National Security

The Good, the Bad, and the Ugly

The revenge of the Soviet military.

If you think Russia's change of defense ministers last month had much to do with defense or military policy, think again. The previous and now humiliated defense minister, Anatoliy Serdyukov, was put and kept in place by President Vladimir Putin -- even when Putin was not technically president (during Dmitri Medvedev's placeholding presidency from 2008-2012). Putin put him there to break the organizational resistance of the Russian military and drag it kicking and screaming into the 21st century. His fall may affect whether the Russian military becomes a modern force, but the leadership shuffle was more about the precarious new insider situation in the Russian leadership.

Putin had previously used Serdyukov to bend the Russian tax service to his will. Although detractors referred scornfully to Serdyukov as a "furniture salesman" (he owned such a business in St. Petersburg before becoming a member of the Putin circle in part by marrying the daughter of Putin's close associate Viktor Zubkov), he was a loyal and adept manager. Having beaten the tax police into an efficient instrument of the Kremlin, Serdyukov was not a bad choice to shatter the dysfunctional organizational structure of the Soviet defense ministry -- and I mean Soviet, because that is what the Russian Ministry of Defense remained long after the U.S.S.R. was history.

The Soviet military had broken the back of the Nazi Wehrmacht and had held the United States to a frozen stalemate during the Cold War, but it long ago lost the ability to field an effective force. Organized around territorially-based divisions that were largely empty of soldiers day-to-day because the system relied on mobilizing reserves in times of need, the Russian army was a hollow force. Lots of generals and colonels populated military bases spread throughout Russia, but few of them had actual soldiers to command. Even worse, when constituted, this hollow force was barely mobile, had never learned to operate jointly among services, and was so dependent on direct orders from the top that local commanders at best relied upon inflexible battlefield set pieces, and at worst would have to call back to Moscow for instructions and authorization to cope with contemporary battlefield conditions.

To his credit, Putin recognized the problem and brought Serdyukov in to fix it. Resistance was fierce, but some Russian officers had been chastened by the military's near-disastrous performance against the much weaker Georgians in August 2008. So, with the help of the chief of the General Staff, Nikolai Makarov, Serdyukov eliminated the mass mobilization structure and the territorially-based divisions (a move that also required eliminating tens of thousands of senior officer positions responsible for commanding empty divisions in hundreds of ghost military installations across Russia, winning Serdyukov and Makarov the undying enmity of officers thus made redundant). Russia's new military structure is brigade-based and organized into four operational strategic commands designed to be able to respond more rapidly and flexibly.

This organizational reform was finished by about 2010, but to successfully implement a military doctrine that calls for a technologically advanced, joint, and professional force, the Ministry of Defense also needed to bring its personnel, education, logistics, and defense acquisition system into the 21st century. And it was here that Serdyukov really annoyed the Russian establishment by bringing in civilian officials (including women, if you can imagine) to change the way the military did business. By changing how business was done, Serdyukov changed how money was spent, and thus how corruption within the ministry and defense industries would be conducted. That is serious business in today's Russia.

Until stories began to appear about the shady dealings of Serdyukov and his civilian management team, all signs were that he had Putin's confidence and was implementing Putin's policies. Serdyukov had reportedly asked to be allowed to resign in spring 2012, but had been refused by Putin. And even as stories emerged in late October that the company Serdyukov had chosen to outsource logistics for the ministry was a front for the misappropriation of $100 million, Putin publicly affirmed Serdyukov's leadership as defense minister. Yet the embarrassing stories continued, and a raid on the apartment of one of Serdyukov's young female colleagues found...Serdyukov (along with jewelry and art reportedly worth millions). On November 6, Putin announced that he had dismissed Serdyukov because of the corruption investigation and appointed Sergei Shoigu, another reliable Putin enforcer who had headed the Ministry of Emergency Situations and recently become governor of the Moscow region.

So is this about corruption and cleaning up the Ministry of Defense so that money will no longer be stolen or diverted? Not really. It's more like Captain Renault being shocked (shocked!) to find that gambling has been going on, even as he is handed his winnings.

Or, to use an even better film analogy, think of the Russian political system as a giant Mexican standoff, where the antagonists are all holding pistols aimed at one another loaded with kompromat (a lovely Soviet short-form for "compromising material"). Everyone knows (and has evidence) that everyone else has been skimming money from government contracts and finances, and at any time anyone could be brought down by that information. The threat of revelation keeps everyone in line, and the risk of being the next target tends to prevent anyone from shooting first.

