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Topless in Siberia, Toothless in Moscow

GlobalPost's Moscow correspondent Miriam Elder talks about the Putin decade and the possible rivalry between the prime minister and President Medvedev.

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Putin displays his leadership credentials in Siberia. (Photo by Ria Novosti / Reuters)



Editor's note: The play button will work when the audio has downloaded. That may take a minute. Below is a transcript of the Correspondent Call with Miriam Elder

Passport: Good afternoon and welcome. It’s August 13, 2009, I’m David Case, Editor of GlobalPost Passport in our newsroom in Boston. Today we’ll be discussing Vladimir Putin’s Russia with Miriam Elder, GlobalPost’s Moscow correspondent. We’re excited to have Miriam with us. She’s been covering Russia for most of Putin’s tenure and is an excellent observer of events in the country. Welcome, Miriam.


Elder: Hi, thanks.


Passport: Just a brief introduction to set the stage. Ten years ago, Vladimir Putin was all but unknown. Boris Yeltsin plucked this KGB official from relative obscurity and appointed him Prime Minister on August 9, 1999 — approximately a decade ago. Back then, Russia appeared to be in a death spiral of debt, population decline and chaos. Yeltsin, who was susceptible to binge drinking seemed unable to control himself, no less his country. The Putin years have been different. Russia is now far richer than before. In contrast to Yeltsin, Putin exercises a tight grip over the country and its economy. He’s taken a bold, and some would say brazen, approach to international affairs. Once again, in the past year, the country has been crippled by a financial crisis, but this time, the leadership is in control — at least for now. Somehow, despite his hard-line approach and despite the extreme hardships many Russians are now enduring, Vladimir Putin remains wildly popular. Some have speculated that he will remain at Russia’s helm for another ten years.


Now, before we dive in, I want to remind everyone that the call is being recorded. The call and a transcript will be posted on Passport’s website. It’s August and we have a relatively small group on the line with us today, so we’re going to try an experiment. We’d like to make the call a bit less formal than usual. So, as usual, I’m going to lead a Q and A that will last about 20 minutes, but if you’d like to ask a question, feel free to jump in. That means, your lines are currently not muted, so if you do want to mute them, you can do so by pressing *6 and then, of course, pressing *6 again will un-mute them as well. When you do ask a question, we ask that you identify yourself. Please be mindful of the time, so don’t dominate too much of the time, if we can ask that. And also we’d like you to make questions relevant to the topic that we’re currently discussing. We will have about ten minutes at the end for unrelated questions. And, just so you know, we’re going to start by talking about the big picture and then the economic crisis, followed by Russian politics and finishing up with Russia’s international relations.


So, let’s get started. Miriam, Vladimir Putin is shaping up to be one of the major figures of modern Russian history. Can you outline his main accomplishments?


Elder: Sure. I think that you bring up an important point in the introduction, that you can’t really analyze Vladimir Putin or Putin’s Russia without comparing it to the 1990’s. When Putin came to power, the country was in complete shambles. Yeltsin was changing his Prime Minister every couple of months, sometimes more often, the economy was run by a small gaggle of oligarchs and there was a very hot war flaring in Russia’s south, in Chechnya. So, I guess those are the three best ways to understand Putin’s accomplishments and they all have their negative sides. But the first thing is, he managed to restore Russia’s territorial integrity. He brought an end to this war in Chechnya that was killing civilians, troops, both civilians in Chechnya and civilians in Moscow through a series of suicide bombings. So one of his major accomplishments, which has come at the price of an authoritarian regime in Chechnya, is bringing that under control. And the other thing he did was wrest control of the economy from the oligarchs. So there is more free enterprise than there was in the 90’s, but again, that has come at the cost of increased government involvement and all the corruption and inefficiencies that come with that. And I would say the third big accomplishment that he did is he managed to use the days of the high oil price to really project Russia’s power on the world stage. Again, he did that at the expense of reinvesting, I would say, in his own economy, but he did manage to make Russia a global player again, for good or for ill.


Passport: And these are the reasons that Putin stays so popular inside Russia today?


