The Great Watershed Year
No. 1 2005 January/March

In early October 2004, a Russian national newspaper published an
address of congratulations to Vladimir Putin on the occasion of his
birthday by the president of Russia’s National Olympic Committee,
Leonid Tyagachev. I will take the risk of assuming that Russian
newspapers have not carried texts of this kind for the past twenty
or so years. The last time that a sports official gave so much
thanks to a national leader for his support of athletes or extolled
so much praise was during the rule of Leonid Brezhnev. It seemed
that such senseless and distasteful adoration had long ago become a
thing of the past, but it appears that such practices have been
committed to memory only temporarily. Old ways are returning, it
seems, and what is most regrettable, no one seems to be surprised
by it. Ministers, members of parliament, law enforcement officials,
and businessmen queued up to repeat Tyagachev’s patriotic deed.
They fell short of his eloquence, but subscribed to the

The tragic events in Beslan are now history, while Russia
confronts a clear and simple fact: the country has changed
dramatically over the past twelve months. This change is not just a
matter of the endless applause drumming on the president’s ears or
the government’s stated eagerness to sacrifice the division of
powers, independent courts and immunity of private ownership for
“political rationality.” Nor does it have anything to do with its
readiness to revive old fears. The real change involves the very
social situation in the country: freedoms are disappearing.
State-run television, for example, has become a perfect match for
its Soviet-era predecessor, while the print media will likely be
next in line. Everyone is moaning over Russia’s shortage of
qualified personnel in virtually all areas, but it appears
professionals are simply not needed. One of Russia’s best TV
reporters, Leonid Parfyonov, has been literally banned from the
screen. Raf Shakirov, an extremely talented and professional
newspaper editor, has been fired. Russia’s main statist and
outstanding politician, Alexander Voloshin, now idles away his time
at the RAO UES energy corporation, to say nothing of Russia’s
former successful businessman, Mikhail Khodorkovsky.

Russian society is obviously going through an abrupt turning
point, and the most capable and notable personalities are once
again unwanted in their homeland. What is needed is some form of
aggressive mediocrity; just one look at the mute members of
government and parliament, and now the regional governors, provides
convincing proof of this. The idea of a civic society, a vogue of
the recent past, has transformed into the judgment of numerous
loyalists who are vigorously tipping the FSB on anything that looks
suspicious, while the FSB is fully unprepared for it. And civic
valor has come to mean taking an oath to “consolidate forces around
the President,” not responsibility or legality.

Mediocrity has settled upon one-sixth of the Earth’s land
surface, and this is the main outcome of the Great Watershed Year.
The situation brings to mind what Russian science fiction writers,
the Strugatsky brothers, stated in their novel Hard to Be a God:
“Where mediocrity triumphs, power is taken by the dark
souls.”  It is much more important, however, to understand
exactly what happened and where the fatal mistake was made.


Vladimir Putin continued to commit mistakes throughout the year.
The administrative reform ended up in conspicuous failure, and
officials in both the presidential administration and in government
had to admit it. The reason for the failure was not due to
incompetence, but rather a gross miscalculation was made at the
stage of planning. The reform initiative was centered on the idea
of separating the different levels of power. It implied that the
ministries would determine policies and coordinate activities in
the specific areas which report to them; the government services
would have controlling functions, while the agencies would steer
practical actions in line with ministry-defined policies which are
supervised by the services. The main idea was to fix independence
of all the government entities from each other. It meant that a
ministry was not supposed to do “manual jobs” or deal with any
specific details of arising problems – its task was to map out
strategies. The head of an agency would not act on the minister’s
will; otherwise the minister might succumb to the temptation of
writing strategies and manipulating assets which were allocated for
the implementation of these strategies.

Naturally, the ministers revolted against that idealistic model,
since everyone wanted to manipulate situations as they arose. A
fatal compromise was the result: the cabinet members got an
opportunity to interfere in the activities of the government
services and agencies. The latter became subordinate to the
ministries, if not turning into their actual departments. This
ruined the reform at the initial stage.

