On the Record

Putin’s Next Move in Russia: Observations from the 8th Annual Valdai International Discussion Club

Clifford G. Gaddy and Fiona Hill

In recent days, Russia has undergone a significant political shift, one that presents a great challenge to Prime Minister Vladimir Putin’s power as well as his potential for winning the upcoming presidential elections. The Russian political landscape is clearly at a turning point. Russia’s future trajectory will depend in large measure on how Prime Minister Putin reacts to these recent challenges to his power. Given these events, it is critical to understand the underpinnings of Prime Minister Putin’s motivations and actions, as well as what his agenda for Russia’s future may be.

One month ago, Brookings scholars Clifford Gaddy and Fiona Hill had a chance to meet the Russian Prime Minister in person, at the Valdai International Discussion Club. The eighth annual meeting of the Valdai International Discussion Club took place November 7-11, 2011, in Moscow and the region of Kaluga. When Hill and Gaddy returned from Russia, they sat together and discussed some of their observations from that meeting. The recorded conversation originally was intended as background research and material for their forthcoming book, Mr. Putin: Operative in the Kremlin. In the light of recent events, the two researchers have decided to produce a transcript of their discussion, in order to provide insight into Putin’s current thinking.

The Valdai International Discussion Club, at which Hill and Gaddy met with Putin, is an initiative of officials and analysts in and around the Kremlin. The Club is financed via the governmental news agency, RIA Novosti. Each year around 40 foreign think-tank experts, academics, journalists, and politicians are invited to Russia for two days of discussion with a number of their Russian counterparts. The foreign contingent then also participates in meetings with Russian government and political figures in Moscow. The Valdai Club remains under the informal patronage of Vladimir Putin; he is the only government figure that foreign participants have met with each year.

CLIFFORD GADDY:  Fiona, we are now back from Russia, where we attended this year’s session of the Valdai Discussion Club [Nov. 7-11, 2011]. This was the eighth meeting in the series. At least one of us has been at every meeting.

FIONA HILL: Except 2008. That was the year the Valdai Club was taken to Chechnya.

GADDY: Yes, of course. Every year except 2008. Some of those years, including this year, both of us attended. By now, we have some perspective on these events. Many of our fellow participants have already written about this year’s meeting. But I thought it might be interesting if you and I shared a few of our more informal and personal observations, both from the highlight — the dinner with Putin — and from the rest of the Valdai program, which was a trip to the Kaluga region.

So let’s start with the dinner session with Putin. You were seated right beside Mr. Putin for the second year in a row. Anything that struck you as different about him or the meeting this time?

HILL:  What really struck me most, was that in contrast to the past Mr. Putin started to repeat himself. There were several anecdotes that he had actually told us before. That is unlike Putin. Always in the past, he seems to have prided himself on coming up with some new idea, something interesting to say, some ‘zingy’ retort to questions.

Last year, for instance, he startled us with a response about Oliver Cromwell — about when Cromwell’s statue would be removed from the Houses of Parliament — in reply to a question from a British colleague about removing Lenin from the mausoleum. We all thought, “Wow, how did he think that one up?” This time I just didn’t feel he put as much effort into the meeting. I think he has become somewhat over-familiar with the group. He didn’t necessarily anticipate all the questions and have pat answers, but sometimes he was just going through the motions of responding. And on the ultimate question, how do you keep this system going that you’ve created — which was the question that everybody was asking one way or another when they weren’t asking about some very narrow, specific policy issues — he didn’t really have a response. He didn’t present any idea other than that he is the central figure in the system and he would stick to the plan that, as he said, he and his team had laid out about “Russia 2020.” I thought he even seemed somewhat exasperated with the members of the Valdai Group, that we hadn’t got with the plan, that we hadn’t figured out, after all these years of meeting with him, that he has everything under control and everything is moving smoothly along. Really, he seemed to say, “Everything is all laid out, why haven’t you got this yet?”

GADDY: I agree. I was not at the Valdai meeting last year, but compared to past years, I had very much a sense that Putin was mechanical. It was as if you just pushed a button and got a pre-programmed response.

