American Enterprise Institute

Tuesday, September 18, 2007

[Edited transcript from audio tapes]

8:30 a.m.	Registration and Breakfast
9:00	Welcome:	Christopher DeMuth, AEI
9:05		Panel I: Domestic Politics
	Panelists:	Georgy Bovt, journalist and commentator
		Andrei Kortunov, New Eurasia Foundation
		Michael McFaul, Stanford University
	Moderator:	Lilia Shevtsova, Carnegie Center, Moscow   Leon Aron, AEI
11:15		Panel II: The Russian Economy
	Panelists:	Anders Aslund, Peterson Institute for International Economics
		Padma Desai, Columbia University
	Moderator:	Jonathan Schiffer, Moody’s Investors Services Johannes Linn, Brookings Institution
12:30 p.m.		Luncheon and Keynote Address: U.S.-Russian Relations: Yesterday, Today, and Tomorrow
	Speaker:	John Bolton, AEI
2:15		Panel III: Foreign Policy and U.S.-Russian Relations
	Panelists:	Fyodor Lukyanov, Russia in Global Affairs
		Mikhail Margelov, Committee on Foreign Affairs, Federation Council
		Rajan Menon, New America Foundation and Lehigh University
	Moderator:	Dmitri Trenin, Carnegie Endowment, Moscow   Andrew Kuchins, Center for Strategic and International Studies
4:00		Adjournment

Proceedings:

PANEL 1:  Domestic Politics

Christopher DeMuth:  Ladies and gentlemen, can we come to order, please?  My name is Chris DeMuth, I’m President of the American Enterprise Institute, and I’m delighted to welcome you all here today for the beginning of this day long conference, Russia on the Eve of Elections.  The symposium subtitle is Continuity or Change?  But, Russia has been the scene of such constant and tumultuous change now for 20 years, and then in the past two or three years further dramatic and a different sort of change with the recentralization of political and economic control in Moscow and the harassment or jailing, and, perhaps worse, of those thought to be in convenience to Vladimir Putin and his government, that it’s not entirely clear what, at this point, continuity would consist of. 

In any event, the old art and practice of Kremlinology has been reborn and I am really thrilled that such a highly distinguished group of students of the Russian economy, Russian politics, Russian foreign policy, and U.S./Russian relations should have gathered for today’s discussions.  My colleague, Leon Aron, is Director of Russian Studies at the American Enterprise Institute.  He published earlier this year a superb collection of his essays from 1989 through 2006 entitled, Russia’s Revolution, and, since that book was out, he has continued to put out a really deep and perspicacious series of essays in his Russian outlook series on the vagaries of the presidential succession, and, most recently, two wonderful essays on the title, Is Liberty Really Bad for Russia.  I’m delighted that he could take time out from his lucubrations to organize today’s symposium to be in touch with colleagues around the world and that they have responded by coming to be with us today. 

There will be a series of panels this morning, a luncheon address by our colleague, John Bolton, and a further panel in the afternoon.  I’m looking forward to a very deep and productive series of discussions.  To offer further words of welcome and to moderate the first panel on Russian Domestic Politics I will now turn things over to Leon Aron. 

Leon Aron:  Thank you very much, Chris.  Thanks again.  I would like to extend a few other thanks in addition to those, to Chris DeMuth for his constant interest and support of the Russian studies at AEI, my colleague and boss, Danielle Pletka, Director of Foreign and Defense Studies, has been very supportive of this project, the wonderful staff of Lectures and Seminars under Jessica Browning did it with customary perfection, and last but not at all least is somebody who you will see a lot today, and that’s my Research Assistant, Kara Flook, who has been, in the last few days, and nights, I should say, thoroughly engaged with this conference.  One final note, as many of you have already found out by going to our website, Vladimir Ryzhkov is unable to come, he has taken ill, although nothing serious, but, his doctors recommended that he stays put for a couple of weeks. 

With that, I will now assume my duties as the Chair of the panel with a very, very brief introduction, I don’t want to take any more time than necessary from our wonderful panel, a very brief introduction of the panelists with the caveat that you already have their bios in your folders, and, therefore, there is no need for extensive introductions.  [Recording goes silent briefly.]  . . . served as Editor in Chief of Profil and Business Week Russia, of late, and, before that, as Deputy Editor in Chief and then Executive Editor in Chief of Izvestia.  A very good personal friend for many, many years, Andrei Kortunov, now the President of the New Eurasia Foundation, but I’m sure known to a lot of you as one of the top specialists on U.S./Soviet, U.S./Russian relations, and Russian foreign policy, but, of late, delving very deeply into Russian domestic politics as well. 

Another, well, this is a panel of close friends as well, Lilia Shevtsova, whom I know for longer than we care to remember or publicly acknowledge.  She is a Senior Associate at the Carnegie Endowment for International Peace and Moscow Carnegie Center and Associate Fellow at the Royal Institute for International Affairs, known, again, like other members of this panel, to all of you for her superb articles on, over the past 15-20 years on Russian domestic politics and her wonderful books.  Michael McFaul, who asked to go last because he is technologically most proficient, and, therefore, would be using, I believe, a PowerPoint.  With Michael, I have to take a very deep breath before I rattle off all his positions.  He is the Director of the Center of Democracy Development and Rule of Law.  He is the Deputy Director of the Freeman Spogli Institute for International Studies at Stanford University, and also a Senior Fellow at the Hoover Institution, and a non-resident Senior Associate at the Carnegie Endowment for International Peace, and I think it’s all of that in addition to being Professor at Stanford. 

With that, in alphabetical order, save for Michael McFaul who asked to go last, we will start with Georgy Bovt.  Thank you very much.  The order is this, the usual order, we speak for 15-20 minutes, please hold on to your questions until the panel is over, and there will be ample time for that. 

Georgy Bovt:  Thank you very much for coming here and for allowing me to speak about Russian elections, or, whatever.  So, probably the most important question for today is, who is Mr. Zubkov, but I don’t know the answer.  [Laughter].  I probably met this guy, but I don’t remember any reflections, any recollections about his personality, and what person he is.  Could he be the next Russian president?  Sure, he could be, and recently Mr. Putin mentioned that there are about five, he mentioned five guys who are electable in his mind.  Mr. Zubkov is the sixth guy.  So, will there be primaries?  Well, they are already on.  Mr. Putin has started the primaries and the most important goal for him is to select a person who will be like him, like second Putin, because it’s very important for him to preserve in all peculiarities the characters and the framework of the regime he created.  So that’s why he preoccupied most of all of preservation and keeping it in the regime power.  So, the most important thing to pick out the person is, is to pick out the person who will be like him.  But there is no such person in Russia, that’s the problem, and that’s why he is hesitating, that’s why he hasn’t decided yet, neither about his own future, concrete, I mean future, concrete position, and concrete, well, preoccupation, and about the concrete person who will be his successor. 

I think that Mr. Putin, personally, don’t want to just mechanically nominate some person who give him guarantees of safety, like Yeltsin gave such guarantees to Putin in 1999.  I think that, well, he has some ideas in his mind, and one of these ideas is that this person should be somehow popular, and that this person should be somehow electable by the majority of the people.  Well, of course we can, we must, of course, have in mind the principle characters of the Russian electoral process, which is heavily influenced by so-called administrative resources, influenced by restricted media coverage, powered and directed by the current administration, but, nevertheless, he wants this person to be elected, not just, well, with mechanical accounted voices, votes, but, simply elected to be a popular person, to be accepted by the people, and to govern the nation for coming four years. 

As for the Duma elections, as you probably know, this year elections will be the first held under the country’s much amended election laws.  Not all 450 deputies will be elected, only as members of the party, there will be no independent candidates, and there should be 7 percent barrier to be overcome in order to get into Duma.  As for now, there are 15 political parties registered with Minister of Justice.  What allows them to participate in elections?  According to some estimations, probably a dozen of them, maximum, a dozen of them, will really participate in elections.  And there are definite four, probably five, let’s say four, four runners.  Of course, the Unified Russia, according to recent polls, they enjoy from 40 to 59 percent of populous support.  In the second place is so-called Just Russia, with the media coverage comparable to Unified Russia, United Russia, mostly due to its leader, Sergey Mironov, who is the head of the Council of Federation, the upper chamber of Parliament.  But, still lagging behind with probably 10 to 15 percent of populous support.  Liberal Democrats will get from 5 to 10, according to nowadays estimation, and the Communists will add some votes, as compared to the latest Duma elections.  Probably they will get 15, maximum up to 20 percent of the votes, according to current estimations. 

As for the liberals, it’s a big question whether they will be able to overcome this 7 percent barrier, that is true either for the Apple Party, Yabloko Party, or the Union for the Rightest Forces or any other liberal organizational party.  The question is whether their liberal ideas are totally discredited in the Russian society or not, because the very term liberal democrats is heavily, deadly, I would say, unpopular in the society at all.  Aldor [ph.], at least in his first term, President Putin actually put into practice some of the advices and planks of the platform from the platform of the Union of the Rightest Forces. 

The other question is, what will be the agenda for the campaign?  There is still no answer for that because, well, recently could be suggested that nationalism could be put on the agenda, but, nationalism mixed with strong anti-western sentiments appears probably not being very popular with the Putin center circle.  He definitely wants the sentiments to be under control, but, once you’re unleashed there, it would be very difficult to control them in future.  So that’s why I think that his inner circle is quite split on the matter.  Some of these guys would probably be glad to use the nationalism as a powerful tool to come to power and to rule the country, but there are some other people who are hesitating about this, being afraid of this very matter to be unleashed, and come out of the control.  They want to control everything, and once they unleash the nationalism, it will be very difficult to keep the control over the society. 