Elder: I think, basically, what I’m always struck by when I speak to Russians of all classes, of all everything, is that they’re proud to be Russian. When they would travel abroad in the 90’s, they would be completely embarrassed having to explain where they came from. There’s a real sense of pride now with being Russian. They know they’re important on the world stage and they, in a very personal sense, they relish in that. And he’s built up this image of being the only man that can really solve Russia’s problems. Again, that also has its flip side. He does have the ultimate responsibility for what happens in the country and if things take a turn for the worse, it’s he who will suffer for it. But, he had his team have put a lot of effort into building his up as Russia’s savior.


Passport: Are there any hints that his popularity might change? Or do you think that it will endure into the future?


Elder: I think it all depends. I guess we’ll jump ahead a little bit into the economic crisis. But, people are expecting a pretty difficult fall. And when we see what happens in September and October when people are coming back from their summer holidays and you have a whole host of economic data that’s expected to be released. In particular, Russia companies have about 400 billion dollars of foreign debt that will become due in September. And depending on how the government deals with that, if there aren’t other cycles of mass unemployment and if there’s not another ruble devaluation, and those are things that are real possibilities, and if the government can ride through that, then I think Putin will remain popular. But I think the real test time is ahead of us.


Passport: You mentioned a little while ago Putin’s PR machine. Can you talk about that a bit?


Elder: Yeah, I’m really fascinated by his cult of personality. And it’s by no means a mistake. There’s a concerted project in the Kremlin to present Putin as this very manly, fearless leader. And I guess the most important figure in that is this guy, Vladislav Surkov, who is relatively young and who is one of the quieter figures in the administration, meaning he’s not public, and it’s sort of his role to create these youth groups that we see supporting Putin and really this state ideology just around this one man. I mean, the party that rules Russia right now, United Russia, was created for the sole purpose of supporting Putin, it really doesn’t have any other platform.


Passport: Great. Can you say his name one more time for us, Miriam.


Elder: Surkov. Surkov. S-u-r-k-o-v.


Passport: Great. Now, after the fall of the Soviet Union, there was a major push backed by the West to privatize Russian businesses. We’ve seen Putin absorb other important sectors of the economy back under government control, the media and oil and gas industries come to mind. Is this continuing now?


Elder: Well, I think it’s a misrepresentation to call it a reverse privatization or re-nationalization because it’s really been limited to certain sectors of the economy. The energy industry being the most obvious, and the most important. But there are plenty of sectors where, really, it’s still dominated by private players. Another important sector being the metals industry. But that said, there are some concerns about the way the government has handled the economic crisis and the bailouts that they’ve handed out, which is, in return for bailing out some of the main metals companies in particular. Russia government officials win seats on the boards of directors. So while the concern isn’t that the government will take direct stakes, which is something they haven’t done, in these companies. There is concern that there’s a possibility in the future, but for now it’s that they’re directing the strategy of these companies through important seats on the boards of them. But, that said, in terms of actual government control, stakes in part of the economy, it’s limited and they understand the need, I think, for foreign investors and the need for foreign expertise, so its something that they’re trying to navigate very delicately.


Passport: So they do believe in private enterprise?


Elder: To a degree, as long as it’s done, you know, with the agreement of the state. There’s no major deals, obviously, that can be done in Russia without the approval of the state. So, they exercise control in maybe an indirect way over all sectors of the economy, but in terms of direct ownership, nationalization, it’s limited.


Passport: So, in addition to this trend, there have been widespread crackdowns on civil society in Russia — murders of journalists and aid workers, many of which are never solved and which even appear to be possibly state-sponsored. Recently there has been a spate of activists murdered in Chechnya, in the past few weeks even. How does the Russian public react to this violence? And what appears to be more autocracy in the country?


