Current History October Issue; Can Putin Keep His Grip on Power?

Date: Thu, 26 Sep 2013
Subject: Re: Current History’s October issue
From: Joshua Lustig [Managing Editor] <JoshuaLustig@currenthistory.com>

Current History’s October 2013 issue, devoted to Russia and Eurasia, is available at www.currenthistory.com, in print, and via Kindle. It includes the following essays:

• Can Putin Keep His Grip on Power? by Daniel Treisman
• Moscow’s Soft Power Strategy, by Andrei P. Tsygankov
• Russia’s Arctic Ambitions and Anxieties, by Pavel K. Baev
• Turkey and Its Post-Soviet Neighborhood, by Kemal Kirisci
• Georgia’s Rocky Path to Democracy, by Julie A. George
• Is Assad’s Syria a “Win” for Syria? by Mark N. Katz
• Plus, a review of Loren Graham’s new book, “Lonely Ideas: Can Russia Compete?”

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Current History
October 2013
Can Putin Keep His Grip on Power?
By Daniel Treisman
Daniel Treisman is a professor of political science at the University of California, Los Angeles. His latest book is The Return: Russia’s Journey from Gorbachev to Medvedev (Free Press, 2011).

Two years after Vladimir Putin revealed his plan to return for a third term as president, the Russian political environment has changed. From some angles, Putin seems more in control than ever. The mass street protests that convulsed Moscow in December 2011 after a crudely manipulated parliamentary election have died down. The “tandem”–as the arrangement for sharing power between the president and prime minister during Dmitri Medvedev’s presidency was known–has been hidden away in the garage. As the euro zone totters, Russian policy makers congratulate themselves on coming through the global financial crisis in somewhat better shape. Yet, in other respects, Putin’s efforts to reassert his leadership have created new problems while merely sweeping old ones under the rug.

The spontaneous demonstrations of December 2011 came as a shock to Putin’s team. It had anticipated some outcry given the army of cell phone–toting election observers and the dismay that had greeted Putin and Medvedev’s “castling” maneuver–switching roles with seeming indifference to public opinion. But the size of the protests–larger than any since the Gorbachev era–was a surprise. As Konstantin Kostin, then chief domestic politics aide in the Kremlin, put it: “No one expected that tens of thousands of people would go out on the street.”

Not just the scale of the demonstrations was unforeseen; so were the identities of the demonstrators. “After December 5th, we understood there was a new element,” Kostin told me. When reports first came in of protesters gathering, it was hard for the authorities to get a clear count. Previous demonstrations had been attended by radical intelligentsia, angry nationalists, and elderly Communists. But the people filling the Chistie Prudi meeting spot on December 5 resembled typical, affluent Muscovites. The agents at the scene initially mistook them for passersby.

Ten years of accelerated modernization had produced not just glass-paneled skyscrapers and high-tech trading floors but a stratum of cyber-linked cosmopolitans who spend their winter breaks diving in Bali or making pilgrimages to the Staatsoper in Vienna. Teachers, doctors, journalists, lawyers, filmmakers, designers, computer programmers, artists, boutique owners, research fellows, restaurateurs, advertising copywriters, tour operators, and website entrepreneurs, along with freelancers of all kinds, had suddenly shaken off their political passivity. Newspapers referred to this new force as the “enraged urbanites” or, more often, the “creative class.”

Monkey business

Although Kostin now downplays it, the immediate reaction in high circles was confusion and alarm. Some feared a violent clash as thousands pledged on Facebook to gather again on December 10 near the Kremlin. Soon after, Vladislav Surkov, the master architect of Putin’s “managed democracy,” was forced out. Putin himself had little to say publicly about the demonstrations until December 15, when he held a televised call-in show. By then, he had prepared an answer. Protests were fine, he said, a little too insistently; they were even a result of how Russian society had matured under his leadership. But these protesters were strange and possibly dangerous. In their lapels, they wore white ribbons, which he had initially mistaken for condoms. (No one else appears to have had this misperception.) Some people, he warned, “have the passport of a Russian citizen, but act in the interests of a foreign state, using foreign money. We will also try to get in contact with them. Often it’s useless or impossible. What can one say in this case?” And then, with well-rehearsed spontaneity, he added: “You know what one can say? ‘Come to me, Bandar-log.'”

