The Fall of Dmitry Medvedev

by Gordon M. Hahn

Opposition leader Alexei Navalnyi’s recent corruption allegations against Russian Prime Minister and former Russian President Dmitry Medvedev poses a grave threat to Medvedev’s political survival in that position. The timing of the allegations is crucial, coming as the presidential campaign approaches as does Putin’s impending decision whether or not to retain Medvedev in the PM’s post. Putin is not left undamaged with considerable potential political consequences. However, the decline in Medvedev’s political career began long before the recent corruption allegations.

Failure to challenge Putin

One Russian analyst recently noted: “Medvedev, we discover, is not an influential liberal politician” (http://carnegie.ru/commentary/?fa=68683). Although an overstatement, what is true is that Medvedev’s decline has been several years in the making. As soon as he decided not make an independent run for the presidency in 2012 and then observed in complete silence Putin’s rollback of many of his liberalization policies, he became the object of bitter disappointment among young liberal elites and even some in the societal opposition, who saw in his political reforms and thaw the hope for a new perestroika. A perestroika 2.0 might bring real regime transformation and democratization without the revolutionary upheaval of the 1990s, many hoped.

His failure to transform or break with his patron, Putin, and to insist on running for a second term was the beginning of Medvedev’s end. During his presidency Medvedev showed some signs of being able to chart an independent course, instituting several liberalization policies: conducting a very liberal line on issues such as free speech and media, attempting police, prison, and judicial reform; and separating himself from Putin and siding with the West on the Libyan issue by having Russia abstain from vetoing a key UN resolution allowing Western powers to protect opposition and civilian elements. Medvedev’s failure to stay in power and continue his reforms was deep disappointment for young and young-to-middle-aged Russians in the middle and creative classes and the elite with whom I spoke in past years.

The West’s violation of the Libya resolution by its direct interference on the rebels’ side in the civil war settled the issue in Putin’s mind whether to run for the presidency in Medvedev’s place while undermining confidence in Medvedev’s ability to lead on the part of not just Putin, but middle- and older-aged among the elite and even many in society who were long exasperated by Western interventionism usually undertaken at Russia’s expense.

Equally important, however, was Medvedev’s failure to build himself an independent power base by establishing a network of patron-client relations inside the state apparatus, placing some key sate structures under his control, and developing ties to opposition elements. To be sure, Putin’s ties to the intelligence and security services would have made doing this without raising suspicions very difficult. But achieving some independence from Putin’s networks was possible. If accomplished by the time the December 2012 protest demonstrations occurred, Medvedev would have had a chance to partner with pro-democracy elements in society and state and force Putin just to accede to reforms temporarily as occurred in the winter-spring 2011-2012, but as part of the presidential race’s political battle. Russian opinion polls show strong support for free and fair elections, and Medvedev would have made and then seized a key issue in the race. Even his defeat at the polls would not have meant the end but rather perhaps the beginning of his rise to power, if he chose to defect from the regime and lead the opposition al a Boris Yeltsin. Unfortunately, Medvedev proved too weak and/or loyal to Putin to take this leap.

Medvedev’s Mediocre Government and Navalnyi’s Expose’ 

Medvedev’s premiership during Putin’s third presidential term has had few successes. The most important is a very much improved environment for business activity in terms of reduced state interference, regulation and red tape. Otherwise, the fall in oil prices and then the West’s pro-Ukraine sanctions have crippled economic growth and although Medvedev’s government has shown apparent competence in dealing with the economic crisis, the truth is that much of that success is based on former Finance Minister Alexei Kudrin’s management of Russian finances and ‘rainy day’ Reserve and National Welfare funds, the creation of which was Putin’s policy. Growth remains anemic, and Russian opinion polls show that Russians are increasingly impatient about the slow economic modernization and unsatisfactory standard of living, with 51 percent in a recent poll saying they were tired of waiting for such results from Putin (www.rbc.ru/society/24/04/2017/58fddd549a7947a2cf6a4179). Medvedev’s trust rating among Russians has fallen correspondingly, with 78 percent expressing trust in the prime minister in December 2009, 70 percent in May 2011, 61 in October 2012, 55 percent in January 2014, and 61 in August 2015 (www.rbc.ru/politics/26/04/2017/58ff7f609a7947259b93a000).

