The Collapse of Russia Inc. – PART 2

The Collapse of Russia Inc. – PART 2


Enders Wimbush

Ендерс Уимбуш e водещ сътрудник във Фондация Jamestown във Вашингтон, бивш директор на Радио Liberty и член на борда на международния съвет Bulgaria Analytica.
S. Enders Wimbush is Distinguished Senior Fellow at The Jamestown Foundation and Partner, StrateVarious LLC, a member of bulgariaanalytica’s board of international advisors.


If Russia Inc. had one or two profitable outlying divisions, it might muddle through.  But Russia is fracturing along regional, ethnic, and religious lines.  Historian Stephan Blank chronicles Russia’s efforts to hold on to the Russian Far East and Siberia, concluding that Russian leaders have been eager to cut a deal with China—which covets the territory—to prevent losing it.  In fact, the Siberia Question, argues Andrei Piontkovsky, is central to Russia’s future.  As goes Siberia, so goes Russia.  Russia has entered into “bondage agreements” with China over energy and resources to keep China at bay in the East. Nearly all participants in the Russia In Decline project, especially the Russian participants, pointed to the danger of Russia breaking up along regional and ethnic lines with groups in central Russia—e.g., Tatarstan and Bashkortostan—and in the North Caucasus increasingly aggressive, and successful, in separating themselves from Russia proper.


This tendency to break away from the home office is notable across virtually all of Russia Inc., but the most worrisome developments for Russia come from the growing sense of identity and alienation among Russia’s vast Muslim population. To hold back separatism in the North Caucasus led by Chechens, Russia has simply paid them off in money and patronage, according to specialist Marlene Laruelle. Putin has appointed loyal strongmen from the local populations who are “tasked with eliminating rebellious movements in exchange for unlimited political and economic impunity, and a right to play the card of Islamization.”


These tradeoffs could push these territories in the same direction as Pakistan’s northern tribal federal areas, Laruelle says: “local clanic leaders and Islamic insurgents maintain a precarious (im)balance in remote regions of the country with the blessing—voluntary at first, now uncontrollable—of the central authorities.” This deal, which in effect pledges these local strongmen not to blow up Moscow in exchange for a free hand in their political affairs—including increasingly their own foreign and security policies—and little restraint on their attachment to radical Islam, is tenuous by anyone’s assessment.


But is Moscow safe? “Moscow now has the largest Muslim community in Europe; about 1 million Muslim residents and up to 1.5 million Muslim migrant workers,” notes Laruelle. Other important federal institutions are also at risk.  Ilan Berman cites projections that Russia’s Muslim will number at least one-fifth of Russia’s total population by 2020, and “may make up a majority of Russians by as early as mid-century.”  This means, argues Laruelle, that “in 10-20 years, the majority of conscripts to the Russian army will be of Muslim background.“ Already the Russian military has created ethnically distinct military brigades to impede conflict between ethnic groups under arms.


In a workshop associated with the Jamestown project, renowned expert Paul Goble described how, in addition to breaking apart, Russia is also sinking because the permafrost underlying 65% of Russia’s territory is melting rapidly due to global warming.  Citing the extensive work by Russian scientists, Goble noted that by 2040, two-thirds of Russia’s permafrost will have melted with potentially catastrophic consequences:  much transport infrastructure will be worthless; entire towns and industries will cease to exist; and resultant public health disasters — e.g., smallpox, anthrax—will almost certainly prove beyond Russia’s capacity to handle. (See many related entries in

Good corporate governance would find managing this Russia a colossal challenge under the best conditions, but Russia Inc. lacks “governance” altogether.  Historian Irina Pavlova describes how, after 1991, “the mechanism of Communist power, with its infrastructure of ruling and secret decision-making remained intact,” a trend which continues to deepen, except that today “Putin has resolved the problem of consolidating and maintaining his power even more efficiently than Stalin because in a modern informational society the same goals can be achieved by effective manipulation of public opinion, which makes mass repressions redundant.”


As an organizational model, Putin’s elite now resembles “a Tsar’s court, rather than a board of trustees,” describes Petrov.  He is surrounded by “loyal servants,” not skilled managers. It used to be that elite clans at the top in Russia had to agree on important decisions through a long process, but today each clan goes its own way without consulting with the others.  Putin ultimately must adjudicate; he can veto or override, but at significant cost. “Under these circumstances, the risks of making and implementing poor decisions that go against the interests of the system—or not making decisions on time—are growing.” This “system” cannot plan or forecast, and it cannot react to crises effectively, due to the growing shortage of resources. The notorious silovki—powerful actors in the political, military, and security elite—siphon off whatever profits or low hanging fruit materializes.  The major aim of the country’s elites is “to plunder national wealth rather than increase it,” writes Inozemtsev.  Meanwhile the elite have no incentive to undertake industrial modernization because this would create a middle class that would threaten the kleptocracy’s grip on power.


Notes political analyst Antonin Barbashin, the quality of Putin’s division managers—the regional elites, many of whom are parachuted inorganically into the regions from outside—has plummeted since the 1990s and continues to degrade. Loyalty is favored over efficiency, Putin’s personnel selections are “corrosive,” and strongmen sent from the center to sort out the periphery usually do so “in the service of their own interests.” And, consequently, the outflow of talent accelerates.