This odd allusion to Rudyard Kipling’s Jungle Book was striking not just for the breadth of reading it revealed, but also for the unsettling message it contained if one unpacked the reference. The Bandar-log, to whom Putin likened the protesters, were Kipling’s “monkey-people,” scatter-brained pariahs who chattered and fought among themselves, imitating the speech they overheard without understanding its meaning. Lacking laws or leaders, they had “nothing but foolish words and little picking thievish hands.” From treetops the monkeys shrieked: “We are great. We are free. We are wonderful. We are the most wonderful people in all the jungle! We all say so, and so it must be true.” Even more jarring than the implied vision of the Moscow activists is the role Putin appeared to assign to himself. The Jungle Book character who says “Come to me, Bandar-log” is Kaa, the yellow python who, having hypnotized the monkeys, is inviting them to walk into his mouth.

On December 22, 2011, President Medvedev took a different tone in his annual address to parliament. Saying he had heard the calls for change, he announced a series of political reforms, many of which were later carried out. Direct elections of regional governors–abolished by Putin in 2004–were to be restored. Registration requirements for political parties would be eased and the number of nominating signatures needed to run in a presidential election reduced. Authority and resources were to be decentralized to regional and local governments. It was a moment of euphoria for the protesters, many of whom were certain the authorities would now call new elections for a more legitimate parliament. But that was not what happened.

Elite factions

Conquering their initial disorientation, the Kremlin’s political managers soon began working out a counterattack. The goal was to reassert Putin’s control over both the ruling elite and the rest of society. The ruling elite, under Putin, consists of members of state bodies in Moscow and top officials in the country’s 83 regions, along with major businessmen linked to these officials by numerous capillaries. That the Kremlin would doubt this elite’s loyalty might seem strange. Soaring economic growth rates in the 2000s, combined with tolerated corruption, had made many officials extremely wealthy. It was also under Putin that the pinnacle of Russian business had expanded from a few Yeltsin-era multimillionaires to the 96 billionaires on Forbes’ 2012 list.

Still, this elite had grown disunified in a way that Putin’s people found threatening. There were multiple lines of division. In part, Putin deliberately cultivated splits by playing factions against each other–the economically literate “technocrats” against siloviki (officials linked to the security services), or different silovik subgroups against each other. His practice was to let fights smolder until hints of discord started to appear in the press, and then slap down both parties, reasserting his supremacy and restoring temporary equilibrium.

A second partition resulted from the Putin-Medvedev tandem. Although the two leaders differed in style, their interests were closely aligned, and Medvedev had no illusions that he could win a fight with Putin, were he to pick one. Still, friction grew between their staffs, and silovik factions whose commercial interests conflicted with the policies of Medvedev’s technocrats worked hard to plant doubts in Putin’s mind. By 2012, there was clearly a Team Putin and a (much weaker) Team Medvedev.

A third division was perceived to lie between the business heavyweights surviving from the Yeltsin era and those who had emerged under Putin, sometimes swallowing the assets of less fortunate Yeltsin-era oligarchs. Although the original billionaires owed the true explosion of their wealth to the Putin years, and, after Yukos oil magnate Mikhail Khodorkovsky’s imprisonment in 2003, were careful not to anger him, they were still at times considered suspect. Some in the Kremlin believed the protests themselves had been orchestrated by shadowy business forces that sought to test Putin and perhaps even replace him with Medvedev.

“What is Navalny?” the Kremlin adviser Dmitri Badovsky asked when I met him recently, referring to the opposition activist Alexei Navalny. He answered his own question: “He is the utterance of a set of people.” The conspiratorially minded could point to suspicious links. Navalny’s chief fund-raiser, Vladimir Ashurkov, had previously worked for the banking tycoon Mikhail Fridman. (Fridman asked him to leave when the link became public.)

Fourth, there was a gap between Putin’s entourage and a second echelon of profit-seeking careerists in the Duma (the Russian lower house of parliament), executive bodies, and regional governments. These officials had amassed real estate, bank accounts, and other property in the West, and it was feared this might make them unreliable. They had also become an embarrassment. The United Russia party in which they served had become a kind of trade union for opportunistic bureaucrats, to which Navalny’s mocking insult–“the party of crooks and thieves”–had stuck a little too well.

