Emerging trends suggests a power imbalance among Kremlin factions that lays the groundwork for internal pressure for a change in leadership should President Vladimr Putin's legitimacy be sharply undermined by continuing economic decline.
IHS Perspective | |
Significance | The decision to sentence opposition leader Alexei Navalny and his brother Oleg for corruption two weeks ahead of schedule reflects the Kremlin’s desire to head off potentially destabilising unrest. |
Implications | The longer the international sanctions continue and the economy and currency decline, the greater the likelihood of destabilising discontent in Putin’s traditional support base and among the Kremlin elite, where an imbalance of power is already in evidence. |
Outlook | Under circumstances of economic collapse, the previously unlikely scenario of behind-the-scenes negotiations to seek Putin’s resignation, followed by early elections, becomes more plausible, but is still not currently the baseline scenario. |
On 30 December, Alexei Navalny, a key opposition leader and anti-corruption campaigner, was given a three-and-a-half years’ suspended sentence for fraud by a Moscow court. This effectively prevents him from participating in legislative elections in 2016. His brother, Oleg Navalny, received a three-and-a-half year custodial sentence on the same charges. Significantly, the sentencing had been moved two weeks ahead of the scheduled court date of 15 January. A protest had been planned for that date by Navalny’s supporters, who perceived the case to be politically motivated. Around 16,000 people had signed up to attend the demonstration on Facebook before the page was blocked at the request of the Prosecutor General’s office. Around 1,500 people still turned up at an unauthorised protest on 30 December, and 171 were arrested, according to police numbers.
Trouble at the top
The hurried sentencing and heavy-handed measures indicate the Kremlin’s ever-greater wariness of public discontent under Russia’s difficult economic circumstances. Yet the sentence given to Navalny is also lighter than anticipated – particularly in view of the harsher custodial ruling for his brother – showing an unusual lack of resolve. Similar equivocation was present in the case of Vladimir Yevtushenkov, the billionaire owner of Sistema Group, who was released two months after being placed under house arrest on money-laundering charges in September. The arrest was initially seen as a failure by Putin to protect an ally at a time when a Sistema Group subsidiary, Bashneft, was claimed to be under pressure to sell to Rosneft. However, Yevtushenkov promptly returned to the ‘inner circle’, attending meetings with Putin and other Russian business leaders on 19 December.
These and other factors suggest conflicting approaches at the Kremlin to dealing with the crisis Russia faces, and weakening central control over the various factions surrounding Putin – roughly divisible into cliques led by head of Rosneft Igor Sechin (encompassing domestic security/intelligence services); Minister of Defence Sergei Shoigu (who leads on military/defence structures); and Prime Minister Dmitri Medvedev with Gazprom head Alexei Miller (the so-called liberals). At the periphery, there is the group of businessmen close to Putin, including the Rotenberg brothers and Gennadiy Timchenko.
Until 2011, the factions remained more or less in balance. Then, the resignation of liberal finance minister Alexei Kudrin in September 2011 left space for the security groupings, aligned with a more conservative and statist outlook, to expand its reach. They were further strengthened by their role in the crackdown that followed an upsurge of anti-government unrest in late 2011 and 2012, and again by the annexation of Crimea. The key decisions on Russia’s strategy in Ukraine have been made exclusively by members of this circle, within the National Security Council, chaired by Putin.
Putin kaput?
IHS sources in Russia report increasing chatter at a high level with regards to Putin’s potential departure in 2015. This has been echoed in speculation in the Western and Russian media. Putin himself was asked about the threat of a ‘palace coup’ during his annual press conference on 18 December, a possibility he rejected on the grounds that ‘we have no palaces’, while underlining his strong public support – but offering no reassurance regarding the actual situation at the Kremlin.
Putin does continue to have high approval ratings, at 81% according to an Associated Press poll in mid-December. However, the foundations of Putin’s legitimacy, in the eyes of the electorate and the elite, are being eroded. With both, there has been a tacit ‘pact’ since Putin came to power. The Russian population has benefited from political stability and economic growth, while the elite has been protected and allowed to enrich itself at the price of loyalty. Now, these bulwarks are crumbling. IHS forecasts growth to be -1.7% in 2015, with inflation at 8.8%. A 19 December Levada-Centre poll showed that 52% of Russians think the economy will worsen next year and 47% think the political situation will become increasingly fraught.
All sides have reason to be dissatisfied with the president. Business is shackled by sanctions, and the liberals have been largely left behind, yet the conservatives are still constrained from exercising free rein. Moreover, Putin has lost credibility with Western leaders and the elites know that Russia will not be accepted back into the international community as an equal partner while Putin remains at the helm.
Outcome and implications
Putin’s recent rhetoric suggests he is banking on the crisis being temporary and economic performance recovering within two years, which implies he would like to stand again in 2018. He is very conscious of his legacy and likely to fight hard to retain his position. There are still circumstances in his favour: the weak rouble artificially expands budget revenues, enabling Putin to promise inflation-matching pension increases in 2015, for instance. Demand for local goods is likely to rise given the rising cost of imports, and there are early signs of Russian manufacturing posting growth figures. Nonetheless, the power imbalance among Kremlin factions is inherently problematic for political stability. The full impact of the economic downturn has not yet been felt, and will really start to bite in the first half of 2015. If worsened by a continuing decline in the oil price, and accompanied by a sharp fall in Putin’s ratings, the case for a negotiated resignation along the lines of Boris Yeltsin’s departure in 1999, will become stronger.