As for the other topics that could be put on the agenda, as for now it’s very difficult to find any difference between party platforms because none of them, if you put them on the table, without names and any partisan definitions, it will be very hard for you to distinguish, where is the platform of United Russia and where is the platform of the Communist party, for instance, where is the platform of the Just Russia, because everybody promises everything to everybody.  There will be free medicine, there will be big pensions, and some other stuff.  So, all of them quite similar. 

But, recently, probably it’s even premature to speak about it, but, recently I’ve noticed that some of the parties try to find some demands and some slogans which could sound more concrete for the society.  For instance, in the recent interview, Sergey Minorov was the head of the Just Russia Party, made some statements about, well support of the youth generation by somebody with concrete propositions of how they should behave, how they should study, how they should do their career and so on and so forth.  There could be some other planks appear on the platform which sound more concrete and look more concrete for the electorate, but, so far, it’s premature to speak about the general appearance of the whole electoral campaign. 

The other question, which also important for this electoral campaign, either for the Duma campaign and for the presidential campaign, is the Putin’s legacy itself.  What is, as I’ve said, what is most important for Putin personally is to keep his people in power, and to keep his inner-circle in power with the same redistribution of balance and influences as he has already established.  That’s why he put all his inner-circle members and head of economic private and governmental corporations, and that’s why he wants to keep them in power after the elections.  Whether that will be possible is a big question because there is no precedent in Russian history when any Russian ruler, a successor, or overthrown their previous rule, would ever keep his promises on continuation of the course.  I guess that could be even a personal tragedy for Putin because the nearest future, even the nearest future could not meet fully his expectations about this future.  And, in the Russian political system, there is no position for him being effective enough to influence the, well, full-time president who will be his successor, and whether they’ll be his personal friend, as Sergey Minorov, or even such an unknown person as Victor Zubkov, the outcome could be the same.  The future, the nearest future, could not meet fully the expectations of Putin, but probably there is more reservation, probably he could simply step down and the current play he plays is just for the sake of creating the image that he is in full control until the 3rd of March of the year 2008, and that is the end of his game, and the continuation would be put on the shoulders of his successor.

So, that’s all, thank you very much.  [Applause]. 

Leon Aron:  Thank you, Georgy, for staying right on time, set us on the right course.  Andrei. 

Andrei Kortunov:  Thank you, Leon.  Last time we were here, was it a year ago, more than a year ago, I recall that I was on the foreign policy panel, and now, Leon, you moved me to the domestic politics panel, I wonder whether it is a promotion or demotion.  [Laughter].  Yes, maybe it’s kind of a diversification of my own academic portfolio.  But, let me start with saying that I’m grateful for having the chance to be here and to talk in front of this audience.  I should say that Leon is the person who can bring the most distinguished audience in the city.  I don’t know how he managed to do that, but, definitely, it’s quite exceptional.  It’s always a pleasure to be here.  Let me say that since the subject is really very broad, and we have a number of exceptional speakers, I will try to limit myself to giving you a snapshot of the current situations, specifically following the line of the previous speaker, I will talk about the elections to the State Duma, and will give some of my humble conclusions about where it might lead us to. 

Let me say that in my opinion, it would be fair to state that Russia is entering a new political cycle.  It is entering a new cycle, and this cycle will be quite different from what we witnessed during eight years of Mr. Putin.  The elections to the State Duma might be one of the first manifestations of this new ballgame that we are going to get involved in.  First of all, the political discourse is going to be quite different from what we had earlier.  It’s not a discourse between the political establishment on the one hand, and the non-system position on the other.  It’s rather a fight within the political establishment.  For the first time, these elections will not be black/white elections, not a fight between communists and liberals, between nationalists and integrationists, but we will have a much more complicated picture within the political establishment mostly. 

Second, it’s clear that politics is getting local, in Russia, like in any other country, and voters are much more concerned about specific issues than they are about big ideological questions that dominated the political scene for almost two decades in the Soviet Union and in Russia.  It’s clear that politics will reflect, more and more, the social agenda issues like education, housing, like local government, issues like medical care, like pensions, will fly high.  That would change the essence of the Russian politics, gradually. 

And, finally, the last, but not the least, I would venture to say that politics has become somewhat more professional in Russia.  With all the reservations we might have about the conflict establishment, we can see that there is a learning curve and a rather steep learning curve. 

So, let me just illustrate these basic assumptions by the analysis of the current elections to the State Duma.  Let me give you a couple of facts about the elections.  First of all, the turnout, it’s evident that the turnout will be lower than usual.  During the ‘90s and earlier in this decade, was sure the turnout of about 60-65 percent.  If you look at polls this year, the May polls suggest a turnout of 45 percent, August polls suggest a turnout of 49 percent, close to 50, but not more than 50 percent.  Of course, there might be independent variables that will influence the turnout. 

For example, there might be a huge scandal, and, of course, when Mr. Zhirinovskii involves Mr. Lugovoi, running, on top of the LDPR list, this is something that might, at least in theory, generate new interests towards election, and if we have many people like that, probably the turnout will be higher, but it’s not very likely.  Of course, personal involvement by the President might also drag these levels higher, but I’m not sure that Mr. Putin is ready or willing to be personally involved in the election to the State Duma.  Likewise, the involvement of the successor, if we have the ultimate successor within the next two or three months, might change the picture, but, not as dramatic as potential involvement of the President. 

So, the odds are that voters will be relatively passive compared to what we had earlier.  Partially, it is a result of the limited protest vote potential, the tie erases all the votes, and, definitely, there are fewer people in Russia who are willing to use their votes as protest votes.  Partially we can say that the reputation of the State Duma is lower than it was four years ago, and, again, polls suggest not that Russians do not pay attention to democratic procedures, but they really do not trust political parties that we have today in Russia.  Even if we compare the figures that show respect to the State Duma, the figures that show respect to the government, government gets higher scores than the State Duma.  The perception is that the State Duma is not for real, that under the current political system it cannot make decisions, and, definitely, it cannot defend the interests of the population. 

Now, if you take the new legislation, in what way can it influence the outcome?  Conventional wisdom suggests that it favors United Russia.  It’s not necessarily the case because for United Russia it is easy to co-opt, to absorb, if you wish, to bribe, independent Duma members.  If you look at the results of the last elections, United Russia got about one-third of the votes, however, it was able to control the State Duma.

So, I would rather say that the new legislation, the new proportionate system of our presentation favors big parties and is absolutely ruthless to newcomers.  This is definitely a purpose that the Kremlin has stated very explicitly, to personify politics, to consolidate big political parties, and to make sure that we have a limited number of players represented in the State Duma. 

So, if you look at the potential composition of the State Duma, you will definitely see three political leagues.  The first league is represented by one party, which is United Russia.  No one can compete with United Russia, even in the Kremlin they say about 1.5 party system, not about two-party system, but 1.5, suggesting that probably the Just Russia, or, would you say Fair Russia in English?  Just Russia, is not going to compete, Just Russia.  Yes, that’s interesting.  Is not going to compete with the United Russia. 

So, the only question is, how many votes the United Russia will get.  Indeed, statistics suggest that right now they can count on support from approximately 47-48 percent of the public vote, but, of course, the [indiscernible] can bring this figure up. 

The second league, Just Russia, you know, 12 to 15 percent of the public vote, depending on whether they can steal some votes from communist, and, definitely, Mr. Mironov is quite explicit about his intention.  He says that the party should gradually accumulate all the left flank of the political spectrum of Russia, however, it’s not clear of how he can do it with people like [indiscernible], whether [indiscernible] is the person to represent the left wing of the political spectrum.  She’s definitely fair. 

Now, if you take communists, I think that communists will get lucky if they get 15 percent of the public vote.  They have to compete with the Just Russia, they have also compete with some other nationalist groups.  However, one can argue that this 15 percent is more or less secured, unlike other parties of the second league, they have stable constituency which they can count on.  So, we cannot really expect major surprise here. 

Now, Liberal Democrats, I’m a little bit skeptical, if you have all these defections, and if you consider the relative importance to the Kremlin, one can argue that it’s not clear whether the Kremlin will need this party in the next State Duma.  Zhirinovsky’s clearly nervous.  He doesn’t feel secure, and that might affect the overall performance. 

And, finally, the third league, we can talk about parties which are not likely to cross the election barrier, and are not likely to be represented in the State Duma.  There are a number of them, probably the most prominent is the Union of Rightest Forces.  They can still count on something like 4 or 5 percent of the public vote.  It’s yet to be seen whether they are able to make use of this electorate.  If you take Agrarians, Yabloko, Patriots of Russia, they are not likely, at least right now, they’re not likely to get more than 2 percent of the vote each.  So, basically, unfortunately, for many of us the third league is not going to be represented in the State Duma, unless something dramatic happens, and the situation will change completely. 

Now, does it mean that we don’t have anything to watch?  I think that it’s not the case.  Indeed, there are some indicators which will be relatively important because they will somehow show the trajectory of the Russian political development, and they might become more explicit and more important in years to come. 

Let me outline a number of these indicators that observers can watch.  First of all, the specific level of political support for United Russia, and, it’s a big issue, whether they get majority, or whether they get qualified majority, or whether they get less than 50 percent, I think all these indicators will be important because they will tell us whether we can really count on a two-party system in the foreseeable future, or the system will be consolidated around the United Russia and no changes can be expected. 

