Panama Papers: it’s the drip-drip effect Vladimir Putin will be worrying about
The early Russian media reaction to the claims from the Panama Papers that Putin’s close associate channelled more than $2 billion to offshore companies has been quite predictable: a combination of denial, counter-claims of poor journalism and, of course, silence.
In a country where the state has significant control over media outlets and given the number of other big stories around (Ukraine, Syria and the ongoing economic crisis in Russia) burying news is not too difficult for Putin’s media managers.
You might think that with an approval rating hovering above 80%, there is little reason for Putin even to be flinching. Certainly the allegations are unlikely to create immediate problems for the regime, as has been argued elsewhere in The Conversation, but their timing and focus will be uncomfortable. I see three reasons why Putin and his circle will be nervous at the extent of the Mossack Fonseca revelations. They each relate to an element of reputational damage. Even in a top-down, hierarchical political system such as Russia’s, this matters.
Russia is approaching an important parliamentary election in September for the State Duma, which is the lower house. As for every electoral authoritarian regime, elections represent a moment of vulnerability. The last State Duma election in December 2011 sparked the biggest street protests in the country since the Soviet era, as Russians vented their anger at systematic electoral fraud.
The problem for Putin is not that the Panama Papers will serve as a catalyst for civil unrest – in the context of the aforementioned media control, they won’t – but that corruption will take on extra salience before and after September’s election. The bottom line is that corruption is a glaring issue that the regime has failed to resolve over the past 16 years. As such, it is capable of galvanising opposition groups and the wider public.
Meanwhile, Putin already has a complicated relationship with the most vocal and active element of the opposition – the liberal-leaning minority calling for “Russia without Putin”. The 2011/2012 protests revealed the extent of this entrenched radical group, which has a de facto leader in the young lawyer Alexei Navalny, and has given up any hope that constructive engagement with the regime will improve the country’s fortunes.
Until now, the regime has been able to manage the spread of this mindset among ordinary Russians, but this is undoubtedly the most problematic layer of society from Putin’s point of view. The stability of Russia’s political system partly depends on constructive engagement with opposition forces and on the ability of the regime to co-opt them into playing by the rules of its game. It makes elections and political reforms less risky if they agree not to push too hard. The Panama Papers will do little to diminish the view within this faction that Putin must go before meaningful reform can happen.
Beware the courtiers
But most importantly, the negative publicity generated by the Panama Papers has the potential to expose and even isolate Putin among the ruling elite. This is definitely a worst-case scenario, but the issue for Putin and his inner circle is that these most recent allegations may not be a one-story wonder. This is said to be the biggest leak in history – and in the context of pressure to rein in global tax havens, it is unlikely to be the last.
If the Panama Papers – and perhaps subsequent leaks – drip-feed journalists and the public in the same way as the WikiLeaks or Snowden revelations, the Putin regime could well feature prominently. Much will depend on the scope and duration of future allegations and their ability to combine with other problems Russia is facing – but Putin is not infallible.
Putin, it should be noted, is no dead cert to run for re-election in 2018. He is also not without his obvious failings. His success in mobilising public support in favour of bold foreign policy moves, such as annexing Crimea and deploying troops in Syria, masks ongoing and parallel problems – his failure to decrease tensions with the West, lift sanctions and halt a general economic slide. There is certainly unease among the elite at the way Putin’s aggressive foreign policy has essentially isolated the country. His outmoded model of economic modernisation has also raised concerns.
As a figurehead for this variegated Russian elite, Putin will retain their support and loyalty for as long as his high approval ratings are believable and for as long as he represents the best option for securing their interests. But if the idea of “Russia without Putin” gains traction among them as the easiest way to improve their fortunes and to mend the country’s image as a recalcitrant and criminal state, Putin may well find himself facing his first genuine challenge in his 16-year reign. It is not beyond the bounds of possibility that the Panama Papers could be the beginning of it.