Weekly 5 July 2022

Moral dilemma

Hello! This week our top story is a look at the difficult choices faced by many of the political technocrats who have worked as economic managers for President Vladimir Putin over the last 20 years. While staying in government after the start of the invasion led to allegations of collaboration, there has been no mass exodus of officials. We also look at the arrest of top university head and long-time Kremlin adviser Vladimir Mau.

Tough choices

Media outlet Meduza (designated a foreign agent by the Russian authorities) published a long article last week about how Central Bank employees have been resolving the moral dilemma of whether to continue in their jobs after the invasion of Ukraine. The article concludes that, while many Central Bank staff were disturbed by allegations of collaboration from former colleagues, they believe they need to keep working to ensure that ordinary Russians can live at least like “the 1990s, and not the late 1980s.”

A few days after the war began, Central Bank head Nabiullina wrote a message to colleagues in which she spoke of an “extreme, completely unorthodox situation” facing the economy. “Of course, we would all prefer this not to have happened,” she wrote. Meduza’s sources added that the head of the Central Bank also told her staff that their task was to “save everyone” and “do everything to ensure that people lose as little as possible”. She then issued an unofficial ban on talking politics and has not publicly mentioned the war.

Few are willing to openly offer even a hint of skepticism about the “special military operation.” When he stepped down as a presidential aide in March, Anatoly Chubais said nothing about the war. However, after his resignation, news agency TASS cited law enforcement sources who spoke of  a “check into Chubais’ secret accounts that might be held in European banks.” Arkady Dvorkovich, chairman of the Skolkovo Foundation, condemned the war in mid-March in an interview with U.S. publication Mother Jones. Within two days he was dismissed from his post and Andrei Turchak, secretary of United Russia’s general council, accused him of a “national betrayal.”

At the same time, Alexei Kudrin, head of the Audit Chamber, wrote on Facebook in March that his agency needed to prioritize professionalism “regardless of personal ideological preferences.” Journalist Farida Rustamova, and, later, media outlet Agentstvo, reported that after the start of the “special operation,” Kudrin met Putin and warned the war would have serious economic consequences and lead to social unrest. Putin gave no response to the warning. Kudrin’s acquaintances told Agentstvo that the economist has no plans to quit: “he feels he can be more useful if he remains in post and retains some influence.”

It is almost impossible to get a sense for how the technocrats who run the Russian economy feel about the war. Not many are willing to discuss this with journalists at the moment. On condition of anonymity we spoke with a few: none of them support the “special operation,” but most of them have — despite their opinions — opted to continue in their jobs.

“What changed on Feb. 24?”

The officials who spoke with The Bell were largely of the same opinion: they said that there was no advantage in abandoning their work at a crucial moment, and that the only way to influence anything in Russia was from within.

“The choice is either to leave (but not everybody has that opportunity and, moreover, why should I leave my country?), or to carry on with my work,” one of them told The Bell. “I can’t think of a more interesting role for an economist than the position I currently hold. We are at the epicenter of a grandiose transformation of our economy. We are seeing many of these processes for the first time. I think the experience that my colleagues and I are gaining now will be very useful in the future.”

“What changed on Feb. 24? Was Russia somehow different before that?” asked another official with some irritation. “To have influence on anything while remaining in Russia but working outside of the systems of power is practically impossible.”

For mid-ranking officials, whose departure would not make headlines, personal safety plays a big role in deciding whether to remain or not. Two ex-officials who spoke to The Bell talked about the safety issue more than anything else. Because it is currently impossible to assess the risk, both of them quietly left their jobs without offering an opinion about the war.

“It is simple and convenient to label all officials as ‘bad people’ not least because there is a fair amount of truth in this,” said one of The Bell’s sources inside the government. “But these people are just the same as the rest of society.”

Trolley problem

The choice faced by Russia’s officials and businessmen might be a difficult one for them, but it’s hardly unique. Resolving a dilemma with two bad choices is one of the oldest and most significant tests of moral philosophy.

