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Good morning, everybody. I think could we take seats and I think weÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢ll get started. Let me begin by saying thank you very much for coming this morning, on an icy and rather unpleasant Friday morning, early. My name is Jim Collins. IÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢m the director of the Russian and Eurasian program here at Carnegie in Washington, and I am pleased to introduce today, really, I think probably his first of what will be a few of our events surrounding the election and presidential transition in Russia as we look at that process over the next few months. And weÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢re going to start this morning with a presentation with Nikolai Petrov, who is a visiting scholar and almost an anchor of our center in Moscow. He is doing especially interesting work on the relationship of RussiaÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s regions to the center and how RussiaÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s regions are developing relations within themselves about the business, political and bureaucratic relationships. He is going to talk this morning not so much about who will win the election because that doesnÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢t really seem to be a matter of particular suspense, either for us or for the Russian public. But IÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢ve just spent a week there and I think Nikolai would confirm that, all that said, the suspense is nonetheless very real in the Russian polity today and it revolves around exactly what kind of a government and what sort of a governance structure, and what kind of priorities, the next administration is going to bring to the Russian nation. And for most Russians, that is at least if not more important than exactly how the election proceeds or what arrangements formally are in place after the inauguration in May. And what I would say is, in a very simple way, what I found is everybodyÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s quite sure who the next president will be, but everybody is totally unsure about how the country will be governed by Mr. Putin and Mr. Medvedev and how priorities will or will not change as a new administration takes up a rather different set of challenges from those that Mr. Putin has been dealing with over the last eight years. And so I simply wish to convey to you that while we may think thereÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s not a great deal of suspense about the electoral process in Russia, the Russian polity broadly, I believe, is extremely uncertain about just what this transition is going to mean, how it will unfold and what itÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s going to mean for every member of the political, economic, bureaucratic and other elites as well as the regular citizens of the Russian federation. And so itÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s with that, that I would like to turn the floor over to Nikolai. He will talk about Russia after the election, major challenges, and prospects for the future. And after he has spoken weÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢ll have a regular discussion in the usual Carnegie way. So Nikolai, the floor is yours. Thank you, Jim. Thanks for coming in spite of this bad weather, and itÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s my pleasure to speak to you. I would start with saying that once again, like at the time of Mikhail Gorbachev, the country is coming to a period of great transformations. And there are serious doubts whether, first, authorities do realize the situation and second, whether they are capable to control the situation. So let me start with a brief historical review. And I will tell at first that the second PutinÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s presidential term was almost lost for the country, in terms of any kind of modernization of economic and social sphere, and there was a kind of holiday which authorities were organized for themselves. They were too busy with these different schemes of transfer of power and different power games, and all those problems which are very serious and which should be phased by the government. And there was a whole bunch of different reforms prepared, and they have been studied at the beginning of the second term, but they caused social unrest and being afraid of aggravating the situation, our authorities decided either to postpone or to cancel all these reforms. So since that time, the situation didnÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢t become badly in the sense that there are very serious problems facing the country, but itÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s not bad in the sense that although reforms were not undertaken for four years, nothing was done in order to improve the plans. And the next president will have the same problems but will face much more serious challenges. A year ago, there were three basic options on the table. The third term for Mr. Putin, the scenario of a strong president who could perhaps replace Putin totally, and the scenario of a weak president, the guy who will replace Putin partially and the, well, re-division, redistribution of power should take place. The third scenario of a weak president was realized and weÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢ll know the name of the new president pretty soon. And although there are no surprises with this name, itÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s very unknown how exactly the general construction of power will look under Mr. Medvedev. And I would stress that Medvedev is perhaps one of the most weak candidates for this scenario of a weak president, in the sense that first, he doesnÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢t have his independent power base and second, there were several cases when he was weakened, when he was humiliated, when especially he was considered to be frontrunner, and later he became number two and so there was the whole betrayal of the team around him, and for several months he was considered to be not the most probable option. And later now, when he appeared once again as successor, he doesnÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢t have any real team at all and it will be very complicated for him to do anything if only he wants. And I would stress that the very fact that international observers who are not allowed to come to observe elections is weakening Mr. Medvedev as well. Although itÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s understandable that elections are not fair, but in order to make this