Putin's System Is Beginning to Change

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Written by Mihail Hazin; Appeared in Bulgarian at A-specto, translated by Valentina Tzoneva exclusively for SouthFront

The currrent situation is making Putin adapt to the logic of socialistic governance, but he will not sideline the ‘liberals’ until  new parties of ‘the military-security establishment ‘ are created.

I have not written a prognosis for Russia for years. First of all, because there was no point; nothing was changing, the main tendencies remained the same, there was no visible change. But now the situation has started to change and it calls for a new prognosis. I am not going to go back to the previous analyses, I am going to start from zero-level (with the exception of the prognosis for the global economy).

I am going to start with the Russian elite. In any case, I am going to remind you about some of the previous aspects. The Russian elite emerged at a time when the process of disintegration of the most recent socialist society began, and addressing two major questions posed by considerably large social groups – from organised crime to the middle and low bureaucracy. The tasks were to completely eliminate their responsibility to the society and to guarantee the preservation of their status quo (and wealth). The second task was resolved by introducing the private property system, while the first one, by eliminating of all, more or less active, state institutions.

By the end of the 90s, when it became clear that the state can not exist without institutions (and when the problem of protecting the wealth stolen in the process of privatisation arose), the politics of the elite started to change slightly. Some new common rules were adopted (for example, not to discuss in public the resolution of inter-elite disputes). In the process of establishing these rules, it became necessary to find an arbitrator who will not only resolve disputes between the different members of the elite, but also to explain to them which activities within the frame of the asset-management, are in the best interest of the elite as a whole, as well as which are good and which are not.

Looking for an arbitrator took time which was, however, used as a starting point of the process for the emergence of the ‘military-security establishment’ in the elite, who not only stabilised the structure of the elite but turned it into an instrument for observation and application of the decisions of the arbitrator. Finally, an arbitrator was found who had previously solved similar problems in the corrupt capital of Russia of the 90s – St Peterburg. He not only got to the top of the authority, but introduced to it that concept of Russia’s position in the world with which he grew up. A concept dating not later than the 50s, accepted by the Soviet governance under the efforts of Kuusinen, and which is based on convergence of ideas. In other words, the covergence of the elites of the West and the USSR. Before Putin, the members of the Russian elite did not think about the fate of their country at all. In the best case scenario, they considered themselves as the gauleiters of the West. Most important for them was to steal more, to hide what was stolen in the very same West and to carry on with this not-so-smart combination for as long as it is allowed. The present-day elite of Ukraine today is a good example of such behavior. Putin changed all of it.

Putin's System Is Beginning to Change

Mikhail Khodorkovsky

It has to be mentioned that the removal of Berezovski, Gusinski and Khodorovsky from the elite is not Putin’s personal decision but a consensus of the elite. Everyone who categorically refuses to respect at least certain rules is removed from the elite. In a way, these are persons who, after getting rid of the obligation to obey the laws and the rules of the country,  categorically refuse to undertake a new yoke even voluntarilly, and in narrow frames. This was not appealing to some in the elite, including that not everyone had access to such resources of protection as ‘the three’. This was the basis for reaching the consensus.

Putin managed to add to the ‘Khodorovsky case’ an additional pretext using it as an instrument to make the oligarchs of the 90s pay taxes. In Ukraine, where there is no such analogy as the ‘Khodorovsky case’, the oligarchs do not pay taxes. And the result is obvious. Let’s make a slight diversion now.

The arrival of Putin to power coincides with the coming to power of the diligent, imperial republican Bush Jr in the USA. Shortly aferwards, the events of 9/11/2001 took place. For America, this was the beginning of the economic crisis. (I have stated on numerous occasions that my warning on 10th of September 2001 was based on the fact that the authorities in the USA did not want to admit the extremely bad economic results from the summer and they had to look for external reasons on which to transfer the responsibilities). But Bush needed allies because he had to take a decision (the war in Iraq), which was not approved by the international community.

If for Clinton the Russian elite was a bunch of aboriginies, who for beads and little stones would sign any document (as in the case of ‘Sahalin-2’ Agreement with Royal Duch Shell for extraction and liquefaction of natural gas, for example), Bush was ready for a while to grant certain rights to Putin and Russia, while his priorities were on other questions. He had a similar understanding with Putin about the global energy problems. Khodorovsky angered Bush with his Chinese tricks. For this reason, Putin received ‘carte blanche’ for internal and foreign-policy questions for quite a long period. At the same time, his foreign policy was strictly limited. The State Secretary, Condoleezza Rice, stated once that “Russia’s interests end at its own borders.”

