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Sestanovich: Key Question in Russia Is Who Will Succeed Putin in 2008?

Interviewee: Stephen Sestanovich, George F. Kennan Senior Fellow for Russian and Eurasian Studies
Interviewer: Bernard Gwertzman, Consulting Editor
September 30, 2005

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Stephen R. Sestanovich, the Council’s top Russia expert, says he found on a recent trip to Russia that the overriding question is who will succeed Vladimir Putin as president when his constitutional term comes to an end in 2008.

“Putin has had a breather from last year’s disasters,” says Sestanovich, the Council’s George F. Kennan senior fellow for Russian and Eurasian studies. “But the big question that he and his colleagues have had to address is, What kind of political transition will there be in 2008? Will it be something obviously rigged—whether requiring a change in the constitution or something like the illegitimate process that was occurring in Ukraine last fall? Or will it be something that passes muster both internally and internationally? Nobody knows what he and his associates have in mind. The common term for this that you hear in Moscow is ‘Operation Successor.’ And so far, Operation Successor is a secret.”

Sestanovich, a Clinton administration ambassador-at-large and special adviser to the secretary of state on the newly independent states of the former Soviet Union, was interviewed by Bernard Gwertzman, consulting editor for cfr.org, on September 30, 2005.

In the past year, we’ve read a lot about the serious problems in Russia, from criticism of the way the Beslan hostage situation was handled last September to the arrest of Russian oil tycoon Mikhail Khodorkovsky, from political corruption to cutting off retiree benefits that led to demonstrations in the street. You’ve just come back from a trip to Russia. What is your impression? Are things as bad as they seem?

I think you need to step back from this to see that there’s a kind of underlying disagreement that you hear—whether the Russian government is more retrograde than the people, or the other way around. You hear a lot of people saying, “This is the best Russian government that you can expect because the Russian people aren’t ready for democracy.” And you hear others say, “Russian society is more pluralist and progressive and ready for self government and it’s this brittle, authoritarian regime that’s holding them back.”

What’s your feeling?

Last year with everything that [President Vladimir] Putin and his pals did wrong—one policy failure after another—there was a loss of confidence that this was in fact a government that could help modernize Russia. But in the past several months, there have been no new calamities and the result has been what amounts to good news for Putin, a little bit of restabilization, a sense that Putin’s back in the driver’s seat, back on his feet, and in a stronger position to reshape Russian politics over the next several years.

The next several years will lead up to another election for the presidency in 2008. What will happen?

There are parliamentary elections at the end of 2007 and a presidential election in the spring of 2008. This is the only issue of Russian politics that people talk much about. Putin had a call-in show this week in which he answered questions for several hours from around the country. There were apparently hundreds of thousands of callers and he was asked a question about whether he would seek a third term; that would require a change in the constitution, of course. [The constitution limits presidents to two terms.] He said he was against it, that he thought stability and legality and continuity were important and that meant constitutional continuity. So he said he’s not looking to stay on forever, but he added—in a phrase that tantalized everyone—he expected to find his place “in the ranks.” What kind of role he has in mind for himself, if he intends to stick to this position, is a little unclear. Some people say it’s the “Lee Kuan Yew formula” [Lee, a dominant figure in Asian politics, was prime minister of Singapore 1959-90 and then a senior minister]—a senior minister who kind of sits in the next room and tells the government what to do. Others say that he wants to be chairman of Gazprom [Russia’s largest natural gas producer] and earn a handsome living because he would control the biggest chair of Russian energy assets and would be able to dictate a lot of policy. Nobody knows. And nobody knows whether he intends to stick with this position in the first place. One hears that his entourage is divided on the question.

Let’s stay on politics just a bit longer. Are there any viable opposition candidates or any opposition parties to his ruling party?

The United Russia Party, which is Putin’s ruling party, is dominant across Russia. But in the past few weeks, there’s been a couple of somewhat interesting developments; it’s hard to assess them right now. The former Prime Minister Mikhail Kasyanov announced a couple of weeks back that he does intend to run for president in 2008. And while he has some negatives in mounting a campaign of that sort, in particular a lack of television access and problems in getting people to contribute to his campaign, he does at a minimum have very high recognition. Also, the two liberal parties that never have been able to unite in the past, the Union of Right Forces, known as SPS from their Russian acronym, and Yabloko, the party of Grigory Yavlinsky, have announced they’re going to be collaborating starting with the Moscow city council elections that are coming up this fall.

That’s interesting that Yabloko can finally get an ally. Maybe they’ll get some votes.

Well, they see Moscow as a center of more modern and progressive opinion and they figure that if there’s any place that they ought to be able to establish a beachhead in national politics, it ought to be in the capital. But they realize that even there it’s hard to do and that they need to work together if they’re going to have any chance of getting a substantial share of the city council seats.

Let’s talk about the economy. Have the pensioners who demonstrated against benefits cuts been pacified? What’s happened on that issue? And is the economy—obviously in some cities like Moscow the economy’s booming—is the wealth being spread around the country?

There’s no doubt that the demonstrations of old people around the country during the winter shook the regime and rattled them. The result has been that Putin has started talking about the need to spend more on the infrastructure of social services, of health care, education, pensions, and so forth. With the government running a surplus that comes to 7 percent of GDP [gross domestic product], there’s plenty of money to go around, although Putin’s economic advisers keep telling him, “We do have an inflation problem and you’ve got to be careful here.”

It’s interesting that when he was in Washington at his press conference with President Bush, following up on a comment that Bush made on spending money in the wake of the hurricane disasters, Putin interjected—even though he really hadn’t been asked—“Yes we need to spend money.” Then he volunteered a comment about the need to deal with national social problems. He obviously saw some of the exposure of America’s vulnerabilities as an opening to say that this is how he was going to be handling his own budgetary situations, and of course his own political situation, because it seems that there is real popular discontent out there.