conclusion you should not come to the country; itÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s clearly seen from outside. But elections could be and perhaps will be more or less free, and in case of observers would come it could be demonstrated. Now, itÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s not the case and Medvedev will be elected, so there are no doubts that he will get something like, say, 70, 75, even 80 percent of votes, but his legitimacy will be not well-proven by any kind of independent observation. So what was chosen can be called the regency model, with a weak president who is coming, not replace the former president in full sense but to play certain, well, elements of President PutinÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s role and with President Putin playing the role of a regent. And now, we have three different options connected with how the further development will go on. The first option is the transfer of power, when the former but more powerful president, step by step, will give his power to the new one. And the point of no return is not, well, in March. It will take place in a year or in two years from now because Putin is too strong, and he will keep being strong after MedvedevÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s election as well. So until this point of no return will be reached, it will be possible to change the whole distribution of roles and so on. So another possibility is PutinÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s comeback and nobody can exclude this possibility, necessarily, as a kind of initial design but perhaps as a reaction in case, if the system will not work efficiently under Medvedev with two different presidents ruling the country. And the third option is to keep certain balance, to keep Medvedev as kind of a weak president being responsible for social-economic sphere, which is not very different from his responsibilities as of the first deputy prime minister, and to keep Putin being responsible for the rest, for power agencies, for foreign policy and for making strategic decisions. And this model was already used in Russian history and I can remind you Chechnyan government under Mr. Alkhanov being there with formal president and Ramzan Kadyrov being very powerful prime minister. So that time it worked in Chechnya, so perhaps it can be used at the scale of the whole country. This week we did organize the conference on the building of the successor and it was the second conference in a row. The first one was organized at Carnegie Moscow center last fall and at that time we dealt with major problems and major challenges which the next president will be faced by, regardless of who exactly will be chosen to play this role. And now weÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢re focused more on instruments or mechanisms, and whether those mechanisms which are in place are capable of response, are capable to deal with these major challenges. And I would say that there are very serious doubts everywhere and well, youÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢ve seen perhaps Mr. PutinÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s very proud report on his presidency, made at the state council meeting. And there is another kind of, well, report, analysis of results of eight years of PutinÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s reign, made by Boris Nemtsov and Vladimir Milov. So none of these two documents can be seen, can be considered to be more or less objective and neutral, and you should look at both in order to understand what has happened in reality. But this, well, analysis made by opposition forces is very interesting, in terms of describing the scale of problems the country is facing now. And let me give just a mere illustration connected with demography. First of all, I would say that it was Mr. Medvedev who was appointed to deal with national projects, so-called national projects, and I would say that it was school of ruling the country; you know, like Peter the Great being a child was using special kinds of military units, soldiers, in order to play different games and in order to understand how it was possible to make orders. Medvedev brought this possibility to deal with four very important problems. Resources which were given to Medvedev were not huge and as a result, not very impressive. But well, Mr. Putin and Russian leadership in general are very proud to report about huge successes achieved with regard to demography, which is one of the most serious and objective problems. So we cannot blame authorities for doing something wrong in the last eight years, but itÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s the general result of many different socioeconomic processes. And the problem is that Russia is losing now a labor force. So it was losing population for a long while, now itÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s using labor force population in working age. And the scale of these losses is huge. Since the year 2009, the Gozcom (ph) study estimates Russia will lose each year more than 1 million workers. And up to 2025 the overall loss of population will be 8 million and loss of working force will be 16 million, which is huge. So Russia is really facing very serious problems connected with a shortage of labor force and in spite of getting huge money now it cannot invest this money, it cannot use this money efficiently due to many shortages, labor force being one of this major shortages. So Mr. PutinÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s answer to this problem was his idea to increase labor productivity four times by the year 2020, which is absolutely impossible. And this is another example of the fact that our authority has studied belief in the general success of, well, their rule of the countryÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s development and well, there are many more signs telling that they do not understand the real scale of problems the country is facing now. So there is a wonderful Russian fairytale about a peasant and a bear who are, well, dividing crops. And the bear is usually given the half which cannot be used by him, like say, roots and leaves. In case of potato, the peasant is getting roots and giving leaves to the bear and in case of the corn, the bear is getting roots instead of leaves. So I would say that something similar is going on in the case of PutinÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s legacy which is given, which should be transferred to Dmitri Medvedev. So itÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s in a very bad shape, not only due to the fact that it tried to describe, due to the fact that very, well, urgent and very essential reforms did not take place during PutinÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s second presidential term, but due to the fact that problems which the country is facing are aggravating during all this time although mechanisms, instruments to solve these problems were not developing at all. And I would compare the situation with a car, which looks pretty well and which is remodeled during the second PutinÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s presidential term in a very essential way. So there was power steering added and itÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s much easier for the driver to turn the steering wheel, although transmission is very weak, if not absent. So he can, well, turn this wheel without any changes for the car. ItÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s very beautiful ÃƒÂ¢Ã¢â€šÂ¬Ã¢â‚¬Å“ I mean, this car is very beautiful inside but it doesnÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢t have some very important things like, say, shock absorbers, and there are problems with its engine, and all these changes were taking place while the car was standing; it wasnÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢t moving at all. So thatÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s why itÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s not so easy, it wasnÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢t easy for authorities to understand whether those reforms, political reforms, connected with the electoral system, connected with refusal from direct gubernatorial elections, connected with the new laws on political parties which, well, did change the political landscape in a very essential way. It was impossible for authorities to understand how bad these reforms are, in terms of the general systemic outcome. What will be needed for Medvedev, he will need to change this system but when the car will begin motion, when the car will try to move it will become understandable that round wheels are better than square wheels, and that the car is absolutely inefficient. The problem is whether it will be possible for Medvedev and for Putin, who will be nearby, to fix all these problems at a time when the car will move. WhatÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s going on now? ItÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s very essential political remodeling once again, so theyÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢re trying to add the second driverÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s seat to this car to let Medvedev at least somehow to participate in driving. And there are two basic sets of challenges, one connected with internal construction, how effective this internal construction should be. And itÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s understandable that one driver will be responsible for, say, making signals and another driver will be responsible for making turns ÃƒÂ¢Ã¢â€šÂ¬Ã¢â‚¬Å“ (laughter) ÃƒÂ¢Ã¢â€šÂ¬Ã¢â‚¬Å“ and nobody knows how it will be possible for them to combine moving without accidents. ItÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s clearly seen during the last two months that Medvedev wasnÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢t allowed to deal with certain very important spheres of the state like, say, power agencies. So this is Putin who addresses all the time to different power agencies; Medvedev was not allowed to deal with foreign policy and even with center to regency relations. So the last speech which was presented, the last Medvedev speech in Krasnoyarsk which was presented as kind of his economic program, looks very different from what was told by Putin, although Putin, in the day before this speech answering journalistsÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢ questions, told that there is one and the same PutinÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s plan. There will be no contradictions between, say, PutinÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s plan and MedvedevÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s plan due to the fact that there is no MedvedevÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s plan at all, and Medvedev will just concretize and make certain details clear with regard to PutinÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s plan. However, MedvedevÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s speech looked very differently and I would say the general feeling is that they came with the idea to continue those reforms and those economic reforms which has been studied in 2001-2002 and which was stopped in 2003. And MedvedevÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s speech looked much more rational than PutinÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s more strategic ideas, and much more business-oriented and business-friendly, perhaps. The problem is that itÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s clearly seen that, well, the general idea is to combine economic modernization with keeping political system in its present shape which ÃƒÂ¢Ã¢â€šÂ¬Ã¢â‚¬Å“ I would say which is absolutely impossible. So let me say a few words about Dmitri Medvedev himself. I did tell that heÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s a weak president; it doesnÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢t mean that heÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s personally weak. And some experts are saying that heÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s a strong man, he is much less liberal than he already ÃƒÂ¢Ã¢â€šÂ¬Ã¢â‚¬Å“ well, than he seems. And if to look at his activities, nobody can remember any real event when he played as liberal. It was him who was the head of presidential staff at the time of these political reforms undertaken; it was him who was claiming for using force at the time of Ukrainian presidential elections in 2004. And there are many more cases reported when he was occupying less liberal and more conservative position than Putin when discussions were going on. The problem is that the guy never played the role of a first person, of person number one anywhere; as a head of a company, of collective farm or of a school. All the time he was staying near Putin, and itÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s hard to imagine that being person number two or number three all the time, staying in shadow ÃƒÂ¢Ã¢â€šÂ¬Ã¢â‚¬Å“ he did have his own ideas, his own plans, which are different from those plans which were realized by him together with Putin. But even if so, even there are very different ideas Medvedev can bring as the newly elected president. There are no possibilities for him to realize any ideas at all and we should understand that it took two or three years for Putin to form his own