A huge and painstaking reorganization of the government
machinery was thus void of any good sense. Moreover, the general
situation with governability, together with any efforts to achieve
a breakthrough, deteriorated badly. The ministers slipped back into
the position of deputy prime ministers, while the turnover of
documents and the decision-making process became slower than
before. A breakthrough could scarcely be expected, when, for
example, officials in many new services did not receive their
salaries for half a year. However, this was not because money was
absent, but because it could not be decided what ministry a
particular service should be ascribed to.

Thus, the revolutionary plan collapsed because of last-minute
hesitations; it seems that somebody braked slightly at the eleventh
hour, rendering redundant all of the efforts.

It seems that such apprehension also lies at the root of the
mistakes in the lifting of social privileges. This lifting, taken
per se, is a progressive and correct step, and the idea has been
discussed for a long time. It was clear that a window of
opportunity for such an unpopular move would open right after the
presidential election, but ministers and other top-ranked officials
had failed to make the appropriate computations by the time this
opportunity actually emerged; the prime minister apparently feared
an awkward situation and avoided responsibility. Thus, three
different figures for a single provision would be named on just one
day. Not even a simple cost estimate was drawn up to show how much
each financial privilege cost the federal budget, or how
allocations had been made by regions. Despite years of long
talking, nothing was ready on time.

In such a situation a genuinely resolute step would have been
the suspension of a decision. To get the whole thing off the ground
without a workable mechanism is tantamount to dooming the budget to
plunder and the people to torment. Postponing the date for lifting
privileges would be most reasonable in a situation where the
appointees to government posts have proven themselves to be
professionally inadequate. Yet, as it often happens in Russia, an
order was given to implement the reform at all costs.

The next error involved the elimination of governor elections,
where the fight against terrorism offered a good pretext for
changing the country’s political system. Previously, Putin seemed
to be a man who was capable of protecting the green shoots of a new
democratic Russia which everyone had painfully nourished for over
15 years; but today the Russian president is different. Putin did
not abrogate democracy in 1999, when Russia’s unity was in a far
greater danger than now and when the regional barons had flocked
together in the Fatherland party. He acted upon clear principles of
democracy at that time, observing the division of powers and
aligning local laws with the federal Constitution and legislation.
But five years after the start of his presidency, the old
half-feudal principles were proclaimed the pillars of Russia’s
unity. Following the Beslan tragedy, the leader gave up – by his
own will – the major gains of the past few years which could have
laid the foundation for a renewed Russia. Having gained power, he
signed an end to the election of governors, thus curtailing even a
semblance of democracy in the political system. The United Russia
party, staffed by the nomenklatura, is now called upon to
consolidate the country the way the former Communist Party of the
Soviet Union, also staffed by the nomenklatura, was supposed to do.
Is there any difference in this arrangement?

After Beslan, Putin made yet another dramatic mistake. Nothing
was said openly and candidly about the kind of reforms that were
apparently needed in the law enforcement agencies which displayed a
glaring lack of organization during the crisis. The Beslan tragedy
revealed the inability of the security service heads to handle
their duties, and nobody accepted blame. The security services
proved that they were unable to coordinate a single stage of the
antiterrorist operation, while leaving the hostages and servicemen
of the Alfa and Vympel task force units pay with their lives for
the mess.

In the wake of Beslan, the failure to publicly confess to the
weakness of the state, together with the silence about whatever
plausible antiterrorist measures or reshuffles in the security
services were required, further demonstrated Putin’s weakness.
Yeltsin, by comparison, although being in a far shakier position
than Putin is today, fired his security chief Sergei Stepashin and
interior minister Victor Yerin after terrorists seized a hospital
in Budyonnovsk in 1995. Putin did not dismiss anyone, while the
usual excuse – “No one else is more qualified than the present
staff” – sounds rather childish. No one will be worse than these
guys. And the essence of the presidential duties is to search for
those who are better qualified. A period of five years is long
enough to train from scratch an expert on disaster situations,
which are now occurring with increasing

The irresponsibility of the generals will inevitably cause a new
major failure of the security services. Or, has caused it already,
if one considers the Pumane case which smells of a secret police
provocation miles away. The reluctance to disturb the black box of
the secret services reveals yet another Putin’s weakness. It means
that his trust of the security system is every bit as wanting as
his trust of the business community. He feels secure only if he
places his friends into positions of power, or his collegemates who
owe everything to him – but whom the professionals do not respect
very much. The problem is that this approach makes fighting with
terrorism impossible.