The number of parties represented in the State Duma, we can have a three-party Duma, let’s say with the United Russia, Just Russia, and communists.  We might have a four-party Duma, if Liberal Democrats gather.  And, finally, I still do not exclude that we might have a five-party Duma, if, let’s say, the Union of Rightest Forces gets, which is not very likely, but, still, this is something to watch, because the composition will definitely define the format of debates in the State Duma, and if the Rightest Forces are represented, of course the professionalism of the next Duma is likely to be higher than otherwise. 

Who is going to get second place?  This is also important.  Is it the Communist Party, which will get the second place, with 15-17 percent of the public vote, or, is it Just Russia.  And, so, the fight about who will represent the left flank of the Russian political spectrum is important for the future.  Either communists are going to change and gradually turn into a social democratic party, which is still possible, although not very likely, or, Just Russia is going to marginalize the communist party, and the communists will move further to a more radical position. 

And, finally, the last, but not the least, participation of Putin or his successor, to what extent Putin might indicate his preference, to what extent he would like to demonstrate his particular support for any of the political forces.  It’s not clear, but, if we see it, it will definitely define the balance of powers in the next State Duma. 

Let me make one conclusion, that, in my opinion, is relatively important.  I think that the next political cycle in Russia, no matter what people in the Kremlin really want, will move the country towards greater political pluralism.  I think it’s almost unavoidable because no next leader will be as popular as Mr. Putin, I think it’s also unavoidable if Mr. Putin really wants to get back in 2012.  The only hope that Vladimir Putin has if he wants to get back is to have a more pluralistic political system between now and 2012.  That means that we might see a kind of embryonic checks and balances system, we might see more political battles in the legislative power, or we might see a little bit more independent judiciary, and, probably, a more diverse political discourse in Russia.  It is a challenge.  I think the question is, what specific forces, what parties, what political groups are going to make use of this opening.  But, my bet is that we will see this opening, and this is probably the most characteristic of the new political cycle that Russia is entering.  Thank you. 

Leon Aron:  Thank you very much, Andrei.  [Applause].  And now we’re moving to Lilia Shevtsova. 

Lilia Shevtsova:  Thank you, Leon.  And, if I may, I would like, first of all, to return to our gratitude to you, Leon, not only for the fact that you’ve collected us here, I mean the members of FOL, Friends of Leon, but also for the fact that, you, one of the few western analysts, have been, through the years, and that’s not a cheap compliment, I’m pretty sure that all my colleagues will join me here, you have been, through the years, the person that has been keeping the intellectual discourse on Russia on a really high level.  And, if I may, I would strongly urge all of you folks to read the latest masterpiece of Leon, On Liberty in Russia, which really provokes a lot of serious thoughts and conclusions.  So, thank you, Leon.  And, just remember, that members of FOB, friends of Bill, once helped him to become a president. 

And now let me turn to my brief points.  I will say I will apparently limit them to few brushstrokes.  Firstly, on continuity and change, and here I have a bit different view from my friends, from my friend Andrei, secondly, on Putin’s legacy, and, thirdly, on the role of the west, on the role of the west in Russia, domestic developments.  So, regarding the dilemma, continue and change, President Putin has recently demonstrated how he’s going to solve this dilemma.  And, apparently, we have some arguments to conclude that President Putin will follow the Russian axiom, that means that the change of the Russian political regime could be the means or the key factor in guaranteeing the system’s survival.  And, we’ll have, perhaps, one year, or a year and one-half, to see whether this axiom, the change of the regime, is the means of the systemic survival, whether this axiom is true or whether the events, the developments, the political forces of Putin’s successes will change the axiom. 

My feeling is that, at least during the next year, and through the year 2009, apparently will have a lot of modifications on the surface, new balance of forces, new people, some serious shuffles on all levels, in short, the change of political regime.  This is the logic, because the system and these people, the political class and the business, and all the networks, cannot survive if the regime is frozen, the situation is frozen.  They will have to change at least partially, but slowly and gradually, and apparently President Putin will preside over the regime change, and over the annihilation of his previous regime.  It’s just like Hegelian dialectic, the rejection of rejection, [indiscernible].  Leon, I’m not sure that I translated correctly. 

And the change of regime, and here I would underline and highlight it strongly, should not mislead us, because the change of the regime is the way for the system that includes bureaucratic authoritarianism, or you can define this authoritarian power in a different way, bureaucratic capitalism that Andrei Kortunov so deftly and skillfully has been analyzing, and assertive foreign policy.  These are the major components of the system.  So these elements, the system process will survive, it has potential to survive, and to self-perpetuate itself. 

There are at least two factors, one systemic and the other situational, that explain to a great degree its resilience.  The systemic factor is the constitution.  So far, less constitution is in place, which justifies, endorses, legitimizes the concentration of powers in one hands, and the role of the president as the arbitrator standing above the free and the society and the system.  It’s highly doubtful that your forecast will be true, or any element of political pluralization of the political sin would mean that the system will start its way to the state, or to the suicidal state ground.  I’m not coining this phrase, I’m stealing it from Arnold Tornby, there are systems that undermine themselves by the way of starting some kind of apertura, opening, the moment Putin’s successor will start the open, they’re done.  Just like Gorby with his law of unintended consequences.  The moment he started, he introduced several elements of free elections, the Soviet Union was done with. 

Second point, with several subpoints, on Putin’s legacy.  It seems to me it’s fair enough, and Mike will correct me if I’m wrong, because he’s definitely going, I will be looking at his computer, he’s going to put Russia into the global and comparative context.  It seems to me it’s fair to say that Putin has done his job and has created his own coffin at least two years ago.  He has done his mission.  He’s performed everything that he could.  And now, President Putin could be viewed as the hostage, and maybe victim, of his own logic, of his own network, of his own system, of his own legacy, and he doesn’t know what to do with his own legacy by the way.  All these recent situation, developing, just have proved that those people at the top are at a loss, what to do with personified power. 

So, several components or elements of Putin’s legacy, and, by the way, he could easily preside over his legacy, being the hostage of it.  So, first element, Putin’s consensus, this is amazing, this is a miracle, that, for the first time after Stalin, we have such a broad political and social national consensus in Russia that both Yeltsin and Gorbachev could have been jealous of that consensus.  But it’s very important, what is this consensus about?  This consensus is about preserving, prolonging the status quo.  And this consensus includes a lot of very social and political groups, starting with liberals and technocrats, in the government and outside of the government, from independents, rallies, and the rest of the political and social scene, and the major part of the society.  We shouldn’t avoid this, very unpleasant for us liberals, conclusion, yes, up to 70 percent of the society would like to support and prolong the Putin’s consensus. 

So different groups, various political forces, with antagonistic strategic interests, they support the consensus because they don’t have alternative or due to other reasons, but we should also be very cautious when we are looking at the [indiscernible] of this consensus and status quo.  Of the desired people to have the status quo, it’s very important, so the [indiscernible] of this status quo could be the following.  Well, you may add, if I’m wrong, or if I miss something, the oil price, the fear of repetition of Yeltsin’s bizarre chaotic period, so, in fact, the stability alone could be explained by the fact that Russian society is living in the pocket or in the shadow of Yeltsin’s regime.  And people constantly compare Putinism to Yeltsinism.  And, also, the sense, well, the element, such element as acquiescence on the part of the political leadership towards the society, in fact, political leadership, political system, leaves society to survive by using different means, under one term or condition, don’t meddle into politics.  And the society is pretty happy in this situation of lull, numbness, within the basket of Putin’s status quo. 

Second element of Putin’s legacy, I will call it, tentatively, Mike could correct me, or just give me some fresh idea how to define it, so Putin’s gimmick or invention know-how is, Putin’s imitation democracy.  There are a lot of types of democracy, as we know, from the writings of my friend and colleague.  Putin’s imitation democracy is imitation not by default, but by design.  And, so far, it’s one of the major impediments on the way of Russia’s transformation.  And this is one of the major factors that discredits the real democratic institution.  And, Putin, and this is his know-how, is the first Russian political leader who said that Russia is not a unique country.  So, he got rid of this uniqueness, uniqueness paradigm, and stereotype, Putin is saying and arguing, Russia is just like all other democracies, or, even better, just look at the United States and some other countries.  Well, so, we are only unique in means of implementation, the usual liberal democratic values, the standards.  We found our own means. 

Element number three, or, component number three, also Putin’s gimmick, at least partially he could be credited.  This is Putin’s mobilization technique, in fact, with approval of the society, and major part of the political elite, even some liberals and democrats, it’s hard to be liberal and democratic currently in Russia, and, at the same time, to be within the system, anyway, he’s using the militarist syndrome, or militarist rhetoric, he’s returning back to the traditional Russia matrix in order to justify the centralization of the state, and it’s up to our colleague, Dimitri, Fyodor, Mikhail, to tell us to what extent he is relating, and to what extent Russian political elite is serious about returning to the old matrix. 

And, final element, sometimes I’m forgetting my elements, final, oh, Putin’s final element and component, but maybe there is some other, I’m talking about the really serious ones, the Putin’s foreign policy doctrine, and, by the way, the fact that Andrei is sitting here with us, and Andrei is a well-known specialist on foreign policy, only gives credit to Leon Aron’s understanding of Russian political situation, and Russian systemic development because by putting Andrei here, Leon says that foreign policy is the element of Russian political picture.  And I would say, Fyodor, Dimitri and Mikhail should be sitting together with us because foreign policy, under Putin, became the servant of domestic prerequisites.  And I will steal another phrase from another good friend, Robert [indiscernible] saying that, Putin has succeeded during several months and at least maybe a year and one-half, in mustering and in creating the foreign policy as a paradigm to be with the west and to be against the west.  But he has lost.  He has lost because at least one element of this pattern continued to be quite successful, in mobilization, the Russian society on the anti-western platform, but, as regarding the relationship between Russia and the west I won’t say that he has been politically successful. 

