KARMO TÜÜR ⟩ Putin is building a new loyalty network. There's a clear turnaround underway in that country

Karmo Tüür Photo: Sander Ilvest / Postimees

The relationship between power and assets in Russia is again turning to the left, that is, to the supremacy of the state, writes Karmo Tüür, a political scientist and expert on Russia.

This time, the reason lies not so much in the state ideology as in the personal desire of Vladimir Putin, who has usurped power in Russia, to build up a new loyalty network.

The left-right scale has been so egregiously misused of late that I mostly disapprove of its usage. However, this time I will try to use it myself, but before that, I will explain what I mean by it. Namely, the simplest, economic-political axis. The left end of the scale = more state control, the right end = less state intervention.

The idea of redistributing assets based on plain envy and greed is nothing new. In the Western cultural space it is often presented under the slogan of «social justice», whereas in Russia there has never been much concern for using such word filters; even during the Soviet era, the «socialist dream» was so thinly veiled that practically no one sincerely believed in it.

At first I thought of wording the article as «left shift», but as the text was taking its final shape, I realized that it is no longer a shift, but a full-fledged turnaround.

Yeltsin-era right turn

Anyway, after the end of the Soviet regime, this Pharisaical pretending came to an end. In fact, it came to an end even earlier, during the collapse of the Soviet economic model, but under Yeltsin it became the prevailing model of state organization. «Take as much independence as you can swallow» – this was true not only for the regions of Russia.

The more enterprising ones were able to exploit this so successfully that almost nothing was left of the Soviet-era myth of «people's property». Privatization was carried out with such ferocity that, of course, injustice was caused in monstrous quantities, both in social and legal terms.

In any case, that era gave birth to the concept of «oligarchs», and the Kremlin began to be portrayed as a multi-towered structure and the state power as a seven-headed banker. The center of gravity temporarily shifted to the right end of the scale, where money had more control over power than the state had over the economy.

Putin started from the right

Putin started out as the overseer of foreign economic relations for St. Petersburg, a megapolis, and he saw very closely how incompetent state control was and how money flowed like rivers into personal pockets instead of the budget. However, after unexpectedly finding himself in the presidential chair (he lacked both the prerequisites and ambitions for it), he managed to gather himself precisely with the support and influence of budget-funded power and control structures and began to dismantle the oligarchic system.

The idea was very simple: to create a «new elite», a new tier of owners who were personally grateful to Putin. Through vigorous means, both new and old owners were made to understand that while assets could remain in their possession, they must, in return, remain politically passive and no longer interfere.

Perhaps the most visible and in some respects the last case was the case of Yukos/Mikhail Khodorkovsky, when a kind of equilibrium point was reached. While the state increasingly intervened in the economy and there were regular hostile takeovers, holders of larger assets still had the opportunity to transfer their assets out of the country and/or formally transfer them to organizations registered abroad, i.e., «offshore» them to a legal entity registered in a tax haven.

State train turns left

The term offshorization is important, as a deoffshorization has now been announced, which means that all substantive assets must be brought under Russian jurisdiction. Although it is possible for the business owner to remain in the West as a natural person, with their family if they so wish, they will lose control of their assets.

The deprivatization of the Chelyabinsk metal giant is the most recent and glaring example. This means that alleged flaws were found in the privatization process that took place several decades ago and the property is subject to transfer from its current owner, Yuri Antipov.

Again, there is a new and simple logic behind the process. The previous and/or new owners may be the managers of the assets, but now passivity is no longer enough. Whereas in the previous cycle the business owner had to refrain from interfering in politics, now they have to be zealously and assiduously supportive of the regime.

Not a shift, but a turnaround

In conclusion, it can be said that Putin began by shattering the Constitution and will now, within days, complete the build-up of the new loyalty network with illegitimate «elections». In Russia, everything that matters even a little bit must now be actively faithful to Vladimir Putin (in a rather Stalinist way).

At first I thought of wording the article as «left shift», but as the text was taking its final shape, I realized that it is no longer a shift, but a full-fledged turnaround. The relatively right-wing policy, liberalism and democracy of the Yeltsin era (as far as has ever been possible in Russia) have now been converted into a personalistic, illiberal and left-wing formation which, through emphasizing the supremacy of the state, has reached the point of being a militarily aggressive monster.

In the closing paragraph, I think it's important to emphasize once again – the right-left scale is flawed, but understandable as a metric for the degree of state intervention. Vladimir Putin considers himself the embodiment of the state and subordinates everything to himself. For us, however, there is a moral decision ahead: do we recognize this usurper as legitimate head of state or not.