MOSCOW — Speaking at the Russia Calling! investor conference, hosted by state-owned VTB Capital, on Thursday, Prime Minister Vladimir Putin tried to reassure both Russian and foreign investors that, despite Russia’s recent political uncertainty, despite the tanking Russian stock indexes, despite the sliding ruble, despite more money than usual fleeing Russia, despite the bad to worse news coming out of Europe, despite all this, everything in Russia is going to be OK. The future is clear and under control.
“I’d like to speak about our priorities, about Russia’s strategic plans, so that investors and business can understand the logic and motives of our behavior, especially now, in these uncertain times,” Putin said. “And, of course, it is exactly in such times that the trust of our partners is so important. And you — we understand this — need predictability and openness.” His speech was flecked with the vocabulary of reassurance. Soothing phrases like “we understand,” “we see,” “we know” broadcast the image of a captain at the wheel, steering the ship of state past all that ice in the water because, don’t worry, he sees it.
Putin had already tried to smooth these choppy waters two weeks ago at the conference of United Russia, his ruling party, by announcing his return to the presidency, potentially for 12 years. The point was to erase the uncertainty that had the bureaucracy playing musical chairs all summer and return some stability to the system. But that quickly backfired. “Brezhnev” and “stagnation” quickly became the words of the day, and not two days later, Alexei Kudrin — finance minister and darling of the West, whose conservative budgetary policy had saved Russia from calamity in 2008 — was fired by a jumpy Dmitry Medvedev. The plan to stabilize things had, in other words, opened up a whole new can of entropy. Or, as one prominent Western investor in Russia described the whole thing in the couloirs of yesterday’s conference, “Yeah, it was a fuckup.”
Thursday’s performance was a take two of sorts. Putin seemed to be speaking not only to the class of people who squeegee money around the world, but to a broader audience of those who wonder what’s in store for Russia with another decade of Putin on the horizon. Putin’s answer today was, in so many words, that Putin’s back, and he’s the same Putin he’s always been.
“Changes are, without a doubt, necessary, and they will happen,” Putin intoned from the podium, “but it will be an evolutionary path. We don’t need great shocks, we need a great Russia!” Responding to a question about the growing number of Russians wishing to emigrate, Putin said:
Both I and the acting president Dmitry Anatolievich Medvedev have sent a clear and precise signal to the country: We are not going to destroy, mangle, or demolish anything. We’re going to develop our political system, but we want to strengthen its fundamental foundations. We have lots of political bustlers — faster, higher, stronger, use your saber to chop this, hack that. But we’ve already gone through this. We’ve seen this several times in our history: We’ll destroy everything, and then? And then what?
“We’ll build a new world, whoever was nobody will become somebody.” We all know these words [from the Internationale] from our childhoods. And what came of it? What came of it is that, in the 1990s, everything collapsed. So all of this “hack,” “chop,” “run without turning back” — we have to put an end to all this. We have to calculate, carefully pinpoint the destination point of our progress, and confidently move in that direction. That is how we should act, and I’m certain that that’s when your mood will change, too. It’s not an easy task, but we can do it. We can do it!
Here, certainly, is the language of a Russia traumatized by a revolution whose pain is still all too fresh. But it is also the language of Putin the standpatter, and invokes his favorite straw man: the 1990s. There are many people in Russia — people now in their thirties, for example, or the educated, urban elite — who remember the 1990s as a golden age of liberation. Not so for those who fell into penury, or for Putin. Reared in one of the most conservative organs of the Soviet state, the KGB, Putin saw the change of the 1990s as a destructive, negative force. (Which, of course, it was, too.) His spin-doctors use this narrative to legitimize the stability of Putin’s own era: the peaceful golden years after the storm.