Neutered technocrats

To reunify this fissiparous assortment, Kremlin policy makers announced that the Russian establishment was to be “reformatted.” This operation was supposed to have the psychological impact of Khodorkovsky’s arrest in 2003, which set new rules for business circles and expelled the remaining members of Yeltsin’s old team. What did this mean in practice?

First, it meant drawing a clear line under the Medvedev experiment. His reforms were diluted. Gubernatorial elections reappeared, but with a screening process called the “municipal filter.” Candidates had to obtain signatures from 5 to 10 percent of all municipal deputies in the region–difficult for anyone but the incumbent. Rather than decentralizing more resources, Russia’s federal government increased its share of expenditures from 59 to 61 percent.

Simultaneously, the technocratic wing, which had balanced the siloviki throughout the previous 12 years, was neutered. Investigators were set loose on liberals who had advised on Medvedev policies. Most notably, after several months of menacing interviews and searches, the internationally respected economist Sergei Guriev, dean of the New Economic School, fled to Paris. Personal entreaties from such heavyweights as the former finance minister Alexei Kudrin, the former economics minister German Gref, and Putin aide Igor Shuvalov reportedly failed to elicit a commitment from Putin to call off his goons. The message was clear: Economic liberals no longer had any protection.

Medvedev’s prize project–the high technology innovation zone of Skolkovo–also came under attack. Criminal investigators accused two executives of stealing $789,000 by means of a fraudulent tender. They also suggested Skolkovo executives had channeled money to the opposition by paying $750,000 to activist Ilya Ponomarev for a few speeches and expert briefs. When Surkov, who had been given oversight of Skolkovo after losing the job of managing politics, challenged the investigation during a speech at the London School of Economics, he was quickly forced to resign. Oversight of Skolkovo passed to an old Putin friend, Andrei Fursenko. The project of turning Moscow into an international financial center was also buried, and investigators targeted major businessmen known to be connected to Medvedev.

Even seemingly minor Medvedev initiatives were demonstratively reversed. In 2010, Medvedev had scrapped two of Russia’s eleven time zones and ended the annual switch to winter time, claiming this would increase efficiency. Putin restored the two time zones and the time change. Medvedev had decriminalized slander. Putin criminalized it again. Medvedev had lowered the mandatory retirement age for high officials to 60; Putin raised it to 70.

Surkov had reveled in manipulating politics from behind the scenes, dangling cash in front of Duma deputies like carrots in front of donkeys. Putin replaced him as political mastermind with Vyacheslav Volodin, a hard-nosed operative who did not see the point of complicated games where orders and threats of prison would suffice. Despite constant rumors of his imminent sacking, Medvedev was allowed to remain as prime minister, on a short leash. Apparently gambling that time was on his side, he sought to spin out this position as long as possible. As one former adviser told me, Medvedev understood that “in order to survive he needed to do absolutely nothing.” He survived.

To separate himself from the discredited United Russia, Putin had already appointed Medvedev its leader. As his personal vehicle, he created a “Popular Front,” which remains amorphous more than two years later. To discipline the foreign property owners, Putin ordered them to repatriate their holdings. In April 2013, he signed a decree giving state officials three months to liquidate any assets abroad, closing bank accounts and selling stocks, or face dismissal. When Navalny exposed the Duma deputy Vladimir Pekhtin as the owner of $1.3 million worth of luxury Florida real estate, the Kremlin did not defend him, but pressured him to resign. Meanwhile, Volodin used the careerists in the Duma to spearhead potentially unpopular reactionary laws, making it easy to reverse course later if necessary by blaming the deputies.

Finally, oligarchs suspected of mixed loyalties were reminded of their dependence. Their supposed “messages” expressed in Moscow’s street rallies received the Kremlin’s reply when demonstrators were arrested and sentenced to years in Siberian labor camps.

Velvet repression

As it “reformatted” the elite, the Kremlin also set to work on the rest of society. That society consists of two main parts: the disenchanted “creative class,” mostly in big cities, and the more traditional residents of Russia’s heartland.

