Ben Judah - Fragile Empire - How Russia Fell in and Out of Love With Vladimir Putin

These numbers – and certainly far darker ones Surkov had access to – were doubtless running through his mind when he announced at a small political function: ‘The biggest flaw prevailing in the political system is that it rests on the resources of one person, and as a consequence one party.’ He then said: ‘This makes the system unstable.’ 46

At the end of his first presidency Putin could have been forgiven for telling Surkov not to worry. The bureaucrat plucked from obscurity to crisis-manage a crashed Russia had come out on top. Not only had he brought his rivals, the regional barons and the rebel insurgents, to heel but he had also amassed huge political resources in the most valuable of currencies. He now had power, popularity and petro-dollars in abundance. The gamble in arresting Khodorkovsky had paid off. The subsequent homage paid to him by the shaken oligarchs had secured the Putin consensus. Propaganda and paid state wages had built up a Putin majority. His propaganda and policies had made him not just popular, but with consistently over 60 per cent ratings he was one of the most popular leaders in Europe.

Putin’s circumstances were not just favourable for state building. They were more favourable than the conditions in which China’s Deng Xiaoping or Singapore’s Lee Kuan Yew had begun their authoritarian modernizations. Putin had the resources and the ambitions to rebuild the Russian state. Yet a decade later the state would not only remain inefficient, dysfunctional and venal – but was more corrupt than it had been a decade earlier. What went wrong?

Putin was no Lee Kuan Yew. His state-building programme was flawed, knotting the Russian state into a tangle of incompetent and inefficient institutions that bred corruption. Those powers ‘renationalized’ were not being embedded in federal structures but in the opaque circles around Putin and his ‘friends’. The mechanics of power, rather than modernizing, were being turned into a court. The state was turning into a festering swamp of incapacity. This was a system not built with efficiency in mind, but built to be under Putin’s control.

One of the first rules of management is that pouring vast amounts of money and drafting in large amounts of people will not make an organization better at achieving results if its strategy is defunct and those in charge are incompetent or dysfunctional. Throwing money and more people at a problem may actually compound the problem by making an inefficient structure clumsier, with ever more dependents, without getting anywhere near increased efficiency. This is what started to happen to the Russian state.

Putin had made one huge promise when coming to power – ‘democracy,’ he said, ‘is the dictatorship of law.’ This slogan was repeated and repeated. The aim was to end the bureaucratic breakdown of the 1990s. Russian officials were supposed to become less corrupt, administration was supposed to become more successful, the FSB better at tracking down gangsters and the overall state less predatory on ordinary people. The justification for all the extra state capacity was supposed to be increased efficiency.

The Kremlin viewed this as synonymous with recentralization. It was not. ‘Recentralization’ under Putin did not see the strengthening of federal institutions at the expense of regional ones. It has meant the castration of all competing institutions to Putin. One by one, independent power centres that could restrain the executive were neutered. The power of the mass media, parliament, independent governors and meaningful elections to challenge the Kremlin and thus hold it to account for its inefficiencies was eliminated. Yet these institutions exist for a reason – they provide checks and balances not just to limit absolute power, but also to expose incompetence and curb gross inefficiencies.

Power was being personalized, in a defunct framework. Thus, the large amounts of money and cash invested by the Kremlin into building up the institutions that were supposed to make Russia less lawless did not deliver. The primary evidence of state inefficiency in Russia is corruption. The ‘abuse of public office for private gain’ continued to take place on every level of the state.

There is a difference between the kind of corruption that Putin might have wanted in order to increase his power, and the kind of corruption that Putin would not have wanted as it undermines his legitimacy. What he did not want was the continued bad behaviour of the petty bureaucracy, the police and the local security structures. They became increasingly predatory. This did not happen because Putin ‘wanted it’. It happened as an accidental by-product of his flawed agenda.

What it created was the exact opposite of the ‘dictatorship of law’ he had promised. The fatal flaw was as follows. As Putin brought the loyalty of national and regional elites, he expanded the bureaucracy and the ‘siloviks’ as props of the regime. This was both rhetorical – honouring the FSB publicly and repeatedly – and practical as he encouraged all ambitious civil servants to join United Russia. As he relied on them and associated with them, this meant that they should not be challenged, humiliated or aggressively policed.

He did this, however, at the same time as closing down all institutions that could hold them to account. Those inside the petty bureaucracy who could have fought corruption on behalf of Moscow had been neutered. The mass media, elections, local politicians and a national parliament de facto no longer existed as tools to fight abuses.

Putin created a system where he removed everyone capable of fighting corruption in the bureaucracy and made his image reliant on the bureaucracy. This gave officials impunity to behave in a predatory manner. Nor did he set an example. Putin believed that through his control of the national TV media he could hide Kremlin corruption from the public. He more or less did. His huge mistake was in encouraging the bureaucracy to join United Russia. Whilst they behaved in an increasingly predatory way, he began to associate himself in the minds of normal people with the policeman who wanted a bribe or the local official who wanted a cut.

Even United Russia’s parliamentary leaders such as the slippery Vladimir Burmatov are well aware of this. We had a frank conversation over fruit juice in a dim cafe behind the Duma. ‘The main problem in our country is the relationship between people and power. The people don’t have a problem with Putin. They have a problem with the tax inspector, the traffic cop and with the local housing official. They then associate their misdeeds with Putin and United Russia. And this poisons everything.’ Yet they had little to no idea what to do about it. As he left, the deputy threw down the equivalent of $30 to cover a bill worth less than $10. He was making the point that he was too rich to care about change.

Corrupt officials meant that Russian businessmen increasingly built in the ‘rule of 30 per cent’ into their budgets to cover bribes for the necessary officials. The statistics of millions doing so are shocking. Between 2001 and 2005 the think-tank INDEM estimated that the volume of bribes extorted by the authorities had increased nearly ten times to over $316 billion. 47INDEM calculated that the average cost of a bribe had gone up over thirteen times in those years, from $10,000 to $136,000. 48During Putin’s first presidency Russia slid dramatically down the Corruptions Perceptions Index, compiled annually by the NGO Transparency International. In 2001 the country was in 79th place, alongside Pakistan. 49By 2006 it was 121st in the index, with Rwanda. 50This meant it was not getting any easier to run a ‘clean’ business, but harder to avoid living by the ‘rule of 30 per cent’.