And the last moment, quite unpleasant from our western colleagues, on the role of the west, in Russia’s domestic development, here I will be, again, I will use my brushstroke, I will be very crude, and I’m not going to use any kind of shades, etc.  Of course the west is not a serious factor in Russian domestic development.  The west is not a key or crucial factor, definitely not, and I understand all domestic prerequisites, drivers, factors, that have brought Russia to the paradigm that we are in now, and that Georgy and Andrei so elaborately have discussed.  But the west, it seems to me, is creating quite a benevolent and quite a stimulating environment, international environment, for the self-perpetuation of the imitation democracy, and the Russian system. 

And there are several factors in play.  I would say, firstly, lack of the western common strategy of embracing and engagement Russia.  Secondly, a lot of misunderstanding within the western political intellectual community, what’s really happening in Russia, and schematic approach, and my friend Dmitri Trenin has been totally right, right in that the west should understand Russia.  Thirdly, both attempts, acquiescence of the Russian political regime, has been so skillfully, no, no, brilliantly demonstrated by the western political leaders, including the American president, and, the attempts of other political forces to demand Russia’s isolation, building of the cordon cemetiere bore these radically diametrical antagonistic ways only help Russian regime to consolidate.  And, finally, it seems to me that Russian political regime has been extremely successful, these guys are very bad strategically, but they are pretty good tactically, in co-opting the western business, the western political elite, and western, even trying to co-opt western intellectual elite, the cream of the cream.

Maybe I’m pushing the bolt too further, but, several examples, I advise you all to read beautiful masterpiece, Gerhard Schroeder’s recent book that has been translated into Russian and English, well, I just cannot quote, well, I’ve got a quote, but I don’t want to embarrass the German nation.  Second, terrific gratitude, with a bow, in the Japanese style, of the president of Shell, just recently, at the St. Petersburg Economic Forum when, what’s the name of the guy, because it’s such a difficult name?  Yes.  Thank you, Andrei.  So, with a bow, he’s been waiting at the door to express his deepest gratitude to the Russian president for solution of the Shell problem, that after we kicked Shell out of Sakhalin 2.  And, he’s the beautiful, brilliant, adjectives quote, from one of the members of the Valdai group, can I quote him, he’s a good friend of many of us, I will save embarrassment, I’m not going to mention his name.  Russia, the member of Valdai group, just recently fresh from Valdai, recent Valdai, maybe the last Putin’s Valdai, sorry, Andy Kuchins, my friend, I saw your face, but, well, he knows whom I am quoting. Russia seems like an extremely open democratic and ultra-free, really free country, when you’re standing next to the Russian leader on the veranda only 15 centimeters away from him, holding a glass of brandy and champagne, that makes a strong impression.  Really, this is a democratic leader.

[Laughter].

Well, and, you know, just read the articles from the British, unfortunately, I haven’t read the pieces from the American newspapers, recently, but I’ve read Independent and Guardian, and I will save embarrassment, because, well, in a different form it was the same song.  So, all this—Shell, Gerhard Schroeder, behavior of Chirac during the G7, sorry, G8 summits, and especially at the EU Russia summits, all these could create an impression among the Kremlin elite that they have succeeded to co-opt nearly everyone.  We have them all. 

And, really, the final thing, in the system that we are talking about, and Mike will be discussing, is the system sustainable?  Well, it has potential to grow, and it has potential to self-reproduce itself.  While it has potential to grant economic growth, but, again, using brilliant, Yevlensky’s expression, this is the growth without development.  And what we have now is the system that do, sooner or later, not to bring further degradation of the Russian political elite, and we see it happening, but, sooner or later, it will bring us to what Andrei Illarionov has been predicted so far, crisis, or degradation, or regular rot.  The problem is, I’m ending with a paradox, that I don’t understand, and I don’t know how it could be so, it’s definite that this current reality, Russian reality, could be preserved and stabilized within the system, but the question is, and the question is very serious for all us Russian liberals, to what extent democratic system can preserve Russia in the current geographical format.  And I’m ending with a favorite quote of mine, German poet, Goethe, looking at the German nation, he said, we, Germans, are constantly creating problems for ourselves and the world.  In 1945 the Germans ceased to create problems.  But it seems to me there is another nation that continues to create problems for itself and the outside world.  Thank you. 

Leon Aron:  Thank you so much.  [Applause].  Michael.  You’ll disclose the author of that quote, I take it, off-the-record, to some of us, who are very curious.  [Laughter].  The timing of this conference, not accidentally, there were many factors that went into it, but, in part, to make it very, very hard for those who do participate in the Valdai conference to be in both places because I think unfortunately we are now at the point that anything arranged by the Russian government is becoming quite an impediment to a true discourse about Russia.  I think Valdai has become one of those things.  And I don’t want to say proud, but, I’ve never attended, and don’t intend to.  Mike. 

Michael McFaul:  Well, I’ve been invited and dis-invited to that esteemed meeting.  I actually don’t have anything to say.  I feel like, in fact, I feel like I don’t have, I haven’t had anything new to say about Russia for about six or seven years, and, therefore, I’m going to do two things.  I’m going to show you some slides as a way to disguise my lack of new ideas, and I’m going to try to provoke some of our panelists, both on this panel, it’s a shame, I flew all the way from California last night to be here, and then to find out that Leon isn’t even speaking, so I think that’s absurd, and I’m going to try to provoke him to say some things and not just moderate, but, too, I want to add some lead-in questions for my panelists, particularly on the economic side, but also on the foreign policy side.  You’ll understand why I’m going to do that in a moment.  The first thing I want to say, is, on predicting continuity and change in Russia, I would say Russia experts are just as bad as all social scientists in having really bad models and really bad predictive capabilities to anticipate revolution or democratization. 

And, so, I damn you all, and we can go back and read all the silly things we said in the fall of 1999 when we talked about continuity and stability and the strength of oligarchs and the Russian weak states and after Yeltsin comes Yeltsin, that was a famous article written around that time.  I just remind you of all that.  We all said that.  Not everybody in the same way, but, there was a lot of prediction of stability because that’s always your best option in terms of whether to predict continuity or change.  But, generally, I just want to say we’re bad at this kind of predictive game, more generally, speaking about social scientists, economists, political scientists.  So, that’s my first statement, we’re bad at it and we’ve got it wrong many times before. 

Second, to try to get beyond that banal statement, we at least have to understand what the regime is, and then my approach today is kind of to think of the regime comparatively about trying to predict its change. 

And, my bottom line, in case I go on too long, is that this regime is an autocracy, and let’s call it that, let’s not call it imitation democracy, and I’ll show you why I believe that in a second, but it’s a particular kind of autocracy.  It’s a personalistic regime.  It’s not a full-blown dictatorship.  And when you think about other personalistic regimes and what causes them to fail, the number one cause, if we look comparatively, is lack of economic performance.  And, so, for me, the central question is, does this new political regime that’s been put in place by Putin today, rather masterfully, I think, does it have a negative consequence or a positive consequence for economic development? 

I want these gentlemen who are going to speak after us to answer that question very specifically, and to get beyond just the correlation of rising autocracy and rising economic growth, but to try to get in and see, does this political regime have, within it, the components for sustained economic growth, or does it have it within it the components that will bring down economic growth, and, eventually, therefore, lead to the failure of the personalistic regime? 

If I had more time, I would also want to ask the same questions about foreign policy.  Is there anything about this kind of regime that leads to a different foreign policy behavior than, say, whatever you want to call the Yeltsin regime or the Soviet regime, does regime type matter for foreign policy?  I have a hypothesis about that, that it does, and that it can lead to negative consequences, but I’m not going to have time to get into that, hopefully the afternoon panel will take that question up. 

So, first, just to be clear, Russia, the formal institutions of democracy have not changed, informally there’s been tremendous centralization of decision-making, particularly, remember, there’s been no new democratic reforms and a weakening of checks on executive power.  I hope that none of this is going to be controversial, this is just reporting. 

These are just the various changes that have taken place under Putin.  I think this starts back in the fall, no, in the spring of 2000, and we could go back and chase that trajectory, we could have a long argument about whether this represents continuity with Yeltsinism or not.  I’d be happy to do that.  I think it’s important to understand that, actually, for predicting change, but let’s just keep to the descriptive part for now.  So these are the components of Putin’s personalistic regime. 

Photos from outside our office in the spring, just to remind you that, to me, this stuff is striking, that managed democracy, actually, I thought, was quite brilliant.  You know, you let the Lilia Shevtsovas of the world go, and talk about and publish her articles, and you let the Gary Kasparovs of the world talk about rising autocracy, and, say, we’re pluralistic.  This stuff actually kind of surprises me and makes me think that the regime is a little more nervous, that I would say, if I was advising the regime, then it should be, and I think has some of the seeds of its destruction, which I’ll get to later. 