The above forms the background of the ‘Navalnyi rolik’ revealing Medvedev acquiring significant riches through what appears to be abuse of his official position and suspicious largesse in terms of ‘investments’ from state-allied oligarchs into structures owned or managed by Medvedev’s families and friends (https://dimon.navalny.com/ and http://www.novayagazeta.ru/articles/2017/03/02/71664-priem-protiv-preemnika?utm_source=push). The subsequent March 26 demonstrations protesting corruption (in particular Medvedev’s), included calls for Medvedev’s resignation and worse (www.rbc.ru/society/02/03/2017/58b7f3959a79474158912948). This had to impress upon Putin the potential for growing political discontent with him resulting from the taint of the long-standing ‘tandem.’ Medvedev’s approval rating has taken a considerable hit. A recent Levada Center poll shows a historical low of 42 percent of Russian trusting Medvedev and 18 percent “definitely supporting” his resignation from the premiership, with another 27 percent likely supporting such (www.rbc.ru/politics/26/04/2017/58ff7f609a7947259b93a000). Putin’s spokesman Dmitry Peskov commented on the fall in Medvedev’s rating, attributing it to the government’s difficult task and not to the corruption charges (www.novayagazeta.ru/news/2017/04/26/131079-kreml-poobeschal-proanalizirovat-dannye-o-padenii-reytinga-medvedeva). Coming as the presidential campaign approaches, the Kremlin obviously would like to contain the damage. But the charges cannot have left Putin undamaged and the possible implications are surely not lost on Putin.

Thus, as Putin begins to contemplate whether or not to retain Medvedev as PM during his fourth term, he must weigh the potentially powerful, even pivotal political consequences stemming from the Medvedev corruption scandal. First, a fall in Putin’s popularity and thus authority has occurred. Second, that decline should it persist could require letting local authorities deploy more ‘administrative resources’ and more underhanded methods of securing Putin a first round victory. Third, excessive ‘irregularities’ in the presidential voting process could spark demonstrations just as perceptions of election fraud in the December 2012 Duma elections — plus Putin’s decision three months earlier to run for the presidency in Medvedev’s place — led to mass protest demonstrations. Fourth, demonstrations could conceivably lead to unintended consequences, ranging from revolution from below or above to chaos and civil war to a siloviki-led hardline coup. This is a familiar pattern across the globe, granted one sometimes encouraged by outside democracy-promotion efforts, political interference, and post-takeover endorsement (see Kiev 2014). In short, to shore up his own authority, there are now good reasons across the board to terminate the already tenuous tandem.

Choosing Medvedev’s Successor

Unfortunately, we can never be absolutely confident that Medvedev’s fall was the result of the trend reviewed above or follow through on the alleged agreement between Putin and Medvedev during the August 2011 fishing trip. That supposed deal exchanged Medvedev’s foregoing a second presidential term in favor of Putin’s return to the Kremlin for Putin’s promise to appoint and leave Medvedev as prime minister until the end of Putin’s third presidential term.

In some ways, the decline in Medvedev’s stock now is timely for Putin if its damage can be limited. If he was planning to remove Medvedev, he now has a very good reason to do so; one that allows the resignation to accrue Putin’s benefit, as one who does not tolerate the corruption he has failed to stamp out all around him. Moreover, the impending election allows delaying the premier’s resignation until after the campaign. It allows Putin to remove Medvedev without appearing to bend to pressure; something he prefers not to do. He can remove Medvedev a year from now, using the opportunity that a new term provides in terms of requiring a new start and thus making changes. The same factor allows Putin to remove Medvedev without having to admit a mistake in ‘tandeming’ with and promoting him to Russia’s top office.

