ANDREW GUFF: Good afternoon. I'm Drew Guff, and I'll be moderating today's Russia update with Masha Gessen and Steve Sestanovich.
Masha Gessen emigrated to the United States when she was 14 and moved back to Russia 10 years later to become one of Russia's leading journalists. She has the distinction of following basically every major political and journalistic event in the last 20 years since the fall of the Soviet Union.
Masha just published a new book that came out yesterday, "The Man Without a Face: The Unlikely Rise of Vladimir Putin." So please welcome Masha Gessen -- Masha Gessen.
Our second participant today is Steve Sestanovich. Steve really needs no introduction to anyone. He's the George Kennan Senior Fellow for Russian and Eurasian Studies here at the council; also, prestigiously, the Kathryn and Shelby Cullom Davis Professor of International Diplomacy at Columbia. No stranger to anyone in this room, he has worked at the State Department. He has worked at the National Security Council. And Steve, we welcome -- we welcome your participation today.
Masha, let me first start by congratulating you on a really fine performance on Jon Stewart yesterday. (Laughter.)
MASHA GESSEN: Thank you.
GUFF: And I have to say, reading your book, I take it you will not be filling out an absentee ballot in favor of Vladimir Putin on Sunday? (Laughter.)
GESSEN: No, I do intend to vote in Washington, actually, on Sunday, but I'll be voting for everybody except Putin. (Laughter.)
GUFF: Good. So let me ask you the following. Can you give us your view of what will happen on Sunday and, more importantly, what you think will happen on Monday and beyond --
GUFF: -- in Moscow and across the country?
GESSEN: Right. I think most likely what will happen Sunday is that Sunday night, Putin will declare victory without waiting for the final official results to come in. And what will happen on Monday, which I think is more interesting, is that there will be protests on an unprecedented scale that will make protests that we saw in December actually look small. That's my prediction.
GUFF: Mmm hmm. OK.
QUESTIONER: Can we boost -- boost her audio, please? We can't hear --
QUESTIONER: Also, would you mind repeating what you just said?
QUESTIONER: Yeah. (Cross talk.)
GESSEN: Oh, OK.
QUESTIONER: Yeah -- (off mic).
GESSEN: Can you hear me now? Yes?
GESSEN: OK. What I said was that I think that Putin will declare victory on Sunday night and that there will be huge protests on Monday, probably larger than the protests we saw in the winter.
GUFF: So do you -- do you think that Putin -- will he win on the first ballot, according to polls? And do you think it's more important to Vladimir Putin to win on the first ballot? Or does he care more about public reaction to winning on the first ballot if it's disputed?
GESSEN: Right. Well, there are a couple of issues here. One is, yes, I think it's likely that he would get the largest number of votes of the five candidates on the ballot on Sunday. I think if the votes were counted accurately, he wouldn't get over 50 percent of the vote, right, which is what's needed to win on the first round.
I also think it's -- you know, it's sort of confusing the issue a little bit to just about what happens to this particular ballot, because this particular ballot is the product of Putin election laws and Putin election practices. So the ballot itself is rigged. And what he -- what he gets out of that ballot is, by definition, a rigged victory.
I think that everything that he has done and that his administration has done in the last couple of months has actually been geared toward not just winning the election but winning it decisively in the first round. And I'm sure that that's what territorial election officials have been instructed to provide.
STEPHEN SESTANOVICH: Drew, just a couple of numbers. He is -- for Putin to be denied a victory in the first ballot, you got to have -- just to be really babyish about this, you got to have one guy who gets 20 (percent) and three guys who get 10 (percent).
SESTANOVICH: And --
GESSEN: No, actually, no. No, you don't --
SESTANOVICH: Well, I add it up to 50 percent.
GESSEN: Right. But you're forgetting about all the people who are going to invalidate their ballots.
SESTANOVICH: Yeah. It's -- right. Or some other --
SESTANOVICH: -- something else that add -- that adds up to 50 (percent). But that's sort of -- those are the basic ingredients.
And right now, most of them are well short of that. Zyuganov is polling at about 14 (percent), 15 (percent), the Communist leader. The others are more in the 6 (percent) to 8 (percent)-plus range.
SESTANOVICH: Now, all of those could, under other circumstances, be expected to get 20 (percent). Zyuganov's party got 20 (percent) in the -- in the December elections. The other candidates could get -- could get 10 (percent). But that would represent a kind of surge for them -- not to be excluded, but it is still a kind of remote prospect at this point.
GESSEN: Yeah, but wait a second. I take issue with the polls that were read -- I mean, what we have is three polling organizations, two of which are openly controlled by the state and one of which is nominally independent. But --
GUFF: Maybe -- just a second on that, if you could describe VTsIOM, Levada, for all of those who are not familiar with the polling companies.
GESSEN: OK. They're two organizations, the Fond Obshchestvennoe Mnenie, meaning the Foundation for Public Opinion, which is controlled by the state. There's VTsIOM, the Old Russian Center for Public Opinion, which was taken over by the Kremlin, what -- about seven years ago? And you know, the people who used to run kicked out on the street.
