Streetwise Professor

September 25, 2011

Putin’s Brain Rebels

Filed under: Economics,Energy,Financial Crisis II,Politics,Russia — The Professor @ 6:31 pm

The most surprising development to follow the unsurprising (to me) Putin return is the revolt of Finance Minister Alexei Kudrin:

“I will definitely refuse,” Kudrin, 50, said when asked whether he would join Medvedev’s government. He spoke in Washington at a World Bank meeting.

“I have many disagreements with Medvedev on economic policy, first of all concerning the significant military spending,” said Kudrin, who is widely seen as the architect of Russia’s economic stability in the 2000s.

Spending on national defense will grow by 2.1 trillion rubles ($65 billion), or 3 percent of gross domestic product, from 2012 to 2014, Kudrin said, adding that this is how much the state is spending on education this year.

He did not comment on a declaration by Putin on Saturday that he would also push ahead with the army’s modernization.

Kudrin’s attack on Medvedev is facially farcical.  Putin has been Mr. Big Spender.  He has been the one who has been promising to spend huge quantities re-arming the Russian military (as suggested in the last quoted sentence).  Moreover, Putin has also been promising the sun and the moon domestically, from higher pensions to delaying increases in utility tariffs that would move prices closer to market levels.  The target of Kudrin’s ire–Medvedev–has done little more than his usual Sancho Panza impersonation.  Putin has led the way.

So what is Kudrin’s game?

Possibility 1: he really wants to be prime minister, and this is his way of knee-capping Medvedev.  Putin needs Kudrin way more than he needs Medvedev, and the threat to leave may be a sure fire way to get Putin to jettison Medvedev.

Possibility 2: Kudrin is truly alarmed at Putin’s profligacy, especially in the face of an impending financial crisis that could crater the price of oil and thereby completely undermine the Russian fisc.  Kudrin cannot call out Putin directly, so he slams the hapless Medvedev as a way of sending a message.

Possibility 3 (suggested by @ninaivanova on Twitter): Kudrin is having problems with his deputies, and wants the authority to choose them.  Threatening resignation could lead to Putin to agree to these demands.

Kudrin’s attack on Medvedev (and his silence on the truly culpable one, Putin) is so risible that I am leaning towards Possibility 2.  Kudrin has to know that Russia’s position is precarious (so is everybody’s, but as in 2008 Russia could suffer immense collateral damage that is actually more devastating than the harm suffered at the epicenter of the crisis).  He has to know that Russia has the thinnest margin for error, and that raining rubles on the defense establishment (where much of it will be skimmed, and disappear without a trace) and pensioners, etc., will make that margin disappear–and actually put the country in a hole.  Kudrin knows–and has said repeatedly–that the feasibility of the government’s budget depends crucially on the the price of oil, and that the price of oil is hostage to hair-raising developments abroad.  He further knows that he cannot publicly scold Putin–especially now.  Under these circumstances, sending a message to Putin by slamming Medvedev makes sense, in a perverse way.

It will be far more interesting to watch this play out than the scripted election.  Kudrin is Putin’s brain when it comes to anything economic, and Putin cannot function coherently in this sphere without him.  Hell, he can barely function coherently in this sphere with him.  This goes double in current circumstances, with the rumblings of disaster emanating from Europe.

Two other entertaining sidelights to this story.

One is this quote from the MT article:

Putin pledged to improve the investment climate and fight red tape by “consulting the entrepreneur community” on economic legislation.

Where would that community be, actually?  Putin probably imagines his judo buddies to be entrepreneurs.  As if.

The second is something that came across my Twitter feed.  It purported to be a quote from Kudrin: “Я бы предпочел работу в более гетеросексуальном коллективе”: “I would prefer to work in a heterosexual team.”  My inclination is to believe that this is a joke–in which case it is pretty funny.  But perhaps it isn’t–in which case it would be riotously funny.  Either way, I can see it being an accurate reflection of the way the manly men in the Putin circle view the elfin Medvedev and his group.  Can anybody cite a reliable source that quotes Kudrin saying this?

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  1. Google gives 7 results, with yours at the top.

    I imagine it’s made up.

    Comment by Sublime Oblivion — September 25, 2011 @ 8:52 pm

  2. As far as I can see the quote came from drugoi, who’s a comedian / gadfly type of character on the Runet.

    I for one am going for #1.

    Comment by Sublime Oblivion — September 25, 2011 @ 8:56 pm

  3. “The question of whether he (Kudrin) will or will not work is an issue of his employer. And as a person who could be potentially invited for work, he has the right to announce his opinion in advance,” Dmitry Peskov said.


    Comment by Sublime Oblivion — September 25, 2011 @ 11:30 pm

  4. Possibility #4: Kudrin is beholden to Putin for the latter’s bailing out and saving his company(ies) in 2008. They are also connected through various other financial and business ventures. Kudrin is Putin’s man. He can’t work with another clan (Medvedev’s), even if the latter is not so powerful or much of a threat. And because he is beholden to Putin, he must do his bidding. The Putin Plan is to blame Medvedev for all the problems Russia now faces. Kudrin started the ball rolling.

    Prof, it’s never about ideology. There isn’t any ideology. All the talk is just for show. It’s always just about money.

    We all knew this would happen (Putin for life), but all the same, we’re all a bit depressed:)

    Comment by mossy — September 26, 2011 @ 4:15 am

  5. Listen SO, given that you repeatedly stated that Putin would not run as president again, why should anyone with a brain listen to your opinions?

    You are almost always wrong anyway.

    @Mossy, have to agree, except that SO and his ilk are happy Putin is “back” (like he ever went away….)

    Comment by Andrew — September 26, 2011 @ 5:26 am

  6. Then again, maybe it was all just hot air.

    Comment by La Russophobe — September 26, 2011 @ 6:15 am

  7. Putin’s priorities after the election-

    1) Large spending project(s) to provide ample corruption opportunities for the elite.
    2) Assemble new group of scoundrels in the Middle East.
    3) Develop new “safe house” for his “girls”.
    4) Praise Zhirinovsky for giving up his votes so that it looks as though he won by super majority.
    5) New PR campaign against US promoting himself as all that is standing between the US parasites and global domination.
    6) Try to attract new suckers to invest in Russia.
    7) Find body double for the shirtless photos.
    8) Find new positions for the “Dojo Boys” (thnx to Professor).
    9) Assign the FSB to get his Super Bowl ring back from Bob Kraft.

    Comment by pahoben — September 26, 2011 @ 7:24 am


    That was quick.

    Comment by deith — September 26, 2011 @ 11:30 am

  9. Yeah, it was quick. Actually, everyone here is shaking their heads. Black box. Big black box. No one knows what’s going on. The rumor is that “a deal was cut” with Medvedev, who wasn’t keen on leaving his post. But what the deal was and why Kudrin is sticking his nose out and getting it chopped off — not clear.

    but pahoben made me laugh, so thanks!

    Comment by mossy — September 26, 2011 @ 11:51 am

  10. mossy-thanks for that. I know it is unsettling to have a major public dispute like this and not know the background-very unusual.

    Comment by pahoben — September 26, 2011 @ 2:55 pm

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