Among the possible candidates to succeed Medvedev in the Russian White House include Defense Minister Sergei Shoigu, whose plusses include his broad popularity among Russians, his experience in a high state office dealing with domestic policy, in particular the Emergency Situations Ministry, which deals with the results of natural catastrophes and the like, and his experience in foreign and security policy acquired as Defense Minister. State Duma Chairman and former Presidential Administration Deputy Chief in charge of domestic policy and politics Vyacheslav Volodin is another possible candidate. Although Volodin has deep domestic policy experience, his only serious foreign policy contact has been indirect through his presence in the Presidential Administration and since becoming Duma Chairman as a member of the Security Council. Moscow Mayor Sergei Sobyanin is another potential candidate to replace Medvedev as is Foreign Minister Sergei Lavrov, who is a very accomplished diplomat and foreign policy operative and very much respected by Putin. Sobyanin’s lack of foreign policy experience and Lavrov’s lack of domestic political credentials damage these potential candidacies significantly. Each would need a new appointment into the issue areas where they are lacking in order to be considered front runners.

The problem with the above short list is that it lacks a Petersburger, whom Putin has always relied on in key positions since consolidating power. More importantly, it lacks someone with broad experience in Russia’s economy and finances. Putin increasingly sees the office of prime minister and other executive posts, such as regional governors, as technical administrative positions rather than political ones. Such offices should be occupied by ‘technocrats’ with economic and socioeconomic perspective and administrative experience. In addition, even under Putin the prime minister’s chair and the government’s economic and financial ministries and agencies have typically been held by liberals, always economic liberals, often political liberals: Medvedev, Kudrin, Gref, Artyomov, Nabibullina, etc. Thus, it is likely the government will be headed in Putin’s fourth term by a liberal of either sort. Shoigu is no liberal and an economic novice. Volodin is an economic novice as well and politically he promised liberalization but for the most part tightened the screws for Putin after Medvedev’s liberalization of the election system in 2012 in response to the December 2011 protests. Lavrov has no domestic political record, political or economic.

If Medvedev’s days are numbered, then the top candidates from the liberal perspective are Kudrin, and perhaps Andrei Belousov. Kudrin is Russia’s financial guru, and Putin recognizes that. The Russian economy was able to tread water and is slowly recovering on the back of the reserve funds and general financial strength of the state fostered by Kudrin as Finance Minister. Kudrin’s other advantage over the others is he is a Petersburger, though not a member of the Petersburg siloviki circle or Putin’s Ozero close associates. To the contrary, he is likely seen by these elements to be an opponent, given his liberal political and economic views. Putin clearly has great respect for Kudrin’s policy chops, given his repeated appointment of Kudrin to offices giving him access to Putin, including in 2015 to head the Center Strategic Development (CSD) and the presidential group drafting a 2018 economic strategy for Putin. These votes of presidential trust in Kudrin came despite his semi-defection from the regime in September 2011 after it was announced Putin would be running for the presidency. Kudrin then sought to mediate between the regime and opposition, and made and continues to make calls for free and fair elections, a general political liberalization, and greater rule of law.

Belousov is Putin’s presidential economic assistant and a close associate of the Stolypin Club and of Putin’s business ombudsman, Boris Titov. Belousov and Titov are more economic statists than liberals; something along the lines of the U.S. Democratic Party’s Keynesianism as opposed to Kudrin’s more Republican-style laissez faireism. Belousov is an academic and policy geek, with no political record or even party affiliation, no less any credentials as a political reformer. He worked in several Russian economics-oriented think tanks until 2006 when he began working under Putin and Medvedev in various capacities: the Medvedev government’s Deputy Minister of Economics and Trade, 2006-2008; Director of Economics and Finance Department of Prime Minister Medvedev’s central governmental apparatus, 2008-2012; Medvedev’s Economic Development Minister, May 2012 – June 2013; and assistant to President Putin, June 2013-present.

After Putin asked Kudrin and the CSD to develop an economic development strategy for his expected fourth presidential term, he then asked Belousov to draw up an alternative to the Kudrin plan (www.vedomosti.ru/economics/articles/2016/07/25/650393-alternativu-kontseptsii-kudrina). The resulting Stolypin Club’s ‘Strategy for Growth’ or Belousov-Titov plan proposes creating a breakthrough to 4 percent annual economic growth by stimulating investment by flooding the economy with budget funds and Central Bank emissions along the lines of the Obama administration’s ‘shovel-ready’ projects and QEs   (http://fingazeta.ru/opinions/zachem-stolyipintsev-priglasili-za-kremlevskiy-stol-202295/). Kudrin proposes a gradual approach based on private rather than state investments to stimulate growth. The government’s role should be confined to creating the conditions that will spur private investment: securing macroeconomic stability, keeping inflation low by eschewing currency emissions, lowering budget deficits, and carrying out structural reform.