Elder: Sadly, the answer is that they don’t react. These crimes get minimal, sometimes no coverage, in the media in the country. You have to remember that the government does own the main television channel, which is where most Russians get their news from. Newspapers remain limited to certain cities and when you get them out in Siberia, there’s no infrastructure, so news is sort of days late. And the government just makes sure that this sort of stuff isn’t reported. I remember when Natalia Estemirova was killed a few weeks ago and she was the single most important human rights worker in Chechnya, and I was just kind of asking around and asking people, you know, what do you think about this? Isn’t this horrible? And trying to appeal to their personal side to, you know? A single mother, what an amazing thing she did… and they had no clue who I was talking about. I didn’t meet one person who knew who she was.


Passport: Hmm. That’s interesting. I’d like to pose a question that was emailed by one of our members: “In the old Soviet system, the state owned and financed almost everything. In Putin’s Russia, much has been privatized, but in terms of everyday life, what can citizens expect from the state in terms of day care, schools, healthcare, housing, unemployment benefits, pensions, and so on?”


Elder: From the state itself, they can expect pretty little. There are pensions, there are unemployment benefits, but they’re incredibly small. The average pension in Moscow, one of the most expensive cities in the world, is 700 rubles, which is just over $200 a month. I mean, you can’t simply live on that in Moscow. So what the government started to do during the boom years, and its continuing today during the crisis, is this program of what they call Social Responsibility, which is putting the owning to things like that onto the companies, onto the state-run companies. You know, Gazprom will have a plant somewhere in West Siberia and they de facto appoint the mayor, they run the kindergartens, it’s up to the company to take up the role of the state in those cases, for the most part.


Passport: That’s interesting. Now, let’s focus more specifically on the economy. It’s not hard for Putin to be popular when the economy booming like it has been for the most part of this decade. But somehow he’s managed to maintain high approval ratings this year during a serious economic crisis. Can you give us a feeling? What is the sentiment on the street in Russia, in Moscow and outside of Moscow? Are people optimistic? Are people surprised by the economic situation? Are they frustrated by their political system?


Elder: Well, the first thing that Russians tend to say when you ask them about the crisis and how they’re dealing with it is, “we’ve lived through so much worse.” You know, a lot of people remember the fall of the Soviet Union and the default in August of 1998, where they lost all their savings and just haven’t been paid for months and had been waiting, literally on lines, to get bread. And it’s really not like that today. So, for the most part, its just “let’s live through this” kind of situation. But, that said, for the past month or two, you’ve been starting to hear a lot more discontent, and for the first time, people are linking it to Putin. So I think, really, again, the crunch time will come in September and October. Right now, Russians spend so much time on their dachas, their summer houses, and they tend to have gardens, they grow their food and life is good. When they come back to the cities and they come back to no jobs and they come back to lower pay, or they come back to a further devalued ruble, then things can take a turn. It’s too early to say right now. I think we have to wait and see till the beginning of fall.


Passport: You mentioned earlier this 400 billion dollars that is owed coming due soon. Do you think we’ve seen the worst in the past? The early part of this year was really rough in Russia. Do you think we’ve seen the worst now? Or is the worst yet to come?


Elder: I mean, there’s two ways that it could go. When dealing with the first turn of the crisis at the beginning of the year, it didn’t seem like Russia had a concerted strategy. It wasn’t like the Economic Minister, the Finance Minister, Putin, and I suppose Medvedev sat down and said, “OK, this is what we’re going to do.” It was sort of a dance, that’s what they call it in Russia, they manage to dance around the difficulties. And there’s a very real chance that they can do that again. We’ll have to see how they deal with it. I mean, the foreign banks and the local banks that are going to be calling these loans in September and October, nor is it in their interest to see these companies fail. Because of Russia’s bankruptcy law, which is just wholly inefficient, basically, they will lose, they just won’t get paid — ever. So, it’s in their interest to kind of work with the government and delay the loans, and if that can be done, in an efficient way, then Russian can ride through this second wave of the crisis, as it’s being called over there. It depends on how they handle it.


Passport: They might be reluctant to loan more money in the future though, given the situation they’re currently in.


Elder: The banks?


Passport: Yes.


Elder: Definitely so. But, I mean, in the long term, Russia, it’s such an amazing growth market, as everybody puts it. Its inevitable that once the oil price recovers that Russia will also recover. With all its inefficiencies, with all its corruption, but there is still a large base for growth.


