Who rules Russia?

Who rules Russia? Obviously Putin is in charge but it is also clear that he’s no individual dictator – he’s the main man but has the job of balancing interests in the elite. [1] Since he succeeded Boris Yeltsin as President on New Year’s Eve 1999 he’s been the undisputed leader of the elite – the arbiter between different broad groups rather than the absolutist leader whose every whim is obeyed. Using the old art of Kremlinology, most agree that below Putin there are two groups: the siloviki and the technocrats.

Who are the siloviks? They are the former KGB members, the politicians from uniform – the state security services in power. Literally a ‘silovik’ (силовик) is a person of power, ‘sila’ (сила) Russian for strength/power/force. While not a united group as such they have a shared background in state security giving them somewhat similar views on how to run the country. They tend to conservative, statist and focussed on security and law and order (rather than the rule of law). Many are shareholders in the large public monopolies – natural resource companies, railways etc. and control much of Russia’s wealth. This wealth gives them power and a level of autonomy from Putin – individually Putin is more powerful than any one of them but as a group he cannot disregard their interests and survive (and he doesn’t). They favour stability and guaranteed profits for themselves through an FSB [2] (the new KGB) run economy over liberal and democratic reform. It is said that politics, crime and business are all interlinked in Russia and it is through these men (they are all men) that this system reaches the top. [3]

Igor Sechin

Igor Sechin

They have no leader but if they did it would be Darth Vader himself, the ‘scariest man on Earth’ Igor Sechin, [4] a very close Putin associate since the 1990s and now sanctioned by the west. Coincidently CEO of Rosneft, Russia’s largest oil and gas company. [5] In the 1980s he was in Mozambique and Angola for the Soviet diplomatic missions “as a translator” while allegedly the man in charge of KGB gun running during the civil wars there. Other top siloviki include Sergei Ivanov, Putin’s Chief of Staff and former KGB colleague of his, and Alexander Bastrykin head of the Investigative Committee.

Dmitry Medvedev [author: government.ru]

Dmitry Medvedev [author: government.ru]

The other group are the technocrats – mostly academic lawyers and economists. They are reformers and managers rather than shareholders – unlike the siloviks they don’t own the economy, but think they know how to run it. Dmitry Medvedev (President 2008-12 and now lame-duck Prime Minister) is an archetypal technocrat – a lawyer from St Petersburg who played the role at least of a liberal reformer with a vaunted ‘modernisation’ programme in the political, legal and economic system. [6] This programme, which came to nothing, highlights the key divide between these groups – reform. The siloviki oppose economic liberalisation as they win in the current state-controlled system – they don’t want any threat to their wealth – while the technocrats view economic liberalisation as necessary for economic development. For them political and legal reform goes hand in hand with this – a thriving private economy requires the non-biased rule of law to move away from an economy of robber barons while greater democracy would reduce elite corruption. All these reforms threaten the position of current elites so the divide between the two groups is unsurprising.

Putin’s role in all of this has been to be the arbiter between these splits – seen as the fair man at the top keeping factional rivalry from breaking out into dangerous divides that could topple the whole system. Although a former KGB colonel himself he has a broader view as the leader of the country, needing to consider his own popularity if the economy did crash under the weight of silovik control so has stood above the conflict until now. Unfortunately for him the economy had slowed down and was nearing recession (even before sanctions hit) so it seems this balancing act may have failed, given Russia should be experiencing fast catch-up growth at the moment. This groups are divided on foreign policy: the siloviki are more hawkish and desire a stronger Russian state influencing the ‘near abroad’ for commercial gain and see international economic integration as a threat if not controlled. The technocrats see international integration and inward investment as pushing Russia towards transparency, fairness and the rule of law, so favour a less belligerent foreign policy. Unsurprisingly then, one conclusion drawn from the Crimean affair is that the siloviks have the upper hand with Putin, at least for now.