But if anyone steps out of line, they can be brought down -- as Mikhail Khodorkovsky was in 2003. Clearly, this is an unstable system: How does anyone know when it is safe to shoot? Part of the answer is that it is important to have a powerful protector, and the Russian press has been rife with speculation that Serdyukov lost his krysha ("roof" or protection) when his marriage to Zubkov's daughter fell apart (which has a convenient infidelity kompromat synergy).

So, the speculation in the Russian press goes, powerful players in the Russian leadership who did not like the financial implications of Serdyukov's changes to the defense business placed the stories and enabled the investigations that led to the shock (shock!) that corruption was bleeding funds from defense modernization efforts. Top contenders are Putin's chief of staff, Sergei Ivanov (Serdyukov's predecessor as defense minister, who was Most-Likely-to-Be-Tapped-as-Putin's-Successor in 2007, until Putin tapped Medvedev), and Deputy Prime Minister Dmitri Rogozin.* Both have responsibility for aspects of Russia's defense industry and military procurement and both had expressed doubts and even criticism of Serdyukov's efforts to buy defense technology (and even entire systems, including the French Mistral-class helicopter-carrier amphibious assault ship) from abroad, rather than sticking with under-performing Russian defense firms. When Putin returned as president, he announced an increase in Russian defense procurement -- to some $700 billion through 2020. Maybe that sounds like plenty to go around, but Serdyukov publicly stated that contracts would go to foreign firms if they could deliver technologically advanced systems that Russian defense enterprises could not.

With Serdyukov and his civilian management team out, and a more traditional defense minister (and new chief of the General Staff, General-Colonel Valeriy Gerasimov) in, things can get back to normal. While Shoigu and Gerasimov are not seen as particularly corrupt (to the contrary, they are generally viewed as highly professional and effective), their reversal of Serdyukov's management innovations benefits those who profited from the old way of doing things.

This explanation is fine as far as it goes, but in the Russian system, Serdyukov was too high-ranking to have been brought down by his equals (or subordinates). Serdyukov's protector was Putin himself -- the man who had put him at the Ministry of Defense and who affirmed on television that he would remain defense minister just days before Russian television exposed him at his reputed girlfriend's multi-million dollar apartment. In the Mexican standoff that is Russian elite politics, no one should have been willing to pull the trigger unless given the nod by the real protector -- and he had sent the message to stand down.

The unthinkable happened: one of Putin's men had to go because those below and around Putin sought to get rid of him, and they succeeded. When Serdyukov became a public liability, Putin dismissed him, and has since sought to cast the incident as the launch of an anticorruption campaign designed to ensure the success of Russian military modernization. But the sequence of events is not consistent with Putin as Master Puppeteer, and makes more sense as a case where Putin's hand was forced -- although he responded quickly and adroitly to assert control.

Far, far more serious than the shake-up's implications for Russia's military doctrine and modernization -- and they are serious, because it is unlikely that Shoigu will succeed by retaining Soviet-era management practices -- are its implications for the stability of the Putin regime and its reliance on clans, protection, corruption, and intimidation. The Serdyukov scandal is a hint that Putin is not in control, and that his political system has become vulnerable to fratricide. Russia's political class is now abuzz with talk of an anti-corruption campaign as a way for the leadership to reestablish legitimacy before a disaffected and newly-rebellious Russian public. What happens when the shooting starts? Maybe Putin is as good as Blondie, but that was just a three-person standoff. The Russian political terrain has changed, and it's a better bet that the other cowboys are walking around with loaded guns of their own.

* Correction: This article originally gave the wrong title for Sergei Ivanov.



The People's Republic of California

Why isn’t the Golden State at the climate talks in Doha?

At the annual U.N. climate talks in Doha, Qatar, delegates are undoubtedly applauding the new Australian cap-and-trade scheme, bemoaning Canada's withdrawal from the Kyoto Protocol, and wondering what to do about emissions from emerging India. They will spend far less time thinking about an economy bigger than any of those: California.

California's new cap-and-trade system is perhaps the biggest good news climate story this year, and delegates in Doha should be celebrating it. Just last month, environmentalists celebrated California's first successful auction of carbon emissions allowances. Yet the rise of Sacramento and other state capitals as leading forces in U.S. climate policy raises thorny foreign-policy dilemmas, too. These are easy to miss because U.S. states have no seats at the global climate talks, but are nevertheless critical for negotiators around the world to address.