Now about the economy: Growth is a little bit down. Putin’s been aiming to have 7 [percent] plus net growth—it was to double the GDP in a decade. Right now it seems to have slipped below 6 percent, toward five, we don’t know.

This growth is driven by energy right?

A lot of this is energy growth, but some people are saying, “Why with oil at $65 a barrel are we only growing this fast?” And an interesting report was issued this week by the World Economic Forum, which described Russian government institutions and policies as “woefully inadequate” and talked about how Russia was actually lagging behind in terms of developing modern economic and political institutions. The World Economic Forum ranks the Russians—in categories like protection of property rights, judicial independence, and favoritism in decisions of government officials— in each of those the Russians fell out of the top 100 and lost about twenty points in all of those categories. A lot of this was the result of the Yukos affair [Yukos was an independent oil-producing company that was broken by the arrest of its president, Mikhail Khodorovsky], but I think it also reflects a general sense that Russian governmental policy may actually be slowing economic growth rather than speeding it up.

And as to your last question about the trickle-down effect outside of Moscow and St. Petersburg of this petro-wealth: You talk to American businessmen and they will tell you that they see an economic revival in lots of other parts of the country besides Moscow. They’re doing a lot of their business outside of Moscow. A big computer company representative told me that they do 75 percent of their business in the regions. There’s a booming consumer market out there, which other European and American businessmen are trying to get in on.

So the Russians are letting foreign businesses in? Can they do business under their own name or do they have to have a Russian majority?

It varies, but particularly in fields of consumer goods, light manufacturing, and so forth some people have argued the Russians are trying to make it easier for outside firms to start up operations.

What about on foreign affairs—anything to take note of? Relations in the U.S. and Russia seem correct, but not terribly warm, or are they better than that?

Russian officials say they have no major disagreements with the United States and that there’s kind of consensus about the need for a cooperative relationship. The one issue I would flag of particular interest right now is Iran. The Russians have said they are not in agreement with the EU [European Union] and the United States about referring Iran to the UN Security Council, and on the vote in the IAEA [International Atomic Energy Agency], the Russians abstained with the Chinese and others. The Russians say that, right now, this is just a tactical disagreement and that they are completely supportive of the American and European goal to keep Iran from becoming a nuclear power.

A nuclear-weapons power, right? They’re supporting their right to have nuclear peaceful energy because they’re building a reactor in Bushehr, right?

That’s exactly right—that in their view, Iran is currently cooperating with the IAEA. Now that’s not really the American and the European view. The question is this a tactical disagreement that will be resolved, or will the Russians continue to say that we’re on the wrong track in trying to isolate Iran on this issue? I would say right now you’d have to think that it will be hard to overcome this disagreement.

On Chechnya, is that in limbo right now?

There’s been an interesting revolution in the way Russians talk about this issue because, while the level of fighting and violence in Chechnya itself is not at the high level it was in the past, there’s a growing anxiety about spillover. In fact, what most Russians will tell you is that it’s already spilled over and that they face a deep problem throughout the northern Caucasus; which is to say, in a large multi-ethnic region that combines Muslim and Christian populations, where Russians will readily admit that decades of isolation and neglect by the central authorities have meant you’ve got economic backwardness and lack of anything that we would think of sort of modern institutions and ways of doing business. This has created a very fertile ground for armed and radical opposition.

This is in Central Asia?

No, this is in the Northern Caucasus. That’s where Beslan is. Beslan is not in Chechnya. Their anxiety is that they face social problems beyond Chechnya that they don’t know how to cope with.

Name the Northern Caucasus locales.

The Northern Caucasus includes Dagestan, Ingushetia—places that we don’t know well but that are in southern Russia and have been seen by many Russians, until recently, as the stable hinterland next to a violent Chechnya. Now they see it as the unstable hinterland that shows some of the same pathologies that led to violence in Chechnya.

One of the nagging problems is Russia’s relations with Georgia over the region of Abkhaz, which is secessionist. Is that a problem with the United States, too? Is that a serious problem?

This is in the category of what’s begun to be called “the frozen conflict.” To both Abkhaz and South Ossetia [another secessionist area in Georgia], the Russians have offered support to secessionist authorities that managed to establish some kind of de facto independence for themselves for the past fifteen years. The Georgians, with American support, are saying this isn’t an acceptable arrangement and the Russians have got to participate in normalizing the situation, which means reestablishing the integrity of Georgia by pulling back their own military and political support, while still preserving a great deal of autonomy for these two provinces. It’s been hard to make any progress on these two issues. The Abkhaz and the South Ossetians have been pretty determined in preserving their own independence; they don’t want just autonomy. But the Russians have literally done nothing to push them to come to terms with the Georgian government.

I gather you’re saying, over the last few months, things have calmed down in Russia and Putin’s problems are no longer so obvious?

Putin has had a breather from last year’s disasters, but the big question that he and his colleagues have had to address is what kind of political transition will there be in 2008. Will it be something obviously rigged—whether requiring a change in the constitution or something like the illegitimate process that was occurring in Ukraine last fall? Or will it be something that passes muster both internally and internationally? Nobody knows what he and his associates have in mind. The common term for this that you hear in Moscow is “Operation Successor.” And so far, Operation Successor is a secret.

I guess his—what you have called in the past—his cronies, there aren’t too many visible people, they’re mostly behind the scenes? If he were to die tomorrow, who would replace him?

The prime minister would become acting president, then they would really have a problem on his hands because Prime Minister Mikhail Fradkov is virtually invisible—an over-promoted bureaucrat who couldn’t under any circumstances command support as president. There was a time when people said that about Putin himself.

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