Russia Inc. has no obvious succession planning.  Notes sociologist Denis Volkov, Russia’s current leaders are aging, and by the time of the next electoral cycle (2020), most will be in their late seventies.  Actuarial tables don’t lie, and they say change is coming. Russian elections structured (and intended) to bless existing authorities rather than supplying new elites will be challenging, argues Volkov, especially in an environment of economic decline and social strife. “And there is absolutely no guarantee that the transfer of power in the mid-2020s will be as successful as the transfer of the presidency from Putin to Medvedev at the end of the 2000s. In this set of circumstances, there is a danger that the post-Putin political system could collapse altogether.”


Adds Pashtoukhov, “decline lies in the thinning of Russia’s ‘cultural layer’ and consequent degradation of the elites, who turned out to be incapable of finding adequate responses to new historic challenges.” And as more and more of Russia Inc.’s educated talent flees to Europe and the United States causing innovation and growth to collapse, “Russia will move closer and closer to the precipice of becoming a ‘loser state,’” argues Sungurov. If Putin were no longer in power and no credible successors were obvious, a bad scenario would lead to worse: “the Russian Federation will collapse into six or seven parts…all with different political regimes,” many with nuclear weapons.



Russia Inc. is of course not a company; it’s a country.  If it were a company, the downward pull of its myriad pathologies would have extinguished it long ago.  It is entirely plausible that they will also eventually—probably sooner than later—precipitate Russia’s failure as a state. For those of us raised asking when and how the former Soviet Union would finally collapse, Russia’s demise is not a long stretch.  But these were questions most Western intelligence agencies, research institutions, and think tanks eschewed as too provocative to tackle, as if to speak of them was to invite their reality.  But they have to be addressed; evidence that Russia is headed toward an ugly denouement is now too plentiful to ignore.  The incoming Trump administration, which places unwarranted stock in Vladimir Putin as a “strong leader” who can hold this emerging mess together, if not make Russia great again, needs to pay particular attention.  Right now, it appears as if the administration may not understand with what and whom it aspires to ally.


The pathways to Russia’s future will be shaped by the facts of its decline.  These pathways pose arduous challenges for the new stewards of America’s foreign and security policies.  Even a casual look at Russia’s planned defense expenditures—dropping, to be sure, but relatively higher than investment in most non-defense areas—demonstrates where Russia’s leadership believes decline can be slowed most effectively.  Russia’s military is not what it was, and it is unlikely to regain its technological prowess, let alone find the conscripts it needs to build a serious army again.  But for many conflicts, it will good enough to compete effectively and, against fainthearted competition, even prevail.  In the background, Russia will increasingly  rattle its nuclear armory and, if all else fails, use it, as it has repeatedly threatened to do. “Putin’s Russia demonstrates military might through constant massive exercise that imply the threat of the use of force,” notes defense analyst Pavel Felgenhauer, “but thus far it has tended to bully and attack the weak,” for example Georgia, Ukraine, and the Syrian opposition.

“The Kremlin,” observes Pavel Baev, “is convinced that its readiness to accept greater risks is a major political advantage in various tests of wills and asymmetric responses that shape the mode of this confrontation [with the West]…. The regime’s capacity to absorb a defeat is quite low and further diminished by the heavily propagandistic emphasis on ‘new victories’…” The house of Putin “lives in fear of a sudden shift in public opinion caused by a revelation if its weakness.”  With its existence as a viable state on the line, Russia will be forced to take unprecedented risks aimed at keeping Russia competitive—and Putin and his associates in power — for as long as possible.


Participants in Jamestown’s Russia In Decline project returned to this theme over and over.  Declining Russia is like a poker player who knows he has a bad hand, but that he must continue to play it to remain in the game.  He will bluff, intimidate, coerce, and deny as long as cards remain in his hand and the other players fold.  He will place outsized bets in the belief that others will throw in their hands.  Of course, at some point, Putin will miscalculate, creating contingencies for Western foreign policy and defense planners that will require difficult decisions and concerted responses. Some of these probable contingencies are foreseeable; others are not.  “Never in its history has Russian authoritarianism been so aggressive, so determined, and so consistent in its actions,” writes Pavlova.  Russia today “is more dangerous than the Soviet Union was during the Cold War.” Moreover, “the main tools of its foreign policy arsenal remain, just as they were in Stalin’s time — blackmail, provocations and bluffing.”


Felgenhauer reminds us that the center is the weakest point of any authoritarian state, the Russian Federation being no exception. “Any change that may eventually happen will come not through elections with ballot boxes stuffed in the provinces, but through some revolution in Moscow, peaceful or otherwise.” Thus the importance of the “dormant discontent of the better educated professional class in Moscow and St. Petersburg.” Other analysts see the restiveness of Russia’s periphery as the trigger to a larger national implosion.  Either way, nearly all saw the die as cast: Russia’s decline is irreversible, with consequences that will be far reaching.


Part One

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