Putin committed enough mistakes over the past year to shake any
country, and yet they did not mark ‘a point of no return.’ That
event was marked by the arrest of Mikhail Khodorkovsky, which
really pushed everything downhill.

Its economic consequences are obvious. The Economics Ministry
said that Russia was expected to receive about $4.5 billion in the
form of direct foreign investment in 2004, but a report in late
August said capital flight to other countries might stand at around
$17 billion instead; after September the figure was predicted to
rise. That the country lost over $20 billion became clear as
daylight in August, in fact. Whatever the wise men of the Russian
Finance Ministry say about the increase in U.S. discount rates, 90
percent of the blame for the losses is attributable to the YUKOS
case. It filled the country with fears which, in turn, prompted
businesspeople not to make long-term plans for Russia, but prepare
“emergency landing runways” abroad instead and keep hard currency
revenues there, too.

In addition to the economic aftermath, Khodorkovsky’s arrest
marked a turning point in Russian domestic policy. The relationship
between the President and the oligarchs was initially based on the
understanding that big business cannot dictate to the government,
but the nation needs big business, and it can be successful only
under conditions of independence and freedom.

Right from the start, Putin removed oligarchs Boris Berezovsky
and Vladimir Gusinsky; he carried out this move accurately, without
overshooting the mark at the same time. The authorities bargained
with Gusinsky and did not confiscate property from Berezovsky.
Everything was done to make the blackmailing oligarchs recognize
the new reality and exit from the scene; at the same time, Putin
did not sow the seeds of fear throughout the Russian business

Putin maintained a balance for several years, while confining
his actions to certain limits. This ability proved to be one of his
strong features. On the one hand, the balance helped the state
power to become stronger and, on the other, it enabled the
formation of bourgeois state institutions that had never existed in
Russia before.
By deciding to arrest Khodorkovsky, Putin upset the balance that he
had built with his own hands. He chose to return to the favorite
Russian methods, where political reasons overshadow all principles
and laws and where fear and indulgence toward the stealing
executive become the primary instrument for the ruling sovereign
for reaching his goals.

After YUKOS was flayed, any talk about the division of powers,
independent courts and the supremacy of the law has become
meaningless. When something is sold at one-third of its actual
price, it simply means that the item was stolen. When the state
sells Yuganskneftegaz, YUKOS’s main upstream subsidiary (which had
assets between $15 and 17 billion) for a meager $9 billion and in
very strange circumstances, while refusing to accept the tax
arrears that YUKOS ostensibly accrued, this signals that the
authorities understood they were committing a robbery. And to blame
just one person makes no sense since all of the ideological
groupings seated near the throne – from Sechin and Ustinov to
Kudrin and Gref – are pilfering YUKOS’s assets.

This disgraceful scene, where the state ordered the destruction
of Russia’s biggest corporation, must make any proponent of a
strong state fall silent. As experience tells us, any attempt by
the bureaucrats to put things in order ends with large-scale
stealing. This is quite in line with the Russian saying: “The law
is like a poke – it makes a hole wherever you strike.” The
bureaucrats crush all that is new and efficient just to stuff a few
more suitcases with bribes.

The collapse of YUKOS represents not only a defeat for
Khodorkovsky, it provides a balm to the heart for people like
Berezovsky who have the right to say now: “Well, didn’t we warn you


Why did Putin back down? It should not be forgotten that he
restrained himself for quite a long time, ignoring the provocative
behavior of YUKOS’s executives and the attempts of his own aides to
get him drawn into that horrific campaign. So why did he go back on
everything that he declared to be his goals during his first term
of office?

