In his state of the union address, Putin started a new crusade, coining the term "de-offshore-ization." He called for a law "limiting the rights of civil servants and politicians to hold foreign bank accounts, securities, and stocks." All real estate holdings abroad have to be declared. He concluded: "Let me stress that the state's moral authority is a fundamental prerequisite for Russia's development. Therefore the policy of cleansing and renewal of the state will be carried out firmly and consistently." ("Cleansing" is a diminutive term for the Stalinist concept of "purge.") Two days earlier, when discussing his anti-corruption campaign, Putin commented that "otherwise we would return to 1937," referring to Stalin's great terror. That is hardly reassuring.
Given that Putin is widely considered immensely corrupt and that he has tolerated ballooning corruption for years, it is somewhat surprising that he himself has started this campaign. Some argue that he has been forced to do something because corruption has reached a point at which the state no longer can be managed. Others suspect that Putin has lost control, and that his top aides are pursuing personal vendettas. His own words suggest that he is planning a purge of the government. A major elite struggle is certainly taking place.
Regardless of Putin's goals or control, he is destabilizing the elite. The families of thousands of top officials and businessmen are already abroad, and many senior people are preparing their own departure. Putin seems to welcome their emigration. In November, his press secretary Dmitri Peskov noted publicly that "90 years ago, a philosophical steamship took 225 leading philosophers together with Ivan Ilyin out of the country," referring to when the early Soviet government encouraged bourgeois intellectuals to emigrate (rather than being sent to the Gulag). Clearly, Peskov and Putin were suggesting that it should be done again.
The anti-corruption campaign has enraged ordinary Russians. I happened to meet two provincial Russians in Moscow and I was surprised to hear them claiming ignorance of their leaders stealing billions. After learning of it on state television, they called for the confiscation of the culprits' property and long prison sentences.
Putin has engaged the Russian Orthodox Church in his anti-Western campaign. On Nov. 4, the newly invented day of Russian National Unity, the Patriarch of Moscow and All Russia warned Russians against a return to the “Time of Troubles,” the era of chaos in the early 17th century. He stated: “We were a hair’s breadth from a tragedy of historic proportions, from the destruction of the country, from losing our sovereignty, from the assimilation of Orthodoxy into Catholicism, from the destruction of our national identity.” He went on to warn that then treason had been concealed in the rhetoric of “modernization.”
When he served as president until May, Prime Minister Dmitry Medvedev advocated more domestic freedom, economic modernization, diversification, privatization, and better foreign relations, especially with the United States -- although not very successfully, because of Putin's resistance. Medvedev allowed the West-initiated United Nations resolution of Libya to pass, for which Putin has criticized him. One of the few remnants of Medvedev's policy is that Russia has joined the World Trade Organization. Further achievements in U.S.-Russia relations do not appear likely as long as Putin remains in power.
The rosy economic numbers, meanwhile, mask a darker reality. Rather than revitalizing the economy through long-needed market economic reforms, Putin is allowing state corporations to suffocate the economy as he seeks to stimulate growth through large, misguided investments. He is ignoring the crisis of moribund Gazprom, which is suffering due to competition resulting from the U.S. shale gas revolution. With their abundant state funds, large state corporations are gobbling up private companies, which in turn devour small enterprises. The total number of enterprises peaked in 2009 and is now falling. The consequences are evident to everyone. Prices in Moscow shops are typically three to four times higher than for the same goods in the United States because of the lack of competition. The dearth of private enterprise is equally evident from the difficulty of getting a cab in Moscow.
Although Putin has been president formally for two terms, and informally for a third, his policy has changed profoundly over the years. Today, he seems to have lost sense and balance and in reality he has no program. His dominant policy is the current anti-corruption campaign and shallow populism directed against a broad elite. His line is also anti-American and anti-Western. And now that his few Western friends, such as former German Chancellor Gerhard Schroeder and former Prime Minister Silvio Berlusconi of Italy, have been duly discredited for dubious financial dealings, he seems most at ease with the likes of Syria's President Bashar Al-Assad, Belarus's President Aleksandr Lukashenko, and Venezuela's President Hugo Chávez.
Putin seems to have lost his grasp, making one mistake after the other. Most recently, he punished poor Russian orphans by prohibiting their adoption by Americans. This new law, which he signed on Friday, would deprive at least 1,000 Russian orphans a year of a family and home, leaving them in Russia's infamously overpopulated orphanages. The move was supposedly in retaliation for the recently passed U.S. Magnitsky Act, which refuses Russian officials who have violated human rights the right to enter the United States and allows U.S. authorities to freeze their financial assets, but Russia had already voluntarily accepted much more far-reaching commitments to human rights and the rule of law through the Council of Europe.
Ultimately, Putin's new attitude is destabilizing and not sustainable. But it is difficult to see any clear alternative. Perhaps that is why Moscovites are so grim.
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