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Jul 24, 2014 | 21:26 GMT

Conversation: How Vladimir Putin Rose, and Could Fall, in Russia

David Judson: Hello, I'm David Judson, editor-in-chief of Stratfor. Today, joining me is George Friedman, founder and chairman of Stratfor. I want to talk about what's kind of obvious, which is Russia in the broadest sense. But what I want to specifically talk about today, George, this week you in your column raised the yet-open question: Can Putin survive? That question remains open, but I kind of wanted to back up to the history of analysis we've done looking at Russia and its changing power relationships with not only itself internally, but what the West…take us back to 1998, when we raised basically the question: Can Boris Yeltsin survive?

George Friedman: Well, I mean, 1998 came after a major financial crisis in Russia and the realization that Russia — as it was constituted in 1991, '92 — didn't work, and that privatization had led to the growth of massive oligarchies, and that Russia was really being humiliated in foreign policy and how could Yeltsin survive? And it became increasingly clear that with all the problems Russia was having, the kind of regime that Yeltsin had couldn't survive and that it wouldn't.

David: Ok and that's what led our forecast. So, then I move back going through the countless dozens if not hundreds of forecasts we've done, small and large, and picked 2001, when we did a forecast, considered somewhat outrageous at the time, that Putin was consolidating absolute power. What was the methodology there?

George: Well, the only institution that has ever truly functioned in the Russian empire, going back to the 19th century was the security apparatus. The country is vast, as Russia with its poor communications — the central government could only hold the place together by empowering security people — Okhrana, Chekists, MKVD, KGB. And this is what functioned, and it was still the only institution that was functioning in Russia in 2001, and it was less about Putin than about this institution re-asserting itself and trying to bring some stability — repressive stability, but stability. Putin, being a KGB man, was the one that the system threw up to do this. And there was a kind of logic, and he was going to bring control to the situation. He was going to have to become far more autocratic, far more repressive and far more assertive throughout the entire system, because it wasn't working. And so from that, we said two things. One, he was going to last. This was not just another pretty face, as one of our articles put it. And second, that it was going to be a very different sort of regime than the one we got.

David: And then, again looking retrospectively here we get to 2004 and our forecast that said the era of concessions is over, pushback against NATO, we had the Orange Revolution. The effort to undo that was beginning. Amplify that a bit.

George: The Orange Revolution was a rising in Ukraine against an essentially pro-Russian government. When Putin saw this, he believed — rightly, wrongly — that this was an operation carried out by the CIA and Western intelligence services to impose a pro-Western government in Ukraine. Whatever, however it happened, a pro-Western government arose. And Putin looked at that and said this is the attempt by the West, first to betray all the promises it made not to come into the former Soviet Union, but also it is an attempt to destroy the Russian Federation. And the West has shown itself an enemy, it is hostile to Russian interests and therefore we will treat it that way. And this began the process where Russia began to emerge with a stronger military, a much more aggressive policy — much less cooperative.

David: So as Mark Twain is alleged to have said, history may not repeat itself but it does rhyme. Looking back through all of this, I hear a bit of history's rhyme.

George: Right.

David: Can you bring that forward to this focus of this, I say, open question: Can Putin survive?

George: Well, Putin is very successful, for quite a while. He managed to create a viable economy, and he also managed to create a sense of his power. When he invaded Georgia in 2008, it was not just about Georgia. It was about Kiev. It was basically telling the Ukrainians, this is what American guarantees are worth. The United States was caught in the Middle East, had no ability to protect, defend — he created a sense of power, and that went on until Syria, for example, when he appeared to school Barack Obama. What happened was that the Ukraine — which is always the battlefield, always a crucial area for Russia, it was the buffer — experienced another rising. The president was deposed, a pro-Western president was put in place, and he was left in a position where all the things he had achieved, starting in 2004, were dribbling away. He held onto the Crimea. The West called this an invasion — Russian troops were there already — a thin strip of land along the Russian border, the Russian-Ukrainian border. What he was hoping for was a general uprising against the Kiev government. It never materialized. He wound up in a situation where he held Crimea. He held a few towns that are now under attack by the Ukrainians, and he suffered a massive defeat. Ukraine is everything to the Russians. This is one of the ways of buffer that they can defend themselves. They at least want an anti-Western government there, whatever they do internally. They lost all that. So that was lost, but also the economy is in very bad shape. The Central Bank is predicting no growth this year, despite of a hundred-dollar-plus barrel of oil. And we're also looking at a situation where there's massive outflows of capital out of the country and declining — dramatically declining — foreign direct investment. The economy's in trouble. Putin's claim that he schooled the Americans, Putin's claim that he demonstrated that Russia was a power again really is being held up for question. And the apparent incompetence of shooting down an airliner simply compounds the sense that he's lost his touch. He's been in power for 14 years. He did extremely well for a while, now he's doing very badly, and among his closest supporters are his successors.

David: Right. So I guess we'll leave it sort of there. The question remains: Can Putin survive? Thank you, George.

George: Thank you very much.

David: We'll be looking for the answers here at Stratfor.

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