Passport: Alright. There has been some talk of Russia becoming a zombie economy because of the way the businesses have been handled. Do you have anything further to add about that?


Elder: Yeah, I guess just the important thing to think about when thinking about that is that the government has put social concerns first. It’s not social concerns out of concern for their citizens, but concern for remaining in power. So rather than use the crisis time to reform or restructure these industries, which have been running in a pretty inefficient style, but a pretty luck style because of the increased well-being that came with the higher oil price, they’re just kind of allowing these post-Soviet biemovs just to kind of run on and be as they have in the past. So, the number one concern is that there isn’t widespread unemployment, that there isn’t widespread discontent, and in the short run, that will keep the people happy, but in the long run, it’s not good for the economy, obviously.


Passport: So they’re going to do everything they can to make sure people’s lives continue to get a little bit better to avoid a major uprising of some sort.


Elder: Yeah, one of the first post-crisis directives was instruction to all the governors, the regional governors in Russia, to make sure they have a handle on the industries that operate in their territories and there are no mass firings at all. For example, right now, Russia’s main car maker, it’s Avtovaz, and its located in this southern city called Tolyatti and they were floating plans to fire about 27,000 people. I think that’s about a quarter of their work force. And immediately, a huge ruckus was raised and that probably won’t be happening because it would just lead to immense discontent in the region.


Passport: Ok, let’s talk about Putin’s political ambitions. Over the past ten years, Putin has built himself up as the ultimate ruler of Russia. But, let’s not forget that Dmitri Medvedev is actually the President, currently. You wrote an excellent article for Passport a couple of months back about the tension between Putin and Medvedev, looking into if there was a sort of rivalry between the two of them. What is the status of the Putin Medvedev tandem now? Is it working well?


Elder: Now it seems like it is. Medvedev seems happy to take the back seat. You know, he’s allowing Putin to run around Siberia topless and take care of all the things that a president should be taking care of. So he seems quite content to follow through on the deal, which was “you get to sit in the Kremlin, but you don’t have the ultimate power in the country.” And it’s been difficult, also, through actions, to see that there has been any follow-through on any sort of a split. Another thing that a lot of analysts are watching in Russia was last week Medvedev ordered a Prosecutor General to investigate these things called State Corporations, which are different than a state company, it’s not like Gazprom or anything like that, it’s sort of these holding companies in government sectors of industry like the nuclear industry or the shipbuilding industry. And these corporations tend to be headed by Putin’s best friends, relatively unsavory figures, and it’s hard to judge what that move is. Whether they’re trying to investigate these companies for corruption so that they can fill in gaps in the budget or whether this is Medvedev going after some of Putin’s closest allies, it’s too early to tell, but the results of that investigation will come in early November, so that will be something interesting to watch.


Passport: So, Medvedev is using the state apparatus to possibly whittle away at some of Putin’s power?


Elder: I think that’s a possibility. It’s too early to tell. We have to see how the investigation goes, but that was the only sort of sign that raised a lot of eyebrows in Moscow when that happened because this is a direct blow to Putin’s best friends. That said, did it happen without Putin’s approval? That’s hard to imagine. So we’ll have to see how it goes.


Passport: Ok. Can you tell us, when is the next election cycle in Russia and what is the expected outcome? Does Putin have plans to run again in the future? Can we expect to see that?


Elder: It’s a possibility. The next election is in 2012. And earlier this year, or last year, actually, there was an amendment to the constitution passed which will change the presidential term from four to six years. So the next president will be in power for six years, and if it is Putin, he could, in theory, have two more consecutive terms, which would put him in power further years. I think it’s too early to say if he will run for president, you know, everything is orchestrated and I don’t know. I imagine that he would and a lot of the political analysts in Russia think that he will. Although he is enjoying enormous power as Prime Minister of Russia, he doesn’t have direct control over foreign policy, and I think he cares a lot, also, about his own prestige. And so, going to the G8 and these international meetings is probably something he misses and would like to see again.