As a whole, for the duration of his two presidential mandates, Putin managed to implement the idea of convergence in the Russian elite and then he stepped aside satisfied. “I worked as a slave on a galley” – this was not a poetic metaphor but a real consideration of the work; the hired manager decided to retire after completing his two mandates. Before that, however, there was a casting and the elite chose the liberal Medvedev over the strongman, and then appointed him as the president. And then the problems started…

They were related to the economy. The crisis of 2008 was extremely unpleasant for the elite. Medvedev was not able to control it (there is no control without responsibilities and the elite swept the responsibilities aside with a metal broom). The financial flows declined sharply. The role of the arbitrator sharply increased accordingly and it turned out that Medvedev was not able to do anything. The insignificant improvments of 2009 – 2011 were not serious enough and the elite, or more precisely a part of the elite, called Putin to return back to power.

Putin's System Is Beginning to Change

Dmitry Medvedev

Against Putin’s return to power was the collaboration-oriented part of the elite (led by Voloshin-Umashev), which considered the idea of convergence rather independant, and which categorically refused to take any responsibility for anything inside the country. The instructions from the IMF for defining the economy of the governement absolutely satisfied this part of the elite. This part of the elite arranged for the so called ‘ballot’ process aiming at  discrediting the results from the presidential election in the country.

As we know, this project did not succeed. Putin not only came back to power but he came back with conditions completely different from those in 2000 when the elite gave him the mandate; in other words, back then he was a hired manager and he was not in position to change the rules of the game. We are not talking about his personal ambitions here, we are talking about capabilities. After 2012 the situation changed completely; Putin received his mandate from the people and he had the right to change the rules.

The necessity for such change was vital. Here I am going to bring to your attention the analysis of Andreyi Fursoff of years ago. Several times in its history, Russia has found itself in a very complicated situation where the urgency of modernisation is in conflict with the categorical lack of desire of the authorities to attend to such modernisation. When we consider the specifics of the Russian state structure, inherited from the Byzantine Empire in which the sacral head of the state is the protector of the people against the governing elite, specifically this most legitimate statesman has been obliged to resolve the modernisation taskat any cost. A certain amount of experience during the past centuries has accumulated.

The first modernisation began in the 16th Century in western Europe; the ban on lending money against interest has been eradicated. The building of capitalism began. The era of scientific and technical progress. Meanwhile in Russia, the conservative oligarchy, the common name for which is the ‘Ruriks’, drastically limits any attempts for modernisation. This is the reason for the emergence of ‘oprichnina’ and the pressure of Ivan the Terrible on the elite. Let me say that he is a positive figure in the public consciousness as far as he completes the Byzantian interpretation of a sacral state leader.

The reforms of Ivan the Terrible did not succeed. Boris Godunov (many historians believe that he is the most prominent administrator) almost managed to bring the reforms to success, but he was prevented from doing so due to his death and the Ruriks took advantage. By the way, I do not exclude the selection of Mihail Romanovich to be a result of the common position in the Russian society after the brief rule of Vasilii Shouyski; anyone but not Rurikovich!

The reforms which Ivan the Terrible started were completed (relatively) by Peter the First and the conditions of serious lagging and considerable zeitnot – they are so drastic that as a result of the reforms the population of the country shrank. And Peter the First remains in the national memory as the Antichrist.

The problem arises again in the second half of the 19th Century. At that time, the major opponent of the reforms is the ruling feudal group (contingently called ‘the great kings’), which brought to the country the revolutions of February and October 1917. As the Revolutions did not manage to resolve the major problem of modernisation, it reappeared again in the beginning of the the 20 years of the past century. The conservative opposition to the reforms are now ‘the old Bolsheviks’, who prefer to enjoy life and not to bend their backs for the benefits of the country. In the course of the reforms, Stalin grows up in the role of the sacral leader and his work is a complete success. I will mention again that the same Byzantian model; the leader of the people against the top of the elite is realised.

