Putin Looks After Pork, Not Pipelines

putin_pork062909.jpgPavel K. Baev has a good article up about Vladimir Putin’s conspicuous absence from the Gazprom annual meeting earlier this month, when Alexei Miller had to give a long list of bad news, including an 85% dividend cut, a 35% cut in investments, and delays in production plans across the board.  But it’s not like Putin has just been sitting in his dacha – we’ve been treated to a long list of hands-on management and personal appearances, from the humiliation of Deripaska at Pikalyovo to the complaints over pork prices at a supermarket.  Baev lists some of these activities here:

Duties of prime ministers are certainly complex, but few apart from Putin have taken to making blitz appearances in unexpected places and performing small miracles by reviving paralyzed plants. It started in the small town of Pikalevo, Leningrad oblast earlier this month where TV crews arrived just in time to show Putin stepping out of the helicopter, making a brief tour around the empty enterprises and forcing the owners to strike a deal to re-start production, not even leaving them the pen with which the contract was signed as a souvenir (Nezavisimaya Gazeta, June 11). Then came the visit to Barnaul where the prime minister inspected the foundation of a new medical center, but the mere fact of his presence in Altai krai was enough to resolve the labor conflict at the Rubtsovsk tractor plant that suddenly saw demand from new customers (Kommersant, June 20). After the visit to Ilya Glazunov’s personal art gallery where the artist was eagerly attentive to the prime-ministerial advice, some commentators started to worry about Putin’s connection with reality (Ezhednevny Zhurnal, June 16). Last week he paid a surprise visit to a super-market in Moscow and expressed dissatisfaction with meat prices, accepting reassurances that they would be immediately revised down (Vremya Novostei, June 25). Yuri Kobaladze, the executive director of the company that owns the chain (and a former general from the Foreign Intelligence Service) had the nerve to clarify later that it was only light hearted, but July sales were nevertheless duly announced (Moscow Echo, June 25).

Theresemblance of this “manual management” to the trademark style of NorthKorean “great-and-dear” leaders is more than a little amusing(www.grani.ru, June 26). The public relations effect from suchattention to local problems is inevitably short-term, but it creates anincreasing demand for quick fixes of such complex problems as, forinstance, the stagnation of the “mono-cities” built around one orseveral industrial enterprises (Rossiyskaya Gazeta, June 26). Thesimple proposition that the depth of economic decline requires seriousreforms in the overloaded system of bureaucratic rent-extraction fromevery business activity is not present in the recently revisedanti-crisis program. The “ideology” of this plan boils down to theexpectation that rising oil prices will restart the growth engine thatworked so wonderfully during Putin’s presidency, while the hands-ontackling of some local situations will help in defusing public protests.  (…)

Gazprom is both a tool and a victim of this “it-will-pass” policy thathas already transformed the crisis into stagflation. Putin’smicro-management of the company’s activities is never advertised, buthis hand is unmistakable in the brinksmanship tactics that defines thedevelopment of parallel gas conflicts with Ukraine and Belarus.Compromises in these quarrels are always only a means toward the end ofdenying them any independent say in gas matters. Putin quite sincerelydoes not see how this tough behavior damages Gazprom’s reputation inEurope, much the same way as he cannot grasp the logic of thediminishing effectiveness of performance by this overgrown corporatebehemoth under his enlightened guidance. Gazprom is allowed to reduceits contributions to the state budget and is granted permission toincrease prices for domestic consumers despite their diminishingincomes, its every acquisition or investment in Europe is backed by allthe necessary foreign policy resources – and it is still in far moretrouble than its glossy annual report admits. Every crisis bringsreinvigoration to businesses that can learn, but Putin remains adamantthat his course has always been faultless.