Those people ended up forming an organization of their own called the Levada Center -- it bears the name of their founder -- which has a weird structure. They basically -- it's not a single polling organization. It's actually an organization that consists of several independent polling operations. And the political operation, the arm of the organization that does electoral polling, is, to my mind, highly suspect or at least it always yields exactly the same results, to the percentage point, as the -- as the two state-controlled ones.
And the thing is -- you know, I've talked to the people who do these polls, and their goal is to predict election results. Their goal is not to take a measure of public opinion. It is actually to get as close as possible to the result that we're going to hear back from the Central Election Commission at the -- at the -- at the end of the first week of March.
GUFF: And you feel that's true even of Levada, that Levada's numbers would be statistically inaccurate?
GESSEN: Well, they are statistically indistinguishable from all the other numbers historically. But also that's -- I've asked -- Grazhdankin (ph) who runs the poll -- their electoral arm of Levada what the goal is. The goal is to predict election results.
GUFF: OK, we'll leave it at that.
Steve, the Russian economy, over the last 10 years, grown tremendously. 2011 also not a bad year at all by world standards. Russia grew third fastest among all major countries. Disposable income up 10 times in 12 years. Arguably the cleanest balance sheet of any major country. Half a trillion dollars of reserves. The list goes on and on. Forty percent of households connected to the Internet. Cheaper Internet in Russia than there is in the U.S., et cetera. To what extent is the protest movement a result of the economic progress of the last 10 years? And to what extent is it despite in search of more progress -- economic, political and social liberalization?
SESTANOVICH: Well, I think it is to some extent, although a Russian friend of mine was explaining to me not so long ago that, you know, Russian politics is not about economics. It's about, you know, popular rule and that -- and that is the desire of the -- of the protesters.
I think it is true that Putin does deserve some of the credit for this movement in the following sense: It's not really about economic progress. It's about -- what the polls show is a popular attitude that it's -- there's not a risk of revolution and of tremendous instability in pushing for reform, for fairness, for the rule of law. The polls show people don't want revolution and they fear instability. But they don't fear that what they're doing is going to cause revolution and instability. And I think that creates a kind of boldness that it -- go -- that is separate from just the fact that they don't fear repression. They think that they're -- the country is ready for -- to be ruled in a different way.
GUFF: Putin's wasted no time in writing a series of articles and manifestos that have -- that have shown up in Russian-language press. And if you read them, they are -- they're incredibly progressive, very rational. The economic portion is -- you would -- you would -- you would say taken right out of the playbook of Kudrin or Dvorkovich. To what -- to what degree do we think those highly rational, attractive policies will actually be implemented after the election?
SESTANOVICH: I'm not sure that Putin has seen any of those. (Laughter.) I wouldn't -- I wouldn't take it for granted at least that he has. I mean, that's campaign promotional material, and I don't say that really to disparage him. He has been given a lot of advice, starting in December, that he had to adopt the rhetoric of modernization and of liberalization.
On the stump, he hasn't really talked that way. He's had a different kind of rhetoric for the -- for the public. People thought in December that the choice was between liberalization and repression. But actually, Putin has a run a pretty vigorous campaign, and the theme of that campaign is the one that people thought was going to be a certain loser in December, when it was Putin's first response. He's actually carried through with it. That is painting opponents as traitors, as paid agents of the West, and trying to marginalize them and saying that the issue is really about Russia's future and independence and, you know, invoking Napoleon and the like. So if you -- if you listen to Putin as opposed to read Putin, you hear a somewhat different explanation of what the election's all about.
GUFF: Mmm hmm. OK.
And on social and political, I can't speak to that as much as I can say, having been part of a round table that Putin was at back in September, before the flip was announced, he was already espousing the modernization program with some forcefulness.
GUFF: But that was strictly an economic crowd.
Masha, the protest movement has been called the -- in the Financial Times, the Jean-Jacques protest movement after the fancy restaurant in Moscow where a number of the protest leader have been known to gather, indicating this is a -- this is a liberal intelligentsia middle-class urban protest movement. Is that a fair characterization?
GESSEN: OK. Well, first of all, Jean-Jacques is not a fancy restaurant. (Chuckles.) It's a -- it's a French-style cafe in central Moscow where I've gone for years, working out of that cafe during the day --
GUFF: OK. But it's not (pirozhki ?).
GESSEN: Yeah, it's not (pirozhki ?), no.
GESSEN: But it's a -- it's this little bistro.
But I think -- I'm actually kind of angry about all of this coverage portraying the protest movement as the middle-class protests or the Jean-Jacques protests, because I think the only reporters who can write those kinds of stories are reporters who are too lazy to leave Jean-Jacques and actually go out and see what's going on.