Now this is a simplified model – a broad-brush approach to try and make the analysis of power in modern Russia easier. In future I’ll go into more detail of the specifics but this general overview captures the key dividing line at the top. In reality these categories can be fluid not all disputes silovik vs. technocrat: policy affecting different industries can pit silovik vs. silovik etc. One note of caution: every semi-authoritarian state seems to be presented as split between reformers and conservatives, and this is the same model with a Russian flavour. Despite these caveats, these two broad groups can be identified and do tend to take opposing lines on the key issues in Russian politics so understanding this is crucial in understanding the Russian elite. [7]

P.S. You might be wondering where the people are in all this? This is managed democracy. The Duma (parliament) is subordinated to Putin and the ‘competing’ parties are all Kremlin controlled. They have no independent role whatsoever.

 

[1] This is certainly true of Putin pre-2014, which is what this post focuses on. Whether we have seen a change recently is much too early to say with any certainty.

[2] FSB: Federal Security Service [федерал служба безопасности], the successor to the KGB (Committee of State Security)

[3] Although of course I would never allege that the mentioned individuals are personally corrupt in any way.

[4] Those are actually nicknames he’s been given.

[5] It controversially became the largest through the purchase of Yukos Oil’s assets after its oligarch owner, Mikhail Khodorkhovsky, had been jailed. He blamed Sechin for his imprisonment.

[6] More on Medvedev in a future post.

[7] And that is the job of a model – to simplify enough to draw out a particular feature or relationship.

Tolstoy’s ‘The Cossacks’

[spoiler alert] 

Phew! Now I’ve got that modelling stuff off my chest (for the time being at least…) I can move on to lighter and hopefully more entertaining things! So this week I’m going to start what will hopefully become a regular feature on what I’ve been reading. In these I’ll discuss the books a bit and see if anything interesting has come out of them for me. Obviously I’ll limit this to relevant stuff – I probably won’t review Peter Criss’s Makeup to Breakup which I’m reading now but I will give a few thoughts on the less bubble-gummy stuff.

So this week I’m looking back at Leo Tolstoy’s short story The Cossacks [Казаки]. He started it in 1853 and eventually finished in 1862, publishing it the following year. I finished this a week or so ago (the English translation of course) and was somewhat surprised to read that it was Turgenev’s favourite Tolstoy work. Given that this is the first of his I’ve read I hope that isn’t a bad sign for the rest. I didn’t hate it, it’s just that nothing really happened – but that was the point. It’s the second ‘Cossack novel’ I’ve read after Mikhail Sholokhov’s 1920s/30s epic And quiet flows the Don [also spoiler alert] and the interesting thing is that in Sholokhov’s epic everything happens! In that novel you get the late Tsarist period, the First World War, the February Revolution, the October Revolution and the Civil War as a backdrop to the lives of Cossacks caught up in the turmoil.

Clearly I’m not expecting that from this short story but I was expecting something. In this story nothing happens. To go through it simply, an upper class young man from Moscow, Dmitry Olenin, disenchanted with his superficial life joins the army and goes to the Caucasus, moving into a Cossack village near the Terek River. He lives there, realises that simple Cossack living is the ideal existence, falls in love with the beautiful Maryana, who is strangely cold and not really developed by Tolstoy, and set to be married to a local Cossack Petrushka, and then (after a raid by Chechens)… he leaves. The whole story is based around the lack of events – it’s about the rhythm of life in a Cossack village and the internal changes in Olenin as he moves from disenchantment at Moscow life to appreciating the simplicity of rural life. The lack of incident is crucial to the mental development of Olenin and attraction of Cossack life. They hunt, drink, sleep together, have children and die – and so do their children and their grandchildren. Village life is presented as unchanging over time – uncorrupted and genuine compared to the falseness of elite Moscow life. The ending is crucial in cementing this image – Olenin leaves to the tears of his kunak (friend/guest), the old Cossack ‘Uncle’ Yeroshka declares his love for him, but once he sets off and looks back down the street life has returned to normal: Yeroshka is back in conversation and has seemingly forgotten him. Life goes on in the village as it has before and will in the future – uncorrupted by ‘modernity’.