Now, just to be clear, so we don’t get into some weird argument about American democracy versus Russian democracy, I would be happy to be invited back, Leon, and tell you of all the pitfalls of American democracy and how the Bush Administration has done a lot to undermine it.  I’d be happy to have that argument and present it.  I’m doing some writing on it.  I don’t want to do it here because here we’re talking about Russia, and, to me, just to be clear, these are the classic definitions of autocracy, from the literature, these are all quotes not from Russia experts, and I think you can look and you can see where Russia might fit depending on the way you define it. 

Now, what’s interesting is, we need to, I think, develop a little more understanding of degrees of autocracy, which, I don’t have an answer to today, I’m going to have a banal one in a minute, and kinds of autocracy in the same way that we’ve developed very precise notions of electoral democracy versus liberal democracy, and we’ve got ways to score democracy; I think we have to do a much better job at understanding different kinds of autocracy.  For me, Russia is a competitive authoritarian regime.  It is not a full-blown dictatorship.  It is not Turkmenistan.  It is not Saudi Arabia.  Right?

Elections have some degree of uncertainty.  We don’t know, 40 percent, 35 percent, Unified Russia, we don’t exactly know.  We don’t know who is going to be the next president of Russia.  Those are good signs.  Those are signs that there is some degree of uncertainty in political competition.  So it’s not in a 7/7 category of Freedom House, but it is an autocracy.  And, therefore, to talk about these elections, particular parliamentary elections as if they’re a meaningful election, I think is wrong.  And I think the Russian electorate, by the way, is beginning to figure that out, and I think Andrei’s point about falling turnout rates I think is the most important thing to observe in this next electoral cycle, is at the beginning of a long cycle where the Russian population begins to understand that the Parliament hasn’t done anything for the last four years.  Why should I give up a day, Sunday, it’s a Sunday, right, why should I give up my Sunday to go vote for these guys that I have no idea what they’ve done for the last four years?  That is, I think, a real problem, and begins to delegitimate imitation democracy.  That’s the problem, I think. 

And, in fact, I’ll skip that for now, I just spent a good deal of time in Morocco observing their parliamentary elections.  Morocco is, as you know, a monarchy, and, all the time, as I was asking, I was part of an international delegation to monitor the elections, and we were asking a set of questions about the status of Morocco’s partial democracy, or autocracy, I would call it, competitive authoritarianism.  And, just to give you a comparison set, these are the questions we were asking about that monarchy, and in the back of my mind I always had Russia in mind because I’ve observed every single parliamentary election in Russia since Russia became an independent state. 

And, here’s the comparison, equal access to the ballot:  easier to get on the ballot in Morocco than it is in Russia.  Level campaign field:  much more level in Morocco but that’s because the King makes it very clear that the parliamentary elections don’t matter.  So he makes it all fair for everyone. Interestingly, and I think it’s an important positive sign, Putin still cares about the outcome of the parliamentary election.  And it’d be great if he joined a political party and then got active in the election, that would be even better, he cares a little bit, the King doesn’t care as much.  That’s how you explain that one.  Real opposition competes:  in Morocco, yes, it’s a PJD, it’s a real opposition party, antithetical to the monarchy; in Russia, I’m not so sure.  I’d be curious what you all think.  Are real opposition parties competing, and do they have a chance to succeed?  I’m not so sure. 

Free and fair counting:  Morocco was fantastic, I actually think Russia will probably be relatively free and fair, although, I have no evidence or data to support that, I just think that’s true.  Curiously, there will not be the same kind of monitoring that there had been in other elections.  Parliament picks the prime minister:  in Morocco, no, the King does; in Russia, no, the President does.  In fact, in Russia, rather than waiting until after the election and then deciding what the balance of forces are to pick the prime minister, the President does it before the election just to make it convenient and stable, as he says, “I like to have a stable government before the elections”.  That’s actually antithetical to the way elections are supposed to work. 

And then, finally, does the parliament influence the choice of the Prime Minister:  the King in Morocco has made it very clear before the elections that he will choose the prime minister from one of the top parties.  He was very explicit and he said he didn’t say necessarily it would be from the top party, he was worried that the opposition party was going to win, and he didn’t want to choose the prime minister from that party, but he said, very explicitly, the government will be formed from the parliamentary majority.  That, obviously, is not the case in Russia. 

So, that’s the system.  Is it stable?  Answer, short-run, yes; long-run, I don’t really know, and I want to get to the long-run because the short-run I don’t think is that interesting.  Just to put Russia in comparative context, these are the survivability rates of different kinds of autocracies, and Russia is in the middle.  Personalistic regimes, on average they last about 15 years.  It’s not a military regime, which are easier to move back to democracy, and it’s not a one-party state, curiously and interestingly, that project, if it was tried, it failed in Russia, and that’s a good sign.  That, I think, and here I tend to agree with Andrei, the fact that that does not exist leads the possibility open for more rapid change being a personalistic regime.  Theocracy is not interesting for us. 

What do we know about personalistic regimes, generally speaking?  Economic growth is the key to their survivability.  This drives the whole thing.  It’s not ideology, it’s not organizational capacity, it’s not repression, and I would say all three of those nots are present in Russia, that’s a positive sign, and I think the attempts to do any of those three would also fail.  If I had more time, maybe in questions, I would talk about why I’m optimistic about any three of those attempts to sustain autocracy I think would backlash. 

So, the key is economic growth.  Therefore, the real story is the story after our panel about what are the causes and what are the long-term prospects of this growth?  I’m going to skip these slides quickly because we have a whole panel on it, but I think the Russian economic story is fantastic, Russians are richer today than probably they’ve ever been in their 1,000 year history, macroeconomic story is particularly amazing.  All this stuff is true and we can walk through the numbers, maybe Anders and other people will, but that’s not interesting; Ikea is there, it’s not just the rich people, let’s remember that.

The really interesting thing to me is does any of this growth have to do with the kind of political regime that Putin has created?  And, again, I want you to remember the big comparative map about around the world.  On average, democracies and autocracies grow at about the same rate, over the last 40 years.  You know, we could argue about the data, and specifics, but, on average, they grow about the same rate.  So when somebody gets up and says, autocracies grow faster, it’s a bunch of BS.  It’s not true, systematically.  For every China, there’s a democratic republic of Congo.  Right?  In the end, if you can’t read that, China is this fantastic performer at the high autocracy side, and then there’s about 40 or 50 autocracies that are really laggers, and, on average, they grow about as fast as democracies. 

So, the real question is, that’s not interesting to say there’s autocracy and growth in Russia.  That’s just such a stupid correlation.  We need to unpack it and we need to understand, is there a relationship between these things.  My quick answer is that, my intuition is that there probably is a relationship and it’s negative, not positive.  That is to say that the causes of growth are independent of regime change, it just coincidentally happened at the same time.  If you want to get at really what caused the growth, it’s devaluation, it’s tremendous economic policy, sound economic policies, I think we have to, Prime Minister Primakov, let’s not forget the incredible job he did, by the way, of setting the table, I think, as Anders writes about it in his fantastic book.  By the way, on this, I urge you all to read it, whereby all the economic policies were basically in place, Putin just took them off the shelf, the tax code, all these things.  Andrei was part of this.  This was all done before any change in the political system.  And, so, the puzzle, if they’re connected at all, I think they’re connected in a negative way.  I didn’t know Andrei was going to be here, but I love to quote him on this, because, it’s not, you don’t, you shouldn’t be impressed by 7 percent growth or 6.5 percent growth, you have to think about the counterfactual. 

How could Russia have grown with a different political regime?  And my argument, and it’s a, I realize it’s counterfactual, but I think Russia is actually performing well below what it could have been.  And, the key indicator, and I’ll just tee-up the panel for the next panel, I think is investment.  I think if you look at Russia’s very low investment rates, fantastic compared to 1998, so, yes, if that’s your measurement, really fantastic, but, really slow compared to Estonia or China or the region as a whole.  The only way you can explain that, I think, is the discount rate that investors, both in the stock market, and direct investors, put on political risk regarding property rights.  That’s just, I think, a very simple and very clear argument. 

Moreover, I would just remind you that when you talk about the Russian story being fantastic, well, it’s only fantastic if you just look at Russia, if you put it in the context of these really economic powerhouses, like Georgia and Latvia and Kazakhstan and Armenia, Russia actually doesn’t look so great, it looks pretty average, 9th, over this period.  And in 2005, Russia only grew faster than two countries in the post-Soviet region, Moldova and the Kyrgyz Republic.  And, remember, Kyrgyzstan had a little revolution in 2005, so, they should get a pass for 2005. 

So, and then we could go into these other effects that I think come from the lack of democracy, rising corruption, insecure property rights, I’m just going to skip these because I’m anticipating we’ll talk about these in the next panel, larger state, yes.  But, is it anymore effective?  I would say no.  And, just remind you, lots of ways to measure public goods, but murder rates I think is an interesting one, and the anarchy period of Yeltsin, lower murder rates than the stable, orderly period of the Putin era. 

And then here, just on all indicators of governance from the World Bank, Russia’s flat or going down under the Putin era.  In other words, the state autocracy has not led to more effective government in Russia, and I think that, in the long run, is going to have negative consequences for economic growth. 

To conclude, the next president inherits all these things.  Right?  With none of the benefits that Mr. Putin had when he came in 1999.  Dual power structure is just inevitable.  There’s only one personalistic regime that I know of, and maybe somebody could help me, I’m sure there’s others, but the only one that I know of where the personalistic regime, it’s interesting, the person matters.  Right?  And there’s only one place I know, Singapore, where the personalistic regime was set up and then the person who set it up went into the shadows.  That’s Singapore, a little tiny, little place, very, very kind of special circumstances. 