And what's going on is that -- there was actually a poll conducted, commissioned by the organizers, during the December 24th protest on Sakharova. And a it's fascinating poll, if you read the results. First of all, it showed that 50 percent of the -- of the people who came to the protest did not learn about the protest from the Internet, right? Also, only 5 percent of them said that they -- their income allowed them to have whatever they needed, right? So 95 percent certainly do not identify themselves with the -- as most affluent. Most people said that they can't afford a car, right? This is -- this is not a protest of affluence. This is -- what we found in that poll was really a representative sampling of working-age Muscovites. And that seems to be the case in other cities as well.
SESTANOVICH: One qualification of that: I think the working class is underrepresented here, hardly represented. The Levada poll that Masha mentioned has 8 percent of people saying they're workers. Contrast that with Tahrir Square.
And this has been Putin's theme. He is trying to appeal to the silent majority. He does not want the protesters to be able to identify themselves as the Russian electorate. It's not just lazy Western journalists who have done this; this is Putin's strategy is to treat this as a marginal phenomenon.
But he's not totally wrong about it. And it's a challenge to the protesters, I think, to broaden their base after the election and pointing forward to other elections to come. If they want to turn the demonstrations into political movements and parties, they're going to need broader support demographically than they now have.
GUFF: So following that logic, are we going to see, post-election, the rise of new parties, the rise of independent candidates after Sunday? To what extent will we see new faces and new parties?
SESTANOVICH: Well, you're going to see some new parties, maybe not right away, although some of them are appearing now. Prokhorov, the billionaire best known as the -- here as the owner of the New Jersey Nats --
SESTANOVICH: -- has announced that he's going to have some kind of party. It was a little unclear what it is. He said it would it would be --
GUFF: That's the party in -- (inaudible). That's where he's having his party. (Laughter.)
SESTANOVICH: He does like those parties, too, at least as much. There's talk of Kudrin trying to form a new liberal technocrat party. That's a great label for a mass movement. There will be probably be efforts in some of the -- even the current opposition parties to come up with new leadership. It is not known whether Navalny intends to -- he's the blogger, anti-corruption spokesman -- whether he intends to form a party.
I think you're going to find a lot of people running in the regional and local elections in the next six months without party affiliation. It looks as though it will be easier to form parties, but a lot of people will just run on their own. And that will throw up new figures and new leaders.
GESSEN: Well, actually, I think it's important to state that at this point it's impossible to form a party, right? I mean there has to be party-law reform in order for people to be able to form parties at all. Medvedev has promised the reform, but Medvedev hasn't really been seen or heard from in a c couple of months, so --
SESTANOVICH: Well, there was the first reading of it in the --
GESSEN: There was a first reading. I wouldn't be surprised if it died in the Duma in the spring. Might not. Right? But, I mean it's too early to talk about parties when you still can't form parties.
But what is happening, and it's happening already, is that people are running in the local elections; you know, the elections that they forgot to cancel, the tiny little municipal elections. There are people all over Moscow, independent candidates, dozens of them, people that no one had heard of, you know, until about a month ago.
GUFF: Masha, can we talk about the two Alexeis? Can we talk about your impressions of Alexei Navalny and Alexei Kudrin, two figures in the opposition right now?
GESSEN: Right. I mean, I wouldn't actually call it an opposition. I think it's a -- again, you know, until we have political institutions, it's kind of not really accurate to talk about the opposition. There's a protest movement. And Alexei Navalny, the anti-corruption blogger, and Alexei Kudrin, the former finance minister, are interesting figures in the protest movement.
Kudrin, I think, has great potential as a negotiator if the regime ever decides to negotiate. In fact, I mean, I think he can be an incredible asset, actually, to both sides.
Navalny, he is an incredible organizer. This is somebody who has run a one-person campaign over the last several years exposing corruption in Russian state institutions. And he's the man who came up with the phrase "the party of crooks and thieves," which is probably the greatest catch phrase in Russian politics in a dozen years.
He's got the kind of political views that one develops when one comes of age in a political-cultural vacuum. On the one hand he's kind of nationalist, on the other hand he's a libertarian, and it's not quite clear how these things mix. What's clear is that he lacks the education, the exposure to actual politics to have formed coherent political views. I'm sure that it will happen.
GUFF: How long can protests go on after the elections? Is this going to be a ground war? Monthly? Quarterly? How -- one can paint a scenario where Putin is elected, first or second ballot, protests happen, pro-Putin protests, anti-Putin protests. This is a scenario that could be a war of attrition. And is there potential for a violent flash point somewhere along the way?
GESSEN: Yes, I think there's potential for -- I mean, I think that that will be the day that the fate of the protest movement, the fate of Russia is decided, is when Putin considers using force and possibly gives an order to use force against the protesters. We're getting ominously close to that point actually -- in (advance ?) of Monday's protests until Moscow authorities finally decided to issue a permit for large-scale protest right in the center in Pushkin Square.
There's a lot of back and forth between local authorities and the Kremlin. And that seems to be one of the ways in which -- in which this is being regulated. The -- we saw this at -- with the earlier protests as well. It was clear that the police on the ground are actually disposed toward cooperation with the protesters, and the brass gets completely different information from a completely different source and has a weirdly warped view of the protest movement.
