After the recent appointment of two new deputy prime minister, Dmitry Medvedev (former chief of presidential staff) and Sergei Ivanov (defense minister), things started changing at the fast pace. Medvedev started executing the first part of his social plan, “The Health”, today. According to the plan, all the doctors in the country starting this February will be getting paid additional 10,000 rubles ($350), and nurses 5,000 ($175); all the home-room school teachers will receive additional 1,000 rubles ($35) to their salaries.
Thought these adjustments might look small and funny to Americans – this is a lot of money for a Russian government employee. Russia was really lucky this year with the growing oil prices, and as a result there is enough money in the budget to afford social improvement plans; the extra-cash has nothing to do with Putin’s policies – it’s a pure luck.
The total cost of the improvement plans is 5.75 billion dollars, which is enormous money for a Russian budget. The only concerns now are: the Russian corruption – it would really help if the money didn’t get stolen and went to where it’s supposed to; second, it’s oil prices – how is the government going to maintain that level of salaries, if the next year is not as “lucky” as this one; and third, and the most disturbing concern is – population decline. Every year brings new statistics of less and less children born, and young men and women capable of work.
There are two ways to look at the political shift in Putin’s surrounding. The new chief of staff is a good manager. The new Deputy prime ministers are experienced and “old”, but still very young politicians. Some sources claim that Putin is suggesting a new president and prime minister, Medvedev and Ivanov accordingly, however it wouldn’t seem right – Medvedev is more of a background person, and it would take another Abramovich to advertise a new person to the nation.
Another approach to the situation is actually very optimistic. Medvedev and Ivanov have a very intelligent vision of the Russia’s present and future, they are patriots, and they’ve been in the government enough, to get tired of corruption and to safe money, so now they could do the actual job.
Peter Zeihan gives a very deep profile of both officials and Russia in general in his Geopolitcal Intelligence Report “Realism in Russia?”, where he examines the Russian mentality (weak, but proud, grieving for the superpower times), and Russian times after the fall of the Soviet Union (lack of elite class that could have enough desire to care about Russia, poverty and corruption).
Zeihan is rather optimistic about the two new appointees, and I will quote part of his report below (the report is available here, though you need to have a subscription). However, in my opinion, two good individuals aren’t enough to change the country, which is rotten with corruption, violence and poverty. There need to be honest men to honestly execute the “honest” plan. So while the overall mood of new changes is very positive, and analysts are staying optimistic, no one should dismiss the factor of the Russian corruption and egoism; though there has never been a change that didn’t start with an idea of one man.
More on Medvedev and Ivanov from Peter Zeihan’s report:
First, Medvedev. The former presidential chief of staff, now first deputy prime minister, is certainly a pro-Western technocrat. But he is akin to neither the starry-eyed reformers who applied disastrous shock therapy in the 1990s, nor idealistic pro-Westerners in the mold of Grigory Yavlinsky who want to see Western democratic institutions grafted wholesale onto Russia. At 40, Medvedev is just old enough to fully comprehend how far Russia has fallen -- having been 24 when the Berlin Wall fell -- but just young enough to have a mindset radically different from his predecessors. Most critical is that he admires the West despite the fact that -- unlike Putin -- he has never worked abroad. His respect is rooted in the accomplishments of the West and what Russia potentially could gain from them, not out of the unrealistic desire of many of Russia's pro-Westerners to actually "join" the West.In contrast with most reformers, Medvedev believes that the state should play a strong role in the economy -- particularly in key sectors such as energy. Medvedev was a key, if quiet, figure in the onslaught against Yukos, and he is chairman of the board for Gazprom, Russia's state natural gas monopoly -- which just happens to be the world's largest energy company. These are not the stances and actions of someone who believes that capitalism is a magic wand that will fix all of Russia's problems.
Ivanov, who was Russia's defense minister before being named deputy prime minister, is similar in his uniqueness. Like Putin, Ivanov spent the bulk of his career in the Federal Security Service (FSB), and both were stationed in Europe for a time. Thus, he, like Medvedev, has a healthy respect for military, economic, political, social and technological capabilities of the West. But where Medvedev sees opportunities in interactions with the West, Ivanov perceives threats. Thus, he is a magnet for the siloviki -- a group of foreign policy, military and intelligence personnel who want to see Russia restored to its former glory.
Yet while Russia's nationalists in general and the siloviki in particular consider him their best-known sympathizer, Ivanov is far more pragmatic than the average nationalist. Unlike many of the defense ministers who came before him, he is not concerned about NATO tanks rolling eastward -- realizing that the United States, much less the rest of NATO, lacks that capacity. Instead, he worries about the steady expansion of Western influence -- which spread first to Central Europe, then the Baltics, the Balkans, the Caucasus, and now Ukraine. Ivanov views the West as more of a cultural and economic threat to Russia than as a military juggernaut.
Both Medvedev and Ivanov are pragmatists and patriots -- though they obviously still hold their own business interests as well -- and thus are more likely to occupy the middle ground that pure reformers or nationalists avoid.
Medvedev sees Western-style corporate governance as a sound ideal to impose on Russia's oligarchs -- but not at Gazprom, which he sees as a key to future foreign policy. Ivanov sees cooperation with NATO as a necessary evil, but more as a means of building a more efficient Russian military than out of any expectation of swaying NATO policy. And both men see China as an opportunity: It is a customer for Russian energy and weapons, and -- by forming a political alliance against the West -- a crucial potential partner in security policy. But, unlike the siloviki, they are also more likely to take a comprehensive view of the power to the east, noting the implications of its giant economy and China's recent "Northern Sword" military exercises, staged on Russia's southern border. It has not been lost on either that ethnic Chinese in the border region outnumber the Russians by more than ten to one.
In short, both see threats in every opportunity, and opportunities in every threat, making them the first competent, pragmatic, clear-eyed politicians to reach the top of Russia's political heap since the Soviet breakup.
Yet neither Medvedev nor Ivanov is a particularly strong candidate to succeed Putin, despite rife speculation on that score in the Russian press. Medvedev is Putin's protégé, Gazprom's chairman, and the Kremlin's grey cardinal, but so far he lacks a sizeable political following from which to independently launch his career. He well could cultivate such a resource in the next three years, but he does not have it yet.
Ivanov, meanwhile, is likely not someone to whom Putin would gladly hand the reins. Unlike Medvedev or Ivanov, Putin is an instinctual Westernizer -- to the degree that the Russian press has often quipped: Putin Joins West, Russia May Follow.
So why advance Ivanov into greater prominence? Two reasons. First, Ivanov has the ability to either unleash or hold back the nationalist tide, a capacity that Putin would be foolish to ignore. Second, should Putin's goal of Westernizing come to naught (something that must have at least crossed his mind as Ukraine peeled away), Russia would be forced into direct confrontation to the West. If Russia is to be ruled by a nationalist, Putin would prefer that it be ruled by a nationalist who is capable of viewing the world without the preconceptions that have cost Moscow so much.


