CONSTITUENCY FOR CHANGE? OBSERVERS HOPEFUL AS

C O N F I D E N T I A L MOSCOW 000818 SIPDIS SIPDIS E.O. 12958: DECL: 03/25/2018 TAGS: PGOV PINR SOCI KDEM RS SUBJECT: CONSTITUENCY FOR CHANGE? OBSERVERS HOPEFUL AS INAUGURATION APPROACHES Classified By: Ambassador William J. Burns. Reasons: 1.4 (b,d). ¶1. (C) Summary: As candidate Medvedev transitions into "President-elect" Medvedev, commentators have begun to speak with increasing frequency about political support for a reform agenda, not only the expected backing from the "liberal" economic elite, but also more broadly amongst Russia's business leaders; federal and regional leaders; and even among certain strata of society. While none would describe this support as a mandate for change, Medvedev appeared to be reaching out to this latent base in his February 15 Krasnoyarsk speech and during his "seminar" on the economy last week with business and financial experts. Admittedly, Russia's political experts acknowledge that Medvedev's core values are not known, and even less is understood about how the Medvedev - Putin "tandemocracy" will function, some believe that the prospects for a new "thaw" are greater than they have been for years -- if Medvedev chooses to take the reform path. Other observers, while agreeing that change is necessary, believe that a Medvedev who has spent 17 years in the shadow of Putin, is not the person to get that ball rolling. End summary. A Return to Reform? -------------- ¶2. (SBU) In recent weeks, we have noted some signs that a Medvedev presidency could return to the economic reform agenda that Putin supported during his first years in office. Economic analysts xxxxx point to the decision not to include telecommunications on the list of "strategic sectors" as a first sign of a potential shift away from the policies of state capitalism. Further, Medvedev has publicly advocated new policies to streamline the administrative requirements for the fishing industry, potentially a step toward further reducing the obstacles to other small businesses across the country. xxxxx told us that they saw little chance that Medvedev would tackle administrative reform "off the bat" -- suggesting a more assertive approach to promoting the innovation economy than Moscow's economic watchers had expected. ¶3. (SBU) Encouraging signs on economic reform, however, do not necessarily translate into optimism for reform in the political sphere. Medvedev has long been with Putin and has given no indication that he is ready to wade into the difficult waters of political reform. xxxxx identified the challenge of gaining control over the "coercive" elements of the government - the FSB, the Investigative Commission under the Prosecutor, and other organs controlled by Sechin's allies -- stands as problem number one for the new president, particularly given their influence over the state corporations and likely opposition to their reform. Actions to assert his authority over those powerful players may require Medvedev to look for broader support beyond the elite in support of his reform agenda. Constituencies for Change -------------- ¶4. (C) Taking a cue from observers who have focused their hopes for change on differences between Medvedev and Putin, the BBC Moscow's Konstantin Eggert argued to us that Putin had successfully fashioned himself into the "people's president" -- one who enjoyed the support of the man on the street and was able to convert that image into unassailable popularity. Medvedev, Eggert thought, was not that sort of man. His personality, background, and temperament suggest that he would appeal primarily to Russia's intellectual and technical elite, and to middle class businessmen. There is some evidence that this stratum is ready for change and could provide a constituency for reform, if Medvedev were to pursue a new strategy. The educated middle classes, according to Eggert, are irritated by the gap between what they have accomplished in their lives and the fact that lack of institutions means they remain at the mercy of bureaucrats, whether they be the traffic police, ministry officials intent on shaking them down, or members of the judiciary should their troubles cause them to end up in court. Eggert thought that this quietly restive part of the population could be a potent source of support, but is unlikely on its own to "stick its neck out" without leadership from the top. ¶5. (SBU) A recent Levada Center poll offers some evidence that the looming succession and prospects for change entertained in Krasnoyarsk have heightened expectations among a significant minority. Twenty-three percent of those polled expect that Medvedev will undertake liberal economic reforms, while sixteen percent believe Medvedev will rely on the middle class for support (only ten percent expected the same from Putin when he became President). A reduced number --from 52 percent for Putin to 38 percent-- believed that Medvedev would rely on the "siloviki" as he proceeded with his Presidency. A VTsIOM poll, taken in early March, shows that 54 percent of respondents expected Medvedev to take Russia on a more "democratic course." Dissatisfaction