Just to give you an example. On December 24th, the brass thought that there would be 10,000 people because they had leaked Boris Nemtsov's phone conversations. And they had -- they assumed that they had discredited the protest movement sufficiently. The lower-level officers, you know, from colonel on down, knew there would be tens of thousands of people, expected more than a 100,000, and basically did everything that was necessary for effective crowd control. So (there is ?) that chasm between the police that actually deal with the protesters and the people who are giving them orders.
At some point or another probably, there's going to be an order to use force, and my big hope is that, at that point, the police refuse to use force.
We've already seen precedent. There's the town of Lermontov (ph) in the south of Russia. A week and a half ago, some local -- the (potential ?) local independent candidates who'd been denied a place on the ballot in the local elections, barricaded themselves in City -- Lermontov (ph) City Hall and declared a hunger strike. And the police were called and refused to storm the building, and then the SWAT team, the OMON (ph), was called and refused to storm the building.
SESTANOVICH: Drew, I'm a little more skeptical than Masha that Putin is going to give an order to use force because I think this is something that the regime fears as the ultimate discrediting moment, where precisely because soldiers and police may not obey and because they fear the popular reaction, they don't want to go there.
I think, for a lot of people, the day in which there are, you know, innocent protester -- innocent people -- protesters shot in downtown Moscow is the day that all hell breaks loose, that the regime collapses, that people defect en masse and call for a new order.
I think that's a -- that's a fear that Putin has. Putin is not a soldier, and he's not a policeman. He's a KGB guy, and the KGB tries to manage situations a little bit differently. I would say he probably looks back on the past couple of months and thinks, you know, I've come out of this better than a lot of people thought. Looked pretty terrible -- (chuckles) -- first week of December.
SESTANOVICH: But he's managed to stir up his base. He is probably going to have a, you know, messy-looking victory on Sunday with whatever the margin -- some amount of padding and falsification that will give people something to complain about. But, all in all, he may well feel pretty confident about his ability to ride this out now, more confident than a couple months ago.
GUFF: Is what we're seeing a -- almost a natural progression for a system that doesn't have deeply rooted democratic institutions? In other words, this is the only somewhat crude language of the relationship between the government and its people. Is that what we're seeing? Is this a natural evolution?
GESSEN: Is the protest movement a natural evolution or is the whole situation -- (inaudible)?
GUFF: In Western democracies, people can vote freely in a local election, state election, regional elections, federal elections, and that cycle can turn very quickly. Here, we don't have that, and we don't have the institutions backing and traditions backing that. So is what's happening --
SESTANOVICH: We've had big protest movements, and European societies are full of, you know, the history of progress towards democratization coming about through urban violence, intense confrontation between the authorities and the crowds. So that's not so unusual.
It's unusual in Europe now because most -- almost all the other countries of the Soviet Communist system have made the transition more peacefully and successfully and without this kind of new line of division being drawn that makes people feel that you -- you know, something outside of elections is necessary in order to move the country forward.
GUFF: So one more question before we turn to members for their questions. Masha, Alessandra Stanley wrote a very interesting piece on Russian -- on the state of Russian television recently for The New York Times. And she talked about a show on state television on NTV. And the topic was "Putin or not Putin?" And the interviewer himself was somewhat giddy about the fact that six months ago, it -- that just -- that topic could just not have been discussed. And even Boris Nemtsov has been in the NTV studios, and he was in wonder that he hadn't been there for five years; now he could go in.
What's changed? What's changed in a bigger sense?
GESSEN: What's changed is that the balance of fear and money and personal connections that hold up this system -- that balance has shifted. Nobody quite knows what the right amount of fear is anymore. So -- and you can -- you can really see that on television. Somebody goes out on a limb, shoots a great report on the protest movement. Everybody watches it, is amazed. Two weeks later, the whole team gets fired. But then somebody else does the same thing and they don't get fired. And there's no consistent editorial policy on Russian television, any of it -- you know, all of -- all of it being controlled by the state. There's no -- there's no apparent consistent editorial policy. What's striking about it is its incredibly inconsistency, and I think that really spells trouble for the regime.
SESTANOVICH: If I could just add one sentence, I think that Masha's exactly right, but it -- that's only part of the kind of deeper crisis of the elite. The elite is shot through with unhappiness with Putin and with Putinism. And you don't have to -- you don't have to go very far to encounter people who are thinking about different kinds of opposition, who are unhappy with the status quo and ready to do something about it. All the action is not in the streets. It is throughout the elite that has benefited from Putinism but just don't any longer see that this is a guy who can lead the country forward.
GUFF: OK. Great.
So on that note, we will -- in true council fashion, we will end on time at 2:30. We've got approximately 30 minutes for questions from members.
QUESTIONER: Thank you for a very interesting -- oh, Kati Marton. Thank you for a very interesting conversation. Could you two address Putin and Moscow's foreign policy? Which seems to plunge us back into the Cold War -- their willingness to exercise a veto at the U.N., their willingness to basically encourage Assad to do a Chechnya in Syria. What does this mean going forward? What does it mean for our foreign policy?