For the creative class, Putin’s operatives switched among three techniques: co-opt, intimidate, and disable. More amenable elements were to be co-opted, splitting the opposition and providing the illusion of power-sharing. To the surprise of some commentators, the Kremlin seemed eager to register a lot of liberal parties–probably anticipating that they would neutralize each other fighting over their limited constituency. At a cocktail party in the British Embassy in early 2012, the infamous head of Putin’s Central Electoral Commission, Vladimir Churov, rushed over to the political activist Vladimir Milov. “Where are your documents?” he demanded, in mock concern. “All the other parties have put in theirs. We are waiting for yours!” However, a party founded by friends of Navalny was not registered.

The Bandar-log got a new place to hang out. Moscow’s mayor, Sergei Sobyanin, remodeled the Soviet landmark Gorky Park into a playground for the city’s hipsters, with free Wi-Fi, fancy cafés, jazz concerts, lines of ping-pong tables, fountains, sandy volleyball courts, river beaches, and enormous cushions under the trees, where girls in bikinis sunbathed through the summer.

For those who refused to cooperate, the sticks came out. A torrent of repressive laws streamed from the Duma, as if from a line of “out of control printers,” in the words of a popular witticism. These laws: increased fines for participating in unsanctioned protests; required NGOs receiving foreign funding and engaged in “political activity” to register as “foreign agents”; allowed the closing of websites providing information deemed harmful; criminalized slander, blasphemy, and “offending religious feelings”; banned the distribution to minors of “propaganda of nontraditional sexual relations”; prohibited the adoption of Russian orphans by Americans and of all children by Russian single-sex couples; and expanded the definition of treason.

These laws became the instruments of what some took to calling “velvet repression.” Rather than putting many people in jail, the authorities aimed to intimidate and distract the opposition with drawn-out investigations, searches, and interviews. Still, a few arrests and trials were staged to publicize the new order and disable protest organizers. Sergei Udaltsov, leader of the Left Front, which hoped to steal the far left slot from the Communist Party, was accused of conspiring with a Georgian parliamentarian to foment violence and placed under house arrest. Another Left Front activist, Leonid Razvozzhayev, claimed to have been kidnapped in Kiev, tortured, and transported to Moscow, where he turned up in the hands of prosecutors.

Navalny was tried in the city of Kirov for allegedly stealing $500,000 worth of wood, a case that had already been closed by the police for lack of evidence, but which was reopened on the personal orders of Aleksandr Bastrykin, Putin’s hyperactive chief investigator. Convicted in July 2013, he was sentenced to five years, only to be released on bail at the request of the prosecutors so that he could run in the Moscow mayoral election, lending some legitimacy and excitement to what would otherwise have been a suspenseless coronation of the incumbent.

Besides these well-known figures, 27 previously unknown participants in a May 6, 2012, demonstration at Bolotnaya Square were arrested and accused of attacking policemen. Two have already been sentenced to several years in prison after agreeing to cooperate with the prosecution. The message to potential future protesters is clear: They, too, could end up behind barbed wire.

Big spender

To keep the support of ordinary Russians in the provinces, Putin’s first tool has been public spending. Since the start of the global financial crisis in late 2008, he has increased the average pension by almost 60 percent adjusted for inflation. He boosted government expenditures from 34 percent of GDP in 2008 to 41 percent in 2009 to shield Russians from the pain of the economy’s 8 percent contraction.

Then, the day after his 2012 inauguration, Putin signed 11 decrees that instruct the government to achieve a number of concrete goals by specified dates. These are nothing if not ambitious. By 2014, the government is to reduce the time Russians spend waiting in line for state services to no more than 15 minutes. By 2015, it is to ensure that 2.44 percent of the world’s scientific journal articles are written by Russian scholars. By 2016, the government must provide places in preschool (which in Russia includes the equivalent of kindergarten) to all children aged 3 to 7.

