The ban on the messaging app Telegram demonstrates once again that Russia's regime is committed to subordinating business interests and freedom to whatever security concerns. Rumors have it that Putin will adopt a more liberal economic policy in his fourth term. However, it takes more than a few new faces to change course, writes Mark Galeotti.

telegram02Roskomnadzor tries to pin down Telegram

by Mark Galeotti

With all the elegance and delicacy of a drunken mammoth, the telecoms regulation Roskomnadzor has gone after the Telegram messaging app, and in the process blocked Google and even Yandex sites, interfered with baking services, alienated even such users as Ramzan Kadyrov, and raised the prospect of causing potentially billions of euros in economic damage. This act of what seems like self-destructive overkill is not simply a case study in institutional inflexibility and techno-business ignorance, but also a telling case study of two crucial dichotomies in today's Russia, that between business and security, and that between political aspiration and technical capacity. In the process, it illustrates the central dilemma facing Vladimir Putin: real reform, at the expense of Russia’s autonomy in a globalised economy, or a slow drift into shabby isolationism and the status as 'North Korea lite.'

Business vs. Security

It does not really matter whether the ban was truly driven by anger at Telegram’s refusal to provide the authorities with the means to decrypt communications through the app, or whether, as some have mooted, its planned cryptocurrency which, according to the Federal Security Service (FSB), could create a 'completely uncontrolled financial system' and 'a threat to the security of the country'. (The fact that bitcoins apparently accounted for a quarter of donations to Alexei Navalny’s presidential campaign may or may not be a factor here…)

Either way, this demonstrates once again that the regime is committed to subordinating business interests, freedom, and opportunities to even the most tenuous security concerns. Neither Telegram-the-app nor Telegram-the-cryptocurrency can be considered truly unique, and blocking them will not deny opposition protesters the chance to communicate or drug-runners the means to move their funds.

Instead, as much as anything else, this is about the machismo of securitisation. Having decided that it is essential for all communications and money transfers to be readable to the state – as if it had the analysts, accountants and computer capacity to read, understand and store more than a miniscule fraction of the whole – then the security agencies felt they could not back down. The logic, to give it a charitable description, is that if Telegram can be allowed to flout these rules, however tokenistic and nonsensical, then somehow that is a crack in the dam, and who know what could happen next.

Yet not only does this mindset make any course correction into a defeat – rather than accepting that sometimes policies do need to be revisited and revised – it is demonstrating once again the Kremlin’s preference for conservative, managed crony capitalism over genuine economic diversification. Whether in turning a blind eye to 'raiding' (the use of corruption to take over companies), most dramatically visible of late in Rosneft’s plunder of Bashneft, or in its continued protection of uneconomic monopolies and cartels, it sees a wider sense of security, keeping key elites and Kremlin favourites happy, as a primary concern.

Aspiration vs. Capacity

When turning to the gap between political aspiration and technical capacity, the latter relates not so much to engineering and computing skills so much as the ability to understand how these can be applied to the modern, interconnected world and the constant stream of unintended consequences that flow from governmental hubris. Government officials are still using Telegram, even advising users how they can take advantage of a VPN to bypass the attempted blocks. Meanwhile, the wider fallout from Roskomnadzor’s campaign is having a serious wider impact on the economy, over above the state’s credibility.

kudrin in davos 2015Former liberal minister of Finance Alexei Kudrin is rumored to be appointed next week in the new Russian government. Photo Jolanda Flubacher

This illustrates a fundamental lack of ability to manage the challenges in regulating global markets and the globalised information space. Although it may well be wishful thinking or an attempt to lobby the Kremlin, there are those writing that Putin plans to adopt a new, more liberal and socially-driven economic policy after his inauguration on 7 May. It remains to be seen whether this is true: there is more to modernisation than continued defence cuts, and if anything the signals from the Kremlin seem more determined than ever to prioritise security and an aggressive foreign policy. However, even if this turn out to be the case, and the new government commits itself to more radical and reformist economic policy, this will need more than just new faces at the top (although they will likely be familiar new faces, such as former Finance Minister Alexey Kudrin). It will also require much more elegant and expert management throughout the ranks.

Giving Kudrin a role, whether in government or as some kind of economic consigliere to the Kremlin, will cheer foreign markets and be an easy symbolic act. But just as no battle plan survives contact with the enemy, for generations Russia has demonstrated that no economic reform plan survives contact with the bureaucracy. So far, while many of the new entrepreneurial class are eager for the chance to innovate and disrupt, that seems not the agenda of the officials, within whose ranks most powerful Russian businesspeople must in effect be counted.

Stolypin vs. the Kims

It is perhaps glib to describe the choice for Putin now as to whether he will at last emulate one of his role models, late tsarist premier Peter Stolypin, or whether he will instead become Russia’s answers to North Korea’s Kims. Of course, the Russian Federation will never become a massive North Korea. But 'North Korea Lite,'  a country increasingly seeking – or forced – to disconnect itself from the rest of the world as far as it can is not wholly impossible.

stolypinPrime minister Pyotr Stolypin, assasinated in 1911, reformed the Russian economy.

The oil and gas will still flow outwards, the BMWs and other elite luxuries flow in. However, an unspoken element of Putin’s almost pathological drive for 'sovereignty' is that within Russia, nothing is outside or beyond the state, and the only way of asserting that, as visible in the Telegram case, is a self-harming commitment to destroy whatever fails to meet these criteria, regardless of the political and economic cost.

'DPRK lite' is, of course, an extreme and implausible scenario. But as his fourth and presumably final presidential inauguration nears, Putin is faced with a choice, whether he likes it or not. Either he continues in his current path, one defined by securitisation, isolationism and legitimation through a narrative of a world of threats, or else he accepts the need for real change. Often before he has made halting starts towards reform, only to let them come to little as soon as the moment passed or, more often, when they looked as if they would constrain his own freedom of manoeuvre, harm the interests of his friends, or cause dissatisfaction within the elite.

Peter Stolypin was no woolly liberal – he presided over the bloody suppression of the 1905 Revolution – but he also appreciated that Russia’s long-term prospects depended on modernisation and diversification, even at the expense of the existing elite. He might have been the man to save tsarism, had he not lost favour with the tsar and ultimately been assassinated in a plot which may well have had the monarch’s tacit blessing. Putin has no tsar above him, and his grip on the security apparatus seems firm. But unless he can demonstrate the wit and the will to seize the current opportunity wholeheartedly, the logic of his current approach will continue to drift towards 'DPRK lite.'