Putin's System Is Beginning to Change

The October Revolution

In the 80s of the last century, the problem arises again. Theoretically, it had to be resolved by Byzantium recipe by nominating a leader who, supported by the people, fights the rusty and paralysed bureaucracy and commercial mafia. With this, the right conditions were in place (for comparison, the practice of Belarus for the last 20 years). Instead, the processes take the direction of revolution in bureaucracy. The prime ministers of the republics negotiate the division of the country and we know the results today.

If the elite of the West were successful in fulfilling its global project as it was planned in the 80s and the beginning of the 90s, sooner or later Russia would have been destroyed. But the crisis began and we found ourselves in a complicated geo-political configuration which is difficult to understand. That’s why I am going to start my prognosis with the main internal Russian conflict.

In modern Russia, there are three major groups: the first is of the liberal family with leaders Voloshin, Umashev, Kudrin and Choubays. Here we have the oligarchs of the front line. Their major wealth is acquired by privatisation, tax evasion, corruption and racketeering. In general terms, we refer to them as liberals. Their main problem is that their business is unprofitable. It is getting more difficult to obtain budget preferences. Their internal fight for the remaining resources in the country is getting more fierce. Their opportunities to legalise their money in the West are consistently declining.

Their opportunities for maneouvering are to fight with Putin in order to bring back the situation of the 90s when they were ‘gauleiters’ of the ‘Western’ project’; to try to ‘overcome’ the alternative groups; to leave everything behind and run away in the West. The probability of the last option is decreasing. They have been told on numerous occasions that they will never be figures of significance in the West. And as far as the business is concerned they are not capable (with a few exceptions); the immigration might bring them to begging. This group is in almost complete control of the economy and financial politics of the country and its bureaucratic part is almost literally at the mercy of the global financial elite (through the International Monetary Fund). Let me say that the global financial elite is only a part of the elite of the ‘Western’ global project. But in general, this part dominates in the determination of the financial and economic politics in the last hundred years (after the establishment of the Federal Reserve). The Russian ‘liberals’ are in principle against any development (because the devleopment is in conflict with the interests of the ‘Western project’) and they haven’t had their own political programme for a long time now. This was obvious at the most recent economic forum in Krasnoyarsk. Probably this will result in the ‘passing’ of this group of the Russian ruling elite.

The second group is the group of the military-security establishment and second generation oligarchs from the beginning of 2000. They do not have prominent leaders but rather a complex collective management. They also have a few options for action. It’s possible that for a while they might ‘flirt’ with the ‘liberal’ oligarchs and businessmen in order to get a role of political refugees assigned to them, which will provide them with certain protection in the West. But the protection is relative and only in case they are politically active (Khodorovsky). This option is limited in time.

Their other option is for a firm autarchy and turn Russia into total dictatorship. To a certain degree, this is an accelerated previous version, meaning that if the West faces a total crisis, the main point is to survie and to wait for the ‘storm’ to pass. As far as the ‘liberals’ are reasonably suspected of representing the interests of the West, it is necessary to remove them from the power as soon as possible because they weaken Russia in the eve of the crisis, performing the programmes for supporting the economy of the dollar implemented by the IMF.

The positive part of their programme lies in interception of the financial flows of the liberals (which might double the resources of this group), in the frame of the group interest and powerful modernisation of the economy in the image of pre-military industrialisation. But where will they obtain the necessary resources and who will perform the programmes is not very clear. One thing is clear, the ‘military-security establishment’ cannot on their own manage the relevant programmes; it is necessary for them to increase considerably the support for their group and firstly by creating a managing elite for the country on all levels from zero, as was done in the 30s.

The third group which must not be underestimated is the group of the regional elite and the nationals leading. They don’t want the programmes of the 80s for division of the country anymore (because they see the results of the reforms in the ex-Soviet republics), and in this context, they are ready to support any powerhouse in Moscow. Theoretically, they tend to support the ‘military-security establishment’ (for as long as the liberals are a threat for collapse of the country and increase of instability). But they will fight fearlessly for privileges and access to budget means. In any case, they are a serious resource for the leaders in the country in the process of developing the system of control and balance.