By 2018, an election year, Medvedev and his ministers are charged with increasing life expectancy from 70 to 74 years, real wages by 1.4 to 1.5 times, and labor productivity by 1.5 times, while lowering housing prices by 20 percent and the death rate from circulatory diseases by 12 percent. By then, the government should also have boosted Russia from 120th to 20th place in the World Bank’s “Doing Business” rankings, and increased the proportion of citizens who are satisfied with the quality of state services to 90 percent.

Salaries in the armed forces, health care, and education are to rise, as are military pensions. The number of mortgages signed annually is to have reached 815,000 (up from 691,000 in 2012), and the interest rate on them must not exceed 2.2 points above inflation.

Additionally, by 2020, the government must provide “accessible and comfortable” apartments to 60 percent of all families who desire better housing, “create and modernize 25 million high-productivity jobs,” and get at least five Russian universities into the global top hundred. Needless to say, if all this is achieved Russian citizens will be grateful to the president who decreed so many good things for them. On the other hand, failure will give Putin a perfect opening to fire Medvedev or members of his government.

Culture war

Simultaneously, Putin has sought to inoculate mainstream Russians against the urban virus. While portraying the angry Muscovites as a mix of sexual minorities and foreign agents, the Kremlin has exalted the conservative sensibilities of the heartland. Appealing to nostalgia, Putin brought back the “Hero of Labor” medal, along with Soviet-era fitness tests for youths. A few days after his inauguration, he appointed a worker from a tank factory, Igor Kholmanskikh, as special envoy to the Urals Federal District. Kholmanskikh’s only qualification was that, on the call-in show on which Putin quoted Kipling, he had offered to bring friends from the assembly line to sort out the Moscow protesters. “You showed who the Russian people are, who the Russian working man is,” Putin gushed.

The scandal over Pussy Riot, the punk collective that performed uninvited in the Cathedral of Christ the Savior in February 2012, fit the Kremlin’s culture war perfectly. It distracted attention from the campaign for honest elections. At the same time, the images of masked feminists gyrating before the altar could not but offend Christians in the provinces. The Orthodox Church, under the reactionary and outspoken Patriarch Kirill, also hoped to gain from the publicity. Protests against the women’s prosecution by outraged Western celebrities, especially those who appear on stage in scanty costumes, helped the Kremlin paint Pussy Riot, and by implication other Moscow revolutionaries, as aggressively seeking to force Russians to accept foreign, postmodern values.

As attention to Pussy Riot waned, the Kremlin turned to combating the threat of a gay rights movement that had, until then, gone largely unnoticed. A ban on “pro-homosexual propaganda” signed into law this June coincided with an apparent upsurge of vigilante attacks on gay men. Again, the celebrity-studded effort in the West to protest this anti-gay campaign by boycotting the 2014 Sochi Winter Olympics or plastering it with rainbow flags threatens to rally Russians behind a leader whom, in other regards, they like less and less.

To label these various actions a strategy may attribute to them more coherence than is merited. While the driving force is certainly Putin’s political schemes, the outcomes also reflect battles for influence and resources between rival groups within the president’s inner circle, as well as freelancing by opportunists who hope to join it. The last two years have seen the siloviki triumphant. In fact, they have sidelined all other groups so successfully that in the next stage they will probably start to tear each other apart. Putin, realizing this, may have begun a tentative rebalancing, placing in key positions relatively colorless and unattached professionals such as Sobyanin and the current defense minister, Sergei Shoigu.

Back in the bottle?

In the Kremlin, Putin’s operatives are congratulating themselves on having squeezed the genie back into the bottle. But how well have these tactics really worked?

Whether one uses police figures (almost certainly too low) or those of the opposition (probably too high), the number of demonstrators in Moscow each month has fallen sharply–from 210,000 in December 2011 to 5,500 in July 2013 (according to opposition reports), or from 57,500 to 2,000 (according to the authorities). A decline was to be expected; most protest waves eventually dissipate. But the prosecutions did raise anxiety levels. Nevertheless, the thousands who defied the harsh new law on demonstrations and heavily armed paramilitary troops to protest Navalny’s conviction in July–climbing onto the window ledges of the State Duma and chanting “Freedom!”–showed that indignation could still overcome fear.