Strictly speaking, there can be only one answer: the President,
seemingly resolute and confident of his strength, has proven to be
too feeble. He has no clear plan of what he would like to achieve
and how, what should be built and in what sequence. His resolute
look conceals inner confusion and diffidence.

This weakness became noticeable back in 2001, when the mass
media published transcripts of telephone conversations from the
chief of the presidential administration staff, Alexander Voloshin.
Of course, Voloshin’s phone calls could only have been bugged by
one of the secret services; Putin pretended not to have noticed
anything. Russia has deep-going traditions of bugging, and yet
publishing the contents of a taped transcription is considered to
be a federal offense. Putin did not dare find and punish the
malefactors then. Unofficially, the Kremlin’s former security boss,
Alexander Korzhakov, was blamed in the scandal. However, Putin, by
not acting as a strong boss of the secret services, displayed his
weakness and dependence on specific personalities.

Putin’s weakness is also manifest by his incredible appointments
of particular officials. Quite conscientiously, he appoints to
leading positions weak persons incapable of independent
decision-making: Mironov, Gryzlov, Fradkov, Patrushev, and many
others are fledglings from Putin’s nest. By gathering inferiors
around himself and selecting members who follow the principle of a
teenage street gang leader – “Everyone is against us, the whole
world is an enemy, never surrender your friends, but bash aliens” –
makes for a weak presidency, not a strong one.

The bad turns and errors of the past year are not only
distasteful; they are the cause of serious concerns. The government
is rapidly turning into an ossified nomenklatura. Its political
skills are degrading at a high rate, as shown by the recent
developments in Abkhazia. It vests hopes in the use of force and
television propaganda, and diligently scrapes off the legitimate
opportunities of feedback; to do otherwise would force the
authorities to consider people’s interests rather than dupe and
bribe them. This heightens the possibility of a crisis, since only
flexible systems can produce stability. As for Putin’s power
vertical, it is tightening. It does not conceal the authorities’
diffidence, but makes the whole system fragile.

One may get the impression that Putin is materializing the ideas
that might have seemed promising in 1999 and 2000. Although many of
them do sound reasonable, the country has changed dramatically in
those four years, and in many respects credit for this must go to
Putin. If so, quoting again the Strugatsky brothers, we would very
much like to put him “into the same rank as Richelieu, Nicker,
Iyeyasu Tokugawa, and Monk.” However, the President’s abrupt
about-face that has crossed out everything he has done in the past,
shows him as a doctrinaire rather than an outstanding politician
proceeding from real life.

The result makes him look more like the Russian Emperor Nicholas
I, not Richelieu. A historian once said of the Russian emperor: “He
believed he was responsible for everything happening in the
country, wanted to know and manage everything, were it a quarrel
between the chairman of local nobility and a governor, or the
construction of a police station in a provincial town. The
fruitless efforts to embrace the universe and to put it into a
symmetric order exhausted him. The diversity and chaos of life
hampered the implementation of his doctrines, drove him into
despair, and he had to channel all his efforts into inventing tools
for harnessing the frenzy of things and people so that his
principles could blossom. Consequently, he sought to pin down every
national to his or her place and demanded blind obedience from both
chief and workers.”

The end of Nicholas I’s epoch is well known. Russia lost time
for modernization and wasted the energies it gained from the
victory over Napoleon. Attempts to conserve the “order of things”
resulted in a total loss of everything. Russia’s internal policy of
the time was a reign of mediocrity and highly corrupt bureaucracy,
whose “blind obedience and moral deviations” became illustrative
for the authors of history textbooks worldwide. The best people of
the time opposed the regime, and the best personal qualities of the
emperor had no impact on the essence of his epoch.

Nicholas I’s rule resulted in Russia’s defeat in the Crimean
War; Russia recovered from the loss, but appears to be unable to
make up for the lost time.