All the other powers in Russia (‘leftists’, Russian nationalists, monarchists and others) are highly marginalised and they have no resource for the strengthening of their positions. The only exception is the patriotic forces, which are getting powerful in the course of the events in Ukraine. They have not yet selected leaders commonly recognised but on an average level, the influence of the military-security establishment sharply increases including among the youth part of the liberals. If the economic situation begins to quickly deteriorate, it won’t be surprising for this group particularly, to suggest a new discourse in the frames of which to determine the political configuration of the country.

The global situation is even more complicated. After the ‘Strauss-Khan affair’, a riot began amongst the global financial elite which threatens the fate of the ‘Western global project’. The point is that the resources for development of capitalism is finished and as a result the Western project does not have a positive programme supported by resources. This leads to the sharp increase of anti-American attitudes in the world and to the gradual arrival to power in different countries of a priori opposing to the USA couner-elite. Because theoretically it is not ready to completely destroy the existing system as far as it has no resource for redistribution of the financial flow of the USA, the situation of this counter-elite becomes more difficult; especially after the acceleration of the economic crisis.

Putin's System Is Beginning to Change

Presidential Address to the Federal Assembly, 2015

In reality, the elite supporting the Western project is sub-divided into groups strongly competing between each other due to the circumstances that as a result of the crisis there will be no space for everyone in the ‘bowl’. Conventionally, these are three groups. The first one is that part of the elite which cannot give up the modern financial system based on emissions. These are: the biggest banks and financial institutions, the global bureaucracy, the financial and the political part of the elite of the national states (outside of USA). Their situation deteriorated especially after they failed to put their man (Summers) as Chief of the Federal Reserve. This group controls the Russian liberal ruling group. All the state clerks, those of the Central Bank, those from the expert groups which are in close relationship with the National Research University, Russian School of Economics, Gaidar Institute – they are representing this group although having weak influence in the group.

The second group is that part related to the national elite of the USA. They have two positive projects: the so-called ‘Programme Maximus’ and ‘Programme Minimum’. The first presents an attempt for creation of a free zone for trade between USA and the European Union, which will bring the rest of the world to complete chaos. This project (let’s call it ‘a city on the hill’), theoretically will allow to maintain the standard of life of the ‘golden’ half billion (USA and some countries from Western Europe) and the global ruling of the elite of the Western project.

A major advantage of this scenario is the preservation of the ‘middle class’ in the USA at the expense of the resources of the wealthy citizens of the European Union, or it will allow the protection of the social and political model of the USA. But if things turn to the worst possible direction, there is a back-up alternative.

If this project does not materialise (I have a specific opinion on this question but I am not going to discuss it here), there is an option for collapse of the world into different currency zones – the one of the dollar led by the USA and the Euro – from Western Europe; with the unavoidable and serious technological degradation and a considerable decline in standard of living for the population. Of course they will try to avoid this scenario.

The third group – this is the part of the global financial elite (I stress that this is the biggest and the strongest part of the elite of the ‘Western’ global project), which is not directly connected to the USA. Its base is the financial part of the former British empire usualy related to Rotschild. Indirect data points that the major positive project of this group is the collapse of the global currency emition zones where it is aiming for the position of a middleman. The ‘city on the hill’ option is not suitable because it will weaken its position drastically. That’s why the group is looking for contacts with the Russian ‘military-security establishment’ group and actively supports the actions directed at the creation of the ruble financial system and Eurasian integration or the creation of a conditional ruble-controlled financial zone.

From the above we can recognise all the tendencies taking shape in Russia. The ‘liberals’ brought the Russian economy to crisis; the decline began at the end of 2012. The global financial system needs resources (the American bureaucrats gradually ‘closed’ the emission) and the Central Bank and the government of Russia (the Finance Ministry first of all) continue activly to support the export of capital and maintain the dollar reserves (although they realise that they are facing a high risk of not getting their money back). In addition, they are terribly frightened of being removed from power because they do not have alternative budget and administrative resources. In such case, in one or two years they will lose all their assets in Russia. But in the West, without the support of Russia, they would be destroyed in the space of a few years.

From the perspective of the interests of the country (and from the position of a man who has the mandate from the people), Putin had to free himself from the liberals but on the face of it there is a political expedience – there are only two active groups in power; removing the liberals puts Putin automatically in the position of dependence of the military-security establishment, which almost automatically deprives him of any kind of freedom including the mandate to serve the people.

