The Russia Conundrum

Putin wants to see himself as a full-fledged player in the ‘big game’ of global geopolitics, but the state of the Russian economy and society does not afford him that opportunity. Therefore, he claims his seat at the table by using other methods – by playing against the rules. Western leaders seem to have had enough. The Biden administration has promised that, from now on, such games will cost the Kremlin dearly. For his part, Putin has vowed to draw a ‘red line’ in defence of Russian interests, warning that those who cross it ‘will regret what they have done in a way they have not regretted anything for a long time’. Matters might be different if there were a genuine prospect of political change. But Putin’s regime in its current state is not ready for reform. Its laws completely rule out the possibility of changing the power structures by means of elections.

Combined with torrents of state propaganda, school education, orchestrated political processes and outright violence, this has contributed to a sense of hopelessness in society. At the same time, the authorities intentionally keep income levels within a range where people scrape along from pay cheque to pay cheque, keenly aware of the total dependence of themselves and their families. All this reduces Russia’s economic growth rates, but serves to preserve the political status quo.

Public attitudes to Putin’s regime reflect the structure of Russian society. Perhaps half the population would not mind keeping Putin in power for a fifth presidential term after his present six-year spell ends in 2024. The same half thinks that the sentence imposed on Alexei Navalny, the opposition activist ailing in prison, is appropriate. Among the other half, there are many critics of the system, but also many others who are not ready to take an open stance.

Russian society is heterogeneous. About 25 per cent of people are educated residents of big cities, where opposition to Putin is strongest. About the same amount, maybe a little less, live in ‘electoral sultanates’, or territories where feudal and even tribal orders rule. The remaining 50 to 60 per cent live in the industrial society of the mid-twentieth century – in so-called ‘mono-cities’ and other urban areas of central Russia that have only two or three large enterprises. Meanwhile, the population of big cities has changed greatly because of the influx of migrants from Central Asia. For all these reasons, I am not sure we can expect early positive political changes in Russia driven by public pressure.

Under Putin, the authorities have consciously sought to revive the imperial reflexes of the Russian population, and this includes the inculcation of a mentality that can perversely equate business success with foreign encroachment. It was an argument that was used to justify the Kremlin’s attack on Yukos and there are countless other examples, including the infamous Magnitsky case that brought the practice of state-sponsored corporate raiding – called reiderstvo in Russian – to the world’s attention.

In June 2007, armed police raided the Moscow offices of the thriving investment fund, Hermitage Capital, run by the British-American financier, William Browder. The police identified themselves as members of the FSB’s Economic Security Service and claimed they had authority to confiscate documents and computers as part of a tax probe. In fact, they were perpetrating a classic reiderstvo

operation, which would result in three of Hermitage’s subsidiary companies being seized on bogus charges.

The FSB officers who carried out the raid were not acting alone; they had enlisted the help of corrupt law enforcement officials and judges, who were all part of the scam. Using the corporate registration documents that they had seized, the FSB men and their associates were able to perpetrate a fraud, in which they claimed (and received) a refund of $230 million in taxes that Hermitage had paid to the Russian state. When the company’s lawyer, Sergei Magnitsky, discovered that the raiders were claiming bogus tax refunds in Hermitage’s name, he made an official complaint, only to find himself arrested by the very police who were involved in the plot. In November 2008, he was brought before a judge and charged with tax evasion. On remand in jail, Magnitsky was pressured to make a deal and testify against Browder. He was threatened and denied medication for serious health problems, but he refused to perjure himself. On 16 November 2009, after 11 months of imprisonment, Sergei Magnitsky died in a cell in the prison hospital, having been handcuffed in a stress position. The European Court of Human Rights would later rule that he had been held in conditions that amounted to ‘inhuman and degrading treatment’ and subjected to negligence and lack of adequate medical care in breach of Article 3 of the European Convention on Human Rights.