It might be helpful if we explained the format for this dinner Q&A with Putin. That’s all it is — just a question and answer session. Putin doesn’t really say anything at all in the beginning; he just lets people ask questions. Then he answers. It is not a conversation per se, although that’s what he calls it. There’s no give-and-take or back-and-forth, not even what you might have in an ordinary press conference, where you ask a question and you can get a follow-up question or you can make it more precise if you see that the interviewee is evading the question. That means that there are obviously some real softball questions.

HILL: Yes, like, “Mr. Putin, how do you think relations with China are going this year?”

GADDY: Or “Could you comment on how great your performance has been?” Even so, most people do try to ask questions that will elicit some kind of a meaningful response. I think everybody knows that it’s completely up to Putin to decide whether he wants to give such a response or not. He can take any question, a boring question, and make it interesting, or he can take interesting questions and make them boring.

I think that in past meetings, there were times when we were impressed with how Putin handled the questions. He really wanted to say something, he wanted to communicate something, or he wanted to give the impression that he’s sharp and has all the facts at his fingertips.

HILL: But this time he didn’t try to do that — unless it was on the issue of fracking [hydraulic fracturing, the technique used to extract shale gas]. The only time I thought that he became truly engaged was when he wanted to explain to us how dangerous fracking was and how shale gas — which he claims has no real promise whatsoever anywhere outside of the United States and perhaps Poland -– is extracted.

GADDY: Yes, he took his menu or whatever it was, the paper he had in front of him, and he started drawing diagrams of what fracking supposedly looks like and how the horizontal drilling is carried out and how the fluid is injected and so on. With false modesty he said, “I’m no expert on this, but I probably know more than anybody else in this room…” and he then went on to draw illustrations and held them up to show everybody.

HILL: That was the only time where he really got lively, apart from when he talked about missile defense, when he did a similar thing. He drew all kinds of trajectories through space of the interception of ballistic missiles, and he drew — I wasn’t exactly sure what he was drawing – but there was a strange, celestial arc on the page. He was, in any case, trying to show us the way that the currently proposed missile defense system was targeted against missiles.

GADDY: Well, speaking of ballistic missile defense, how do you view his attitude towards the West, the U.S. in particular? You know, every year we ask ourselves, what does he want to convey to us, what kind of messages, if any, is he trying to use this group to communicate?

HILL: Obviously missile defense was a critical issue where he was laying down markers. He seemed to be making it very clear that we — the U.S. and the West at large — were trying to pull one over Russia on missile defense, and he wasn’t fooled by anything. He expressed a personal conviction, his view, that missile defense is all about Russia, not Iran — he didn’t even really mention Iran — and the intent was to intercept Russian ICBMs.

GADDY: And how about his alleged quote from Rogozin [Russia’s ambassador to NATO]?


HILL: Yes, he went on to claim that a group of U.S. officials had told a Russian official that, indeed, missile defense was “all about Russia.” He didn’t actually name the Russian official, but Andrew Kuchins [of CSIS] intervened to say that the referenced conversation was supposed to have taken place between Dmitri Rogozin, Russia’s envoy to NATO, and visiting senators to Brussels. Andy pointed out that there was no evidence, apart from Rogozin’s own claim, that the senators said anything of the sort. This was an apocryphal story, a myth. Putin then counter-launched into another, classic KGB myth to try to rebut Kuchins’ point. He essentially claimed that a number of scientists involved in the Manhattan Project had given away secret details of the project because the international scientific community wanted to create balance in the global system and didn’t want one country alone to have the preponderance of nuclear power. He claimed basically that there had been an international consensus, not a conspiracy, on the part of scientists to make sure that the Soviet Union and everyone else would have access to the same technology, so no country could lord it over others. And he said this was happening again with missile defense, scientists were telling the truth about its capabilities in order to restore balance.

Putin didn’t go much further with this because I think he realized he was being a bit too harsh and the whole discussion was now focused on missile defense and the nuclear relationship with the U.S. So he then backtracked ever so slightly after putting a very clear marker down and going on at quite great length about missile defense. He said, “But, of course, we are interested in continuing to cooperate with the United States.”

