- Dances With Bears - http://johnhelmer.net -

GOD BLESS US, ALMOST EVERY ONE! – NO KREMLIN CHRISTMAS DINNER FOR THE OLIGARCHS

[1]

By John Helmer, Moscow

This isn’t news:  President Vladimir Putin (lead image, right) is running for re-election on March 18.

According to the latest national polls, he is likely to win with a larger majority of a smaller turnout than in 2012. As Tiny Tim (left) almost said in Charles Dickens’ Christmas Carol, God bless us, almost every one!

What is news is that after declaring his re-election bid to a group of autoworkers; proclaiming a hike in pensions from New Year’s Day; and announcing to Russian troops in Syria that most of them will return home,  Putin is not – repeat not — hosting his annual Christmas dinner for the oligarchs.  God bless us, almost every one!

Russian opinion pollsters report that Putin’s approval rating is holding steady above the 80% mark,  increasing slightly in December so far, compared to November [2]. But this is having the effect of dissuading voters from going to the polls. Naturally, they believe the outcome is certain. So compared [3] to a turnout rate of 65.34% in 2012, the latest polling indicates turnout next March will be 58% or less. 

[4]
Source: Levada Center polling November 2017 reports 81%: http://www.levada.ru/en/ [5] Russian Public Opinion Research Center (VTsIOM), December 8, 2017, reports 82.4%: https://wciom.ru/index.php?id=236&uid=116589 [2]

This is causing a divergence of opinion among Kremlin campaign technicians over how hard to try to raise turnout. They are debating whether the effect, at least in some cities and segments of the population, will be more criticism of the president, fewer votes for him than the 63.6% he won in 2012.  

The Levada Centre of Moscow  has just issued this poll weighing Putin’s pros and cons among voters; the nationwide survey was undertaken at the end of October, and published on December 11.  Here are the negatives:

[6]
Source: https://www.levada.ru/en/2017/12/11/vladimir-putin-s-work/ [7]

The percentages look small, but they are symptomatic. Those willing to express the negatives on the record are a small proportion of what the voter sample thinks but isn’t willing to divulge. This is a warning to Putin that his marathon television press conferences and call-in sessions are losing their persuasiveness.  Then there’s the question of whose interests Russians think Putin really represents. Here the answers make the negative picture of Putin more vivid, and the contrast between this year and earlier years sharper.

[8]
Source: https://www.levada.ru/en/2017/12/11/vladimir-putin-s-work/ [7]

Putin has been studying what approach to take towards this voter sentiment, ahead of his national press conference on Thursday. “’The president is making preparations for the annual news conference all [Wednesday],” announced Dmitry Peskov to the state news agency Tass. ‘There are  no public events on the president’s agenda today, so he will be making preparations [for the news conference] from dawn to dusk,’ Peskov added.”

When Putin opened his press conference on Thursday afternoon, he started by saying: “I would prefer not to talk about my election programme at this point.” Nothing could be further from the truth – and everyone knows it. God bless us, every one! Follow the questions and answers here [9].    

Putin admitted he and his advisors aren’t sure yet what campaign to run. He implied he intends to delegate the tactics to regional governors and the security services.  “With regard to disagreements,” Putin told the press conference, “…we operate in a lively environment: there is discussion and disagreement, but only until we reach a common solution. With regard to this issue – it is technical, but still important – I would like, of course, to see people of authority who are well known across the country, who, I reiterate, sincerely support the policy pursued over the past few years.”

Almost all the president’s answers were then directed at the “everyday people”. As a campaign strategy, this is to accentuate the positive. “This is probably not the right format for presenting [the election platform], but I can share with you some of its highlights that should be the focus of attention for the authorities and society in general. Specifically, this has to do with infrastructure development, healthcare and education. This is also about high technology, as I have already said, and improving labour efficiency.”

The security establishment was almost ignored. No question was asked and no answer given on the subject of oligarchs. On the subject of bankers, Putin had just this to say:  “those people who have brought their financial institutions to the brink do not get any money. This, in my opinion, is extremely important. There is something else I need to point out, because I have often heard this criticism of the Central Bank – that the Central Bank policies are aimed at state control of the banking system. This is not true. First, I repeat, there are 521 banks or more, 521, I think, let alone other credit institutions, because not all credit institutions are banks.”