In Meduza’s article, the motivation for Central Bank staff is explained in terms of the classic trolley dilemma. It goes something like this: a runaway trolley is hurtling down the track. Five people are tied to the rails in its path. You can switch to a parallel track, but unfortunately another individual is tied to those rails. What should you do? In this example, Russian technocrats have apparently convinced themselves they have switched the tracks.

But there is also something known as a false dilemma. And political analyst Kirill Rogov believes this more accurately describes what the technocrats are facing: by saving the country from an immediate macroeconomic shock, they will actually increase future economic damage because they are enabling the Kremlin to continue to impose economically destructive policies in the long term.

Arrest of university head sends a signal to ‘liberal economists’

While Russia’s so-called “systemic liberals” reflect on their position in a newly-militarized country, the security services are sending them a clear message. Economist Vladimir Mau, the head of RANEPA, one of Russia’s biggest universities, was placed under house arrest Thursday. Mau is one of the most influential figures among Russia’s liberal economists, a former colleague of reformer Yegor Gaidar and close to top officials for 30 years.

  • A court ordered Mau to be placed under house arrest until Aug. 7. Two days earlier, his house was searched and he spent much of the remaining time before his arrest being questioned by police. In court, Mau was charged with the embezzlement of 21 million rubles ($380,000) worth of funds from RANEPA.
  • Mau finds himself as the defendant in one of the most high-profile criminal cases of recent years. The majority of charges in the case have been leveled at Marina Rakova, former deputy minister of education, and Sergei Zuyev, the head of another top university. Officially, they are accused of embezzling state money for educational projects and for providing fictitious employment at RANEPA for 12 members of Rakova’s foundation (the salaries of these people supposedly make up the 21 million rubles connected to Mau). However, many believe the real reason for this case is a conflict over state contracts that Rakova had with publishing house Prosveshcheniye, which enjoys a monopoly in school textbooks and is connected to billionaire Putin associate Arkady Rotenberg.
  • Mau has always been seen as one of the most influential economists in Russia. In the early 1990s, he was one of Gaidar’s closest colleagues as Gaidar operated as the de facto head of Russia’s government and introduced radical economic reforms to dismantle the Soviet economy. In 1991, Mau joined Gaidar in government and worked as an advisor until 1994. In the late 1990s, Mau was put in charge of a government think tank researching and developing economic legislation.
  • In 2002, Mau was named rector of the government’s Academy of National Economy, which traditionally trains candidates for top government roles (it educated most of Russia’s governors). Under Mau, the academy was transformed into RANEPA: In 2010, an additional 13 higher education institutions were folded into the university. Its website describes RANEPA as Russia’s biggest university: it has 52 branches across the country and some 235,000 students.
  • At the same time, Mau remained an important economic advisor to the Kremlin. He was a member of the Economic Council Presidium, which advised the president, and in the late 2000s he joined the head of Moscow’s Higher School of Economics, Yaroslav Kuzminov, as scientific director of Strategy 2020, a program for Russia’s long-term economic development. Since 2011, Mau has been a member of the board at Gazprom, the highest possible indication of Kremlin trust. On June 30, the day of his arrest, Mau was once again elected to this position. As RANEPA rector, Mau regularly met Putin (most recently in the fall of 2020).
  • In Russia, those in positions like that of Mau are required to show demonstrative loyalty — now more than ever. In March, Mau duly signed a statement by university rectors in support of the “demilitarization and denazification” of Ukraine. “These days it is very important to support our country, our army, which protects our safety, and our president, who made perhaps the most difficult, yet inevitable, decision of his life,” the statement read. When the prosecutor argued in court that Mau had purchased tickets to Turkey and was thinking about fleeing Russia, Mau responded that he was supposed to be in Turkey to discuss “our university’s pivot to the East.”

Why the world should care

Mau is an archetypal “systemic liberal,” widely respected among top officials despite the fact he has not held a top government role for decades. This means that his arrest will be seen by colleagues as the clearest signal since the jailing of Economic Development Minister Alexei Ulyukayev — who was part of Mau’s team at the Gaidar Institute — in 2016.