SESTANOVICH: Well, what Russian officials say is, oh, look, this is just the campaign season; we have a lot of silliness like this in all countries, and don't pay too much attention to it. There's surely something to that.
On the other hand, we have -- we've experienced Putin's kind of anti-American rhetoric before. It does seem to be something he keeps coming back to and to feel.
On the question of Syria, there is -- there are all kinds of commercial explanations for why he has taken such a tough line. But I think the one that he feels is, it is not right for the world to be run in such a way that a bunch of governments can tell some country whether or not they can put down demonstrations and put down opposition. He resists that idea and doesn't want to subscribe to it. And he's found with the Chinese one of his few allies on that issue.
GUFF: And Steve, can you also address what you think the state of the reset will be after the elections?
SESTANOVICH: Well, again, the foreign ministry line -- maybe more hopeful than completely realistic -- is, after the elections, we'll just -- we'll try to put things back together again. They probably underestimate a little bit of the damage that's been done by the drawing of lines on issues like Syria in particular. When you've got the secretary of state calling Russian actions "despicable," you've gone pretty far down the road toward saying we just see the world differently.
My guess is Putin wants to patch things up in some -- in some way. Every new Russian president -- new Russian or Soviet leader of the past 25 years has begun by wanting to have a good relationship with the United States. And I think you could -- you could make the case for why Putin does. He may, for domestic reasons, think that a tougher line is -- needs to be continued longer.
GUFF: Good. Yes.
QUESTIONER: Thanks. Ted Schell. Do you think -- how do you think Putin views his legacy? Or does his -- does he think in terms of what his legacy will be? And if so, how do you think that will shape the next six years? How does he want to be remembered?
GESSEN: I don't think he plans to have a legacy. I think he actually plans to run Russia forever. (Laughter.)
QUESTIONER: (Off mic.)
GESSEN: Well, actually, no. I mean, one of the distinguishing characteristics of this man and of his government is this incredibly short horizon that they have. I mean, they really do not plan past tomorrow. And his -- he has made that very clear in his actions. And I'm perfectly serious: I don't think he plans to have a legacy.
SESTANOVICH: Does he tell himself that -- whether it's forever or as long as I can get up in the morning -- that he is the author of the stability without which Russia cannot exist? I think he probably does have a narrative for himself that is not quite as -- that is not purely, I want to be president so that I can continue to amass a great fortune and have people -- now every Western journalist seems to have this story of somebody putting on a sport coat, Is there no one -- for him as he enters the restaurant. Is there no one that's ever seen a Western leader get helped on with a sport coat?
MR. : (Inaudible) -- off the sport coat.
MR. : He likes -- he likes the -- he likes the perks, but I think he's got a grander sense of himself that he is the indispensable guy.
GESSEN: Sure. No, that's true.
QUESTIONER: Ralph Buultjens, New York University. The impression one gets from your comments is that this is a situation waiting to explode, that Putin is on the brink, doesn't quite know which way to go. But is it not possible that Putin has some real strength among the Russian people and that there are a lot of support for Putin's policies and that it's not really as bad as you make it sound? Could you assess Putin's strength, actual strength?
MR. : Do you want to --
SESTANOVICH: Well, I -- when I said that the silent majority, when I gave that -- gave his strategy that Nixonian name, I meant to suggest that he does have some support. And in fact, a lot of people who are unhappy with Putin now give him a lot of credit. There is -- some of the opposition is just people who hated him from the very beginning. But a lot of them have thought he contributed something real to the country, that stabilization after the '90s, but he just -- he's a spent force, can no longer contribute anything and, in fact, is holding the country back.
And you could say that there is this -- and I don't want to give it a number -- the swing factor in Russian politics and in the Russian electorate and Russian opinion is among those people who used to be supporters and who have a certain appreciation of what he's done but have just figured this has played out.
You see that in the growth of disapproval of Putin, which -- people who say they've had no -- they don't have confidence in Putin was at only 8 percent in 2008. This is one of these questionable polls, but this organization tells an interesting story. That group, people who don't have confidence in Putin, has tripled in that period. It's gone to 24 percent. That's a significant minority that makes it difficult for -- if mobilized, will make it difficult for Putin to run the country as he has.
GESSEN: I would add -- I agree with everything that Steve just said. I would also add that a lot of the support that Putin does have is based on fear, just like everything else. And fear is something that has been an integral part of his platform the entire time that he has led the country. The message is basically, if not Putin, then everything will fall apart. That is also an unpredictable factor. I mean, fear just has a way of evaporating at some point.
QUESTIONER: (Off mic.)
GESSEN: I'm sorry?
QUESTIONER: Or increasing.
GESSEN: Or increasing. Right.
QUESTIONER: Hi. I'm Carroll Bogert from Human Rights Watch. In Putin's last presidential campaign essay that he published on Monday in Moskovskie Novosti, he uses what I think is a new term, which is "illegal soft power." And it seems to be a kind of ominous term referring to Western support, for example, for NGOs inside Russia. There are two schools of thought that I've heard about what Putin will do about civil society post-election. One is that he will recognize this protest movement and see that he must accommodate in some ways a new Russia in order to govern successfully, and the other is that the gloves will come off and he will crush everyone.