However, Putin didn’t come up with anything particularly concrete on what that might entail. So he was definitely staking out rather aggressive, rather than simply conservative positions on missile defense. He did something similar on the energy question, which always seems to engage him. Putin argued strongly against the prospects of shale gas (even though we know that Russia itself is investing in some boutique fracking and shale gas exploration of their own in the U.S. to make sure that they’re quite well aware of the techniques).

GADDY: Right. As you said, he insisted that shale gas has no future except in Poland and the United States.

HILL: Because of the environmental impact. Rather oddly, he claimed that in the United States, drilling is only being done in remote areas. In fact, of course, it is being done in the heart of one of the densest areas of population on the East Coast. He also said even more bizarrely that if one were to take a helicopter ride over the U.S. East Coast — suggesting almost that he himself had done that — one could easily see the environmental damage from above. That’s rather strange, because you can’t actually see what’s going on to that extent from the air. We speculated afterwards that perhaps he was confusing it with mountaintop removal for coal mining. We had no idea what he was talking about.

GADDY: He typically doesn’t make these kinds of mistakes. So either he’s being misinformed or it’s his own arrogance that refuses to let him seriously think about how much he knows and how much he doesn’t know. He repeatedly projected the idea that he’s on top of everything, that he doesn’t need to either explain himself or defend himself. He gave another response to Andy Kuchins that kind of summed up his whole attitude.

Andy asked about the reset. He said to Putin that the reset has been more closely associated with President Medvedev than you, and people fear that when you come back, you’re not going to be supporting the reset. What do you think you need you do, Mr. Putin, to prove to people that you support the reset? Putin’s answer was, “I don’t think I need to prove anything to anybody.”

HILL: That really does sum up the entire tone of the dinner. First of all, the fact that he came extraordinarily late, and when he finally did arrive he gave no explanation or obviously no apology. Why would he? He doesn’t have to apologize to anybody for anything.

Another thing I noticed this time is that he looked at his watch, as if he had got a bit fed up with the meeting. It was the first time I’ve seen him do that. In previous meetings, he never looked at his watch. If anything, we were looking at our watches rather than him. This time he looked at it twice. But then he obviously decided that he should keep on going for whatever reason, which I found a little bit mystifying. It was almost like he was going through the motions. Then maybe he felt that he really needed to put a little bit more effort into this and just hear what everyone had to say. But, as usual, he didn’t take any notes. He was, however, passed notes by [his press secretary] Peskov.

GADDY: You had an interesting story about one of those notes, didn’t you?

HILL: Yes, there are a couple of stories about the notes. The notes he was getting from Peskov were usually personal things about the people who were asking questions. For instance, one at the very end was about Gabor Stier from Hungary. It was to tell Putin that this was Gabor’s 50th birthday and that he might want to mention that. Putin did so, and that was how we ended the dinner.

Another note before that, which was significant, was one that Putin just glanced at and then put inside his left breast pocket. Sometime later he remembered it was there. I saw him pat his pocket — I guess he was thinking, “Oh, the note” — so he reached in and took it out. It was in very big print — so big that I could read it easily. It told him that John Scarlett, who was sitting across the table from him to the left, was the former head of MI6 — that is, the senior intelligence service of Britain — from 2006 to 2009. Putin apparently had not been briefed about this beforehand. The note suggested that he should acknowledge John Scarlett. Now, the note also pointed out that John Scarlett was wearing a red flower in his lapel. Well, this was Armistice Day, the end of World War I; it was 11-11-11, and all the Brits were wearing poppies in honor of the day. So it was a little confusing. Especially since by the time he read the note, John Scarlett had already been called on to ask a question. He’d asked a question relatively early on about foreign policy. So Putin had clearly not registered that he had already called on Scarlett.

