TWO HATS OR ONE? In 2001 Putin appointed Aleksey Miller CEO of Gazprom. Always a state controlled company, the previous CEO had run Gazprom as if he personally owned it. Putin explained Miller’s appointment: “The first task is to safeguard the state’s interests in this company, to collect everything which by rights belongs to the state, and to make the company’s activity and primarily its financial activity absolutely transparent to all shareholders, including minority shareholders”. As a further measure of control, one Dmitriy Medvedev, then Chief of the Presidential Administration, was made board chairman. This pattern was followed in many other state companies. Putin’s actions made sense to me at the time: it was important for the state to get control of what it owned; many feared Russia was collapsing and a notable characteristic of the Yeltsin period had been how poorly state interests had been “safeguarded”. But this had disadvantages: was Ivan Ivanovich a Minister or one of the chief officers of a wealthy company? He was supposed to regulate the company of which he was an officer; how did that work? Was the company a company, or a branch of the ministry? But the time for this is over: Medvedev has published a list of government officials who are to be removed from the boards of state companies: this is to be done by 1 July. More are expected. Note that transparency was the reason given for each plan: for Putin the transparency was for the government so it wouldn’t be looted; for Medvedev it is for investors. Not a dispute with Putin but the fact that different times require different ideas.

BUSINESS CLIMATE. Medvedev gave an important speech on modernisation and the business climate (“very bad, very bad”) in Magnitogorsk. As usual, corruption and bureaucracy were the chief obstacles. He laid out his demands. Work has started: Putin gave orders to cut the payroll tax from 1 Jan 2012 and to prepare a bill to require all officials and parliamentary members to declare expenses. The airport and airline sectors may be opened up. There has been some progress in one important area: see below.

SHADOW ECONOMY. The head of RosStat estimates Russia’s grey economy to amount to about 16% of GDP. This is way down from some previous estimates (45% in 1999). To put this figure into context (something almost never done in reporting about Russia) it is estimated that the grey economy in Europe ranges from 10% in the UK, 12% in Germany(!) and France, 20% in Spain and up to 40% in the eastern countries. Russia, now roughly at the European median (page 4), is hardly an outlier.

OPPOSITION. As I never tired of pointing out, the “liberal opposition”, when it paired with Limonov’s NatBols, accepted a contradiction into its core: whatever the former may have been, the latter had nothing to do with democracy or liberty. Now that Moscow City permits protests (but not Limonov’s), the contradiction has matured. All this played out on 31 March. Lyudmilla Alekseyeva’s group (she refuses to partner with Limonov now) was given a permit, three or four hundred appeared and it was all peaceful. Limonov, refused permission, held a rally anyway, a hundred or so showed up and there were arrests. Added to which, there is no point in holding protests against not being allowed to protest when you are allowed to protest. And so, the leaders announced that that would be the last “31” protest. But they say they will continue their demos. We’ll see: the protests, aided by the Western media’s resolute incuriosity about the NatBols, always seemed to be aimed at a Western audience. So who won? The protesters for carrying their point? Or the authorities for neutering them?

KHODORKOVSKIY. The judge’s aide who said in February that the verdict was fixed “from above” has resigned; her own decision she says.

LUZHKOVSHCHINA. Apparently in advance of his arrest, the President of the Bank of Moscow got out to London. The police are ready to charge him with illegally granting a US$444 million loan to Luzhkov’s wife.

ISS. With the US shuttle program ending, resupply is now up to Russia.

ELECTORAL CHANGES. Medvedev signed a law mandating greater use of party list voting in regions. He is trying, he says, to strengthen political parties. For a discussion of the party system see here (probably up tomorrow).

POLICE REFORM. As the results of the tests come in, Medvedev is making many appointments in the senior ranks of the police. Someone who follows this more closely than I should analyse them to see what changes are happening. We would want to see quite a few positional changes (>33%?) to believe that the effort is real.

© Patrick Armstrong Analysis, Ottawa, Canada (see