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How to Handle Russia?
A weird schizophrenia grips the nation, as Putin's power fades and new threats emerge.
By Frank Brown
Newsweek International

May 9 issue - World leaders—53 of them, with both notable inclusions and exceptions—will converge on Moscow next week to mark Russia's finest hour, the defeat of Nazi Germany 60 years ago. The cause for celebration is clear, the intentions of their host, Vladimir Putin, much less so. Putin is a Western-leaning, forward-looking president who often seems to be firmly stuck in the cold-war past. Just last week, in his annual address to the nation, he called the demise of the totalitarian Soviet Union "the greatest geopolitical catastrophe of the 20th century." Minutes earlier, he had spoken of Russia's becoming a "free, democratic state." Those watching the May 9 Soviet-style military parade on Red Square will include Putin's friend, George W. Bush, as well as Putin's closest ally, president of neighboring Belarus, Alexander Lukashenko, whom Washington calls Europe's last dictator. No wonder, these days, that Russia is looking like a dotty old neighbor developing a split personality—or that the world doesn't quite know how to react.

The schizophrenia feels dangerous. Russia's neighborhood, a.k.a. the former Soviet space, hasn't been this combustible in more than a decade. In Russia itself, the Kremlin's hold on power is in question. A year ago Russians spoke of a new "climate of fear" as Putin extended his power into all walks of life. Today, says a former senior U.S. official, that still holds—only now it's Putin who's afraid. "I'd been under the impression that Putin was a strong leader, maybe even too strong," says another former U.S. government official, in Moscow last week for a series of high-level meetings. "But now, I've come to the conclusion that he's not strong. He's weak. It's better for the U.S. if Russia has a strong leader, even if he's going in the wrong direction."

What's going on here, and where, exactly, is Russia headed? Pessimists warn of a neo-Stalinist oil state. Optimists still dream of a Western-style democracy with a diversified economy. All agree that Putin himself is the cause of much of the confusion. Consider his recent state-of-the-nation address to Parliament. Usually it's a major event. Bureaucrats listen carefully for their marching orders. Oligarchs and foreign investors parse the speech for good news and bad. Stock markets rise or fall worldwide. Not so this year, Putin's sixth in office. "Putin's message was very liberal. He talked about freedom, democracy, a tax amnesty, but the stock market fell for three days afterwards," says independent parliamentarian Vladimir Ryzhkov. Why? Because no one believed him. Whether businessmen or politicians, Russia's elites or people in the street, no one took Putin's free-market-democracy rhetoric seriously. It all points up a new and startling fact about Russia, as one former U.S. ambassador to the region puts it: "The consensus in Washington and elsewhere is that, increasingly, Putin is a spent force."

Politically, the Kremlin is leaking power. Across the country, lately, there have been protests—pensioners who can't make ends meet, students angry at a proposal to end draft deferments, mothers weary of the unending war in Chechnya. In recent weeks an internal rebellion convulsed the pro-Putin United Russia Party that controls the lower house of Parliament. In foreign affairs, Putin the statesman seems reconciled to a humbler Russia, one that, with little fanfare, just removed obstacles to NATO using Russian airspace and officially acquiesced to Ukraine's membership in the Western alliance—an unthinkable prospect even half a year ago. That's not to say Russia doesn't occasionally play the bad boy on the world stage. Witness its nuclear aid to Iran and the sale of missiles to Syria.

To some, these contradictory signs suggests that Russia is slipping, becoming a bipolar basket case. To others, they represent an encouraging, even healthy historical evolution. "Every Russian ruler after Stalin was less powerful than his predecessor," says Dmitry Trenin at Moscow's Carnegie Center. "Putin is now weaker than Yeltsin, and this is good." A weaker leader, Trenin explains, means more freedom. More freedom means more of a chance for democracy to take root. And that, optimists say, is exactly what is happening, especially in Russia's provinces.

Set aside, for a moment, Putin's power grabs of the last year—canceling gubernatorial elections, changing election laws to lock out grass-roots opposition movements—and look at the political reality, say people like Valery Zubov, a respected M.P. who earlier this month defected from United Russia to join a tiny upstart, the new liberal Republican Party of Russia. Moscow's Kremlin-controlled media studiously ignored his departure, but voters in Zubov's native Siberia got an earful from local outlets. Resentment of Moscow is building, he says. People are feeling disenfranchised, as though Moscow's elites care only for themselves, not Russia's people.

Heightening the sense of confusion, Putin recently promised to give opposition parties more television airtime—itself a stunning statement about the lack of press freedom. But at the same time, the government is using ruthless methods to silence such politically marginal groups as the National Bolsheviks, a youth movement that's been grabbing headlines with stunts like pelting government ministers with tomatoes, then garnering public sympathy when the authorities overreact by handing out harsh prison terms to teenage offenders. Faced with such youthful agitation—and mindful of the role students played in Ukraine's recent Orange Revolution—the Kremlin earlier this year launched a youth movement of its own, called Nashi, or "Ours." In at least one major city on the Volga River, Nizhny Novgorod, Nashi members are getting uniforms, nightsticks and police training. "They are terrified," a Moscow consultant says of the Kremlin political strategists he is working with. "What happened in Ukraine could happen here."