This was interesting, since there were rather large placards around the table identifying the participants. They all faced Putin. Now they weren’t in Russian; they were all in English, as I recall. But Putin can read English. So my observation from this is that here we have a situation where Putin is being passed printed notes that have to be written in large text and he is also unable to read a large placard identifying John Scarlett. So I think Putin may be pretty near- sighted. And he doesn’t wear contact lenses, because, of course, I was sitting so close that I could stare into his eyes see that he was not wearing contact lenses.

Clearly, a man of his vigor and superior physical attributes would not want to be seen wearing glasses. In any case, with all these sports that he partakes in, they are probably not the most practical thing to wear.

So I fear that he wasn’t able to read the name placard, so he was just looking for the red flower. Unfortunately, the person with the red flower in the direction Putin was looking was Anatol Lieven, who was not the head of the SIS or in MI6 from 2006 to 2009. I was very confused when Putin gestured toward Anatol and referred to him as a “former colleague.”

GADDY: I think Anatol was very confused as well.

HILL: We all were. Everyone was thinking, “Hello? Did we not know something about Anatol Lieven?” Anatol went ahead and asked his question. And Putin, if he had realized that he had made the mistake, never flinched. Of course, because he’s trained not to.

But it is a fact that the man himself is getting older. He’s 59 years old. Everybody’s eyesight goes after 40, no matter who you are, unless you have miraculous eyesight. So even if perhaps Mr. Putin could use some bifocals, he would not wear them, certainly not in public. This is not just a trivial observation, a bit of color from the dinner. It sums up the fact that he has this image that he has to keep up at all times. He just cannot let his guard down. Any sign of frailty or any sign of confusion must be avoided.

GADDY: Yes, exactly. We came away with the idea that he is the self-sufficient man. He is the one. He is enough, and he really doesn’t, as he said, have to defend or explain himself or apologize to anybody for anything. Moreover, he doesn’t even seem to be concerned to reassure people that there is something more than him. [Russian analyst from the U.S.-based World Security Institute] Nikolay Zlobin asked the question about what the system will be like after you. Zlobin said, “We don’t see any new faces. We don’t see any younger faces around you. Are there no younger faces?” That’s when Putin answered, “Oh, you’re wrong. There are younger faces.” Nikolay says —

HILL: “Well, who?”

GADDY: “Medvedev,” says Putin. We were shocked.

HILL: I know. We all stifled a laugh.

GADDY: And then later, Nikolay pushes it further, “So who else?” And again he answered, “Medvedev.”

So he did not even admit that this is an issue that he’s trying to deal with. You’d think he would at least pretend that he recognizes that this is a legitimate concern that people have. He doesn’t even seem to want to try to address those sorts of questions.

So in this context the notion of his personal vigor, his health, and his youth becomes all the more important precisely because he doesn’t have anyone else, and so he has to be the one to embody dynamism and youth and strength.

HILL: And the one who keeps the system going, and keeps the plan on track, and keeps everything going for the future.

GADDY: It’s going to be like The Picture of Dorian Gray. He can stave off the appearance of aging for a while, but, as you say, everybody ages and the evidence of it eventually shows. The other thing that struck me … I don’t know if anybody else saw it. I think nearly everyone was standing around the table waiting for him to come in when his motorcade arrived. But I couldn’t get to my seat because that’s where all the TV cameras were. So I decided to just stand by the entrance door, where I saw him come in. The weather outside was pretty mild, there was a dusting of snow, but it was quite mild weather for Moscow. His car arrives within literally 10 or 12 feet of the doorway, he gets out of the car, he’s wearing this puffy ski jacket.

He strides through the door, then pauses without saying a word and just stands with his hands down, sort of out from his side. One of his security aides glides up to him, removes the ski jacket from him, fades off into the background. A second guy moves equally smoothly forward with a sport coat and slips it onto his shoulders. He then keeps moving forward. It’s almost as if he never stopped.

HILL: It’s like a fashion show with quick changes, they come off and come back in.

GADDY: Exactly. Of course, having seen that when he entered, I was curious to see if the same thing would happen in reverse when he left. And, indeed, it did. I wondered what kind of a self image is this.

