Sunday, July 31, 2016

Moscow Running Out of Money, Suggesting Putin Stabilization May be Approaching Its End

Paul Goble
            Staunton, July 31 – Tatyana Nesterenko, Russia’s first deputy finance minister, says that Russia is in the eye of an economic storm and that if there are no reforms in the near term, the country will exhaust its reserve fund by the end of 2017, a development that others like Igor Eidman suggest could point to the end of Vladimir Putin’s vaunted “stabilization.”

            Speaking at the Territory of Meaning conference, the deputy minister said that the Russian economy is now “at the eye of the storm” and that its current stability depends exclusively on reserves which she says will be exhausted by “the end of 2017” (

            “The eye of the storm is when everything quiets down” for a time, leading some to conclude that they are not surrounded by storms into which they will soon be buffeted.  Unless there are serious reforms, Russia will again enter those troubled waters – and it will then find it even more difficult to address the problems given the absence of reserves.

            How is Russia to get out of this? She asked rhetorically. “Will this be something chaotic or will we form a policy that will allow us in a less troubled way to escape from the situation?”  Given that in a matter of months, the government will not be able to pay those who work for it, this is now a critical question.

            That means that the stability on which Vladimir Putin has built his authority is now in doubt, and according to Russian commentator Igor Eidman, “ever more people believe that there is [already] no stability in the country,” even though the country has the kind of wealth that properly exploited should allow for that to continue (

            By 2013, the share of Russians who believed that Russia had achieved stability and that Putin was responsible reached its “historical maximum” of 40 percent, Eidman says.  But with the annexation of Crimea, there was a clear sense of “the beginning of the end of ‘Putin stability,’” he adds.

            The euphoria over that event kept Russians from immediately recognizing that they were going to face sanctions, the growth of military spending, the outflow of capital, the collapse of the ruble, and a general economic crisis. But with time, ever more Russians are recognizing that new reality.

            Today, Russians talk about inflation, unemployment, the loss of hope and the fact that even the government says “’there is no money,’” and according to the latest Public Opinion Foundation survey, now only a quarter of the population believes that the country is in a state of stability (

            “It is interesting,” Eidman says, “that no seeing stability in the country, people have begun ever more often to take note of stagnation” with more than 40 percent describing the situation with that term.  “Many Russians,” he says, “view the current situation as the absence of development with an intensification of general instability.”

            “The overwhelming majority of respondents”  in the new poll, however, when asked to choose between stability and “’radical reforms’” choose stability, although that doesn’t mean that “people are against reforms” if they can see that without them, stagnation and decay will only intensify.

            Desire for revolutionary change, something that no open poll now asks about, Eidman points out, is probably about the same as it was at the end of 2012 when 13 percent of Russians said they felt Russia  needed a revolution (

            But “the loss of the population of a sense of stability is [now] the most serious political problem the Kremlin faces.” It could lead to a loss in support for the ruling party and even for Putin, especially as people become more selective in their evaluations of why the country is in the state it is now in.

            But there is a clear and obvious problem: “stability is impossible without a turning away from the foreign policy adventures and extraordinary military expenditures which are destroying it and from the repressive laws which are splitting society as are falsified elections.” But such a change in overall policy is impossible for the current elite.

            Consequently, Eidman concludes, “reforms for overcoming instability and stagnation could be popular in Russian society,” but they could happen “only after radical political changes” that currently seem less likely to occur. That points to growing economic problems and more instability in the coming months.

North Caucasus isn’t Crimea and Putin’s New Man There Appears Unlikely to Make Things Better, Shevchenko Says

Paul Goble

            Staunton, July 31 – Vladimir Putin’s appointment of an admiral in place of a general as his plenipotentiary representative in the North Caucasus may make things in that region still worse but reflects Moscow’s concerns less about the situation there than the one in the three countries to the South,  according to Maksim Shevchenko.

            Shevchenko, an expert on the Caucasus who is a member of the Presidential Commission on Human Rights, says that what the Kremlin has done reflects its awareness that the situation in the southern Caucasus is deteriorating and that Moscow must strength “the immediate rear of the army” (

            Putin’s decision to install Vice Admiral Oleg Belaventsev in place of MVD Lt. Gen. Sergey Melikov as his man in the North Caucasus is “symbolic” of Putin’s latest cadre decisions, which reflect that it is traditionally easier for the Kremlin to establish relations with military personnel rather than non-military officials, including those of the police.