This story gives the people a reason not just to trust one strong leader, but also to trust in incremental, shuffling, even glacial change. Yesterday, addressing the need to decrease the role of government in the economy, Putin said, “We will gradually — I want to emphasize this, gradually — start to extricate ourselves from the capital of state corporations.” Putin doesn’t like responding immediately to public pressure. Putin doesn’t like firing people. When Medvedev fired two of his loyal generals — Kudrin last month and Moscow mayor Yuri Luzhkov, in 2010 — Putin was publicly silent. But those close to him spoke of a rankling discontent with this very public act of firing a standard bearer for a rash remark. For the sake of unity and loyalty — two more Putin obsessions — Putin had to abide by his president’s actions. Had it been Putin’s choice, however, he would have promoted them out of their post (as he just did, in fact, with Medvedev).
This is why Putin addressed the issue of Kudrin’s firing as he did. During his prepared remarks, he only obliquely referred to the recently departed finance minister. He spoke of Russia’s growing currency reserves and increasing rainy day funds, which Kudrin insisted on during the good times of the last decade. The policy incurred the wrath of United Russia, which wanted to spend more on bread and circuses, but it was these cushions that saved Russia when the world economy tanked in 2008 and dragged Russia down with it. Kudrin’s firing at such a volatile time unnerved investors: Would Russia now spend its money willy-nilly, making the Russian economy even more vulnerable to swings on the world commodities markets? Once again, Putin reassured investors. “Our priorities — and I especially want to emphasize this — have been and will continue to be budgetary discipline and increasing the effectiveness of spending, as well as limiting the growth of government debt,” Putin said. Don’t worry, investors: Kudrin may be gone, but Kudrinism stays.
But when he was asked by a Scandinavian investor about Kudrin’s firing, Putin said something a bit different. After pointing out that Kudrin is one of the foremost financial specialists in the world, Putin began by saying, “Personally, he is my very good friend, with whom I have maintained very tight, close relations over the course of many years, beginning in the 1990s.” Loyalty, 1990s.
Then Putin let it out: “It’s well-known that the decision was made by the president. It was made because Alexei Leonidovich made a series of incorrect statements about the fact that his position does not coincide with that of the president. What else can I say?” After distancing himself from Medvedev’s decision, Putin turned the knife. “I want to tell you — this is my opinion, and the opinion of President Medvedev — despite this emotional malfunction, Alexei Leonidovich remains a member of our team, and we will continue to work with him. I hope that he will work with us. He is a useful and needed person.” More useful, that is, than the walking “emotional malfunction” that is Medvedev.
As if Putin hadn’t humiliated and negated Medvedev enough over the last two weeks, here was one more opportunity to show that the president was president only because of a technicality. As Kommersant pointed out, just the title of “the acting president” — which was how Putin insisted on referring to Medvedev throughout his forum appearance — was a slap in the face: “Actually, one speaks about a person like this only after the election,” Kommersant said. The title puts a sand timer on the title bearer’s head, as well as on all his “emotional” decisions. This is what Putin intended to do on Sept. 24, but Medvedev foiled it by asserting his — now purely technical — authority.
Yesterday, Putin put an end to all such attempts. Make no mistake, investors: He is the president de facto. No more emotional malfunctions. To underscore that, he picked up the themes that had been seen as Medvedev’s pet projects: fighting corruption, promoting nanotechnology and innovation generally, and diversifying the economy away from dependence on natural resources. The purpose was twofold: to show that the Kremlin would not abandon those (very necessary) initiatives, and to show that, all along, they had been Putin’s. Change would continue the way it had always been happening, slowly to the point of it being indistinguishable from inaction, and festooned as always by pretty rhetoric.
At the end of the performance by the de facto president, Andrei Kostin, the head of VTB, his host at the conference and, apparently, his very exuberant fan, thanked him. “Vladimir Vladimirovich! You have a very momentous period ahead of you, and I’d like to wish you not just success, but the most conclusive success!” Kostin said, red and beaming. “Investors vote not just with ballots, they vote with investments. I think that, in half a year, there’s enough time to figure things out and invest in the Russian economy.”
So far, they’ve voted by taking $50 billion out of Russia so far this year, beating every prognosis for capital outflow. Perhaps the next six months — roughly the time Medvedev has left as “acting president” — will be different from the other months, when he was just acting.
Meet the New Putin, Same as the Old Putin [FP]