Thu, Dec 25, 2014 - Page 9 News List

Oil crash may derail Putin’s empire

The price of crude oil has dropped by almost half over the past six months and is expected to stay low for some time. While boosting growth in the West, the trend is likely to bring dramatic change to exporting nations, not least oil-reliant Russia

By Shaun Walker  /  The Guardian, MOSCOW

Illustration: Mountain People

When Russian President Vladimir Putin was asked at his annual marathon news conference whether he feared a “palace revolution” at some point in the future, he cracked a smile.

“I can assure you that we don’t have palaces, so a palace coup isn’t really possible,” he said.

Immediately, photographs of the vast mansions of some of Putin’s inner circle, photographed from the air by anti-corruption campaigners, began doing the rounds online.

However, the question last week had a more serious substance to it: While a popular revolution against corrupt officials has never looked very likely in Russia, what about a split in the elites?

Falling oil prices have combined with Western sanctions to create the worst economic crisis of Putin’s 15 years in power. With oil revenues tailing off sharply, on the one hand it exposes how little has been done to diversify the economy during the boom years, while on the other the amount of money to share among the billionaires around Putin is set to shrink dramatically.

Part of the rationale behind Western sanctions against people in Putin’s inner circle was to harm them and prompt them to pressure the leader. If the economic situation continues to deteriorate and the political turmoil continues, one school of thought suggests Putin could be in trouble from within his own inner circle.

Most Russian officials feel the West is to blame for apparently “instigating” the Maidan protests in Kiev that parked the Ukraine crisis, but many are privately uneasy at the way Putin responded. For those in the inner circle, sanctions have in some cases meant losing business, property and travel opportunities in the West. Those affected have been falling over themselves to insist publicly that their personal pain is a small price to pay for the revival of a Great Russia, but what they think in private might be another matter. Even among those ideologically in tandem with Putin, if their vast wealth begins to be threatened their loyalty might waver.

However, the “vertical of power” that Putin has built links everyone in the same chain. It is not possible to remove the top link without the whole system coming down and there are no signs anyone in the elite is even thinking yet about the possibility of planning for a post-Putin future. Perhaps most alarming is that it is almost impossible to imagine what a post-Putin future might look like. The president can theoretically stay in power until 2024.

As one Western diplomat said: “You can’t really see him just stepping aside. Any scenarios of a change of power appear to be very messy ones, and for the moment, at least, very unlikely.”

Some opposition figures have looked at Mikhail Khodorkovsky, formerly the nation’s richest man, as a potential unifying force for the anti-Putin movement.

Khodorkovsky, who spent a decade in prison, was released a year ago after Putin pardoned him so he could spend time with his ailing mother. Khodorkovsky promised he would not go into politics, but has now said he would consider being president for a post-Putin “transition period.”

Ordinary Russians have little time for the “robber baron” oligarchs who became fabulously rich in the 1990s while everyone else was starving, but Khodorkovsky’s decade in prison might have served some redemptive purpose and he is perhaps the only figure who even theoretically might be capable of uniting sections of the serving elite and the more radical opposition groups. However, he is in exile in Switzerland and would be arrested again if he returns. Any scenario where he could mount a coherent challenge to Putin, for now, still appears from a parallel universe.

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