The Clan Wars, an Introduction: Putin’s Dilemma
On Oct. 16, two Russian political parties -- the Liberal Democratic Party of Russia and the Just Russia Party -- ended a two-day boycott of parliament. They had been joined by the Communist Party, which reportedly will end its boycott this week.
The protesting parties, along with independent election monitors, have accused the Kremlin of massive voter fraud in municipal and regional elections held on Oct. 11, elections won decisively by Russian Prime Minister Vladimir Putin’s United Russia party. Debate over the validity of Russian elections is nothing new; Russia’s political system has long been vertically aligned under Putin and his clans. What is unusual is that these three political parties would make such a public protest in a country where political dissent inside the government or among the people is quickly squashed.
The boycott of the Duma was a true milestone. Never before, certainly not since Putin struck his balance between two groups of powerful clans to ensure stability in the country, had there been such a public show of instability -- a sign that Putin may not have the perfect balance he thought he had.
There is no doubt about who runs Russia. It is Vladimir Putin, who has done so for the past 10 years, first as president, now prime minister. When he was first elected president in 2000, Putin began consolidating the country politically and economically by creating a balance of power under him between the two strongest entities in Russia -- the Federal Security Service (FSB), the country’s primary domestic security agency, led by Deputy Prime Minister Igor Sechin (leader of the so-called siloviki); and the Main Intelligence Directorate (GRU), Russia’s chief foreign intelligence agency, under Deputy Prime Minister Vladimir Surkov (who has coined the moniker civiliki for the economic reformers within his clan).
It is the classic balance-of-power arrangement. So long as the two clans scheme against each other, Putin’s position of ultimate power is not threatened and the state itself remains strong, not one clan or another.
But having all major parts of Russia’s government and economy fall under the two clans creates a certain structural weakness. Surkov and Sechin’s clans jointly share management of political parties, the government bureaucracy, military forces, energy companies and all other state-owned businesses in the country. While the two clans have an equal stake in most of these entities, neither one necessarily has the expertise to run everything efficiently[lets play in the morning on how to re-word this sentence.]Instead of managing what they’re good at, Surkov and Sechin must manage some things that they are not so good at.[lets reword that one too]
The problem is, the Russian economy has been hit hard over the past few years, first by mismanagement, then by falling oil prices and most recently by the global financial crisis. All haveweakened the state. Economic problems have become so acute that Putin, for the first time in his leadership of Russia, has had to step back and reassess whether his system of balanced power is the best way to run the country.
First to plant this seed of doubt were the economists in Surkov’s clan, who went to Putinover the summerand told him the Russian economy had to be fixed and that they knew how to achieve that.As it happened, their plan called for excluding Sechin’s FSB from any involvement in economic matters. It was, of course, a good opportunity for Surkov to weaken his rival clan and pull most of the power in Russia under the GRU.
This presents Putin with a pivotal dilemma. He likes the idea of fixing the Russian economy and making it work like a real economy, but it would mean throwing off the balance of power in the country -- the equilibrium he has worked all these years to achieve.
When these issues came to our attention some months ago, our first thought was that they were merely the machinations of just another high-level Russian source hoping we would promote his agenda. So we sought confirmation with a number of unrelated sources -- and we received it. The final convincing event in our minds was[LINK] Putin’s Sept. 28 declarationthat some heavy economic reforms are indeed necessary. We cannot rule out that this could all be a disinformation campaign -- those are as Russian as vodka and purges -- but we cannot ignore our intelligence from such a broad array of sources, especially when it’s combined with[LINK]signs of political and economic instabilitynow cropping up inside Russia.
So, herewith, STRATFOR presents The Clan Wars, afive-part series on the civiliki’s ambitious plan to repair the Russian economy, the impact of that plan on the equilibrium of Russian power and the dilemma Putin now faces in trying to keep Russia politically stable as well as economically sound.