TIME EUROPE
July 17, 2000 VOL. 156 NO. 3
Putin's Hard 100
The honeymoon's over for Russia's new leader as he battles on military, political and economic fronts
By YURI ZARAKHOVICH Moscow
Moscow computer programmer Igor Bodnarchuk says he was "a fool" to vote for Vladimir Putin. "I expected him to mend the Yeltsin mess by launching a series of liberal reforms. Instead, he is launching a police state."
That bitter reflection on Putin's first 100 days in office, a landmark reached last week, is exactly the opposite view to that of Vladimir Dobrov, 55, a senior banking official in Moscow. "I feel disappointed about Putin," says Dobrov, "I expected him to mend the Yeltsin mess by enforcing strong order. Instead, he displays weakness." It seems President Putin's electorate is beginning to have serious misgivings about the choice they made — for diametrically opposed reasons.
After his inauguration in May, Putin lashed out in all directions. He stepped up the war against the Chechens, picked fights with regional governors, launched a pre-emptive strike against the oligarchs and took on the media. "Putin mounted a coup to create his own mechanism of power," says Lilia Shevtsova, senior associate at the Carnegie Moscow Center. But even though he has built this mechanism on a cabal bringing together the security services, law enforcement agencies and army brass, that "coup" already appears abortive.
An admirer of Napoleon, Putin would no doubt recall Leo Tolstoy's famous line on the French emperor's failed conquest of Russia: "The terrible stroke of his arm failed in magic impotence." If the disenchantment with Putin expressed by Bodnarchuk and Dobrov continues to spread, the same paradoxical combination of might and impotence threatens to break the exhausted country rather than make it great. In Chechnya (see box), Putin can offer neither a political solution nor a military victory. "This senseless war leads to creeping erosion of popular confidence in him," says Alexei Koshmarov, president of the Moscow-based Novokom analytical center.
Putin has applied the same strongarm tactics to politics, with much the same result. He set out to rein in regional bosses by dividing Russia into seven federal districts, run by his envoys, and he introduced legislation to strip regional governors and heads of legislatures of their seats on the Federation Council, the Russian parliament's upper house. He also demanded the right to suspend governors and dissolve regional legislatures. But late last month the setbacks started piling up. The previously compliant Federation Council vetoed the bill from the State Duma, the lower house, to replace themselves with new members.
On the media front, Putin is also in retreat. He alienated liberal supporters by having the media mogul Vladimir Gusinsky thrown in jail, but then alienated still more conservatives by bowing to foreign and domestic pressure to set him free. According to Moscow-based pollsters VTSIOM, 41% of Russians believe Putin "displayed weakness and helplessness in the Gusinsky case" while 49% said he acted in a "hypocritical and conniving way."
The economic war zone is no less fraught. While the Kremlin denies rumors that it plans to reconsider the privatizations of the past decade, a series of raids by law enforcers across Russia late last month indicates just such a revision. The Interior Ministry raided Tyumen Oil in Siberia in search of evidence that the company's assets had been privatized illegally. Another conspicuous case was the suit filed by the Moscow prosecutor's office to contest the "shares for loans auction" in 1995 of Norilsk Nickel, a lucrative piece of state property in Russia's far north. It ended up belonging to Interros, a holding company controlled by Vladimir Potanin, one of the top seven Russian oligarchs.
Other potential targets include Gazprom, the national gas monopoly, LUKoil, a major oil company, and Unified Energy Systems, the national monopolist electricity producer. Late last month, the Kremlin ousted former Prime Minister Viktor Chernomyrdin as chairman of Gazprom's board of directors, replacing him with Dmitry Medvedev, deputy head of Putin's staff. Rumors of the impending arrest of Vagit Alekperov, head of LUKoil, have been so persistent that it had to demand explanations from the Prosecutor General's Office. "We had oligarchic capitalism," says Mikhail Kozhokin, editor-in-chief of the Moscow-based daily Izvestia. "Now, they're ushering in police capitalism."
None of this is going to make anyone happy: not the media, the oligarchs, the regional bosses, nor the citizens who voted for the promise of reform, prosperity and stability. So far, disenchantment is mainly confined to the élites, but Putin's popularity among the masses is also slipping — down from 61% in May to 54% last month, according to the Moscow-based Agency of Regional Political Information.
Putin has been emphasizing as his major achievements the stabilization of the ruble, the beginning of economic growth and the increase in Russia's hard currency reserves from $11.5 billion to $20.5 billion over the past seven months. These accomplishments, however, have little to do with his policies and everything to do with higher world oil and gas prices that have produced a trade surplus of $26.1 billion in the first five months of this year.
To boost its reserves, the Russian Central Bank has ordered business to convert 75% of their hard currency earnings into rubles, which it is merrily printing. The result: inflation is staging a comeback. On his 100-day anniversary last Monday, Putin admitted that inflation, which had remained under 1% in May, reached 2.5% in June. Because of "more money in the country than the economy could use ... Each citizen will really feel negative results personally," he promised glumly. At this rate, annual inflation could hit 34.5%, nearly double the 18% written into the 2000 budget.
Clearly rule by the oligarchs and regional barons has not been good for Russia, but 100 days on, many people are starting to ask if the Putin alternative will be any better. The regime "has neither confidence in itself nor the resources needed to bring its totalitarian ways to their logical conclusion," says the Carnegie Center's Shevtsova. That scenario is increasingly leading Russians to wonder about "police capitalism," and to ask if they again have a ruler who, in the Alexander Pushkin phrase, is "weak and sly, accidentally caressed by fate."
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July 17, 2000
COVER
The Lure of Ecstasy
The elixir best known for powering raves is an 80-year-old illegal drug. But it's showing up outside clubs too, and advocates claim it even has therapeutic benefits. Just how dangerous is it?
Rave New World
It's more than just ecstasy. The youth culture is in thrall to deejays and floats on the relentless beat of electronic music
EUROPE
Putin's Hard 100
The honeymoon's over for Russia's new leader as he battles on military, political and economic fronts
Putin's Chechnya Nightmare
The War the Kremlin Said Was Won
The Haider Effect
Isolated and angry over diplomatic sanctions, Austria threatens to raise the stakes on E.U. enlargement
That's Another Fine Mess
An underage drinking spree sees Euan Blair arrested, and his dad nursing a political hangover
Sun, Sand and Toxic Waste
For the first time ever the European Court of Justice fines an E.U. member state
Europe's Not Up in Arms
A Euro Army is the declared goal, but there's more smoke than firepower
MIDDLE EAST
Why Arafat's in a State
He wants a Palestinian nation, but fears that his people won't forgive him if he makes concessions
The Modern Mullah
One of the architects of Khomeini's revolution has become a guru of Islamic reform in Iran
AFRICA
Fatal Destiny
Experts are meeting in South Africa to combat a plague ravaging the continent — but already there are disputes over the right strategy
Death Row
Kenyans would rather not talk about the disease that is destroying lives and threatening the economy
The Cost Of Living
Pharmaceutical Companies and Drugs
A Distant Mirror
Europe's Black Death is a history lesson in human tragedy — and economic renewal
BUSINESS
Keep the Change
Turkey's government takes on the structural problems at the heart of the country's economy
The Infoanarchist
Could this 23-year-old Irish programmer begin to unravel the Web?
The Data Haven
Closely Guarded Secrets
RELIGION
The Stained Glass Ceiling
Despite stubbornly held conservative attitudes, women are claiming their place in the pulpit
DEPARTMENTS
To Our Readers
Tech Watch
World Watch
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