The Kremlin may also credit itself with having halted a slide in Putin’s popularity ratings. According to Levada Center opinion polls, the proportion approving of his performance fell from 79 percent in December 2010 to 63 percent in December 2011. Since then it has bumped around in the 60s–a level most world leaders would envy. However, this stabilization masks an underlying fragility. Since 2008, the proportion considering Putin “businesslike, active, energetic,” has fallen from 62 to 39 percent (in April 2012). Fewer than 8 percent in 2012 found Putin pleasant, appealing, charming, honest, decent, or not corrupt. Shortly after his inauguration, only 38 percent thought he would have won the presidency if Russia had “a free press and television, which could freely talk and write about abuses of the authorities.” The approval is increasingly grudging.

While the potential for protest in Moscow has dropped, it remains higher outside the capital, apparently boosted by cynicism about other alternatives for expressing grievances. Fewer Russians than three years ago think they can solve problems by going to court or appealing to their member of parliament. But the proportion saying they can defend their rights with demonstrations or strikes has risen from 9 to 16 percent. The next wave of unrest, as the economy falters, is likely to come from the provinces.

Meanwhile, the project of unifying the elite has failed. Divisions continue to open up. And it has aggravated the second echelon, whose members must suddenly worry about their apartments in Bulgaria. With their no-holds-barred campaigns, Bastrykin and Volodin are accumulating enemies. By driving out those with expertise, and forcing Medvedev into a corner but not firing him, Putin has immobilized the government. All this discourages investment, both foreign and domestic. Most important, with its alternately bludgeoning and hesitant approach to Navalny, the Kremlin has helped build up a possible future leadership contender who now looks poised to take advantage of any deterioration in Putin’s popular support.

Navalny ascendant

The 37-year-old Navalny, who rose to visibility as a blogger exposing multibillion-dollar corruption and then led the protests against election fraud, has many strengths and a few perceived weaknesses. Among the strengths is a powerful charisma, backed by athletic good looks, and an ironic, self-deprecating style of speech. He is more serious about winning than most opposition leaders and has shown unusual energy and courage under pressure. A community organizer who hired an HR-schik (human resources specialist) to find him a press secretary, he has a kind of business school idealism, a vocation to change the world one bullet point at a time.

Among Navalny’s perceived weaknesses is a lack of any administrative experience, although his Moscow election campaign appeared expertly organized. He can seem excessively prickly under questioning by journalists. He has marched with extreme nationalists and takes a sharp stance against illegal immigrants, a stance that some liberal allies find disconcerting but that may actually help him bond with Russia’s many moderate nationalists. The question is whether he can refine his nationalist talk into a discourse sufficiently vague and uplifting that intelligentsia supporters can hear in it a call for civic patriotism, while those suspicious of southern immigrants can feel he is on their side.

His greatest failure to date–understandable given the Kremlin’s persistent harassment–is his low provincial standing. No opposition leader can win against Putin without forging an alliance between the discontented in Moscow and those disaffected–for other reasons–in the provinces. There are islands of Navalny support in other Russian cities, and his campaign manager, Leonid Volkov, comes from the Urals metropolis of Ekaterinburg. However, despite his network of internet followers, Navalny has not yet really broken through to mainstream Russians outside Moscow.

Out on bail, Navalny campaigned hard for the Moscow mayoral election, rising in the polls from 11 percent in early July to 20 percent in mid-August. That already seemed to unnerve the Kremlin’s operatives–when I spoke to him in June, Kostin had put Navalny’s support at no more than 17 percent–and pretexts were floated on which Navalny could be disqualified. In the end, Navalny’s candidacy was allowed to stand, and he beat all expectations to win 27 percent of the vote, according to the official results, against Sobyanin’s 51 percent. Whatever the immediate political or legal outcome, the election result made Navalny the undisputed leader of the opposition to Putin’s regime.

Fading fast

Where does all this leave Russia? Amid the political feuding and investigations, governing has taken a back seat. The Russian authorities, never exactly efficient, have become truly dysfunctional. Those technocrats still in office are in earthquake mode, sheltering under their desks. The siloviki are energized.