within the Elite -------------- ¶6. (C) xxxxx told us that, in addition to Medvedev's potential constituency in the electorate, there is support for resuming the gradual economic reforms that Putin had begun in his first term, but then abandoned in his second. According to xxxxx, Deputy Prime Minister Kudrin, Sberbank's German Gref, multi-billionaire Roman Abramovich, and others had lobbied for Medvedev as successor in the year preceding Putin's decision. They, and others like Minister of Regional Development Dmitriy Kozak (although no friend of Medvedev's) formed a small, but respected and potentially potent core group for reform within the Administration. xxxxx thought that Medvedev might bring additional figures with similar sympathies into his administration. ¶7. (C) Conversations since the election suggest that support for a change of course extends beyond the Kremlin walls. "xxxxx have separately suggested to us that quiet discontent is the norm among many -- even those in the United Russia party -- in the Duma, but that few are willing to lift their heads above the pack unless they have reason to believe that prospects for change are real. xxxxx hoped that the economic problems would ultimately force Medvedev to change course in order to salvage his presidency. Will Medvedev Meet the Challenge? -------------- ¶8. (C) As xxxxx told us: "Medvedev is the best of all possibilities." xxxxx who had met with Medvedev twice over the years, described him as "ready to hear sharp criticism," and "ambitious." xxxxx shared xxxxx measured optimism about Medvedev who, "wants power," and would use the corruption campaign he had promised to launch to make inroads on the "siloviki." ¶9. (C) xxxxx agreed that concrete steps would be necessary in order to overcome the pervasive "cynicism" and "apathy" of those hoping for more. Gauging the number of such people has been complicated by the lack of an organization or party for them to affiliate with. The personalities at the head of the standard, western-leaning Yabloko and Union of Right Forces parties have worn thin and street opposition of the sort promoted by Other Russia has no appeal for the middle class. ¶10. (C) Separately, xxxxx told us xxxxx "on projects I cannot talk about," he was convinced Medvedev was looking for ways to signal change. The President-elect was adamant on the need for internet freedom and the inability of the government to control satellite airwaves. Moreover, xxxxx argued that Medvedev was sensitive to the repercussions of the administration's heartless approach to former Yukos VP Aleksanyan's medical condition, although Medvedev was unlikely to expend political capital at the outset to tackle this case. xxxxx emphasized that the average Russian citizen was "as far as the stars" from Western liberal values -- seeing even the limited liberalism that Medvedev represents as beyond the pale of what a "free and fair" election would generate. For a frustrated journalist like himself, xxxxx posited that Medvedev offered a reasonable route to reform that the "radicals" such as Kasparov and Limonov did not. The Tandem Factor -------------- ¶11. (C) Whatever Medvedev's intentions about pursuing a reform agenda may be, much will depend on how the Medvedev-Putin "tandemocracy" will function; something most observers suspect even Putin and Medvedev do not understand completely. Some suggest, and Medvedev seemed to agree in his "Itogi" interview, that all power resides in the presidency and, sooner or later, Medvedev will eclipse Putin as first among equals. They see in Putin's stress on continuity, efforts to elaborate a strategy to 2020, and comments that there is no daylight between him and Medvedev on foreign policy, a tacit acknowledgment that Putin's ability to chart the course has been curtailed with Medvedev in the President's seat. It follows for them that a diminished Putin will therefore remain Prime Minister only long enough to ensure a smooth transition before bowing out. ¶12. (C) Others are less certain. xxxxx believes that Putin did his best to handicap Medvedev in preparing him for the presidency. Unlike Putin, the President-elect has no network in the Kremlin or the regions, unlike Putin who, xxxxx said, on becoming President, could count on the loyalty of the security services throughout the country. xxxxx thought the "siloviki's" continued loyalty to Putin would cause them to undercut any of Medvedev's efforts at reform or liberalization. In any event, xxxxx said, "Medvedev has worked for 17 years in Putin's authoritarian shadow" without revealing any liberal impulses. Why would they appear now?" Comment -------------- ¶13. (C) Under Putin, Russians have seen an improvement in their lives and the stabilization of the political sphere. Medvedev comes from a different generation and outlook than his predecessor and he seems to "get it" that Russia needs reform in order to develop. And there is a potentially influential stratum of support that is quietly hoping for change and waiting for leadership. The question remains as to how far Medvedev is willing to go, particularly under Putin's watchful eye. Burns