I think that this is the reason for Putin to refrain from punishing the liberals for their downright sabotage. Apart from that firing the liberals means a sharp increase of the anti-American line, the arrival of the contra-elite to power, an open confrontation with the USA. We are obviously not ready for that and first of all, for economic reasons. The sanctions are posing a real threat to us. We have serious weaknesses in the economy for example, we have no crops for planting, a tribal economy, we don’t even have eggs to breed chicken… In such situation, the sharp movements might bring in many serious problems.

In the last years, the liberals and the military-security establishment are fighting over administrative authority. The military-security establishment have some little victories, the liberals oppose but as a whole life goes on more or less quietly. The conflict, however, is growing based on external circumstances (Ukraine) and fighting over the lion’s share which has to be divided according to the power of the elite consensus. I am reminding you that this consensus was created by the liberals in the 90s in the process of privatisation and destruction of the Soviet system (including the judicial and the key power systems). But the military-security establishment perfectly fits in and support the corrupted system. In this regard, the task for modernisation which the society is facing (and maybe Putin) does not differ much from the problems that Ivan the Terrible, Peter the Great and Stalin were facing.

The problems with Ukraine from the last year sharply deepen the conflicts and they take the situation out of the slow process in which our country was for years (and which was the reason not to write prognoses for Russia). Today we have a few options for development of the events, which are worth discussing.

First of all, the Ukrainian events seriously changed the position of the military-security establishment. If before they had no relations to the external world, in the common plan they were siding with the discourse suggested by the liberals and if there had been a question it has been about the position taken regarding negotiation with the elite of the Western project. Consequently now, quite clearly a few ‘parties’ are taking shape. This gives a serious base: a new system of control and balance to be created replacing the position of the military-security establishment and the liberals, balanced by the position of the regionals.

Amongst the military-security establishment, the party of the patriot monarchists is taking a clear shape and to a lesser degree, the party of the new liberals, and finally on the surface emerged the existing party for restoration of socialism. The latter does not have an organisational shape but against the background of the empowerment of the group, which is seriously trying to restore the monarchy (even to bring back the Romanovs), the Socialist Party may seriously get more powerful.

Putin's System Is Beginning to Change

Kremlin, Russia

As it often happens consolidation in the frame of these proto-political parties is determined by external factors. The ‘patriot monarchists’ are oriented towards the old continental elite of Western Europe; they are looking for revenge of the Western project for their destruction in the First and Second World War. At some places, they even have local political success (Hungary); the behaviour of this country clearly shows who they see as a strategical partner. To understand the ‘patriotic monarchists’ for the Russian economy is an extreme autarchy model. Although not always, they support a strong integration with non-Slavic countries. The major role in this group is played by the Russian nationalists, which is natural keeping in mind who is their partner in Western Europe.

The ‘new liberals’ who are not standing as clearly as the patriots have as their main partner ‘the Rothschilds’ as I already said. Their policy is for the broadest Eurasian integration (a strong currency zone, self-sufficient system for division of labour with the minimum of 500 million consumers), for creation of conditional rouble currency emission zone, tightly integrated with the leaders of other alternative zones including the ‘isolationists in the USA’, who might possibly come to power after the elections in 2016. I remind you that the first as well as the second group are opposed to the ‘Western global project’, to the ‘city on the hill’.

There are serious differences amongst themselves. The first group supports the sharp increase of the role of the orthodoxy, limitation (but not termination) of Eurasion integration up to the borders of pure Slav countries, relatively limited interaction with the present leaders of the Western project; and yet, for limited integration with China. The second group is much more pragmatic. It supports active interaction with part of the elite of the Western project and China (for now benefitting its interests), they do not breed special ‘love’ towards the Russian Orthodox Church, they consider it too conservative and inflexible. Although they do not reject its consolidating role. They put a clear accent over the non-Slavic countries in the frame of the Eurasian integration (Turkey, Central Asia), they are seriously studying the possibility for work with a number of Islamic countries.

Both groups have got one serious problem which very soon in the process of which in the structuring and formation of their inter-political position will turn out to be basic. They are not in a position to offer the society a constructive politics to fight the model of the social structure which was imposed in Russia in the 90s. The society obviously does not accept it. Thus we have the galloping ratings of Stalin (who they relate to the idea of the responsibility of the authority to the society) and Putin, which, by the way, are due to the serious mistakes of the West, building dichotomy or ‘Khodorosvsky and Navalni as fathers of the Russian democracy’ or the bloody executioner Putin – stimulated the people to joyfully increase the rating of Putin to 90%.

