Putin Wants to Run Russia Like a Corporation

His system can't rely on loyalists anymore, but it will be hard to attract the next generation.

Chief executive ambitions.

Photographer: Alexei Druzhinin/TASS via Getty Images

By swiftly replacing 11 of 85 regional governors in the past two weeks, President Vladimir Putin is previewing plans to run Russia as a corporation after his all-but-inevitable victory in next year's presidential election.

QuickTake Vladimir Putin

Long tired of politics, he needs to set up a formal system that doesn't depend upon former bodyguards and other loyal retainers -- there aren't enough of them anyway. Instead, he's seeking to borrow selection techniques from large corporations, according to commentators close to the Kremlin, in order to identify low-profile bureaucrats with track records for efficiency and to spark a generational change in government.

The strategy attempts to fix a critical flaw in Putin's original government: the absence of opportunity for young people, a key source of supporters for anti-Putin protest leaders such as anti-corruption activist Alexei Navalny. It's not likely to work as intended, though.

A governor's job in today's Russia is unenviable. While it's formally an elected post (the elections were brought back as a concession to protests against the rigged parliamentary election of 2011), no one gets it without Putin's backing. The president also has the power to fire governors, even as Russia formally remains a federation in which the regions have considerable autonomy. The result: Governors hold complete responsibility for running the region but no real independence or leverage. In all sensitive matters, the final decision is up to Moscow, and there, up to Putin. Governors are also first in line as potential victims of the Kremlin's ongoing anti-corruption campaign. At least four ex-governors are now in jail, awaiting either a trial or a court verdict on corruption charges. The governor of the Ivanovo Region, Pavel Konkov, was fired on Tuesday after a number of his subordinates became bogged down in corruption investigations. On the one hand, the precarious nature of their appointments makes some governors greedy in the short term. On another, the impressive job title and the lack of real influence combine to make them attractive to Putin's predatory law enforcement bosses.

In an election year, governors shoulder the additional responsibility to make sure the ruling party, United Russia, or candidate Putin wins convincingly in their regions. That means both legitimate campaigning and any required electoral fraud. Given Russia's growing political apathy and the small but angry anti-Putin opposition's growing election-monitoring experience, that part of the job is likely to be tough in 2018.

So a governorship is only attractive as a stepping-stone job for a leap into the federal government or a powerful role on the presidential staff. Putin's spokesman Dmitri Peskov recently described the new crop of regional bosses as "young, talented, broad-range specialists." Seven of the 11 October appointees are in their late 30s or early 40s. (Some exceptions are unavoidable: For example, 68-year-old ex-cop Vladimir Vasiliev was sent to the predominantly Muslim republic of Dagestan.) Stanislav Voskresensky, the 41-year-old economist who replaces Konkov in Ivanovo, is a representative example. With the skills and worldview of a modern project manager, he has pursued his government career in the economics ministry, the Kremlin's in-house think tank, and the Kaliningrad free economic zone. If he can handle Ivanovo, a depressed region dependent on federal subsidies, a leap into an important ministerial position may be in the cards.

Earlier this week, the Kremlin's view of these people as corporate executives was confirmed when the RBC news site published a video of a training exercise for future regional leaders, run by the Russian Academy for the Economy and Civil Service for the presidential administration. (For some reason, the training included jumping into the sea from a 23-foot cliff. The newly appointed Omsk governor Alexander Burkov, 50, was among the jumpers.) A number of the October appointees also graduated from the program.

Sergei Kirienko, Putin's deputy chief of staff in charge of domestic politics and one of the lecturers on the unorthodox program, has just announced an open competition for managers titled "Russia's Leaders." Any Russian under 50 with at least five years' management experience, not necessarily in government or the public sector, can apply through a website. They'll be given cases to solve and strategy games to play. The 300 finalists will receive 1 million rubles each, which they can spend on further managerial education. The best of the best will join the same program that the current gubernatorial appointees went though, but competitors who achieve any measure of success will, in theory, be seen as a "reserve cadre" for the Russian government, both regional and federal. According to Kirienko, it's all Putin's idea.

This is not the first attempt to draft bureaucrats through open procedures -- there have been regular ones since the 1990s -- but it's meant to be a timely answer to one of the key messages of Navalny's anti-Putin campaign. In a recent expose of the hard-to-explain wealth of Peskov's underachieving son, Nikolay Choles, Navalny wrote:

This is how the nation works, and this is how the social elevators operate. You can get an excellent education and be extremely hard-working, but in this system, let's be honest, there's not much hope for you. And if you live in the provinces, no hope at all. But for a guy with no education and a criminal record, the elevator doors open immediately and he's taken to the floor where champagne is poured and Ferraris are gifted. No wonder, when your dad is a honorable member of the thieving gang that guards the buttons in that elevator.

I doubt, however, that Putin and Kirienko will manage to convince the mostly young people who come to Navalny's rallies that legitimate social elevators exist in today's Russia. Government service, with unattractive salaries and enormous risks, has a reputation for deep-seated corruption which governors' arrests do nothing to dispel. What these young people need most of all is opportunities in the private sector, brought low by Putin's relentless centralization. Evidence that some fairer selection mechanisms are being introduced to the bureaucracy won't quite replace competitive politics, either: Many Russians still remember gubernatorial elections with real rivalry -- and popular governors who weren't faceless managers. During Putin's next term, Corporation Russia may be more competently run -- but it's not likely to become much more inspiring for the citizens who make up both its workforce and its underserved customer base.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

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    Leonid Bershidsky at

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