            Given Belaventsev’s success in organizing the seizure of Ukraine’s Crimea, Shevchenko continues, it is clear that he will be able to strengthen command and control in Russian forces in the North Caucasus to deal with any challenges in the south.  What is less clear from his past career is whether he can make a positive difference in the North Caucasus itself.

            In Crimea, he has shown himself “unable to deal with local elites” or manage to jointly rule the peninsula with the civilian authorities. Instead, his conflicts with them over the treatment of the Crimean Tatars have become legendary as a mark of Moscow’s failure to integrate the population there.

            Of course, it is true, Shevchenko says, that “the positions of presidential plenipotentiaries are quite weak.” They do not have any real power, “not in terms of force structures, finances or cadres. Instead, they are PR managers who present this or that region to the rest of the country” as they assume Moscow wants it presented.

            Under Melikhov, the required image was of the North Caucasus as a tourist destination, one that was incompletely achieved by the plenipotentiary and his staff seeking to “block any information they deemed negative about what has really been going on in the Caucasus,” including about ethnic conflicts, human rights violations, attacks on journalists, and so on.

            Journalists and editors were told to write “only about the beauties of nature, the interesting traditions and customs.” That not only obscured what in fact is occurring but ensured that Moscow, by becoming a prisoner of its own propaganda, would not be aware of just how bad things are, Shevchenko continues.

            If this struggle with independent journalists, experts and rights activists continues, he says, the situation will only worsen as the gap between what is true on the ground and what is said in the media and in government reports continues to grow. That is sustainable for only so long.

            Everyone knows how successful “the special operation in the Crimea” was, Shevchenko says, but “here in the North Caucasus are entirely different realities.” Unless the new plenipotentiary is prepared to look them in the face and work with journalists and experts, he will not know what is going on or what to do.

            Worse perhaps, he will not know what to tell Moscow which is now being misled by security people who want more money for counterterrorism, by local oligarchs with their own agendas, and by his own representative who is telling him that everything is wonderful and that tourists should come to the unstable region.

            Shevchenko is a frequent critic of Moscow’s policies in the North Caucasus, but other experts see the situation and the impact of Putin’s latest appointment in almost exactly the same way.  For examples, see  and

Russia and Gagauz Expanding Ties at Chisinau’s Expense

Paul Goble

            Staunton, July 31 – The Kremlin is working hard to expand its leverage against Moldova by expanding its ties with that country’s Gagauz minority, offering the 200,000-strong southern region “the opportunity for integration with the Russian Federation” directly thus “bypassing Chisinau” and further weakening Moldovan statehood.

            That is the judgment of Svetlana Gamova, a “Nezavisimaya gazeta” journalist who specializes on Russia’s relationship with the countries of the former Soviet space, on the basis of her examination of recent developments in Moscow’s ties with Chisinau, on the one hand, and with Komrat, on the other (

            Last week, she reports, there was a two-day meeting in Moscow between Russian and Moldovan officials to discuss the lifting of the Russian blockade on Moldovan agricultural products that has been in place since March 2014 in exchange for Chisinau’s ending its blockade of Russian supplies to the breakaway Transdniestr region.

            But as Gamova points out, there was “a bonus” from these talks in that Irina Vlakh, the recently elected pro-Moscow head of Gagauzia, took part and reached agreement with Moscow on allowing 43 firms from that region to again send their products to Russian markets. No such opening was offered to other Moldovan firms.

            This is a striking development because talks between Moldova and Russia have bogged down over Moscow’s demand that Chisinau denounce part of its association agreement with the European Union, something the Moldovan government does not want to do, preferring instead to develop relations with both Brussels and Moscow.

            Moscow’s use of the agricultural weapon against Chisinau both regarding Moldova as a whole and its special approach to the Gagauz reflects the underlying reality that until 2014, Moldovan farmers sent 93 percent of the apples they produced to Russia and 80 percent of the plums.

            Only by regaining that market, Gamova suggests, can the Moldovan economy hope to survive. But by discriminating in favor of the Gagauz at the expense of Chisinau, the Russian government is simultaneously putting pressure on Moldova to cave and giving Moldova and its supporters in Europe and the West new reason for concern.

            For two decades, the Russian government has sought to use the Gagauz as part of its Transdniestr strategy of weakening Moldova and blocking its moves toward European integration. Last week’s meetings in Moscow strongly suggest that the Kremlin is stepping up this pressure by making ever greater use of Komrat against Chisinau.