[10]
Source: http://en.kremlin.ru/events/president/news/56378 [11]

The Russian Public Opinion Research Center (VTsIOM) does not publish surveys of voter intention, turnout, or ballot preference; click to see its poll results here [12].  The Levada Center had its origin in the Soviet-era VTsIOM organization but it became a spinoff from VTsIOM after 2003. Levada does publish surveys of the sensitive campaign issues [13].  But since September 2016 it has been sanctioned by the government, and compelled to register as a foreign agent. For the Center’s discussion of the circumstances, read this [14]

In opening his campaign with a pitch to autoworkers on December 6, Putin and his campaign staff managed [15]the presentation in a revealing way.  When Putin visits a factory, it is normal for him to be met at the door and accompanied around the plant by the owner of the plant, the control shareholder.  If that man is an oligarch, the photographs are always publicized to demonstrate the Kremlin’s endorsement and favour.

Last week at the Gorky Automobile Works (GAZ), for Putin’s election campaign kickoff,  there was sex appeal; hoopla;  shining props just off the production line. But there was no sign of the owner of GAZ [16], Oleg Deripaska.  Spokesmen for GAZ and for Deripaska were asked to explain his absence from Putin’s visit to GAZ. They refused.  

[17]
Source:  http://en.kremlin.ru/events/president/news/56323 [18] 

Staff at the two polling agencies, VTsIOM and Levada,   refuse to say if they have produced  breakdowns of their presidential approval rating surveys by education, income or social class. Levada doesn’t say if it has done likewise for its surveys of turnout and candidate choice. Class, as this has been known in Russia between the revolutions of 1905 and 1917, and until 1991  is discreetly left out of contemporary Russian polling.  

This leaves the “ordinary people” at the bottom of the Levada table  – and they are feeling the pinch this year. Rosstat reports that over the first nine months of 2017, real incomes declined by 1.2% compared to the same period of last year.  In January there was an 8.8% increase; this was the Kremlin’s doing with an order to the Finance Ministry for a one-time boost to pensions. In April real income fell 7.5%;  in May and June there was no growth [19].    

Putin has ordered something of a repeat in January next, when non-working pensioners will be given a 3.7% increase. This is one month ahead of the usual February deadline for indexation;  maybe a bit more than the index should allow; but less than the January 2017 bonus. For details of the new pension scheme recently announced, click to open [20].  

For the Tiny Tims of Russia, this year has been one of no improvement, or worse. They are following the brown line – that’s the trend of real income increase (or decrease) compared to 2014:

DISPOSABLE INCOME MEASURED AS PERCENT INCREASING OR DECREASING OVER THE MONTHLY AVERAGES DURING 2014

[21]
Key: green= actual money income paid; orange=income excluding seasonal factors; brown=income trend line
Source: http://www.gks.ru/free_doc/doc_2017/info/oper-09-2017.pdf [22]

The Russian government also operates a special tax for “ordinary people”. It was first created in President Boris Yeltsin’s time, when it was called wage arrears. The officials responsible then are retired or dead, except for Anatoly Chubais. His name is one of the most hated in Russian public opinion; we’ll come to him in a moment.

In practice, arrears were the outcome of deliberate delay in paying wages by state and public institutions lacking the budget funds from the federal Finance Ministry; and refusal to pay wages by commercial organizations, shareholding corporations, and private companies. Arrears are reported monthly by the Russian state statistics agency Rosstat.  As this report of 2001 indicated [23],  during the Yeltsin period the arrears number peaked at over Rb103 billion after the election campaign of 1996; that was the election which Yeltsin, with Chubais’s help, lost on the votes cast,  but won on fraud, with Chubais’s help.   

[24]
Left: Anatoly Chubais with President Yeltsin; Chubais was head of state privatization, deputy prime minister, chief of the Kremlin staff, re-election campaign director in 1996, and head of the state power utility, UES. Right: Chubais with President Putin, who continued to employ Chubais during the privatization of UES. In 2008 Putin appointed Chubais head of the state technology holding, Rusnano, where he remains despite indictments of Chubais’s subordinates for fraud and embezzlement; for details, click [25].  

Wage arrears fell during 1997, then started up again in 1998, peaking in October of that year, after the default of the state treasury on its bonds and the collapse of the banking system,  at Rb88 billion.