Taking credit for progress in California and elsewhere will be tricky for the United States: International diplomacy tends to focus on what is happening in national capitals, slighting state efforts in the process. This problem will be resolved over the long run by what happens on the ground, since climate policy success in places like California should reduce total national emissions -- the ultimate proof of their success. But U.S. diplomats can reap dividends today by doing a better job of systematically showing other countries what ongoing state-level efforts will deliver. Putting those efforts in the context of what is happening in similarly sized economies -- like Australia, Russia, and the United Kingdom -- could help.

Some of what happens as a result of state policy, though, presents tougher challenges for Washington. California's cap-and-trade program, in particular, promises to launch the United States into uncharted territory on climate change -- and could even cause Sacramento to develop its own foreign policy at odds with the agenda formulated at Foggy Bottom.

California is already becoming entangled in the international system: Its program will eventually allow companies to comply with its climate laws in part by buying international "offsets" instead of reducing their own emissions. (Offsets are payments to entities overseas that cut their emissions below what regulators judge that they otherwise would have been, had the offset system not been in place.) Offsets are being used by Europe and Japan to help meet their obligations under the Kyoto Protocol; implemented properly, they can be an important part of California's approach too.

Yet they pose significant dilemmas for Washington. The first has to do with accounting. When the Japanese or European governments report their total emissions to the United Nations, they take credit for offset projects that they or their companies have supported abroad. If an oil company operating in the Netherlands, for example, buys offsets that finance a big reduction in Indian power plant emissions, the Netherlands gets to report that emissions cut as its own. As California allows international offsets into its system, then, Washington will be faced with a decision: Should it follow the European precedent and count the foreign emissions cuts supported by California-purchased offsets as its own?

There will be a real temptation to do so. Anything that makes U.S. emissions look smaller is helpful to U.S. diplomatic efforts. Encouraging a robust offset system can also help push developing countries toward bigger emissions cuts than they would otherwise make, a goal shared by the U.S. government.

But there are also real risks. International offsets are essentially created by regulators who decide that the projects that those offsets support are legitimate  -- in particular, that they would not have occurred without offset support. But the legitimacy of particular offset schemes is often controversial. For example, scholars and policymakers have fought over whether wind turbine projects in China would have occurred even without offset support. Others have pointed out that some industrialists appear to have built chemicals plants primarily so that they could collect offset payments in exchange for destroying those plants' climate-warming byproducts -- which wouldn't have existed in the first place if the plants hadn't been built. By choosing to take credit for Californian offsets, Washington would be vouching for a system regulated by a state entity over which it has limited control.

And that is only the beginning of what could become a considerably more complex problem. As California's use of international offsets develops, the state will essentially enter into a system of contracts with foreign entities. The integrity of that system will rest on the continuation of the rules governing the state's cap-and-trade system. Yet somewhere down the road, if the United States gets more serious about climate change, it may decide to revisit cap-and-trade (or a related system) at the national level. A national cap-and-trade law would probably seek to preempt state level efforts -- much like national fuel economy regulations for cars and trucks have preempted Californian regulations in the past. Washington would then face the prospect of potentially invalidating (or materially interfering with) many of the Californian offset contracts, possibly with severe consequences for U.S. relations with the various foreign countries involved.

Of course, no national cap-and-trade scheme is in the immediate offing. But even if a U.S. cap-and-trade system isn't in the cards for a decade or more, steps taken soon in California will lock the United States in to a future of long-term headaches. In the event of a national effort to combat climate change, Congress could also try to find ways to grandfather in the policies of the Californian scheme -- but even that would mean accommodating the foreign-policy decisions Sacramento is making today.

Avoiding this sort of debacle is precisely the reason that the U.S. Constitution made the conduct of foreign policy an exclusive province of the federal government. The line between what states can and cannot do internationally has always been fuzzy, and legal precedent is thin. But as California's cap-and-trade program becomes increasingly linked up with foreign countries -- and as similar efforts rise elsewhere in the United States -- the case for caution will become stronger, lest the system be set up for a mess down the road. Achieving the right balance will require much more coordination between California and the federal government.

None of this should take away from the positive example that California's program has set for the rest of the United States, and the rest of the world. But the task of fully exploiting that success, and avoiding important dangers ahead, has just begun.

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