Another aspect of the dinner that was interesting was the location, the setting.

HILL: I agree. The meetings between Putin and the Valdai group are no longer in official locations, like the Kremlin or other official government locations. Now we are out in the private sector world. The last meeting in Sochi was in the Rus Sanatorium, where Putin appeared in the most beautiful linen suit, incredibly tailored, looking like he just came from a massage or a sauna or something because he looked so fresh and relaxed. This time we met in this restaurant that several people have written about.

GADDY: At an equestrian club.

HILL: The Novy Vek [New Century] Equestrian Center, in a restaurant called Cheval Blanc in French, or the White Horse, something that led to all kinds of predictable speculation about whether he is a knight on the white horse, and questions about who selected this venue, and so on.

It was an extraordinarily odd setting for an event like this, again, showing this personalization, this privatization, of the whole system. The question is, who picked this? Now, the significance of this place was that the presidential horses are stabled there — that is, the horses that have been given as gifts –- most perhaps from the Turkmen. There were a host of exotic Turkmen breeds, which are supposed to be the precursor to the Arabian stallions, because as people probably remember, the Turkmen are really the famous horse people of the steppe and perhaps the people who first domesticated the horse. So there were some pretty spectacular horses in here.

GADDY: That were given to Medvedev, right?

HILL: That were given to Medvedev, rather than Putin. But then, of course, we have all these images of Putin on horseback, Putin bare-chested on horseback, Putin as a man of action. And there were several equestrian dressage champions of Russia who were training within this compound. It was quite impressive watching them practice. None of us were quite sure what to make of the setting and what message was being conveyed. We were quite flummoxed by it, very confused. But it added to this sense of opulence that has successively built up over the Valdai Club meetings with Putin and other leaders, framed around rather extravagant meals. There was even a couple of endangered sturgeon floating around in a tank, although they weren’t on the menu that night. It was just extremely strange.

GADDY: Hanging around there for the three hours that we waited for Putin to arrive, being served wine and other drinks, you had to figure out something interesting to do. So a couple of us talked to the manager of the restaurant. He told us that that the entire main room of the restaurant in which we dined had been reconstructed only for this one meal. Normally, this very exclusive, private restaurant had intimate small booths and so on. The booths and columns and so forth in the middle of that big room had all had been removed, and would be replaced once we finished our dinner. But you wouldn’t have known that when you came in there.

HILL: No, you wouldn’t have believed that there had been such an elaborate staging. Well, that’s how good staging is supposed to work.

GADDY: Speaking of staging, the Valdai Group itself is the ultimate staged event, wouldn’t you say? There we were, some 40-odd foreign participants — analysts, journalists, all kinds of people from different countries of the world who look at Russia. Not only do we have this dinner with Putin — that’s the prize, if you like. But before you have that dinner, you have to pay the price, which is to endure several days of morning-to-evening long discussions with Russian counterparts.

These sessions are held out in a region of Russia somewhere outside of Moscow. Over the years, we’ve been everywhere from Tatarstan to Khanty-Mansiysk in Western Siberia, to the deepest part of eastern Siberia, to the North Caucasus, and to European Russia. This time we were bused to what is basically a suburb of Moscow, the oblast of Kaluga. Kaluga is a showcase of foreign direct investment in Russia that features a number of special industrial zones for mainly foreign companies. It’s headed by a progressive governor, Anatoliy Artamonov, who spoke to us and hosted us for a dinner.

We visited some of the special economic zones. In fact, our hotel was essentially in one of the industrial zones, not in the city of Kaluga. A few of us had the opportunity — we took the opportunity — to take a taxi into town. That was not part of the program.

