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Betting on the Next President of Russia

Political polls are a funny thing in a non-democratic countries – I imagine it must make an impact on the answers people give when there is a profound and widespread certainty that their vote will make absolutely no difference.

Russian Politics

Nevertheless, the big news today – apart from some little tabloid blurb regarding the British government charging a Russian with the murder of a former spy in London (or something like that) – is that Dmitri Medvedev, after a brief period spent in the shadows, has regained the lead in the polls from his fellow Deputy Prime Minister Sergei Ivanov. A new poll from Levada shows that Medvedev is up to 34% from 29%, while Ivanov has remained at 31%. The conventional political analysis has always painted Medvedev as the relatively more liberal, Western minded of the two, while Ivanov does a better job playing hawkish bad cop. Indeed, when Condoleezza Rice visited last week, Ivanov was given most of the heavy lifting and Medvedev was no where to be found (which was a big change from his star-studded days at the World Economic Forum, when it seemed certain that we were watching the next president of Russia take a turn on the catwalk). Apparently Putin likes to use one to intimidate and the other to charm. But these polls, impressions, and canned analysis shouldn’t be fully trusted. Ask any of your friends who watch Russian television lately, and they will tell you that Medvedev is getting the royal treatment and hours of flattering coverage. On the other hand, many people close to Ivanov say that the “hawkish” trait is an exaggeration, and not a fair representation of what his policies would be like – for example, they say his daughters enjoy spending lots of time in the United States, so he probably isn’t as ready for the new Cold War as some analysts threaten. The biggest problems with polls and perceptions in the Russian succession is that there is a considerable dark horse factor (Kozak and Fradkov say hi) – like any good monarchic drama, it is possible that candidates will be brought forth for purposes of misdirection, and that the real successor cannot be exposed until the timing is right. For those who think they’ve got what it takes to pick the next president of Russia, put your money where your mouth is. A while back, the website Trade Sports opened up a speculative market of futures contracts for the 2008 President of Russia: russiafutures.jpg Currently Vladimir Putin is the favorite, with 7.5 to 1 odds, while Kasparov is running a 10 to 1 contract, and Zhirinovsky with 11 to 1 odds. Obviously it is still way too early. Even the political futures market is affected by the general atmosphere of risk in Russia – if you look at the volume column, even Putin has only sold 116. Hopefully once the market becomes more liquid later on, we can begin to track the daily swings in value of these contracts to see who the Vegas oddsmakers believe will hold down the halls of the Kremlin – which is probably as reliable if not more trustworthy than a Levada poll. (for an example of a liquid political futures market, see the US GOP nomination or the resignation of Attorney General Alberto Gonzalez – I imagine that the Russia books will close the margins in later months). Look to the gas and oil wars One important key to predicting who Putin’s successor will be can be found in the country’s labyrinthine energy politics, where political and legal fallout from the plunder of Yukos is creating certain instabilities in the delicate balance between Gazprom and Rosneft, and creating rifts between the ambitious, competing siloviki behind these state-owned firms. For example, a recent article in Stratfor identified Medvedev’s low profile with the conclusion of the Yukos auctions, reflecting Putin’s increasing worries that by a Kremlin managed by Medvedev would be incapable maintaining the delicate peace in that den of thieves:

If Putin leaves his position to Medvedev, nothing would stop Gazprom from swallowing up the rest of Russia’s energy infrastructure. However, Putin is trying to ensure balance and is strengthening Gazprom’s rival, energy company Rosneft, before he leaves to ensure Gazprom is kept in check. Though Medvedev knew of Putin’s plans to do this, it still must have come as a shock to see Rosneft take most of bankrupt Russian oil firm Yukos’ assets in auctions over the past few weeks. Gazprom did snatch a few pieces, but the auction catapulted Rosneft into the position of Russia’s largest oil company, and made it a power to reckon with. For the past few weeks, Medvedev has been keeping his head down while Rosneft publicly rejoices in its victory and he and his political backer, Vladislav Surkov, determine how to proceed. Moreover, Medvedev needs to prove that Gazprom is still the Kremlin’s most-valued asset and show Putin that he can rule a balanced Russian government. Medvedev and Surkov are apparently looking to move Gazprom into large fields it has yet to attempt or dominate, such as coal, telecom and media. Gazprom is said to be the potential buyer of Russian telephone company Rostelcom; it is expected to take over Russian coal giant SUEK; and it also has been in secret negotiations to take over Germany’s largest coal mining company, RAG. Medvedev is the one heading up these plans, which would diversify and enlarge Gazprom without directly competing with Rosneft. But the issue remains: can Medvedev rein in his ambitions for Gazprom and its aspirations for total supremacy enough for Putin to give him the top spot? Medvedev already is missing some of Russia’s most defining moments, while Ivanov has been basking in the spotlight. Medvedev has to find a way to balance his own agenda and Gazprom in Putin’s master plan — he cannot upset Surkov, hurt Gazprom’s supreme identity or alter his strong public image. If Medvedev does not pull all of this together by the end of the year, he could see himself missing not only media appearances, but also a spot on ballots in March.

So who do you have your money on?