What do you think, Masha? is Russian civil society crushable? There's been a huge growth in nongovernmental organizations inside Russia in the Medvedev years. Can it be crushed?
GESSEN: Well, it always depends on the amount of force that he's willing to use. I have to say I certainly don't believe in the Putin-recognizes-civil-society scenario. There was an indication back in December that there was the idea of playing out -- again, playing the Medvedev part and the Putin part, where Medvedev would sort of coddle civil society and play to that audience, and Putin would continue to play to his audience. That scenario seems to have been given up with the appearance of Moluzin (ph) as the -- sort of the main puppet master in the Kremlin.
But obviously, organizations -- it's possible to shut down organizations. It's possible to intimidate a lot of people into doing less. I don't think at this point that the protest movement can be crushed by anything but brute force.
SESTANOVICH: Masha has said something important in another conversation about what Putin's strategy has been so far, and it's neither of the ones that you mentioned, Carroll, and that is imitation. There is a -- there has been a tremendous mobilization of civil society in opposition to Putinism. Putin is in the process of generating his reaction formation to that, the rival groups, and I think that has considerable potential to produce confrontation, to actually divide the society in a, you know, way that risks violence.
The most obvious example of this has been this dispute about where the rallies could be held on Sunday -- on Monday, with Navalny saying, we're going to Lubyanka Square, where the other guys have been given the permit. Well, you know, there you see the competing civil societies (ready to fight ?) with each other.
GESSEN: Oh, I saw those competing civil societies first-hand. It wasn't just Navalny saying, we're going where the other guys were given a permit. Basically, the two groups -- well, actually, the protesters showed up to file their application for a permit the night before, because if our application is not filed by 8:00 in the morning the day that they begin accepting applications, at 8:01 there will be a different application in there.
So there's a group of people who showed up the night before to spend the night at the -- in the mayor's office, and then a group of Nashis showed up and started shoving people away from the door, and there was -- there was an actual brawl. Several people had to have medical care. I mean, yeah, it's that sort of thing. And then eventually the Nashi got in -- got in a little bit before 8:00 and got their permit before the anti-Putin protest movement representatives were even allowed to enter the building.
SESTANOVICH: That kind of confrontation and violence gives Putin an opportunity to say he's restoring stability, imposing peace, bringing the country back from the precipice.
GUFF: There's been a lot of talk about Russian NGOs. Could you just, Steve, say a few words about what's been written in the Russian press about instituting more Russian NGOs?
SESTANOVICH: You mean, about delegitimizing foreign ones? Or are you --
GUFF: No, no --
GUFF: -- actually as a sort of counterpart or -- instituting NGOs -- Russian-based NGOs a la Western NGOs, in other words, the -- you know, the purely domestic version of NGOs to perform (civil ?) functions that government cannot perform itself.
SESTANOVICH: Yeah, then -- that's a -- that's the sort of the depoliticized version of civil society --
SESTANOVICH: -- that Putin completely approves of, you know, where you're finding organic solutions to society's ills. But this is a different kind of civil society that Putin is -- seems to be generating, this -- the rival street movements, and that's more dangerous.
QUESTIONER: Esther Dyson. I'm -- it's completely unpredictable what's going to happen in the next couple of years. What I'm curious about is whether you think it's more predictable what will be the case after 20 years. In other words, Putin, the NGOs, the fake NGOs -- how much do they really matter in the sweep of the actual Russian people, demographics? Is the Russian Party still going to be a part of Russia? Just speculate a little farther out. And you may think that I'm wrong, that it matters terribly what happens with Putin in the next year, but maybe it doesn't.
GESSEN: I haven't even thought that far.
You know, we don't have a habit of thinking that far ahead in Russia. I do, actually, think it's terribly important what happens, not just in the next couple of years, but in the next couple of months. And I think the trajectory of the country's development will, in many ways, be determined in the next couple of months. So it all depends on what happens in the couple of months. (Chuckles.)
SESTANOVICH: Well, I would -- I agree that how this confrontation between Putinism and the people or the popular -- the protesters that are mobilized is important. I'm not sure it's just in the next couple of months that the -- that the decisive moments will occur. But I do think that crises do then shape what comes afterwards because people are reacting against what they've seen. The whole course of Putinism was really a reaction to the '90s. And so what we have over the next couple of years is going to produce some kind of reaction to that.
And -- or -- that is if it doesn't open up new possibilities for, you know, a different kind of more participatory, pluralist, rule-of-law system, if it doesn't succeed. And I -- so I think that how the two sides handle this will create -- will determine the crisis that people look back on in the way that they look back on the '90s.
GUFF: I will add some of those big arc-of-history questions that we will see or are likely to see, given how slow growth is in Europe and the U.S.: The new prediction is that by 2018 Russia becomes a larger economy than Germany, and the Internet market is already bigger in Russia than it is in any European country.