Russia and other countries that have to be integrated into the Eurasia zone have got economic problems. New slogans are needed to compensate the economic competitiveness in the frames of the integrational processes. I think that the key element here could be the idea of Socialism, moreover, for the sharp decline of the living standards of the population. These ideas will unavoidably surface although so far in practice, there is no political group to develop them.

It remains only to complete the description of the groups which will integrate with each other. It seems to me that particular consolidation of these groups will be the major process determining the situation in the country during the present year. Let’s mark the most important moments.

First of all, Putin will not remove the liberal government and the management of the central bank until the abovementioned proto-parties of the military-security establishment are not clearly formed. The first by the way, practically is on its way to getting formed if the role of the Ministry of Defence gets stronger. It will become the coordination centre of the group although representatives of other military-security establishment structures will get involved. The second will get formed as a purely political group. It will attact electoral potential by sharply criticising privatisation and the corruption of the liberal circles and to search for cooperation with the popular Rothschilds and the American isolationists. On the face of it there are serious reasons to conclude that their efforts will be noticed by the latter, which may become the base for cancellation of the sanctions against Russia.

Let me repeat – the removal of the liberal government I believe possible only after a new liberal party is formed more or less clearly after it demonstrates political pretenses and determines the economic course of the country.

As far as the socialist course is concerned, it has to be presented to the society personally by Putin. I think it is is silly to give up the Byzantian tradition for cooperation of the state leader and the society (all the rest as a whole would have never succeeded in historically-predictable time frame). The ‘May decrees’ are a movement in this direction but after the first step Putin did not take a second one. This direction will allow him to receive the real support of the society and not the public opinion but the implementation of the programmes for developement. A serious support for this course (with a few inconsiderable limitations) will come from the regional elite. And the most important is that only such course will allow the sharp growth of the role of Russia on the global arena, including the world of Islam. I highlight that the present processes of increasing the reputation of Russia and particularly Putin’s (creating the wild scream of the controlled media) in the Western society are connected with the phantom image of USSR as the bearer of values alternative to the ‘Western’ global project.

As I already said, today the ‘Western’ project does not have a positive programme but neither do we. When there is no programme, a banal fight for resources begins in which we practically have no chance. And vice versa. If we had a value system and a positive programme and they do not have one, the role of the resources sharply declines. Here, we have not only serious but a very serious resource.

This is how I am going to finish. The prognosis looks quite relative: the key momentum I consider to be the appearance of a ‘new liberal’ party, following the liquidation of the ‘liberal’ party of Russia. For now, I can not say when this will happen. I am not even convinced that it might happen this year. The crisis will continue as well as the sanctions against us for as long as the ‘liberals’ are in power. Apart from that, it is not very clear when Putin will turn (even partially) to the logic of socialist management. It seems to me that if he does not do it, his comparatively fragile interaction at one stage will be destroyed and he will have to go. In such a case, the situation becomes hazardous; and to make prognoses becomes naive.

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It definitely presents more to keep an eye out for. Worth the read.


Sad but true.Interesting times we r living. If the isolationist get in washington it mat be possible for detente but a big if. At present it will be interesting to see the outcome of the British referendum Brexit could be the new catalyst for significant change. How will the washington consensus mob(anglo-zionist ) spin these events. R the Rothchilds not part of the washington globalist consensus? According to this article they r not ? I find that unlikely for they r part and parcel to the US federal reserve system and also part of the United Europe project hence single monetary union EURO. For Russia to survive this evil act that is being played against them Putin has to sort out the Antlantacist and I know that he is . Bit by bit they r becoming more redundant in his government.

Vuk Marko

I would say that “Alice in wonderland” is more realistic than this “analysis”.

Мирьяна Михайловна

Could you elaborate, please?

Vlad Pufagtinenko

Russia is a terrorist country and Putin is the head terrorist

Pont Limon

And you are a damn fool

Pont Limon

It’s funny to hear someone claiming others terrorists, who himself got a picture of a nationalist, fascist and murdered as an avatar!

Belarus Goosee

The real terrorist are the god damn Americans and their North Atlantic Terrorist Organization (NATO). I second what Pont Limon says about your avatar.

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