Medvedev and Kudrin are known not to get along. During the 2006-2102 period Belousov and Kudrin also clashed, since Belousov was working in the Economic Development Ministry, which, though liberal by Russian standards, preferred Keynesian stimulus methods antithetical to Kudrin’s strict monetary and budget policies and attempt to build up Russia’s sovereign and reserve funds.

The recent hiring of liberal statist Sergey Kirienko as Volodin’s replacement in the presidential Administration and Kirienko’s growing role in domestic political management could suggest a drift more in the direction of Kudrin than Belousov. Although Putin’s recent legislation authorizing the distribution of land in the Far East to Russians for free echoes liberal statist Imperial Russian Prime Minister Pyotr Stolypin’s policy of doing the same more universally, it does not signify a reliance on the Stolypin Club. To the contrary, this economic innovation — so uncharacteristic for Putin — reflects the Russian president’s growing awareness and concern that the Russian economy as policy stands now is doomed to stagnate and therefore lag behind the other great powers.

But Kudrin might be reluctant to join a Putin administration that could become increasingly besieged by popular discontent should it fail to address the political and legal reforms Kudrin prefers. It is unlikely that Putin would undertake political liberalization without being nudged or forced, and at present neither do circumstances nudge nor can the opposition force Putin to move in that direction. Putin will demand guarantees that Kudrin will restrict himself to economic policy not just in deed but in his words. Otherwise, there is no reason for him not to select Belousov or someone of his ilk but with liberal credentials, such as Titov or even Kirienko, to replace Medvedev in May 2018. An artificially technocratic Kudrin could become the stealth leader of any counter-elite forming in Moscow and the regions (http://carnegie.ru/commentary/?fa=66248). Putin cannot risk the formation of a pro-democracy counter-elite within the state apparatus, something that could lead to a regime split and revolution from above or some other mode of regime transformation that excludes him.

On the other hand, like Belousov, Titov and Kirienko, Kudrin seems to lack the charisma necessary to be able to lead a political challenge to Putin. He also proved able to refrain from all politics during his more than 11-year tenure as Putin’s Finance Minister. His experience, Putin’s trust in him, and his status as the alternative to the increasingly discredited Medvedev, all make Kudrin the frontrunner. Powerful hardline forces are gathering to forestall such a possibility, but Putin’s practice has been to balance countering philosophies and clans. So if Putin decides to terminate the tandem in the next year, he may very well opt for the liberal Kudrin, as he did in 2007 when he looked past the conservative Sergei Ivanov and tapped the liberal Medvedev as his temporary successor in the Kremlin.

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About the Author – Gordon M. Hahn, Ph.D., is an analyst and at the Geostrategic Forecasting Corporation (Chicago, Ill.), http://www.geostrategicforecasting.com; member of the Executive Advisory Board at the American Institute of Geostrategy (AIGEO) (Los Angeles, Calif.), http://www.aigeo.org; and a senior researcher at the Center for Terrorism and Intelligence Studies (CETIS), Akribis Group (San Jose, Calif.).

Dr. Hahn is the author of the forthcoming book from McFarland Publishers Ukraine Over the Edge: Russia, the West, and the “New Cold War”. Previously, he has authored three well-received books: The Caucasus Emirate Mujahedin: Global Jihadism in Russia’s North Caucasus and Beyond (McFarland Publishers, 2014), Russia’s Islamic Threat (Yale University Press, 2007), and Russia’s Revolution From Above: Reform, Transition and Revolution in the Fall of the Soviet Communist Regime, 1985-2000 (Transaction Publishers, 2002). He also has published numerous think tank reports, academic articles, analyses, and commentaries in both English and Russian language media.

Dr. Hahn also has taught at Boston, American, Stanford, San Jose State, and San Francisco State Universities and as a Fulbright Scholar at Saint Petersburg State University, Russia and has been a senior associate and visiting fellow at the Center for Strategic and International Studies, the Kennan Institute in Washington DC, and the Hoover Institution.

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About Gordon M. Hahn