This is not an ‘I told you so’ post.
Ok, so maybe it is – a little.
Marketplace, that truly venerable American radio news program, ran with a story today headlined “Troubled times for Russia’s oligarchs“, arguing, in a nutshell, that “Oligarchs were once at risk if they stepped out of line. Now, there’s danger even if they don’t.” While their story is correct in its details, it actually misses the point: Oligarchs who thought they were safe even if they stayed in line were deluding themselves. And thus the idea that Russia has now radically changed is something of an illusion.
Here’s the ‘I told you so’ part. I wrote about this way back in 2013, in various places, but most relevantly when I was putting my book to bed:
In Putin’s Russia, the state has monopolized the media and the political space, and business “owners” have little more than a tenuous leasehold on their property. All of these resources pertain to the club and may not be removed from the club; departure of an individual from the club implies the forfeiture of his or her resources. Competition for control over these resources within the club is conducted exclusively within and by means of the administrative apparatus. Competitors were persuaded to give up their prior freedom of maneuver in return for an implicit guarantee that all well-behaved members of the elite would enjoy power and privilege for as long as the regime stood.
The key point for this discussion is the last one: members of the elite can enjoy power and privilege for as long as they behave and for as long as the regime stands. Implicit in this is the understanding that, even if you do behave, your ‘leasehold’ over rent-producing assets can be revoked in view of the regime’s overarching ’eminent domain’ – in other words, the Kremlin can and will revoke any and all arrangements with elites in order to preserve the system.
Any oligarch or political figure who thought otherwise was deluding himself. In fact, throughout Putin’s rule there have been plenty of instances in which the state (in one guise or another) has come calling. The question of good behavior, then, has nothing to do with whether the state comes calling, but how you behave and are treated when it does. The rule you are expected to observe – whether you are Khodorkovsky or Yevtushenkov or Zyuzin, or Surkov or Luzhkov or Serdyukov – is that you give up your position quickly and quietly. If you do, you’ll be rewarded with further opportunities to compete for rents, at least to the degree the economy allows. If you don’t, you’re done.
That has been the fundamental rule of the game since Putin set the system up in the early 2000s, and it hasn’t changed now. What’s new now is the level of threat the regime perceives to its own survival, the ‘tax’ it imposes on the economy, and the amount of resources available. But that’s an environmental change, not a policy change, and it is incremental. As a result, the idea that Russia’s oligarchs will suddenly wake up to realize their deal with Putin has been revoked is based on an illusion. Everyone in the system always knew things could go this way. They just hoped it wouldn’t.