So, you know, the two largest tech Internet companies are Russian today. So -- and you know one of them very well, sitting on the board. So these -- these are some of the facts that may sweep aside some of the smaller skirmishes going on on a political level if Russia keeps its economic, you know, wheels on the wagon.
QUESTIONER: Tim Frye. Steve, I think you're exactly right that one of the stories that's been under-reported is the extent to which, among the elite groups, there's also a lot of dissatisfaction with Putin. And we've seen Kudrin come out from under his previous position. Do you think there will be others to follow his example? And in the future going forward, what would it take to see some shift among the elites that would cause a real change in Putin's strategy?
SESTANOVICH: Well, I think you can imagine defections from the elite taking place both in response to liberalization and to repression -- liberalization because there are going to be more opportunities for party formation, I would predict. I think this law will go forward. It will be easier to form parties. It will be easier to form blocs of parties in elections.
And I think it's going to be harder for Putin precisely because of the reason Masha mentions, lack of fear, to keep people from supporting those parties. You've got a pent-up demand within the elite for vehicles to express their political interests. And I think Putin is going to find it difficult to resist that. Repression will produce the same result, though. I think you will find an accelerated -- accelerated defection from the elite if there is repression. It will really crack up in a visible way, so that it won't be under-reported any longer.
QUESTIONER: Thank you. I'm Padma Desai, Harriman professor at Columbia. I want to bring in some -- your judgment on economic issues, if I may. Despite the protests in Moscow and despite Syria and despite the anti-American electioneering, the rhetoric, as the newly elected President Putin settles down is it possible that economic cooperation between us and them may (come ?) more, in the sense that we need to export to Russia? Our economic growth is very weak and fragile. Our exports to Russia in 2011 were $8 billion, in comparison to our exports to China of $100 billion.
GUFF (?): Just ahead of the Dominican Republic -- (inaudible).
SESTANOVICH (?): (Inaudible) -- Peru.
QUESTIONER: That's one number. And they need our investment and our investors to beef up their infrastructure and all that. I mean, how important are -- I mean, can't we just put behind all this talk about the protests and everything and talk about economic collaboration and the prospects for that under Vladimir Putin once more?
SESTANOVICH (?): I try never to have an opinion about Russian economics without first checking with Padma Desai, so I hesitate to answer a question that I figure must have a trick in it. (Laughter.) But Padma, what I would say is the obstacle to -- the reason I kind of challenge the premise of your question is I don't think the obstacles to the kind of increased economic interaction that you describe are the ones you describe.
It's not protests in the streets. It's not Syria. It's not -- it's not anything other than the sheer difficulty of doing business in Russia. If you had to pick one big, big, obstacle, and if you ask American businessmen what that obstacle is, it's -- you know, this is a system that is deeply, deeply corrupt, hard to do business in.
And so the area where you need to see progress -- and this is what a lot of Putin's critics have said -- is in corruption, rule of law, you know, the traditional agenda of modernizers. They are talking about measures that will actually do exactly what you said.
Without that, I kind of wonder whether you'll actually be able to benefit both sides in the way you're talking about.
QUESTIONER: (Inaudible) -- and everything is worse than in China, India, elsewhere? (Laughter.)
SESTANOVICH: You know, I can tell you that around the U.S.-Russia Business Council round table, CEOs are asked how they're doing. And most around the table will tell you that their profits and profit margins in Russia are better than they are in most other emerging markets, certainly better than in China. And with Russia's entry into the WTO, Russia is not a great economic competitor of the U.S.; It's a natural trading partner.
So products and services that Russia exports -- very different than what they will import from Microsoft and Cisco and Intel, et cetera. I mean, there probably won't be a Russian Intel or a Russian Cisco. There are Chinese -- you know, Huawei is a great competitor and finding a hard time getting into the U.S. as a -- as a -- as a direct competitor to a U.S. flagship technology company.
So I think that natural relationship, given the WTO entrance, is probably only going to increase most Silicon Valley and big tech companies. They've already formed big groups to come over, organized -- U.S. trade rep's office is putting more people in Moscow. Chamber of Commerce is putting three more people in Moscow specifically to address it.
So I think the WTO entry is going to change a lot. And again, I think those wheels turn almost independent of what's going on politically. And the bigger the relationship gets and the bigger the economy gets, the easier it is for some of these criticisms to get brushed aside.
QUESTIONER: Byron Wien, Blackstone. Just building on this economic issue, you know, people refer to the emerging markets as the BRICs -- Brazil, Russia, India and China. But in terms of valuation, considering the economic strength and growth of Russia, the valuations are low, and they're low because of the rule-of-law issue and the -- and they're low because of the political risk. Does Putin care about that? Does he really want Russia to be a more formidable force among the BRICS?
GUFF: I'll just -- before you start --
SESTANOVICH (?): Yeah, go.
