.

But today, “Russia’s rich [are] growing agitated, too. Evidence is mounting that conditions are deteriorating for the maintenance and investment of their vast wealth — and while this development may gladden populists, it may become an economic threat… Post-Soviet privatizations shifted state-owned factories into the hands of a coterie of well-connected businessmen — the oligarchs. Partly as a result, Russia has 101 billionaires, behind only China, with 115, and the United States, with 412, according to Forbes... Only now, capital flight, a problem in the 1990s, has re-emerged. Money is flowing out of Russia faster than it is flowing in. The net outflow is expected to reach $70 billion by year-end, and the figures suggest that the bulk of that will be from large investors.” NY Times.

Are we witnessing the unthinkable? Putin’s fall from power? Probably not, and Putin enjoys a popularity with the electorate that exceeds the popularity accorded to Obama and the Congress, the latter hitting one of the lowest ebbs for American leadership since such polls were created. But perhaps that country will slip back to a more moderate leadership, and Putin’s seemingly unlimited power may in fact be curtailed… somewhat. But like thinking the military is letting go of power in Egypt, believing that Putin will fall entirely is simply a profoundly unlikely (but possible) scenario.

I’m Peter Dekom, and watching the power of privately- originated massive networked communications impact virtual dictatorships is fascinating.