The political impact of the wage arrears number is obvious. When it is rising, the president is blamed, and his approval rating falls. Russian pollsters have admitted in private  the correlation that for every 1% increase in the arrears, month to month, Putin’s rating has usually fallen by 0.5%. Read more [26]

Putin has never been asked a question about arrears in his national press conferences or national talkshows, but the Kremlin staff pay close attention.  In Putin’s first term, the arrears number peaked in the spring of 2001 at a figure of Rb34 billion. As the numbers went up earlier that year, the official statistics showed it was commercial or private enterprises rather than public or government bodies that were to blame. By imposing more budget discipline, Putin pulled both the arrears and his rating out of their common dive.

In January 2014, the month before the US started the war in Ukraine, the total arrears figure was just below Rb2 billion. By Yeltsin standards, it was Putin’s achievement to have brought the number down so low.  However, as the chart shows, since 2014 the trend has moved upwards, and thus against the president. In 2015 the number passed through Rb2.5 billion. It rose steadily in 2016 to a peak of Rb4.5 billion in May of 2016, before heading downwards.

[27]

The chart shows that this year January started well, but arrears then began rising again to a peak of Rb4 billion in May. Compared to the Yeltsin period, Russians acknowledge the obvious – they are better off. But the trend line during Putin’s three terms began to move against him after the US war started.

It’s also obvious that Putin’s approval rating hasn’t suffered. That’s because of the war effect, and the US Government.  If successive regimes in Washington hadn’t made a policy of attacking Russia, Russians,  and Putin personally, domestic support for him, and the course of domestic elections, would have gone differently.  The break in the correlation between wage arrears and voter approval has been a major achievement of the US war against Russia to date.  In this way, Russian sociologists believe the war has also been protecting the president from the income inequality which Putin has encouraged through the oligarch system. For details of how this has operated, click [28].  That the latest voter survey reveals that 31% of Russians believe Putin represents the oligarchs’ interests, compared to 14% in December 2003 – two months after the arrest of Mikhail Khodorkovsky – indicates also that the US war against Russia has been protecting the relationship between Putin and what the US Treasury calls his “cronies”.  That ‘s to say, protecting Putin from the damage the relationship does to Russian voter confidence in Putin.

Starting in 2014 Putin has made an annual celebration of this relationship by inviting the oligarchs and  a handful of state officials to a Christmas dinner at the Kremlin. On December 19, 2014, Putin had 45 guests. Read the story here [29].  

[30]

On December 24, 2015, the guest list numbered 46; read more [31].  Last year Putin hosted the dinner on December 19, and increased his guest list to 62. For the significance of the additions, read this [32].  

The timing has traditionally been a week or so after the president’s national press conference. So if this year Putin is to follow suit the oligarchs’ dinner should be held next week. Asked this week to confirm if this is so, the Kremlin press office said “in the near future such a meeting isn’t planned.”

The Russian Union of Industrialists and Entrepreneurs  (RUIE [33])  is the business lobby group through which the oligarchs officially interact with the government; it is consulted by the Kremlin on the Christmas dinner guest list, though its president, Alexander Shokhin, wasn’t invited to the 2014 or 2015 dinners. Shokhin is also paid to serve as an independent director on the boards of Rosneft, Eurasia Drilling, Mechel, and pipemaker TMK (where he sits next to Chubais).  RUIE was asked to say if the Kremlin dinner is on this year; it refused to reply.

Russian political analysts believe Putin does not want to appear at the start of the election campaign in the company of the oligarchs. This is why there will be no Christmas dinner. It is also the reason Putin did not want to meet Deripaska at the GAZ factory for the election campaign launch – and why Deripaska’s men won’t admit it.

This does not mean that the one in three voters identified by the Levada poll as believing Putin represents the oligarchs are mistaken or fooled. Nor that the oligarchs are feeling slighted by the Kremlin. This is evident from a look-alike Kremlin reception Putin hosted for Shokhin, RUIE and the oligarchs on September 21, two months before the GAZ ceremony.

[34]
Source: http://en.kremlin.ru/events/president/news/55675 [35]

For this event, there was a record number of guests at the table – 64. But there was no dinner to follow the speeches. “You know we do not meet often,” Putin said [35] in his opening remarks,  “but [we] still regularly get together in approximately the same line-up and compare our positions on the developments in the economy and in specific sectors.  I must say that despite certain limitations, including external restrictions, the Russian economy is stabilising. As you know, it is perfectly obvious that it has overcome the recession, is gaining momentum, and has been growing for several quarters running.”

