It’s not easy these days to be Vladimir Vladimirovich Putin.
Everywhere he turns — economically, politically and militarily
— he, and Russia, has problems.
Putin has tried to make the best of a bad deal. The head of
Russia’s strategic missile forces announced that they would
suspend the development of certain, unnamed, strategic weapons if
the U.S. plan to deploy an anti-missile system in Europe,
initially in Poland and the Czech Republic, were similarly
halted.
In reality the Russians have already cut back expenditures on
strategic weaponry as part of the defense portion of national
belt tightening currently under way. Prime Minister Putin’s
statement that there would be no reduction in defense spending is
regarded by most observers as merely rhetorical cover fire.
Defense Minister Anatoly Serdyukov has instituted a serious
reshuffling that reportedly alters the General Staff control of
the army so as to make it more responsive to the civilian
leadership. The deputy minister of defense, General Vladimir
Isakov, who is also in charge of the logistical command, has been
pushed out. Similarly removed were said to be the head of
military intelligence and the commanding officer of the Central
Command Center District. In turn their staffs and other commands
have been hit by large numbers of unexplained retirements, an old
Red Army device for “sterilizing” the general officer ranks.
Russia’s current economic instability derives in great part from
the precipitous drop in oil and gas prices along with trade
losses in commodity exports, all due to the global financial
crisis and industrial development cutbacks. During the eight
years of his presidency Putin was favored with a seemingly
unstoppable national economic growth.
The bottom is now falling out of the Russian economy, leaving
Putin spinning first in denial and afterward blaming the United
States. Analysts from the Russian financial concerns and
government offices have been instructed to play down negative
findings at pain of losing their jobs.
The Russian industrial figures in November showed a 10.8% drop
from October and an overall fall of 8.7% on the year. Expectation
of a devaluation of the ruble is a parallel development of the
continued descent of oil prices. At current price levels of oil
well below $40 per barrel, and falling, there is a real danger
that concomitant fall of investment in oil development will only
feed the decline in the overall economy.
Meanwhile there are signs that the Russian working public is
exercising its political muscle by staging demonstrations against
punitive increases in duties that raise the cost of imported
goods in general and new and used automobiles by 50 percent.
Rallies were held in thirty cities across the country and riot
police beat back protesters with their clubs in Vladivostok.
Unused to this form of public reaction, Putin spoke out openly in
condemnation of the public protests, fearing the potential of
growing social unrest. He was obviously alarmed that the public
reaction would expand exponentially in these volatile times.
Moscow is putting pressure on its near neighbor, Ukraine, prior
to the annual January gas contract deadline. The issue as usual
is money — $2.4 billion is said to be owed by Ukraine to the
Russian energy giant, Gazprom. The matter has become politicized
beyond the strict Russia/Ukraine disagreements by Russian
criticism of the European Union.
Russian official sources have been quoted as saying the EU seems
more interested in bringing Ukraine into NATO than helping
economically. The fact that Europe receives approximately 25% of
its Russian-sourced gas through Ukraine’s pipelines is a major
point of Russian leverage. In these parlous financial days,
however, it is leverage that is self-defeating.
As the financial crisis deadens the exuberance of Putin’s
leadership, there also has been an increase in dissension between
the military/security factions on one side and the
economic/business elements on the other. Each is pushing for
ascendancy in the Putin-Medvedev bipolar leadership system. There
may be no real division between the two men personally, but among
the political classes there is a constant effort to test any
nascent differences.
For Vladimir Putin’s part the forthcoming year carries severe
tests. He was very unhappy with command and control during the
Georgia conflict. This has been one of the reasons for the
military shuffle. The economic crisis is well beyond his ken and
he is counting on Medvedev to keep in line the politically
liberal but fiscally conservative finance minister, Aleksei
Kudrin.
In strict political terms Putin must rule Russia for the first
time with a diminishing economic hand. He is unable to reward his
favored supporters with the economically related political favors
of the past.
The question exists for the forthcoming Obama administration
whether an economically weakened Russia is more or less of a
danger.