team and to say goodbye to YeltsinÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s, well, construction. It will take even longer for Medvedev, due to the fact that when Putin came to power he came as a very popular president against the background of a very unpopular president who wasnÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢t present at the political stage. Now, it will be different and nobody knows how and when and if it will be possible for Medvedev to form his own team and to do anything he wants to do, which can be different from PutinÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s ideas. However, the very fact that there will be two centers of power means that there will be inevitable ground for very different conflicts to appear, regardless of how good personal relations between Medvedev and Putin are. And well, there are some signs that these conflicts are already appearing and they will become much more intensive immediately after elections. Some experts are waiting that the whole former YeltsinÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s team, which is clearly staying somehow behind Medvedev, represented by Mr. Valoshin (ph) and some other guys, will come to the surface. And it will be possible for them to nominate, to put forward, some guys if only Medvedev will get the opportunity to do something and will try to form his own team. And the last thing IÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢d like to focus on is connected with the society. Russian society is pretty quiet and itÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s not eager to do something against the authorities; itÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s not eager to support opposition parties which, I would say, is pretty rational. So the life-level is better than it used to be, salary-sent pensions are increasing much faster than economyÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s growing, which creates certain problems in the future. It cannot be continued for long and thus, well, immediately after elections or in a while after elections it will be needed to revise this policy and it will be very harmful. So it would seem that there is a kind of unwritten agreement between authorities and society, and while society is eager to do whatever authorities are asking for, like say to vote for Medvedev or to anybody else, and thatÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s why MedvedevÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s popularity is now, like, say more than 70 percent, being compared to 20 percent at a time when he wasnÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢t nominated by Putin. But it will be very different popularity. It will be not like in YeltsinÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s case popularity, which enables the president to do some very serious reforms and to make very important decisions and moves. It will be popularity which will disappear immediately, when only Medvedev will try to violate this unwritten agreement. And one of the basic, well, ideas of this agreement is not to aggravate the situation of, well, society, of citizens of major social groups. And itÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s impossible, and it will be impossible for Medvedev to start any political reforms, due to the fact that, well, any real move will aggravate the situation with the society and it will decrease his popularity immediately and so in a very sharp way. ThatÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s why, by the way, some experts even now are not sure that Putin is seriously planning to become the prime minister. My guess is that he will become the prime minister. The problem in Russia is connected with the fact that, in this kind of semi-presidential system, the government all the time looks like a scapegoat; itÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s blamed for all bad things while the president is considered to be good guy. And thus it will be very risky to become the head of the government, not only due to this semi-presidential political system in Russia but on the eve of very unpopular decisions which should be made by the government, and on the eve of undertaking very important, well, reforms and important steps. ThatÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s why these experts are saying that they will believe that Putin will the become the prime minister only when he will be appointed to this position. ItÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s not needed, by the way ÃƒÂ¢Ã¢â€šÂ¬Ã¢â‚¬Å“ the last thing. ItÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s not needed to change the constitution in order to make the prime minister much more influential than he is now. ItÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s needed just to follow the constitution and be done easily, so there are no problems with the constitution. Some experts are saying that perhaps it will be needed to change the law on the government, but itÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s possible to redistribute power even without these changes. So making the prime minister the person number one in the country and the president playing much less important role, and this can be done easily. The problem is how to deal with all these, well, challenges. And if society, which looks now very paternalistic, very passive, was good at a time of stagnation, when it was needed for our authorities just to keep them aside, itÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s impossible to deal with this society at a time of reforms. And so there are no levers, there are no instruments which will possess authorities, well, immediately to mobilize society and to get popular support, which will be needed in any case. So my point is that, regardless of what authorities are planning, what their intentions are now, well, it will be needed for them to make very serious changes. And society, rational society, will look very different in a year from now, just like our authorities and political construction in general will be very different in a year from now. And I am still optimistic; it seems to me that, although some changes which will take place are revolutionary changes in a sense that will be very essential shifts, very essential changes in the role of different institutions. So this political system, I hope that it will be possible to do this without a large-scale crisis, although crises are inevitable. And the easier it is to put, well, somebody into the presidentÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s office, the more complicated it is to make the system work and to make it effective after all these changes which will take place in a couple of weeks. Thank you.