Passport: Interest. Many opposition players and foreign observers bemoan Putin’s role in Russian politics, but is there an alternative at this point? Is there an opposition?


Elder: Not really. Any opposition with popular support like the Communists and some of the smaller far-right parties have been completely corrupted by the Kremlin handing out seats in the Duma, which is the lower house of Parliament. And the opposition the West likes to focus on so much, led by Garry Kasparov, the former chess champion, is really not a player in Russian politics at all. And the scary thing is, I remember when the crisis first hit, and everyone was wondering, wow, is Putin’s government really going to take a hit because of this, and we were even considering the collapse of the government. And the terrifying thing is, you realize if the Putin government had collapsed, or will collapse, or whatever, the force that would step in is an incredibly nationalistic, far-right force. You know, anti-immigration, even more anti-Western, so the alternative is even scarier than what exists.


Passport: So there’s no opposition that the West can back in terms of the Orange Revolution-type scenario.


Elder: No.


Passport: You mention Garry, we say here in the States Garry Kasparov, we’ve actually been trying to get an interview with him and it looks like we might be able to do that very soon. But, one of our members asked a question: how does he manage to be so outspoken when so many other people in Russia are knocked off for doing that?


Elder: Well, according to him, it’s his international fame. You see the people that are targeted in Russia and its always Russians with a degree of local, I don’t want to use the word “fame,” I guess a degree of local prominence. Of all the journalists that have been killed, and it’s so horrible to say, not one has been foreign. You know, people ask me all the time if it’s scary to be a journalist there and that’s the answer. You don’t go after foreigners. I think they know what the result, what the outcry would be. I think it would raise things to a whole new level. And Kasparov kind of fits into that, you know, he’s an international super-star. He thinks it’s his fame that protects him.


Passport: I will actually encourage members to ask questions, if anyone does have questions at this point. If not, I can continue asking questions. Would anyone like to jump in at this point?


Caller 1: I would, David. This is David Phillips, Miriam, in Charlotte, North Carolina.


Passport: Hi.


Elder: Hi.


Caller 1: I read some time ago, must be three, four, maybe five years ago, an obscure article on an emerging mortgage industry relative to individuals in Russia. And it was curious to me because it occurred to me when I read that, I don’t have any grasp at all, from an individual perspective all we see is the multi-nationals, whatever that other company was, and the government, on top of finances on the world stage, but on an individual basis, how does finance and Western markets for an individual work there?


Elder: Well, I guess I can speak about the mortgage industry in particular. It’s not something that’s homegrown, but Russia is pretty open to trying out these new and interesting financial structures and for mortgages in particular, it was the World Bank that came in and ran a program and was sort of teaching the Russian banks to use it. And again, I guess I’m sounding pretty negative on Russia, but it gets corrupted into the Russian market and now you see rates of 20 to 30 percent so its pretty unavailable to the average person. So, the possibility is there, but the follow-through, I suppose, is quite difficult. I don’t know if that answers your question.


Caller 1: It does. Any idea on the size of it? Can you put that in perspective at all?


Elder: I don’t have the figures, but I know that it was small and since the crisis started, it’s kind of died.


Passport: Do people rely on family money as they do often in East Asia to buy homes?


Elder: They do, but what started during the boom years is credit. People took a lot of credit and the way it works in Russia is, it’s actually not quite often that you take it through a bank, but you take it through your company. So if you take it through Severstal or one of those big metals companies, you take it through them, even if you work for a newspaper, you take it through your publishing company. And the problem is, they took all this credit to make big purchases on apartments or cars and now that wages have dropped so much, the exchange rate has become so warped, they’re really suffering right now. They have a lot of monthly debt payments. The Russian market right now is actually quite similar to the US, you know, where we just love credit, we love living on credit cards and I’m very terrified of the day when they become a wide-spread thing in Russia because Russia has no savings rate whatsoever. People get their paycheck and spend to the very last kopek and wait for the next one to come. And it’s a pretty scary situation.


Passport: These loans that you mentioned, are they denominated in dollars or in rubles?