I’ve realised in writing this review I’m somewhat appreciating the story more. It’s a romantic portrayal of simple rural life – where people are genuine rather than particularly moral, and things go on as they are isolated from the falseness of aristocratic life. It actually makes an interesting prequel to Sholokhov’s epic – this is the ‘uncontaminated’ Cossack life before being thrown into turmoil by the events of the 1910s. So all in all this story has more depth than I initially gave it credit for. Given it’s seen as semi-autobiographical and based on Tolstoy’s own experiences in the Caucasus then this is a very interesting and realistic portrayal of the contrasts of life within the Russian Empire at the time, and in hindsight he captured a moment in time of ‘simple’ Cossack life 70 years before the disastrous upheavals that disrupted this world forever.

Modelling Putin

In the last post I argued that prediction is flawed as unless we are Putin we do not know his preferences and thus cannot predict his actions. The conclusion was that assumptions of what these are are needed to be able to predict anything at all, but do it badly and all predictions will be wrong. So how do we go about modelling Putin?

The basic method often used is a ‘revealed preference’ approach – you rely on past experience of Russian responses to different events, looking for cases where Putin has revealed his preferences through decisions he has made. By looking at his response to previous situations, some estimates can be made of what Putin wants and cares about and what weight he places on different issues, based on what he’s done before.

This is the basis of most analysis of political decision-making (even if unacknowledged). Implicitly they are treating what leaders have done before as an indication of their preferences and thus a guide to future behaviour. In the case of the Russian responses to the events in Ukraine, many have looked back at Russian actions in Georgia in 2008. If Putin responded militarily to attacks on supported groups in Georgia, many argue, then this indicates the potential for him to do it again in Eastern Ukraine. The whole notion of working out a grander long-term picture of Russian foreign policy behaviour is based on looking at actions in the past, interpreting what they say about Russian aims and then applying this to predicting future actions. This is revealed preference prediction in action.

This form of analysis provides perfect information if we assume that:

(a) Putin is making all the decisions alone i.e. his preferences are the only ones that matter

(b) he has done since he first became President i.e. all decisions since 1999 were based on his preferences alone

(c) he has not changed i.e. his preferences have been stable since 1999

If these three conditions hold then have constant preferences – we can treat every decision since he came to power as a consistent rational response based on a fixed set of preferences, so each action shines some light on what these underlying values are. In this framework, with infinite decisions we could perfectly map Putin’s preferences and predict exactly his response to any circumstance: we would finally be able to conduct his cost-benefit analysis for him.

Now the problem is that these assumptions clearly do not hold – and that is why many predictions based on past experience are wrong. Clearly (a) is wrong but to differing extents at different times. Putin is no Stalin and he isn’t even comparable to many of the authoritarian Central Asian leaders. He sits atop a semi-authoritarian system rather than standing above it, the arbiter amongst competing factions rather than the autocrat imposing his will. But his power has ebbed and flowed so that at different times different peoples’ interests have been more represented, so the preferences we are looking for have been changing. As (a) doesn’t hold (b) doesn’t hold and (c) is also a debatable assumption – Putin may well have changed his views in the last 15 years.  These factors make Russian behaviour inherently unpredictable as the underlying aims and motives can change in ways we cannot know in advance.

For example, looking at Russian action in Crimea I can’t think of a single article I read predicting annexation. So how did Kremlin-watchers get it so wrong? I’m arguing that it wasn’t their fault. Mark Galeotti has argued that Putin 2.0 has become Putin 3.0, with the Crimea annexation a watershed moment where Putin is displaying different patterns of response and a change of views. If this is the result of a change in Putin’s preferences then this was inherently unpredictable. All we had to work on were assumptions based on his former behaviour – revealed preference – with predictions based on entirely backward-looking information. By definition the only way to see a ‘new Putin’, a ‘regime change’, is to see him responding to events in a way we did not expect. If we had predicted his response then our model accurately captured him and there is no new Putin – we knew him already! We only recognise a change in Putin once we have failed to predict it. Of course change can be gradual and noticed over time – but this is still post hoc, based on Putin’s new response to a series of events rather than predicting these new responses. So actions based on changed behaviour can never be predicted in advance.