That is not Russia.  And I think the dual power structure of a president, very popular, who is quote/unquote retired, with a weak president coming in with none of the positives that Putin had, I think that creates, already, structural tension.  And the shadow of Putin is just not all the people that Georgy mentioned, running all these companies, the prime minister who is subservient to him, those are very important parts of the shadow of Putin that whoever the president will be, but, the shadow of Putin is also that Putin was the anti-Yeltsin, and that was so important to his popularity.  You can’t be the anti-Putin, at least not in the first two years.  It’s really hard, when the last president has a 7 percent approval rating, it’s really easy to be the anti-status quo figure.  When he has a 77 percent approval rating, it’s a lot harder.  I think, therefore, I don’t have any predictions, I’m too scared to do that, but I think the next era will be at least more interesting, if not more unstable than the last system. 

And finally, long-run, there is no doubt about it, my colleague, Seymour Martin Lipset is always right in the long-run, then, in the long-run, I have no doubt about it that the forces of economic development, globalization, lack of alternative ideology in Russia, Russia will be democratic in the long-run.  No doubt about it, I’m totally, totally optimistic about that.  I just don’t know how long-run, the long-run is.  [Laughter]. 

Leon Aron:  Thank you so much.  [Applause].  Well, it’s been extremely provocative, just as I expected.  Therefore, if I may prevail upon the questioners, not to make statements, but actually ask questions.  I would also encourage the panelists to go to each other’s points. 

Male Audience Member:  Anders Aslund, Peterson Institute.  I hear an underlying assumption here, which I think is totally wrong, that Putin will leave.  I see no reason for this.  Essentially it is because Putin says so, Putin always lies, go through his states, Yukos, democracy, etc., on all important issues Putin disinforms us.  Why should we believe this most important thing, particular to Georgy Bovt, but, generally, to the panel?  And, the other argument is that the Constitution says so, that perhaps goes more to Mike, in [indiscernible] book, by [indiscernible], she quotes Putin as Chairman of FSB in 1999, when they were discussing a third-term for Yeltsin.  She asked, what would the Constitution court say, and, Putin answers, the Constitution court will decide as is necessary.  So much for the constitutionality.  Thank you. 

Georgy Bovt:  Actually, you said everything.  Whether it’s any chance that Putin will stay for the third-term, I would say yes.  There is a chance, but, well, pretty small.  Whether it’s important for him to step down, I think that he really wants to step down because he has some ideas in his mind about his mission for the Russian history.  He imagines himself to be not an ordinary president, but a president with a mission.  Part of this mission is to step down and to let democracy, so-called democracy, sovereign democracy prevail, and so on and so forth.  But, I also want to emphasize that when he do something about Russian politics, it’s very important for him, with all his ideas in his mind, that his actions and the actions of his successor would be supportive.

Recently he said that truth is more important than force.  Of course he has his own understanding what truth is about.  He definitely enjoys a lot of force in his hands.  But, this saying is very important.  He wants his regime to be accepted and if the successor will be weak, as Mr. McFaul said, there will be a real trouble for him as the creator of this regime.  But, I’m not sure that actually he will survive as an active political figure after the year of 2008.  I think that this chance that he will not survive as an acting political figure is much bigger than the chance of him being elected for the third term. 

Leon Aron:  By the way, we do have, since everybody was so disciplined, we have an essential chunk of time to, precisely the amount of time that this panel deserved, to discuss. 

Michael McFaul:  You might say some things, too, Leon, to this question.  I think people would like to hear what you have to say, too. 

Andrei Kortunov:  Let me make one more point regarding his intentions to the extent we can dig in his mind.  He keeps stating one important point.  He says that for the next president, the key tasks are essentially how to fight corruption and how to enhance the competence of civil service.  So, these are two profound tasks which, unfortunately for Mr. Putin, were not accomplished during his two terms in power.  And I think that Putin being a smart person understands that he cannot stand up to the challenge, that the system that he built is not capable of meeting these two challenges.  He cannot fight corruption.  He said many things about fighting corruption, but, in reality he was trying to avoid it, to avoid it for the sake of stability, and he couldn’t tame bureaucracy.  From this viewpoint I don’t think that Russia has a particular strong state today.  It’s a big state in terms of sheer numbers, but it is not strong in the sense that it’s not too efficient. 

So, basically, my point is that Putin has exhausted his agenda and deep in his heart I think he understands that at this stage he has very little to say and very little to offer.  And maybe he believes, it’s hypothetical, of course, but maybe he believes that a relatively unpopular president who has nothing to lose who will be overshadowed by Putin will do the dirty job, do it in four years, and then Mr. Putin, back in the Kremlin in 2012 for the social Olympics, and things like that.  So, at least I wouldn’t exclude that this is something that he really counts on. 

Lilia Shevtsova:  Well, strangely, I would agree with all comments so far, which says that at least we have liberty of various interpretation of this process.  Firstly, I’m not sure that we should trust every word and sentence President is saying, because, well, what they’re doing now, and acting, this is the part of the mystification game.  Secondly, I would urge us to be very cautious when we are discussing the question, who, because so ironically within the system of personalistic regime, which is quite mature in structure, the question who and who is in the driver seat could be less important, irrelevant, that the structure of the car or the model of the car he’s driving. 

Michael McFaul:  Just briefly, I don’t have any great insights on this question, I guess I have to say I’m struck, Anders, by, on the one hand, Putin’s cynicism about democracy, his particularly flippant quote about since Mahatma Gandhi is gone there is nobody to talk to, which was a blatant, you know, just brazen, I could care less what you think of me, and, yet, at the same time, something in the back of his mind that he wants his regime considered legitimate, somehow this relationship with the west that is so strained, but, yet, has some kind of a relationship, and I hope Dmitri will talk about that later.  I don’t quite get it, but it’s not as simple as just saying, I’m a Bhutto, I don’t really care about the outside world.  It seems like he does.  And, therefore, I predict he’ll step down.  But, of course, this scenario of 2012 and let the next guy do all the dirty work and him come in to save the day, I actually, I have no inside information, but that makes a lot of sense to me.  So, I guess I disagree that he’s going to step aside of his own accord, but I have no data whatsoever to support that observation or prediction. 

Having said that, I would just add two caveats to what’s going to happen if he does step down.  The first is that this system is extremely centralized, decision-making is incredibly centralized right now, and that is going to be a real burden for even the most brilliant person to come in, let alone somebody who he just picks out of the thin air and says you are now president.  And I see that as actually a rather difficult thing to manager, where the government doesn’t really matter, the parliament doesn’t matter, institutions that can give you information about how the system is working have been all weak, and, that, I think, is going to be actually a quite difficult thing for anybody to come into.  I wonder if Putin understands that.  I wonder if he does, just how personalistic this regime is right now, and if he steps aside who can fill the shoes. 

And then, second, I take the point about corruption, and I actually, I take, let me just say when Putin says that I see no reason to think that he’s not genuine.  He wants to keep elite corruption, and, you know, if I want to seize your oil company, that’s my prerogative, but he’d sure like to fight petty corruption.  That contradiction, he wants to fight at the below, but then at the top they want to do whatever they see fit, I think that is the real story of the Putin era.  The problem is, I think, is that his strategy for fighting corruption is very, you know, circa 1950s.  It is not 21st century.  In the 21st century the best way for fighting corruption is to have independent media, and a genuine opposition political party.  Those are the two institutions, we know, from other places, that really fight corruption.  It is not a strong state or more and more bureaucrats.  Andrei is absolutely right.  This is not a strong state by any measure, in terms of its performance, it’s really underperforming.  So, I don’t see how an even weaker president, if Putin couldn’t do it, how is a weaker guy going to be able to do this from this top down administrative way, and I think that, again, is another source of structural tension moving forward. 

Leon Aron:  I have Mark Plattner, Padma Desai, Harley Balzer for now.  Mark. 

Michael McFaul:  Leon, I’m just noting you did not answer the question. 

Mark Plattner:  Mark Plattner, Journal of Democracy.  I guess my question is aimed primarily at Mike.  It seems to me there is a fundamental contradiction in the idea of a personalistic dictatorship with term limits.  I’m not sure if the contradiction is in your analysis, or in Putin’s notion of what it is he’s trying to build.  But, it does seem to me, precisely to the extent that power is rooted in the personality of the ruler, the notion that this can be passed on without fundamentally shaking the regime seems very dubious to me.  I wonder how you would respond to that. 

Michael McFaul:  Just that I, I think that’s absolutely right, and that’s why I think it’s, like I said, monarchies have their sons and daughters, parties have their selectorate within the party, militaries have generals, there’s not an obvious way to hand over power in a personalistic regime like the one that Putin has constructed.  So, I think you’re right, and, maybe that affirms Anders suspicions that maybe it’s not going to go that way, but I think it’s a contradiction and a paradox of the system. 

Padma Desai:  I’m Padma Desai, the Harriman Professor at Columbia University.  I do not want to be the devil’s advocate, far from it, I do not think Putin is a democrat, especially the Jeffersonian type, we the people, kind of democrat.  He’s not a Nehru type democrat, when  Nehru in the 1950s gave a vote to every adult Indian, man and woman.  You just have to be an adult, no qualifications required with regard to property, with regard to education, just go out and vote, that was the revolution, and that made him a democrat.  He’s not in that mold.  But I do want to understand his emergence, and the emergence of the United Russia Party in the December, 1999 election.  What brought about that change?  Do you think the Russian public rejected Yeltsin type reforms, because we are talking about continuity and change, why did the Yeltsin type reforms did not continue?  What brought about this change?  Was the Russian public with him during the period from 1999? 