Drama surrounds Putin’s 11 post-election decrees. In private, economists call them a bad joke and unfulfillable in principle. Yet Putin periodically scolds the government for not doing enough to implement them. Since each decree comes with a deadline, Putin has made himself a hostage to the higher expectations he has generated. Rather than retreat, he has advocated spending assets of the Pension Fund and the National Welfare Fund, saved from past oil revenues, on three big infrastructure projects: a high-speed rail link between Moscow and Kazan, modernization of the Trans-Siberian Railroad, and a new ring road around Moscow.

Meanwhile, economic growth has been fading. Year on year, the rate was 4.8 percent in the first quarter of 2012, 4.3 in the second, 3.0 in the third, 2.1 in the fourth, 1.6 in the first quarter of 2013, and 1.2 in the second. Gross investment is down, and exports fell 4.8 percent in the first five months of 2013. In such conditions, Putin’s mega-spending plans might seem sensible at first glance. However, while stimulus programs are important for boosting demand at times of recession, they cause inflation when the economy is near full capacity. Russia’s unemployment rate–5.3 percent–is low, and capacity utilization is high. Forecasters expect a slight rebound in late 2013, especially if the Central Bank lowers interest rates. But more robust growth will require a pickup in the world economy, increasing demand for Russia’s commodity exports, or major economic and institutional reforms.

Even Russia’s position as a commodity exporter looks vulnerable. Competition from Norway and from liquefied natural gas is eroding Gazprom’s European sales. In the medium term, sales are threatened by the shale gas revolution. Yet, rather than reacting to the changing environment, Russia’s elites are debating whether shale gas is actually, in the words of Badovsky, the Kremlin adviser, an “American fake, exactly like Reagan’s ‘Star Wars.'” Gazprom CEO Alexei Miller has called shale gas a “soap bubble” that will soon burst.

Although Putin seems genuinely interested in attracting foreign capital, he has not yet cared enough to rein in the siloviki. Putin’s friends seem more interested in buying out than in attracting Western investors. The state-controlled oil company Rosneft recently purchased 95 percent of the Russian-British oil company TNK-BP. Rosneft’s chairman Igor Sechin resisted demands of the remaining 5 percent of shareholders that Rosneft buy their shares at a fair price. “We are not a charity fund,” he told them. Last April, Bastrykin’s agents raided the Skolkovo Foundation’s office just as a representative of Intel was visiting to discuss further investments. The agents forced the Intel executive to wait outside in the street. By the time the Skolkovo people reached him, he was on his way to the airport.

Reshuffling the deck

In short, the current standoff does not look stable. Predicting how things will change is harder. One possibility is that the reactionaries will undermine themselves by overreaching. The conservative cultural warriors are already making themselves ridiculous. Duma deputy Elena Mizulina, a dour champion of family values and scourge of “nontraditional sexual relations,” recently filed a slander case against television personality Ksenia Sobchak, who had claimed on Twitter that Mizulina opposes oral sex and wants to ban it. Rather than tracking murderers, Moscow’s top detectives spent several hours questioning Sobchak and a list of other witnesses about their sources of information on Mizulina’s sexual preferences. Culture wars are hard to fight when everyone is laughing.

A second possibility is that, alarmed by the declining growth rate, Putin will finally swing back toward the technocrats and make a serious effort to improve Russia’s business reputation. The most effective way would be to replace Medvedev as prime minister with Kudrin, the former finance minister, and authorize him to implement significant reforms. Kudrin has said he would return only if allowed to introduce both pro-market economic measures and more dialogue between the regime and its political opponents. Last summer, Putin proposed merging the country’s two highest courts, which handle respectively criminal and commercial cases. The only point of such a change would be to create a worthy sinecure for Medvedev, a former law professor. If this bill goes to the Duma in the fall, Medvedev’s days in the White House will clearly be numbered. Whether a Kudrin government would be enough to jump-start the economy is another question.

Looking ahead, an embarrassing failure by authorities to manage the Sochi Olympics, amid allegations of astronomical corruption or a terrorist attack or a natural disaster, could send Putin’s popularity rating plunging below its current level of support. That would intensify the jockeying among factions over the succession–and advance its expected date. Destabilization is not inevitable–a steady increase in the price of oil over several years could change the current dynamic. But it will take considerable luck on Putin’s part to keep the Bandar-log at bay.