So can we model Putin? Has Putin changed? With formal modelling we in a quandary – it is impossible to say for sure. There is an infinite range of possibilities – Putin may be unchanged but other factions have more power or vice versa, all to differing extents – there is no way to pin this down formally and rule out anything. This is where ad hoc approaches come in. What we can do is, post-event, look at what has happened and try and interpret it. It has been said that the decision to annex Crimea was made by an unusually narrow circle –  ‘the inner Putin’ [1] (sorry) – rather than the normal broader group. This could suggest both the decision makers have changed in composition and influence, and Putin has changed in encouraging this move. But who knows for sure what underlies this? Can we definitively state that Putin has changed? No we cannot. Can we predict anything with certainty? No. All we can do is give our honest opinions while recognising the precariousness of our position. The important message to take from the failures over Crimea is that we have to be clear about what our assumptions are, what our predictions are based on and be honest about the level of doubt inherent within them. As long as we are honest about that then our ad hoc approaches will serve us as best as possible.

Modelling Putin is possible but it comes down to looking at the past and projecting this onto the future in some way through our filters of ad hoc views and analysis. We cannot formally prove anything in this area, but we can make claims supported by evidence as best as we can and still accept that they are likely to be proved wrong.

So analysts shouldn’t beat themselves up about not predicting the events in Crimea but should remember it as a warning of the inherent fragility of backward looking predictions in an environment where people can, and often do, change.

 

[1] Maybe coined by Brian Whitmore of the Power Vertical blog, but again but I’m not sure.

Prediction is dead – long live Prediction?

I’ve thought of another way of putting one of the key points of the last post, which should tie it in nicely with the next one that will complete these methodological posts. A key thing to take from it is that cost-benefit analyses are fundamentally flawed.  A cost-benefit analysis attempting to establish whether the Russian leadership will take a certain action is flawed as it is implicitly calculated from Putin’s subjective point of view and we do not know what this is. A prediction based on my valuation of the costs and benefits is useless as I’m not making the decisions and am unlikely to have an identical perspective to Putin, as these weights are not objective. The decision makers are weighing up the costs and benefits of different actions subjectively, according to their own preferences, so any prediction of what they will do is attempting to mimic this – to replicate their valuations of specific costs and benefits and so provide accurate predictions of their actions.

The problem is we simply don’t have the information. It is irrelevant how important I think the state of budget is, what matters is what weight is placed on it by the Putin circle relative to other issues. How can observers do cost-benefit analysis from the point of view of Putin if we don’t know how he values the costs and benefits? How can we make predictions of Russian actions if we don’t know their preferences? Putin may be twice or half as concerned about an issue as we had thought and this renders the prediction, however well argued and seemingly justifiable, useless.

This may be sounding fatalistic but there is a way out – prediction as a tool can be salvaged but this fundamental flaw is always present. The problem above is that we don’t know Putin’s preferences at a given moment in time and this can never be definitively overcome. So to predict anything we need to make assumptions or estimates about what these preferences are.  There is an inevitable trade-off here between detail of assumptions and validity of predictions. Assuming nothing leaves us, as above, being unable to rule any behaviour out, while assuming very precise targets and desires would give us very specific, but entirely useless, predictions. If I think I understand Putin and predict exactly what he will do I can guarantee that I’ll be wrong.

So what do we do? The aim must be to find some sensible midpoint between the theoretical absolutism of being unable to predict anything at all and the error-strewn detailed predictions based on, by definition, the wrong values.There must be a way we can make predictions about the future actions of Russia (I’ve got to have something to write about!) while acknowledging the inherent problems with the task that mean you will almost certainly get it wrong.  Well I think there is: ‘modelling Putin’ is possible and useful.

How do you do this sensibly? Find out next week…