Michael McFaul:  Let me go first, just, two things.  I didn’t comment at all whether Putin is a democrat or not.  I was talking about the regime.  The regime is not democrat.  If we want to debate that, we can go into it.  I think it’s really rather obvious.  But, you ask a more interesting question.  How did it come about in 1999?  And I’ve written a whole book on that, Padma, so I’ll send it to you, with Timothy Colton.  But the short answer is, this was about regime, this was, you know, five or six people in the Kremlin figuring out a way to protect their property rights.  The party of power was divided.  There was something called Fatherland, as you remember, and Mr. Primakov, Mr. Lishkov, television was divided, as you’ll recall, governors were divided, and it was, in my opinion, the 1999 parliamentary election it was nasty and awful and all the kind of crap that goes with democracy, by the way, and competition, but it was a competitive election designed to protect the property rights.  Ironically, the mastermind of the whole thing, the man who created unity, Mr. Berezovksy, didn’t work out that way.  So, you know, word to the wise, to Mr. Putin. 

The second point about Yeltsin’s reforms, I guess I would just disagree with you.  I would say the best moment for Yeltsin’s reforms was between 1999 and 2002.  They did all the things that Mr. Gaidar and Mr. Illarionov and all these folks were trying to do, they just didn’t have the political conditions to do them.  They had all the ideas, they worked them all out, sitting out of power, and that period was the period of rather radical, you know, all the things that Yeltsin couldn’t do in the ‘90s they did.  Now, the second term, it stopped.  That’s interesting.  Why that is, I want to defer to my, your panel, and you’ll explain it to us.  It seems like the minute they tried a little bit of messing around with the pensions, there’s a little bit of push backs, which is nothing, in my opinion, and they got scared and they ran away, and maybe when you have 7 percent growth you’re allowed to run away.  But, that’s interesting, why did it get off to such a fast and furious start in the beginning and then stop, but I’m sure you’ll explain it after our break. 

Leon Aron:  If I could just add to what Mike said, I totally agree with that.  Padma, I also see it quite differently.  I think the ’99 vote was the most pro-reform vote since ’91.  The party, the Unity Party, at that time, positioned itself as a pro-Kremlin, pro-reform, well, you could say, pro-Yeltsin, in any case, pro-Kremlin associated with Yeltsin, Putin was still a relatively minor figure, although with an astronomically growing rating.  And, let’s not forget this is when SPS did it best, ’99.  So, no, it was a pro-reform vote, precisely because the people, I think, have begun to see the signs of growth, the recovery after ’98, the first signs of economic growth, and, incidentally, ’99 was, obviously with a very low start, but was a tremendous economic growth in ’99, and then followed by 2000, 2001.

And, I also agree with Michael on the fact that the dirty work at that time has been done by Yeltsin.  In other words, all the hard, well, not all of them, there are some reforms that are still with us, housing, education, medical care, but the institutions were put in place, you had the stock market, you had the treasury, all of those things, incidentally, about which I’m writing in the paper that Lilia mentioned, in all those cursed ‘90s that we’re just, the regime now just uses every opportunity to denounce, inherited and used it extremely well. 

I have, now, Harley Balzer.  And, Harley, I’m very happy that you were not the Valdai participant who stood next to Putin and drank wine.  I’m sure you drank wine, but not. 

Harley Balzer:  Not this year, I didn’t get, once was all I got on that.  [Laughter].  They heard what I had to say and that was the end.  I can’t help pointing out from Andrei’s question about how we translate Just Russia.  If we translate it back into Russian, you can get Tol’ko Rossiya, which goes right nicely with Lilia’s analysis.  [Laughter].  But, my question goes back to the upcoming Duma election.  In 2003, we saw an enormous amount of media manipulation, a real effort to calibrate what percentage of the vote various parties were going to get, even to the point where Rogozhen was given lots of airtime and then two weeks before they realized they had overshot and they cut him off to try to hold down their totals.  Do you think we’re going to see a similar effort to game it this time, or do you think that there really is going to be more willingness to let the parties sort it out for themselves? 

Leon Aron:  Harley, anybody in particular, or anybody who wishes? 

Andrei Kortunov:  Well, if I might.  I think that what happened, they really overdid it.  Right now when you talk to people in the Kremlin in charge of the election process, they will say, and I think they are sincere, that they wouldn’t mind having a Rightest party in the State Duma, maybe even the Union of Rightest Forces, or another group because that would help to build a more professional legislature.  Their problem is that they cannot get these bloody democrats, you know, get together and somehow decide who is going to run the show.  So, I think that they might be at least, they might be less paranoid about the outcome of elections, and, indeed, Putin can afford the luxury of letting not thousand flowers bloom, but a couple of flowers blooming.  So, this scare that they had of the Orange revolution or something that would really put the situation out of their control is almost gone.  However, having said that, I’m sure that if you make one step down, and interact with people who are really in charge, who, for example, decide what percentage a particular region should deliver to the United Russia, and what percentage they’re allowed to give to the opposition, of course like they overdid a couple of years ago, they’re likely to overdo it again because they need to report, they need to show that they’re better than neighboring regions, that they are more efficient.  So, I don’t exclude this excessive calibration at the lower level of the election campaign, which is not justified by any urgent political needs. 

Leon Aron:  Anybody else on this, on this matter.  Yes, Georgy. 

Georgy Bovt:  I’d like to add, there is also contradiction in there mind because when you speak to them, they often, privately, confess that, you know, we experience a lack of ideas.  You ask them in response, where will you like to pick your ideas, these new ideas when you brainwashed all the media and ironed all the media up to the lower level.  There is no answer to that.  The same with democracy.  They privately say they prefer some competition, but when the act, in practice, they act in a way to avoid as much competition as possible. 

Lilia Shevtsova:  One comment, as a warning, or, as the anticipation of suspense.  We, we’ve been paying attention pretty often to situational factors, parties, political forces, etc., we should remind ourselves about the logic of the system, and the logic of the regime.  Yeltsin, at some moment, did think absolutely unbelievable for him during his presidency, and Leon wrote about it in his terrific book, several times Yeltsin, in fact, rejected the danger of the Siloviki coming to power, and, by the end of his term, he invited the guard dogs, the special political and social group to stabilize, defend and prolong his regime.  In fact, according to the rejection of the rejection, Yeltsin had rejected himself in his previous self.  And now the new regime, where we have a very specific cut-rate cabal of people with a specific mentality, specific function, the guard dogs are all in the country, they currently will need much more aggressive and assertive group of people to defend their regime.  So we need to have that in mind, and not a single opening, democratization, is at least logical within the structure. 

Stanley Kober:  Stanley Kober with the CATO Institute, for Michael.  At the end of your remarks you said they don’t have an ideology, and I’m wondering if that’s important.  What is the name of the youth group, the Counterparts of the Komsomol, Nashi, our guys.  That implies to me, our guys good, which means, their guys bad.  That’s an echo of George Orwell, Animal Farm, four legs good, two legs bad.  That’s what it implies to me.  Do you need a more elaborate ideology than that? 

Michael McFaul:  A good question, I don’t have a good answer.  I would say a couple of things, that, those around the Kremlin who have been in charge of creating Nashi, and various other projects, nationalistic projects, you know, they’re doing what they think is necessary for managed democracy, or, now we call it sovereign democracy.  Pavlovsky, just the other day, had this long, always somewhat difficult for me to understand, article, [cross-talking].

Okay, all right, so it’s not just my bad Russian then, but where he says the essence of Russian foreign policy is containment to the United States, and, I understand the logic of that.  And I think in the time and the future that Lilia is talking about, to me that’s the interesting question, that a weak president in the kind of conditions that I talked about, what is their options?  One option is Andrei’s option, which is more pluralism, more competition, a way for Putin to get back into the game.  But, of course, the other option is a greater crackdown, more authoritarian rule, under the guise, and it would be under nationalistic slogans, and my country most certainly would be front and center in that war.  You know, we have the siege mentality, we’re being surrounded by the United States, and let me just say parenthetically when I see this on the news I just wonder if anybody in this town is, never mind, we’re not talking about the U.S., it’s one hand clapping, I guess.  I see this image and then I look at just our weakness, American weakness, and know who strategy, and nobody cares about Russia; Russia is number 35 on their list of priorities, where in a lame duck present, and then I look at the press and it’s a real disconnect, and maybe that, then, says we should be more worried about this.  I, myself, am less worried about it.  I, myself, when I look at voter attitudes, when I look at the ability of nationalism, I’m a little more comfortable, and I think Russia is beyond that. 

But that, you know, that’s just really intuition, that has nothing to do with, we can bring up all sorts of historical analogies to prove it wrong, and you can tell I don’t have a good answer.  It’s there, but I don’t think it’s as threatening as the Nashi rally and the crap that you see on TV.  If those were your only two data points, I think you would be nervous, but when you look at all public opinion poll, and you look at the country as a whole, I think people are more immune, but, Andrei is shaking his head, so I’m hoping he’ll say why I’m wrong. 

Lilia Shevtsova:  For the first time I am disagreeing with my dear friend, Mike.  Please go to the Levada polls, survey of the attitudes of the younger generation between 18 years old and 25 years old towards different developments, not only to the west, but also human rights, etc., etc., etc.  It seems to me that at least the current political leader has done one absolutely unforgivable thing to Russia, this is the degeneration of the younger generation.  The results of the survey are simply devastating, and it seems to me they are creating the Frankensteins, and they still have to learn the lesson of the Frankenstein, in one case, at least, where [indiscernible] and they understand.  They don’t understand breeding this Nashi, locals, etc., etc., what they are in fact creating. 