HILL: On reflection, I realize why the city of Kaluga itself wasn’t on the program. We were a little surprised when we arrived at the hotel that we had been booked into. From its website from afar, it looked like it was possibly near the center of Kaluga. There was nothing to suggest that it was not. But it was on the outskirts of the town, in fact, about a 20-minute ride from what would be the actual center of Kaluga itself, and had nothing next to it — apart from some small nondescript village settlement — but the giant new Volkswagen factory. Some of the other larger factories were nearby, Volvo and Peugeot. And a factory which does some of the pressing out of steel parts that would, to some degree, be supplying the nearby car factories. So we were essentially in a compound in the middle of nowhere. There was nowhere to walk to –- we actually tried to go for a walk and ended up stuck on the road to the factory. The only alternative was to strike out into some empty fields. There were no public buses or public transportation going by, apart from the buses shipping the people to the Volvo factory. It was a really very strange set-up. So we were kind of captive there.

We discovered, as a result of being in this spot, that this was also the experience of the people who come to the Volkswagen plant, because this was their hotel. As far as we could tell, it was entirely built to cater to visiting Germans. It could have been taken from some industrial city in Germany and just plopped right there directly into this isolated spot. All the fixtures were German-made.

This was a theme that we noticed about Kaluga’s special economic zones. They were very separate from the city itself. So there was a sense of separation of this investment. When we escaped on our taxi ride into Kaluga, we realized that this was very much the case, that the presence of these car factories had almost no impact on Kaluga itself. Our taxi driver told us, for example, that even though there were 400 Germans working at the Volkswagen plant, as well as Swedes at the Volvo plant, French at the Peugeot factory, and so on, they were not evident in Kaluga itself. This investment had not had a great deal of trickle-down into Kaluga as far as the ordinary people were concerned.

We didn’t notice that Kaluga had been particularly spruced up as a result. There were definitely some new buildings that the local government had built. There was a trade center. There were another couple of hotels in the downtown. A couple of the churches and parks had been nicely revamped. There were lots of small shops in the center of town. But the overall fabric of the city, in terms of the places where people lived, had not really shown any particular benefit.

We couldn’t figure out where it was that the Germans and the Europeans who were assigned to the factories could actually be living, or whether there was an international school. There was a very odd sense of separation from all this.

GADDY: Kaluga is billed as a model local economy that is to be replicated in the rest of Russia. Kaluga seems to have had clear success in attracting foreign investment into these clusters. They have one for pharmaceuticals, another for auto, and others for other types of industries. We were told about these at length. The government is trying to bring in the foreign investors under a program that really started before the financial crisis and was very much accelerated during the crisis.

I’ve been looking at this issue for quite some time. Russia, at the peak of its boom, before the oil price collapsed in 2008, was the leading auto market in Europe. The Russians were buying more automobiles than the Germans were. But 80 percent of all the autos being sold in Russia were imported. That had risen from roughly eight percent in the year 2000. So what Putin decided to do was say, “Okay, if you’re going to sell to us and take advantage of our market, we need to see you locating some of your manufacturing facilities here, at least assembly facilities.” So he tapped this local figure, Anatoly Artamonov, the governor of Kaluga, to develop these special economic zones. Artamonov explained his approach to us. He outlined a very simple set of principles on which his program operated. “We’re going to make some guarantees to foreign investors, and we’ll stick with them. If we think a project is acceptable to us, our word is our bond and we will stick to them.”

It’s quite interesting to see what specifically he guaranteed. He made four promises. The first two are exactly what you would expect in special economic zones everywhere: lower taxes and tariffs and elimination of bureaucratic red tape. Now it’s interesting to ask the question: If you have a special economic zone, what’s so special about it? There must be something happening here that doesn’t happen on the outside. So if you know what’s special about the zone, by implication you know the default, what’s normal outside. So clearly there are higher taxes outside, there are higher tariffs, there is a lot of bureaucracy. But there were also two other points on his list of promises that I thought were the really telling ones. The first was, “no extra costs and expenses.”

HILL: Right. You’re not necessarily expected to have to pay for upgrading roads and railways, schools, churches and so on that other investors outside of these zones have to do.

GADDY: Or pay kickbacks and bribes. What they are saying is, “Come here, we’ll protect you against the exorbitant rates of kickbacks and bribes in Russia.” So that was the third point, no bribes and kickbacks. The fourth was even more interesting. It said you will have “full freedom to choose your suppl