Elder: Sometimes dollars and sometimes rubles, but back in the boom years, it was mainly in dollars and then it was switching to rubles. But the dollar is as much a currency in Russia as the ruble is.


Passport: Ok, but their salaries are denominated primarily in rubles? So that would be devastating.


Elder: It changes. It depends. You can choose. I used to work for a local newspaper in Russia and I had the choice to choose between rubles and dollars. And a lot of people are like that.


Passport: Ok, do we have any other questions? David, so you have another question?


Caller 1: Sure. Just going back to the topic of opposition movement, or lack thereof, in Russia, you talk about the organized scale, you know, the more high profile, and the folks that have the seats in the Duma and such. But like what we’ve seen in China, the Uighers, kind of a grassroots uprising, and in Honduras, the kind of unsuspecting opposition, or revolt, if you will, to that situation, and the biggest one, I would say, in Iran, where a bunch of people stood up and said, I want my vote to be counted. Is there any resemblance or possibility of anything like that coming form a grassroots level in Russia?


Elder: Across the country, in terms of a nation-wide movement like you saw in Iran, it doesn’t seem like there’s a possibility for that right now. People are really divorced from politics in Russia. The comparison I like to make, or the anecdote I like to tell is when Putin first came to power, he sat down with all of the Oligarchs and said, if you guys stay out of politics, you can go about your business as you’d like, and I don’t think that was a message to just the oligarchs, that was a message to the population at-large. That’s what happens. The Kremlin is the Kremlin and it’s completely separate from the man on the street. But, that said, it’s completely contingent on their economic situation, so we’ll have to see what happens, particularly with unemployment, come fall. But, more with the China comparison, what you have in Russia is you have Chechnya, and I guess I started out by saying that Putin had brought it under control and just in the past few months, maybe a year, we’ve seen that conflict kind of rising up again. So, you have a separatist Islamic movement in the Caucasus and that’s something that disconcerting, but it’s not something that’s going to win the support of people around the nation.


Passport: What about, Miriam, can you address how Obama is viewed in Russia, briefly?


Elder: By regular people, unfortunately, whenever you bring up Obama, the thing they still most like to talk about is his race. They still can’t believe that America has a black president and they tend to look upon that sometimes with curiosity and admiration, and more often with negativity. But I think that the trouble is that the Putin regime really relies on anti-Americanism. They own the state-run TV channels and anti-Americanism is a constant feature on those channels. And Russia… you know, it’s the enemy, it’s the “other” and so Russia can feel strong as long as they’re denigrating the US. But on a real level, we have seen some progress made on this famous reset. There hasn’t been any progress made, any kind of huge shift in relations, but there are small steps that are encouraging. There are these talks on nuclear cuts and Russia seems happy that Obama seems to have stepped back from the missile defense program in Poland and the Czech Republic. But the one area of concern I would say is the situation with Ukraine and Georgia in particular because Russia is very, very unhappy with the support the US has given to both of those countries and I never like using the words “Cold War” but if there is a proxy for influence between the United States and Russia, at least from Russia’s point of view, it’ll happen in Ukraine and Georgia, it is happening in Ukraine and Georgia.


Passport: I’ll just ask one last question and then we’ll call it a day. It always seems from the outside that the Kremlin is trying to assert control over the former Soviet republics, especially in Georgia and Ukraine, but elsewhere as well. Is that how it looks from the inside too?


Elder: Yeah, very much so. But they’re using new and twenty-first century things, the first thing that comes to mind is Russia trying to push the ruble as a regional currency and attempts to ban the Russian language in a host of countries on it’s periphery. But it’s meeting some pretty stiff resistance. You know, Russia used to feel like Central Asia was its back yard and what it said, goes and that’s how it is. They were the ones feeding money in terms of aid and things like that. And now it’s very much a competition between Russia, the West, and most importantly, China. So they’re trying, but it’s not as easy as they expected or hoped.


Passport: Ok, very good Miriam, I’d like to thank you very much for talking with us today.


Elder: Thank you.


Passport: And thanks everyone for joining us, we look forward to getting back together again next week.