Putin’s constitutional bombshell and what it means for Russia

The Bell

Russia entered a new political era this week as President Vladimir Putin announced sweeping constitutional reforms and Prime Minister Dmitry Medvedev resigned.  The Bell explains what exactly took place and what does it mean for the future of Russian politics.

In his annual state of the nation address Wednesday, Putin shocked observers by announcing the most far-reaching changes to Russia’s constitution since it was adopted in 1993. If implemented, these changes will allow Putin to stay in power after the end of his fourth presidential term in 2024 and weaken the powers of his presidential successor. Two hours later, Medvedev resigned and was quickly replaced by the head of the Federal Tax Service, Mikhail Mishustin. In the coming years, politics will be dominated by the construction of a new system for the exercise of power.

The constitution

The Russian constitution was formally adopted immediately after President Boris Yeltsin’s victory in an armed confrontation with a rebellious parliament — so it’s unsurprising that the constitution gives the president almost unlimited power. Over the next 27 years, the constitution has barely been touched — the only real change was the lengthening of presidential terms from four to six years in 2008.

Putin has always been cautious about formalizing his almost unlimited power as Russian leader, and has said repeatedly that the constitution does not need to be altered. But he has now changed his mind and the constitution will be re-written to shape the political system through 2024 when Putin’s fourth presidential term comes to an end.

The alterations will be drawn up by a special working group of 75 people, but its composition shows clearly that it will have a largely symbolic role. It includes doctors, athletes, charity heads, and writer Zakhar Prilepin, who fought alongside pro-Russian separatists in eastern Ukraine. There are only 11 lawyers. In reality, its function will be to put into words the decisions already taken in the Kremlin. When the working group is finished, the changes will be implemented following a nation-wide referendum. How exactly the referendum will take place is unclear, but the Kremlin has plenty of vote-rigging experience.

The essence of the changes is easy to explain — they reduce the president’s powers and increase the power of both parliament and the prime minister. In this way, three power centers with comparable authority will replace one (the president). This should, in theory, guarantee that no single center can control the others, and Putin, preserving his role as leader of the nation, will be able to regulate the activities of all three.

The new structure of power

Parliament gets more authority. The two chambers of the Russian parliament, the State Duma and the Federation Council, will get the ability to influence the make-up of the cabinet. Currently, parliament rubber stamps the president’s candidate for prime minister, and has no say over the appointment of ministers.

  • Putin suggested that the Duma be entrusted “not just to agree, but to propose candidates for prime minister”. It remains unclear exactly what this means, but Kommersant suggested (Rus) the president might be stripped of his right to dissolve the Duma if it votes to reject a prime minister three times in a row.
  • The State Duma will be given the right to vote on candidates for minister positions who are put forward by the prime minister and the president will not have the power to reject candidates who have been approved by the Duma. Currently, ministers are appointed by the president after being put forward by the prime minister.
  • The Federation Council will get the right to participate in naming the heads of the security agencies. Currently, the president nominates the heads of the Ministry of Defense, FSB and other security bodies via presidential order. Now, the president will do that “on the basis of consultation with the Federation Council”.

A weaker president. In addition to losing important powers, the next president will not be able to hold the post for more than two terms. At present, the constitution forbids anyone from being president for more than two consecutive terms. Now, Putin has promised to remove the word “consecutive”. The real significance of this change may become apparent if Medvedev becomes the next president — with the new phrasing, he would only be able to serve one term (as he was president from 2008 to 2012).

In addition, the presidency will be barred to anyone who has spent time abroad (for example, exiled tycoon Mikhail Khodorkovsky). The changes will mean candidates for president must have lived continuously in Russia for the last 25 years, never have had foreign citizenship nor been granted permanent residency outside of Russia.

New role for the State Council. Putin set-up the State Council in 2000 as a consolation prize for regional governors who were kicked out of the Federation Council. At the moment it remains little more than an advisory body chaired by the president. However, Putin said Wednesday that, in the future, the State Council will ensure effective consideration of “the most important questions”, and promised to give it new powers. Political scientists have long predicted (Rus) that heading up the State Council could be a way for Putin to oversee the government and preserve real power after 2024.

A weakened judiciary. Formally, the powers of the Constitutional Court are being expanded and it will be granted the right to check draft legislation for its accordance with the constitution. But, at the same time, the independence of higher courts is being destroyed. The president will be given the right to propose that the Federation Council fire the judges of the Constitutional Court and Supreme Court. At present, the Federation Council can only do this if advised to by the courts themselves. This means that the Constitutional Court and Supreme Court will amount to little more than the Kremlin’s legal department.

