Russia Is Keeping its Elites on a Shorter Leash

Putin is fighting corruption, but only to ensure loyalty among the country's oligarchs.

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Russian President Vladimir Putin speaks with Defense Minister Sergei Shoigu during a meeting with officers and defense officials at the General Staff Academy in Moscow on February 27, 2013. (Reuters)

Tsar Peter I once proposed to his prosecutor-general that corrupt officials be either exiled to Siberia or executed.

"But then who will be left?" the prosecutor responded, according to the oft-repeated historical anecdote. "We're all thieves."

President Vladimir Putin repeated this tale during his press conference in December to illustrate how difficult it is to combat corruption. He was, of course, painting himself as the good tsar who, regretfully, had to discipline his bad boyars.

But if Putin wanted to be more honest, he could have chosen a popular Soviet-era joke about a minor bureaucrat imprisoned for graft:

"The poor guy. Why'd they pick on him?" one colleague asked.
"He stole too much for someone of his rank," another answered.

The second anecdote is more appropriate for the simple reason that it illustrates that official corruption is not a bug in Russia's operating system, but an essential feature. And it's a feature that Putin has used very effectively to keep the elite motivated and in line.

Putin's deal with the elite was always pretty straightforward: Steal (but not too much for your rank) and nobody will mess with you as long as you give unwavering loyalty to the national leader.

But now, one year after Putin won election to a third term in the Kremlin, he is rewriting the terms of the bargain. Putin's "New Deal" with the elite could turn out to be one of the riskiest and trickiest initiatives of his rule.

And it has nothing to do with fighting corruption. It's all about reestablishing control and ensuring loyalty -- both of which the Kremlin leader apparently believes are slipping.

This week, the State Duma is expected to pass the final version of legislation forbidding certain categories of officials from keeping their assets abroad. According to the daily "

Nezavisimaya gazeta ," the bill forbids officials from having a bank account abroad, keeping money in any foreign account, or holding bonds issued by any foreign entity. They will also be required to declare any foreign real-estate holdings.

The Russian media calls this the "re-nationalization" of the elite, and part of the logic behind it is the fear that Russian officials keeping assets abroad could turn out to be disloyal.

Such fears were redoubled by new legislation in the United States providing for visa bans and asset freezes against Russian officials who violate human rights. Some European countries are considering similar legislation, and Putin is clearly worried that this would give Western governments unacceptable leverage.

According to the respected political analyst Yevgeny Minchenko , Putin believes officials "should be completely independent of foreign countries and fully accountable to the president."

Additionally, the opposition's successful rebranding of the elite as "swindlers and thieves" has stuck in the public consciousness -- meaning the Kremlin will now need to more convincingly pretend to care about official graft. Some officials who thought they were untouchable will be vulnerable.

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