“As you also know, we planned for fairly modest growth of about 0.8 percent. In the first quarter of the year the GDP increased by 0.5 percent but it has already gone up 2.5 percent in the second quarter. Investment increased 6.3 percent, which is the highest since the second quarter of 2012. Naturally, this is a good foundation for future development.”

Putin also presented a birthday watch to Andrei Kostin, head of the state bank VTB; and informed the gathering that sunflower oil production is up this year by almost 20%, while growth in knitwear is even better at 23.5%. Press reporting of what was discussed but not disclosed on the Kremlin website, indicates that Putin was asked to protect the oligarchs from US sanctions by relaxing current Russian inheritance laws in favour of passing assets to their children; exempting the oligarchs from returning their assets to Russian tax jurisdiction, so that the assets can be hidden from the Americans abroad; and introducing cryptocurrencies to avoid US dollar monitoring by the US Treasury. For more details, read this [36].   The oligarchs’ fear of sanctions was the dominant topic for the private talks with the president.

The guests were seated in alphabetical order, and the table setting was published by RBC here [37].

Compared to the oligarch dinners of Christmasses past, the most notable guests who were missing in September were Alisher Usmanov (iron ore, steel, telecommunications) and Alexander Abramov (steel).  The most important of Putin’s new guests was Chubais; he was seated between Shokhin and Sergei Chemezov, head of the state strategic asset holding Russian Technologies (Rostec). 

This is the first public endorsement of Chubais by Putin since the prosecutions commenced at Rusnano in 2015.

[38]
From left to right: Vagit Alekperov (LUKoil), Victor Vekselberg (Renova), Elvira Nabiullina (Central Bank), Andrei Kostin (VTB), Roman Abramovich (Evraz), Suleiman Kerimov (Polyus Gold), and Anatoly Chubais (Rusnano).  Source: https://www.rbc.ru/photoreport/21/09/2017/59c3ea7e9a7947bc915bd96b [39]

The Kremlin website report of what was said at their meeting reveals Putin’s hint at the sanctions problem. “Considering that external restrictions still exist and may even be extended, I would like to hear your opinions on this situation, your assessments and proposals. This is probably all I need to say for now.”  The only press report to have included the private discussions reveals that the cryptocurrency proposal was rejected. But there is no disclosure of Putin’s reaction to the inheritance and offshore proposals.

Were the goose and fixings served then? The Kremlin was asked on Wednesday to say if the  September 21 meeting had been a substitute for the Christmas dinner. The president’s spokesman replied he had “no information”.

SEQUEL: The Kremlin spokesman was not telling the full truth, or else there was a change of plan. On December 21, a week after the spokesman had said "in the near future such a meeting isn’t planned”, Putin hosted the oligarchs again. The Kremlin website published Putin's briefer than usual remarks. According to the President,  "we meet not just to wish each other a happy holiday, of course, but also to sum up the results of the outgoing year, and to discuss matters that are important for both the state and business." Putin also acknowledged that he had agreed to the oligarchs' proposal to modify the law requiring offshore entities through which the oligarchs manage their assets to repatriate and pay higher domestic taxes. "We also agreed," Putin said, "to improve the legal status of controlled foreign companies, given the existing practice of how this institution functions and in keeping with your proposals. Corresponding amendments have been prepared." There has been no disclosure of what changes are being made. Read the Kremlin report in full here [40].   

The official guest list [41] identifies 63 at the table -- 56 from business and 6 officials.  Missing from the September 21 list but present for the Christmas dinner were Alisher Usmanov, Alexander Abramov and Nikolai Tokarev, head of the state oil pipeline and port company, Transneft.  Present in September but missing this week are Oleg Deripaska, Anatoly Chubais, Roman Abramovich and Mikhail Fridman. Suleiman Kerimov was also missing this week; he is under arrest in France. One of the oligarchs present said: "it was a really ordinary meeting with the oligarchs like all the past years, so nothing special to signal."

Andrei Tsybulin, chief of the presidential press office and deputy to Dmitry Peskov, Putin's spokesman, refused to say when the oligarchs' dinner had been scheduled, or to clarify the difference between what the Kremlin had said a week earlier and what happened. Speaking through a spokesman who refused to give her name, Tsybulin said:  "we never comment on the President's schedule. All the information appears on the website as soon as we receive it for publication." One of the oligarchs added: "We got the information about the meeting in the mid-week, so I’m not sure it was before December 14 or not."