Andrei Kortunov:  I’d just like to echo Lilia, and it’s not often that I disagree with her, but, here, I disagree.  I think that what we have to do is to distinguish between this quite superficial political allegiances which do exist in the younger generation and much deeper social values.  If you talk to them and if you reflect on them intelligently, indeed they might be a breed nationalistic, and they might be xenophobic.  However, if you look at their lifestyles, if you look at their employment patterns, if you look at how they travel abroad, if you look at how they use Internet, if you look at what fashion and movies they use, the system is, the picture is much more complex.  And I wouldn’t discard the younger generation as indoctrinated just because they’re different, they belong to a different social group, they are more cosmopolitan than we are, and in a way, even if we take people around this table, I bet that our kids are more cosmopolitan than we are.  And, of course, I think that this indoctrination, though it exists, it is incomplete, I think it is reversible, and I think that it is characteristic of particular factions of the younger generation.  So, I won’t really say that it’s that easy to change the mentality of the whole generation. 

Lilia Shevtsova:  One sentence, hopefully you may be right, but, according to the survey the most successful part of the younger middle-class, people who are well off and working for Rosneft, etc., for the state sectors, etc., that cosmopolitan style is not the obstacle for their nationalistic, xenophobic feelings, so that the most xenophobic part the most successful, the most is xenophobic part of the society.  And, besides, we have to think about possible crisis when these people, who are now cocky and expanding in the world, and saying, Russia is back, what they might feel and how they will in fact solve their complexes in case of crisis.  It will be much more difficult situation than situation in Germany in the ‘20s. 

Michael McFaul:  On this debate I guess the key point, Lilia, is about crisis.  So, when I see the Nashi guys, you know, I was at the other Russian meeting a year ago, and they were outside protesting, they didn’t look very threatening to me, they looked like yuppies from Stanford.  That was why I was being, like, give me a break, you guys are not -- how many have been arrested, how many have done real, you know, they follow the Ambassador around and they throw, it just doesn’t look serious to me, and the reasons who these people are, these are not the disenfranchised, these are not the people saying, you know, to think about other historical analogies, you know, those Jewish people have everything and I’ve got nothing.  No, these are the people that are benefiting from the system and they see Nashi as a way to get ahead in the system.  And that, to me, is yuppies from Stanford, I mean, the same thing, except in times of crisis, and there I guess I agree with Lilia.  What happens when their opportunities then do become constrained?  And that, then I don’t know what happens with them. 

Leon Aron:  I couldn’t help noticing that, in fact, this is something that Lilia said before when she was describing a regime where people don’t meddle in politics but they’re quite happy, those on top don’t want change, this is, of course, Brezhnev, 1970s, underlined by oil as well, which, the reason I’m reminded by that also by what Mike said now because what you’ve described is a Komsomol leadership of the 1970s.  Absolutely not, this is just a way to move forward, I don’t give a damn, and, in fact, when the crisis came, they ran away and they did extremely well for themselves, precisely the Komsomol leadership was one of the top elites that profited immensely from the collapse of the system.  Who knows.  

We have now, right, thank you for your patience, and then Andy Kuchins, and then Andrea Loreal. 

Female Audience Member:  [Indiscernible], I’m elite trainer for Russian language and culture at the World Bank.  I have a different question.  I have a question about the grassroots movements.  I know that this is just a new thing in Russia, but, it means, it seems for me that it’s emerging.  What do you think about their future?  Do they have any future, like, for example, this St Petersburg Narod from St. Petersburg, as I understand, [indiscernible], but it’s also like in St. Petersburg in April, when it’s this march, so on.  So, this is, do you think they have any future, can they change the political landscape of the country, or, they don’t have anything just in the future? 

Leon Aron:  To whom would you like to pose this question? 

Female Audience Member:  I don’t know, maybe Georgy. 

Leon Aron:  Or anybody else, okay, we’ll start with Georgy. 

Georgy Bovt:  I’ll tell her the story about my house in Moscow.  So the different families in different, we live in the center of Moscow, quite an old house.  We decided to organize, just to make some improvements in our house.  The first one was the elevator.  So we bought the elevator by ourselves.  Then we make a reparation in the staircase and some other stuff.  So, but, who was the initiator of that?  The initiator, the organizer and the leader was living on the fifth on the floor, and he was married to the Russian woman, and he was from the United States of America.  And that’s very depictive for the activity on the grassroots level for Russia.  Passiveness is the first obstacle, and the administrative barriers and some restrictions caused by the political regime are on the second place.  That would be my answer. 

Andrei Kortunov:  Follow this line, you spoke about house owners, I run a program supporting independent associations of house owners in Russia, and about six months ago we wanted to put together a meeting of the associations, and I thought that we would get something like 100, 200 applications to participate.  We got more than 2,000.  We had extremely active, extremely interesting event.  What is probably the most interesting is that the ministry, which used to ignore these associations, found it so important that the minister himself, Mr. Yakovlev, he came, he sat for the whole duration of the meeting taking notes. 

I think that when we get down to issues which are of practical concern to people, and, indeed, housing is probably the most important issue, but, for example, look at students, I think it’s pointless to appeal to students to take political positions because they are cynical, they might be very career focused, things like that, but look at what happened at the Moscow State University, the whole thing started when students of the Department of Sociology started complaining about the quality of the food and the prices in their cafeteria.  Then, logically, they shifted to more general issues about how the Department was managed, about quality of education, about corruption, then other departments started to get involved.

So, I agree that, of course, there is a passivity, and there is a clear intention of state to impose the all-social contact on society.  We provide you with some stable increase in living standards, in exchange we’d like to have your loyalty and your passivity.  However, since state itself has very limited in situational capacities, it cannot control everything.  So, if you take specific areas, I think grassroots movements are clearly important.  The question is whether civil society institutions, like in yours, can develop their own institutional capacities to stand up and to confront this challenge, whether they can do something beyond advocacy, whether they can really participate in solving social issues.  And, if they can, there is clear a chance for grassroots movements, but, of course, it’s a very, very long road. 

Leon Aron:  Chairman of our afternoon panel, Andy Kuchins. 

Andrew Kuchins:  Thanks, Leon, and thanks to the panel.  First of all, I have a question about the evolution of the political system, but I’d like to make a clarification and a comment.  In case anybody in the audience misunderstood, the quote that Lilia cited was not from me.  [Laughter].  Now, my comment along these grounds may not be so appreciated by Lilia and the panel.  But, I found your comments about the participants of the Valdai discussion group, frankly patronizing, condescending and insulting.  It suggests that the members of the group, of which I was a member, Fiona Hill, Cliff Gaddy, Cliff Kupchin, a number of others here in Washington and in Europe, are somehow not sufficiently strong enough and independent minded to weigh the information that is conveyed to us in our various meetings, and that somehow we are lackeys of the Kremlin, ala Mr. Schroeder.  And that was the clear implication of what you said.  And, you know, it’s just not true. 

Now, there is quite a diversity in the group, actually, and, in fact, in this last trip it included the likes of Mr. John Laughland, a so-called human rights defender from Great Britain, who wrote a pretty notorious column in The Guardian three years ago called, American’s Chechen Friends.  You can go and look back at it.  But it was a scurrilous attack on the Carnegie Endowment and the work of the Carnegie Moscow Center, which I was directing at that time, and, of which, of course, you’ve been a long-standing member.  In fact, I approached him about, I confronted him about this in the streets, and it was reported in Moscow news.  I am Mr. K, if anyone saw this report.  We practically came to blows.  But there’s a fair amount of diversity in the group.  My point is, look, we go there, we get data points, and you weigh those data points with all the other data points and you come to conclusions.  So, I just wanted to say that. 

My question has to do with the political system.  Fresh from my brainwashing trip to Moscow, I came away with the impression, before the trip I was more in line with Anders, and I thought there was a considerable chance that Mr. Putin may stay on.  After the brainwashing, I’ve come to the conclusion that the likelihood of that is between 0 and 1 percent, and I’m more likely to agree with Georgy Bovt that it’d be more challenging, actually, for Mr. Putin to maintain influence for a long period afterwards than it is that he will actually stay on.  So, if indeed Mr. Putin does step down, clearly the political system is going to change, and some of you have talked about that, and Mike pointed out the dangers of dual power for sure. 

My question is about the role of United Russia because I was struck, there were several things pointed to me that is part of the plan, and for those of you who haven’t been in Moscow recently, there’s some new posters around town that say, Plan Putina, Pobeda Rossii, Putin’s plan, the victory of Russia.  Victory on what?  Over whom?  Not clear.  These posters are apparently put up by United Russia.  There are similar posters in Sochi, where we went down to meet with Mr. Putin last Friday.  They say Plan Putina, Plan Kolodyazhnova, I think the Mayor of Sochi.  So I imagine these sorts of posters are all over the Russian federation. 

United Russia is having a party Congress in early October.  My sentence from a number of discussions, including with Mr. Putin, is in response to my question about his role, his future role in the United Russia party itself, is that part of the plan to manager this political dilemma that they have for themselves is that United Russia is going to play a more significant role in Russian politics.  I think it was Mr. Surkov, in February of 2006, who suggested that the challenge for United Russia was not to win the next elections, but, in fact, to be the ruling party of Russia for the next gene