Nowhere is Russia's split personality more on display than in business, symbolized by the de facto expropriation of Yukos Oil. Last week a Moscow court abruptly postponed the reading of its verdict against the company's founder, Mikhail Khodorkovsky, presumably so as not to unleash a barrage of international criticism at the very moment of Moscow's May 9 celebrations. Unfortunately for Russia, the Yukos affair has gone well beyond the company itself and its international repercussions. Predatory bureaucrats have taken it as license to go after enterprises across Russia—big and small, multinational or Russian—and now seem out of control. To some, in fact, the infamous days of the old "wild East," when the mafia controlled business, seem almost tame by comparison. "It was easier with the bandits," says Andrei Milovanov, a Moscow cement-factory owner threatened with losing his business to the tax authorities. "It is much worse when the bureaucracy itself has become organized crime."

Putin is clearly concerned, says a Kremlin-connected Western financier, citing an instance in December when a rogue tax official levied a $158 million back-tax bill on telecommunications giant Vimpelcom. After a spooked Russian stock market shed 10 percent of its value, an angry Putin called the tax authorities, who quietly lowered the bill to $18 million, the financier says. Putin raised the issue again last week when he criticized Russia's authorities for "terrorizing" businessmen and condemned some for "sheer racketeering."

Under the circumstances, Russia's preparations for May 9 seem almost surreal. If anything, the big celebrations only accentuate the reality of Russia's loss of empire and its decline as a superpower. Like Putin himself, ordinary Russians are deeply unsettled at the nation's waning influence in countries once taken for granted. Ukraine's new president, Viktor Yushchenko, will not attend. Neither will Georgia's Mikhail Saakashvili, unless more progress is made on the removal of two Russian military bases from his country.

The leaders of two Baltic countries aren't coming, in part because the Soviet Union's World War II victory marked the beginning of what they call "an occupation," a term repugnant to Moscow. As for President Bush, he's seen as approving all this by bracketing his Moscow visit with trips to Georgia and Latvia. "Bush is being two-faced, not acting like a partner," says retired Russian Army colonel Viktor Baranets, a military analyst with Russia's largest daily newspaper, Komsomolskaya Pravda. "It's as if we invited Osama bin Laden to be on the reviewing stand next to Bush."

For much of the past year, diplomats say, there's been a growing sense in Washington and European capitals that something has gone badly wrong in Russia. But exactly what, and how to deal with it, is less clear. German Chancellor Gerhard Schroeder, whose country relies on Russia for one third of its energy needs, rarely broaches unpleasant topics with Putin and publicly lauds him as a "total democrat." In return, Germany enjoys an unspoken most-favored-nation status in the Kremlin. France follows a roughly similar strategy. U.S. officials tell NEWSWEEK that pushing Putin toward democracy is a lower priority than winning his cooperation on Iran and North Korea. Some White House aides suggest that Russia's backsliding on democracy is less dramatic then it seems, especially when compared to Boris Yeltsin's election in 1996. Bush's overall strategy is to keep communication channels open—"to engage, not to isolate," says one State Department official. That means keeping Putin in a holding pattern until a new leader emerges in two years.

Finding the right diplomatic path is complicated by the fact that Russia and the region are changing so fast. With the toppling of three pro-Moscow regimes in the last 17 months, the Kremlin confronts a radically different former Soviet Union. Plans for creating a "Common Economic Space" to rival the EU are dead. Any pretense of projecting Russian military might into the so-called Near Abroad is gone. When Kyrgyzstan's mob-led "Tulip Revolution" erupted in March, no one talked of Russia's restoring order in the capital of Bishkek; Moscow simply doesn't have enough properly trained and equipped troops. The result is a dangerous power vacuum, especially in Central Asia, where a violent revolution in Kyrgyzstan's neighbor, Uzbekistan, would spell disaster for regional security. By the end of the year the situation will be worse as 11,500 Russian soldiers leave posts guarding the Tajik-Afghan border from heroin traffickers bound for Western markets. "I'm scared of what is going on in the former Soviet Union, the world's powers are just looking out for themselves and not at common problems," says Olga Potemkina, of the Russian Academy of Sciences' European Institute.

Putin himself all but concedes Russia's weakness, even its growing irrelevance in many spheres. Oddly enough, in the Russian military establishment, NATO is bandied about as a potential solution. "The new generation of military leaders is very well intentioned towards NATO. They understand it is good for Russia," says retired Gen. Viktor Yesin, former head of Russia's Strategic Rocket Forces. That bespeaks a surprising openness in a military long opposed to any cooperation with the West—as well as a disconcerting lack of faith in Russia's own leaders. A leaked Defense Ministry poll conducted earlier this year found that 80 percent of the officer corps disapprove of government policies, and just 17 percent trust Putin. For a former KGB colonel attuned to the tenuousness of power, signs like that must be troubling indeed.

With Nadya Titova in Moscow and Richard Wolffe and Eve Conant in Washington
© 2005 Newsweek, Inc.

© 2005 MSNBC.com
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