An important detail. On the one hand, Putin provided a lot of details about what Russian politics will look like in the future. On the other hand — no final decisions have yet been made. If the Kremlin deems it necessary, there is nothing that could prevent the athletes and writers on the working group charged with formalizing these changes from recommending that Putin be allowed to run for a new presidential term.

What remains unclear

Putin’s future. Many experts interpreted Putin’s focus on the State Council to be a nod at the ‘Kazakh scenario’: after 2024, Putin will step down from the presidency but will continue to lead the country via a new status of  ‘national leader’. The likelihood of this will become clearer when we know what new powers the new State Council will receive. But political scientists (Rus) contacted by The Bell, Vedomosti and Open Media suggested that Putin could also take on another role, for example, prime minister or Duma speaker.

Who will be president. If Putin leaves the presidency, this will mean that a search for his successor will take place ahead of new elections. Putin already knows how this can happen: before the end of his second term in 2008, there was a two-year contest for the presidency between Sergei Ivanov and Dmitry Medvedev. Both Ivanov and Medvedev were deputy prime ministers, and Putin watched them battle it out between 2005 and 2007. Back then, Putin only made his decision at the very last moment — Medvedev’s presidential candidacy was only announced in December 2007, just three months before elections.

The role of prime minister during so-called Operation Successor was held by technocrats — Mikhail Fradkov and Viktor Zubkov. This is another similarity to today’s situation — Medvedev’s replacement Mishustin is also seen as a technocrat prime minister who does not have major political ambitions.

The most likely candidates to succeed Putin are generally thought to be Medvedev, Defense Minister Sergei Shoigu, and Moscow Mayor Sergei Sobyanin. This would explain why none of them were made prime minister — it would have been a premature signal. If elections are not moved forward, Putin has at least three years more years as president.

Medvedev’s lot. Until this week, Medvedev was the leading candidates to succeed Putin and, as prime minister, he would automatically have become acting president in the event of Putin’s illness or death. Now, he is only one of several candidates. Following his resignation, he will take on a specially created role as Putin’s deputy on the Security Council. This can be interpreted as a demotion, or an escape from the frontlines: Russia’s prime minister is widely seen as responsible for unpopular reforms and a stagnating economy.

A specific reason for Medvedev’s resignation was not made public — neither by Putin, nor Medvedev. Ministers learnt the news just minutes before the official announcement. “Like lightning from a clear sky,” was how one of them described it to The Bell. The question of Medvedev’s political future is probably a mystery even to Medvedev himself now. “The prime minister’s face didn’t look very happy, but it’s too early to discount him,” a major businessman told The Bell. “Not everything is lost, but a lot is,” a second source said.

Mishustin’s role. New prime minister Mishustin is a typical technocrat who does not look like a future president. Experts compare (Rus) him to former prime minister Zubkov. However, Mishustin is younger and reputed (Rus) to be a highly effective manager. During a decade as head of the Federal Tax Service, he made Russia’s tax collection system one of the most digitally advanced and efficient in the world. While he is seen as “a serious professional” in the IT industry, government sources and major businessmen told The Bell Mishustin is also very canny when it comes to building relationships. We wrote about Mishustin in more detail here (Rus), and his most recent interview is here.

What does it mean for business?

The market’s reaction to events was clearly visible in the graph of Wednesday trading on the Moscow Exchange.

Medvedev’s resignation upset investors — but only for half an hour. After the announcement of Mishustin’s appointment, the market began climbing again, and rose another 2.3 percent over two days. The Russian market is already up 5 percent in 2020.

Such a response is understandable — it’s a long time since anyone has associated Medvedev with a liberal reform programme. All the businessmen who spoke to The Bell described Mishustin as an effective manager and a person “on good terms with everyone”. In any case, over the last two years the Russian market has appeared to be largely un-coupled from domestic political developments.

For now, it’s unclear how economic policy might change. The only thing Mishustin has said is that he is against introducing a progressive income tax. This is positive news for the market: before Putin’s speech, officials were discussing abolishing income tax for the poor, which would have meant increasing the income tax rate for everyone else.

One of the most persistent rumors about the make-up of the new cabinet is the possible appointment of Putin’s economic advisor, Andrei Belousov, as deputy prime minister. We wrote in detail about him in 2018. Back then, а highly ranked official described him as “a rigid statist” who believes Russia is surrounded by “a circle of enemies”. And in 2014, Belousov was the only one of Putin’s economic advisors to support the annexation of Crimea. He is also a proponent of massive government spending. Medvedev’s government had been reluctant to spend the oil super-profits accruing in the state’s coffers, but Belousov won’t have any such difficulties — although there is little hope the money will be spent efficiently.

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