GUFF: -- point out on the issue of valuations, the market is -- has low valuations compared to the rest also because the big-cap companies are extractive industry companies, and they trade at much lower P/E multiples and EBITDA multiples than a Procter & Gamble does in higher value-added consumer products. So it's a -- it's a big anchor on the -- on the P/E of the market, in addition to those issues.
SESTANOVICH: I guess the only thing I'd add to that -- the other person I try not to have an opinion about the Russian economy without consulting is Drew Guff, so you know, we're well-served here.
Putin may figure that, you know, valuation is something that might be important if I'm going to be trading now, but I'm going to be holding -- (chuckles) -- these assets for 20 to 40 years, the valuation problem will correct itself as long as I hold onto it.
And that's sort of -- that has been a kind of underlying theme of the resurgence of state capitalism there is these are undervalued assets that foreigners have been able to get, and we don't want that. We want to restore control and -- so that, you know, 20, 40 years down the road, these will be an addition to Russian wealth -- to Russians' wealth.
GUFF: And those consumer product companies that are listed on the market trade at -- Esther (sp), what's Yandex's P/E? It's unapproachable; it's a 50 P/E. So when you do have those rare companies that do make it to a kind of global status in consumer products, given that supply demand, they're often more expensive than their Western counterpart.
QUESTIONER: And in more transparent sectors of the economy.
GUFF: Run by younger entrepreneurs and younger managers who are out on the streets, generally demonstrating after they have coffee at Jean-Jacques. (Laughter.)
We have time for one more question before we -- before we wrap up.
QUESTIONER: Steve Hellman (sp). A quick electoral -- back to the electoral politics, the discussion has a bit of a sour-grapes tone to it, some measure. Is there a politician -- is there any name that you can think of that would beat Vladimir Putin in an open election? And the other side of that question would be under the circumstances, if you were sitting where he's sitting, would you just let the election play itself out, have it be completely fair and square, maybe even lose on the first ballot and go ahead and win in triumph and put the whole thing behind you?
GUFF: Do you want to --
GUFF: Go ahead. (Laughter.)
GESSEN: We've had 12 years of the systematic destruction of democratic institutions, the independent media, the judiciary and public space in general. In those circumstances, you can't have politicians. You can't have politicians in the absence of politics.
So it's no surprise that you can't point to a single figure and say, this person could beat Putin. Nobody has the resources, including the name recognition that's needed to beat Putin, because Putin has created the system that way, right, which is why the protest movement is not a political movement; it's a movement for political institutions. It's a movement for fair elections, for the institutions that could bring us fair elections, but not for any particular politician because we don't actually have the politicians yet.
Now, if I were Putin, would I let the election play out? Sure, if I were Putin, I -- but I wouldn't be Putin, right? (Laughter.) And then the thing about Putin's decisions on how to conduct this election is how it relates to what happened December 4th and in the aftermath of December 4th, right? There is a very strong sense in Putin's circle that they has -- they had mismanaged the democracy, right? They had a managed democracy, and they had mismanaged it. They had allowed too much unrest, too much protest, and look what it turned into. And -- which is why Sidikov (ph) was fired and (Voloshin ?) was brought in to manage the democracy better, give less freedom, you know, not play those silly games with second rounds of the election and that sort of thing, just in a safer way so that the democracy is properly managed.
SESTANOVICH: I agree with that, but I think you can also imagine this election having turned out somewhat differently, with the players who were able to pursue a strategy that says, look, you don't like any one of us necessarily better than Putin, but we're offering you a government of national unity, and do you like that better? Putin did not have to worry about that, having chosen his opponents, essentially. He knew that none of those people were able to pursue that strategy or present themselves to the people in those terms.
But there are new leaders in the Communist Party, in the Just Russia Party, even among nationalists, who do have the potential to step forward, and they are actually -- were kept out of -- kept out of this race. If you'd had an opportunity for lots of people to get in and not -- and no interference by the Kremlin in the way the candidates were chosen, you could have ended up with an unpredictable situation in which the choice that people made was not Putin.
Putin doesn't like circumstances like that. (Chuckles.) He doesn't take a lot of chances. He wants to -- I don't know how he envisions things going forward six, 12 years, but for now he's kind of stuck with what he's got. He thinks he can surely win a majority. He doesn't want it to be too narrow a majority because he knows people are going to say, well, it was falsified. So he's got to have it -- it's got to run up a bit. He's got to run up the score, but he can't look as though it's hopelessly falsified. He is facing a day-after prospect that is partly the result of what he's done, in which he's -- it's going to be hard for him to make this victory look good, maybe even harder than it has to be given that -- the core support that he has among significant sectors of the -- of the Russian population.
It's a -- we're looking at a prospect, I think, of political turbulence and of delegitimized government increasing over the next couple of years.
Well, we did our hard stop. I want to thank -- if we could show our panelists -- (applause).
SESTANOVICH: Drew, can I say one thing, in case you forget?
SESTANOVICH: There are books for sale outside. (Laughter.)
GUFF: That's right.
GESSEN: Thank you.
SESTANOVICH: Masha, good luck with -- good luck with your book.
GESSEN: Thank you.
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