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Energy Insights: Energy News: Russia: Why oil crash could threaten Vladimir Putin with a palace coup

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Russia: Why oil crash could threaten Vladimir Putin with a palace coup



With a growing economic crisis and less money to share among the oligarchs, there is talk of splits in the Kremlin elite that could undermine the president’s power

shaun walker new byline 

in Moscow The Observer

Vladimir Putin
Vladimir Putin responds to questions at his annual press conference in Moscow, on 18 December. Photograph: Nickolay Vinokurov/Corbis

When Vladimir Putin was asked at his annual marathon press conference whether he feared the possibility of a “palace revolution” at some point in the future, the Russian president 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.

But 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 will expose how little has been done to diversify the Russian economy during the boom years, while on the other the amount of money to share among the group of billionaires around Putin will 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, 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 may be another matter. Even among those ideologically in tandem with Putin, if their vast wealth begins to be threatened their loyalty may waver.

Protests at Maidan Square in Kiev in February.
Protests at Maidan Square in Kiev in February. Photograph: FABRICE ELSNER/SIPA/REX/FABRICE ELSNER/SIPA/REX

But the “vertical of power”, which 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 that anyone in the elite is even thinking yet about the possibility of planning for a post-Putin future. Indeed, 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 puts it: “You can’t really see him just stepping aside. Any scenarios of a change of power in Russia appear to be very messy ones, and for the moment, at least, very unlikely.”

Some opposition figures have looked at Mikhail Khodorkovsky, formerly the country’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 now says 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 may 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 will be arrested again if he returns to Russia. Any scenario where he could mount a coherent challenge to Putin for now still appears from a parallel universe.

The brief flurry of liberal street protest in 2011 and 2012 was ruthlessly snuffed out by the Kremlin, and many have suggested that, far from a liberal revolution, the most likely revolt in Russia is the “senseless and merciless” Russian uprising of which Alexander Pushkin wrote. Nationalist forces, which have always been carefully kept in check by the Kremlin, were let out of the bottle with the uprising in east Ukraine, where a number of the rebel commanders were doing the Kremlin’s bidding but also harboured fantasies of bringing revolution to Russia. “I voted for Putin in 2000 and I agitated for him among my men in Chechnya. Now I am ashamed,” one high-ranking rebel leader, a former Russian military officer, told the Guardian earlier this year in Donetsk. “I would like to see the same kind of thing that has happened here happen in Russia. A people’s revolution, to get rid of the corruption and put the military in charge.”

Mihail Khodorkovsky addresses the committee on foreign affairs at the European parliament at the beginning of December.
Mihail Khodorkovsky addresses the committee on foreign affairs at the European parliament at the beginning of December. Photograph: EMMANUEL DUNAND/Getty

This is another scenario that could theoretically gain traction among many of the same sections of the population who support Putin, as well as certain members of the elite, but which appears unthinkable in the current climate. Commanders such as the nationalist Igor Strelkov were removed from east Ukraine as soon as they got too popular, with little fuss. As even those close to the Kremlin admit, the role of state television in forming popular opinion is overwhelming. A former Kremlin official who knows Putin personally told the Guardian earlier this year: “Whoever has control of television has control of the country. If communists took over, within three months the country would be communist. If fascists took over, within three months it would be fascist. That’s just the country we live in.”

Indeed, popular support seems to be sewn up for Putin, though an oil-driven sustained economic downturn could provide a serious test. It was intriguing, though, that Putin dodged the question about any split in the elite. When a Reuters journalist told him that certain members of his inner circle blame him for the economic and political deterioration this year, he laughed, and said: “Give me their names!”

It was a joke, but there was no follow-up insistence that the journalist must be wrong. Putin, who has a visceral dislike of popular revolution and has calibrated policy for years to ensure its impossibility in Russia, may also start to look over his shoulder at those around him.

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