West Confronts the Riddle of Putin

‘I don’t want to participate in the destruction of Russia,” Boris A. Berezovsky said last week, explaining his decision to step down from the Russian parliament.

It’s a bit late for that. Berezovsky has already done his personal best to ruin that unhappy land. As one of the richest and most successful of the so-called “oligarchs” who joined in the decade-long orgy of looting that wrecked the economy while creating a handful of billionaires and 50 million paupers in the Russia of former President Boris N. Yeltsin, Berezovsky’s place in the annals of Russian destruction is sure.

But now, with President Vladimir V. Putin’s tax police and prosecutors raiding one oligarch after another, and with his loyal political minions ramming one bill after another through the Russian Duma, the new Russian president poses serious questions for everyone concerned about Russia’s future. In particular, as Putin steps into the international limelight at the Okinawa G-8 meeting this week, the seven heads of state of the world’s leading developed nations are trying to figure out whether Putin’s drive to restore central authority in Russia is a personal power play or a sincere effort to stop the chaos.

There’s a reason why the leaders of Germany, Japan, the United States and the other G-8 countries are so puzzled by Putin. Whether Putin’s goal is to save Russia or re-enslave her, he would have the same steps on his to-do list.

By attacking the once untouchable oligarchs, Putin is serving notice that even rich people must comply with fundamental state laws. Furthermore, he is making sure that, in the future, Russian business will pay taxes. That is really the only way the government can get the funds to do its basic jobs, like keeping hospitals running, paying teachers and getting pension checks to senior citizens on time.

Attacking the oligarchs isn’t just a good way to get some money into the coffers. It’s excellent politics. Most ordinary Russians bitterly resent Berezovsky and his peers. They are convinced, with some reason, that the privatization of Russian state assets was a dirty and illegal business, and that the current “owners” of Russia’s oil and gas fields and its other valuable assets have no valid moral claim to their riches.

The harder Putin cracks down on the oligarchs, the more popular--and more powerful--he will become. This is a political logic Putin’s G-8 peers understand; few of them will be surprised if Russian tax officials and prosecutors continue cracking down on the oligarchs.

So far, so good. But here’s the rub. If your goal was to create a new and more efficient dictatorship, you would do exactly what Putin is doing. You would scare the oligarchs, confiscating the wealth of some and sparing others. You would fire some of the regional governors, terrify the others, and generally convey the message that crossing the Kremlin could be hazardous to your political health.

If Putin succeeds--if he crushes the oligarchs and disciplines the regions--he won’t just be the elected leader of a democratic state. He’ll be bigger than that--in effect, he’ll be the czar of all the Russias, and nobody and nothing in the whole country will be out of his power.

So the G-8 summiteers are looking at Putin and asking the question Glenda asked Dorothy in “The Wizard of Oz”: “Are you a good witch or a bad witch?”

The answer is that Putin himself may not know yet what kind of witch he wants to be; and the United States has very little influence over how he decides to rule Russia. As we wait to see the shape of the new Russia that Putin is building, we need to remember a few basic truths.

The first is that whether Putin turns out to be a good witch or a bad witch, it is in the U.S. interest for him to be a strong witch. A weak Russia looks good to a handful of foreign-policy experts who are still fighting the Cold War, but in the real world, the United States needs a strong central government in Moscow. Washington needs a Russian government forceful enough to control any loose nukes floating around, and it wants a Russian government strong and self-confident enough to sign international agreements--and then keep them.

When Putin stopped off in China and North Korea on the way to this week’s G-8 summit in Okinawa, some observers worried that Russia was trying to rebuild its international influence as a rival power to the United States.

They should all take a deep breath and relax. Russia is far weaker today than the Soviet Union ever was. It’s economy is half the size it used to be, and Russia’s population grows older, sicker and smaller every year. (The latest estimates show Russia’s population falling from 147 million in 1998 to 121 million over the next 50 years.) Even if Putin miraculously heals the Russian economy and reverses its demographic slide, Russian growth for the foreseeable future simply doesn’t pose a serious threat to U.S. national interests. Continuing Russian weakness and failure, however, could create big problems ranging from the spread of organized crime to more loose nukes to serious instability in both Europe and Asia.

It isn’t just the old Cold Warriors who worry about Putin’s new Russia. Western investors who got into bed with the oligarchs are worried, too. If Putin gets serious about enforcing Russian laws, there’s no telling how much wealth of the oligarchs--and their foreign business partners--he can confiscate.

As Berezovsky himself admits, “Everyone who wasn’t sitting with arms folded during [the Yeltsin] years willingly or unwillingly broke the law.” That is partly because Russian laws are so poorly written it is virtually impossible for a business to operate without breaking some law somewhere; and partly also because in the great stampede for riches and power, nobody cared anything about legal or illegal, right or wrong.

Berezovsky proposes that Putin should therefore grant an amnesty to the oligarchs and let them keep whatever they managed to grab, however they got it. Plenty of Westerners will agree with that logic--especially Western investors who’ve sunk billions of dollars into companies controlled by the oligarchs. These investors will try to get the U.S. and the other G-8 governments to protect them if Putin’s tax police and prosecutors start digging too deeply.

This is something we shouldn’t do. Foreign investors in Russia knew full well that its privatization process was deeply flawed. Their hunger for potential profit was so great that they overlooked a basic business principle: Don’t buy anything until you make sure the guy selling it has a clear title.

If Putin is as smart as he seems, he knows that a pragmatic compromise with the oligarchs and foreign investors is Russia’s best course. He will claw back enough money to satisfy public opinion and rebuild the credibility of the government; give the country a viable set of commercial and tax laws; and go on to other urgent issues--like rebuilding Russia’s crumbling medical and educational systems before they collapse.

Let’s wish him well--and hope he’s a good witch. There isn’t much more we can constructively do. *