A cold and snowy December week in Moscow is always more interesting than pleasant, but I have not found the mood in the Russian capital so depressed since the collapse of the Soviet Union in 1991. Growing repression has made President Vladimir Putin more feared, but respect for him has plunged deeply as well. People who used to compare Putin with the stern Tsar Nicholas I, who ruled from 1825-1855 and built up the Russian secret police, now deride him as Paul I, the foolish and ineffective tsar who reigned for just five years before being murdered by his exasperated advisers in 1801, much to the relief of his subjects.
Moscow is boiling with aggression and anger, but everybody is unhappy in their own way. A standard statement is: "We are in a dead end." Muscovites refer to Vladimir Lenin's definition of a revolutionary situation: "when the upper classes can no longer govern, and the lower classes no longer accept living in the old way."
The mood is reminiscent of the late Brezhnev period, when nobody thought the system was sustainable, but nobody could see how things could change. Although discontent remains great, opposition protests have ebbed because people see no alternative, leader, or program. In the upper middle class, the dominant theme of conversation is when and where to emigrate. The future is abroad.
Paradoxically, Russia is doing very well economically. The wealth in Moscow is just astounding, not only with its 100 billionaires but also a vast middle class. Macroeconomic data are stellar. The consensus expected 2012 growth rate is 3.6 percent, while neighboring Europe is mired in recession. Russia has a budget surplus and almost no public debt, a huge current account surplus, and bulging international currency reserves. Admittedly, Russia thrives on large energy exports, but oil prices are high and likely to stay there.
So why the sour mood? The popular protests against Putin after the rigged parliamentary elections on Dec. 4, 2011, seem to have pushed him out of balance. His strength has always been tactical improvisation rather than strategy, but that requires self-confidence and inspiration, which now seem to be lacking. His state of the union speech on Dec. 12 was strangely backward-looking. At his rambling, marathon press conference on Dec. 20, he hardly answered any questions over the course of four and a half hours.
Rather than being a guarantor of stability, Putin has suddenly become a source of destabilization. His defensive actions include increased repression against political opposition, a faux campaign against corruption, an anti-American crusade, and obscurantist appeals to Russian nationalism and the Russian Orthodox Church. In a populist vein, he agitates the poorest two-thirds of the population against the wealthy, well-educated, and cosmopolitan. His fundamental problem is that he represents no real values and therefore lacks any source of legitimacy other than stability and economic growth that will not last forever.
Like many authoritarian leaders, Putin presents himself as a convinced democrat, stating in his state of the union address: "For Russia there is no and can be no other political choice than democracy... We share the democratic principles adopted in the whole world." Yet, he quickly betrays his true feelings: "For Russia, the tradition of a strong state is characteristic." And "Control is without doubt the most important function of the state." Such talk is reminiscent of fascism. Step by step, Putin is systematically increasing repression of the opposition with new antidemocratic laws -- for example, against foreign funding of non-governmental organizations -- and the jailing of opposition activists.
Still, Putin states many truths, even this key one: "It is obvious to all that our main problems are the low efficiency of state power and corruption." Corruption in Russia is certainly out of control. Investment analysts privately estimate standard kickbacks on government procurement at 70 percent for pipelines, 50 percent for roads, and 35 percent for medical equipment. But for all his tough talk, Putin is widely seen as the main protector and beneficiary of corruption. Opposition leaders Boris Nemtsov and Vladimir Milov and his former junior business partner Sergei Kolesnikov have accused him of embezzling tens of billions of dollars.
Never mind that -- Putin has launched an anti-corruption campaign against senior officials, and Russia's state-controlled television devotes substantial news time to all the gory details. The opening salvo was an investigation of embezzlement of $100 million against the then Minister of Defense Anatoly Serdyukov. Former minister of agriculture Elena Skrynnik has been accused of being involved in fraud of $1.2 billion. Neither has been formally charged or arrested, only called as witnesses (though a deputy economic minister has been arrested for kickbacks of $500 million). Other open fraud cases of about $200 million each involve city officials in St. Petersburg, the space agency, the state telecommunication company, and the Federal Property Management Agency, respectively.
For any other country, such revelations would be big news, but not to the placid Russian elite. They comment privately that hundreds of billions of dollars have been stolen, and the biggest culprits are much higher up in the Putin hierarchy. In each case, the real reason for a corruption investigation appears to be that one member of the elite is attacking a weaker culprit for the sake of revenge, power, or material benefit. Few think the former ministers will end up in prison.