20 years under Putin: a timeline

Contrary to the forecasts, the general tone of Vladimir Putin’s 2013 annual address to the Federal Assembly was rather restrained. According to political analyst Tatiana Stanovaya, the Kremlin has paused its program of repressions in the run-up to the Sochi Olympics.



The president’s most recent address was awaited with considerable anxiety, especially considering the wave of reactionary policies that succeeded Putin’s 2012 address. The recent dissolution of the state-owned news agency RIA Novosti was another alarming signal. The situation was further fueled by rumors that mayoral elections would be abolished through a reform of local self-government. However, the president’s address did not go so far as to direct a continuation of the crackdown. It is possible that the Kremlin took into account society’s negative reaction to the 2012 address. It is also possible that the crackdown has just been put on hold in the run-up to the Sochi Olympics. In any case, the most recent presidential address turned out to be much less emotional and more appropriate than the one that preceded it. Thus, we must ask: Judging by Putin’s speech, who is to win and who is to lose next year?


Key beneficiaries

The All-Russia People’s Front (ARPF) is likely to become a key beneficiary of the Kremlin’s plans in the coming year. It is important to note that although he supports ARPF’s primary platform, Putin, in keeping with the principle of political moderation, did not once mention the name of the organization in his address.

The first ARPF proposal Putin supported was the local self-government reform, which among other things implies that mayors of large cities will be incorporated into the regional executive branch. Without getting into specifics, Putin noted that the reform should be “examined in detail.” Although the president does not want to be directly associated with an abolishment of mayoral elections, a draft of the reform law has recently been published by the Institute of Social, Economic and Political Studies, which works for the Kremlin. In other words, the ARPF will in a way be responsible for the reform.

The second ARPF proposal Putin supported was the idea of drafting a bill on public control, which will specify the ARPF’s official status. The bill itself was prepared two years ago by the Public Chamber and the Russian Presidential Human Rights Council (HRC). Political will to adopt it, however, was lacking at the time. In September 2013, Putin ordered the HRC to prepare a draft law based on the preliminary work done by the ARPF; this law included a proposal to create a widespread system of public councils—an idea Putin mentioned once again in his address. According to this new bill, the ARPF will assume the status of a public control body. Although in essence the ARPF is a quasi-governmental structure, the political potential of such organizations should not be underestimated, especially in the context of a general decline in authority of the regime and parliamentary institutions. Thus, ARPF councils will have the right to conduct investigations and consequently will rival parliamentary investigation bodies. They will also be able to carry out inspections of government bodies—rivaling the Accounts Chamber—and to request information from government agencies.

Third, Putin supported the ARPF’s idea of drawing half of the Public Chamber from various professional and social groups. The current Public Chamber was formed under the influence of Vladislav Surkov. The Chamber will eventually become a quasi-public structure and will be “closer to the people” only on paper. One might assume that one of the objectives of the Public Chamber will be to mobilize public support for the president.

Governors also seem likely to become beneficiaries of the Kremlin, judging from the president’s address: they were promised additional funds through an interbudget transfer in the amount of their region’s investments in technoparks and incubators. The Siberian and Far Eastern regional governors turned out to be the luckiest of all: Putin suggested that their regions be designated privileged tax zones, a move aimed at supporting the development of a non-resource-based economic sector. This initiative is nothing but a reincarnation of Dmitri Medvedev’s idea of creating offshore tax zones inside Russia. When Medvedev put forth this proposal, economists found it unacceptable. The bottom line is that resource-based companies, surrounded by non-resource-based businesses that serve their interests, will be the primary beneficiaries of such zones. Putin’s initiative is in essence directed at supporting Rosneft and Gazprom’s ambitious energy projects in Eastern Siberia and the Far East.

This year, the Medvedev government became the president’s main target. During the address, one often had the impression that there simply is no government in the country.

Russia’s Federal Migration Service is likely to become the third beneficiary of the Kremlin in the coming year. The president declared that the migration laws should be toughened, especially regarding illegal immigrants. This, however, was not the result of successful lobbying efforts by the federal migration service itself but was to a great extent a reaction to increasingly frequent interethnic conflicts, such as the recent ethnic riots in the Biryulyovo district and the town of Pugachev. The phrase “amoral international,” which Putin used to describe the actions of ethnic mafias and law enforcement officials, has become the slogan of the day.


Small concessions

The Russian Academy of Sciences (RAS) received a certain amount of support from the president in his address. Scientists will participate in the development of programs directed at increasing labor productivity. The recently created Russian Scientific Foundation will also enjoy some support. In a way, however, these bonuses are nothing but compensation for the humiliation members of the Academy endured a few months ago after Putin’s decision to reform the RAS.

Vyacheslav Volodin was also treated kindly in the president’s address. Putin praised him for conducting regional elections in which, for the first time in years, the real opposition was able to participate. This reflects the Kremlin’s general trend of softening its attitude with regard to critics of the regime. The Russian Supreme Court’s ruling that the guilty verdict against Pussy Riot was unjustified, as well as the granting of amnesty to some participants in the Bolotnaya case, can also be seen as signs of the same trend.

Exporters of the non-resource-based sector got lucky too: Putin ordered that the government develop measures to simplify the procedure of obtaining export permits. Two-year tax holidays were promised to small businesses, and a simpler procedure of obtaining construction permits was promised to business in general.

Certain promises to the people are also worth mentioning, such as more affordable housing, the possibility for students to get back their essays after the Unified State Exam, development of the health insurance system, a scheme to halt the rise in dormitory fees for student residences, and a new housing program for Russian families.


The losers

This year, the Medvedev government became the president’s main target. During the address, one often had the impression that there simply is no government in the country; instead, there is a body that does not do anything, and even when it does something, it does it so badly that it results in public outrage. According to Putin, the government’s work has stalled, and the May decrees are not being fully implemented.

State companies and state corporations were subject to criticism as well. Putin cautiously criticized Rosneft, without mentioning the company’s name, for its offshore deal to buy TNK-BP and called for tougher financial control over state companies. In this context, Putin mentioned the problem of the deoffshorization of the Russian economy, which has already been discussed by the authorities for several years, without much success. The president declared that offshore companies will be denied access to state guarantees, state contracts, and loans from state banks. Furthermore, such companies will have to pay taxes according to the Russian law.

It is worth mentioning that the fight against offshore companies is nothing but a ruse. Russian companies, including state-owned companies, have a complex structure that allows them to pay taxes at a lower rate in Russia (and take credit for being socially responsible businesses) while at the same time using offshore zones for closing important deals. Practically all state companies use offshore zones. Gazprom, however, uses this strategy more often than the others, for which it is regularly criticized by minority shareholders. In this regard, it is very probable that Rosneft lobbied Putin to direct criticism at offshore companies, since its competition with Gazprom has become more pronounced over the last two years. Thus, Rosneft CEO Igor Sechin publicly promised to withdraw TNK-BP assets from offshore zones and signed a corresponding agreement with the federal tax service.

The general tone of the presidential address turned out to be rather restrained. While talking about Russia’s international policy, Putin noted that Russia does not seek the role of a global hegemon, boasted of Russian diplomats’ success in Syria, underlined the importance of the Eurasian Union, and even made it clear that Ukraine’s observer status in the Customs Union suits Moscow. The most probable explanation for such a softening is that the Sochi Olympics are drawing near. In the face of calls for a boycott of the Olympics, it is crucial for Putin to improve world leaders’ attitude toward Russia. However, one should not indulge in vain hopes for a “thaw”: next year’s address might be quite different.