Golikova was trained as an economist, not a physician or epidemiologist—curious qualifications for the nation’s top health authority. She previously served as first deputy finance minister under her mentor, Alexei Kudrin. As health minister, Golikova was besieged by allegations of corruption, starting with Navalny’s probes. Investigators have alleged her complicity in the embezzlement of hundreds of millions of dollars allocated for health ministry purchases. Potentially more damning are accusations that she intentionally failed to regulate the dangerous, highly addictive narcotic called desomorphine—known as “krokodil” due to the scaly, rotted appearance of the flesh around injection spots—manufactured by a company where her stepson works, effectively making Russia’s health minister also its “main drug dealer,” in the words of opposition journalists.45 Time will tell whether such damning accusations have merit.
Golikova’s demonization of beer rather than the more potent vodka foreshadowed Duma legislation in 2009 that proposed a ten to thirty-five percent increase in taxes on vodka (which made up seventy percent of the market) while increasing levies on beer by two hundred percent. “200% tax is not enough,” declared United Russia representative Viktor Zvagelsky, deputy chairman of the Duma’s powerful Committee for Economic Policy, who wanted to see the beer levy increased by an additional eighty percent. His reasoning? “The risk of alcohol dependence among consumers of beer is higher than that of consumers of wine or hard liquor.” Flying in the face of all epidemiological research and historical experience in Russia and abroad, Zvagelsky claims: “Beer alcoholism is, in some cases, more dangerous than distilled spirits.”46
“I find it very hard to understand the logic behind the disproportionate increase of excise duty on beer compared to strong alcohol,” replied Anton Artemiev, chief executive of Baltika, Russia’s largest brewery. “It will inevitably favor the consumption of hard alcohol, including vodka, and is bound to have a negative effect on alcohol abuse in the Russian society.”47
Cynics saw the logic of vodka politics all too clearly. “The motivating factor behind the proposal was as old as they come: taxes,” wrote Tim Wall of the Moscow News in 2009. In addition to its vodka problem, Russia had also become the world’s third-largest beer market, behind only China and the United States, a major difference being that fully four-fifths of the beer consumed in Russia was made by foreign-owned brewers while almost the entire vodka market was either in state or private Russian hands. Slapping such a hefty tax on beer would not only bring in another two billion dollars; it would also bolster the position of (domestic) vodka producers vis-à-vis their (foreign) beer rivals—all ostensibly in the name of the public interest. “The Kremlin is just doing what governments do when they’re short of cash,” Wall concluded, “roll the drunks for a few roubles, dollars, pounds or euros. And Russia’s federal budget will be seriously short of funds in the next couple of years, particularly if the oil price falls.”48
Despite the vocal protests of beer manufacturers, the measure passed, severely damaging multinational producers like Carlsberg and SABMiller with their extensive investments in Russia. The predictions came true, of course: beer sales dropped between five and fifteen percent by 2012 while domestic manufacturing of the more potent vodka expanded by roughly the same amount.49
The counterintuitive crusade against beer continued in 2011, when a bill from Medvedev’s original 2009 anti-alcohol plan came before the Duma, intent on re-categorizing beer as an “alcoholic beverage”—meaning it could no longer be advertised on television or be purchased at any of Russia’s ubiquitous kiosks. The original bill focused primarily on the more potent, higher alcohol brews. Proposed exemptions covered weaker beers under five percent alcohol by volume, which comprised the lion’s share of beer sales. Yet somewhere between the first and second reading (and quick passage) of the bill, the five percent exemption mysteriously disappeared: effectively imposing a total ban on all beer in kiosks, dealing a major blow to brewers and retailers alike.50 In the process, an originally sensible, incremental restriction was transformed into a drastic, sweeping imposition, similar in spirit to the failed autocratic sobriety measures of the past.
As with the previous anti-beer legislation championed by United Russia deputy Viktor Zvagelsky—who (according to articles linked on his official website) has authored most of the legislation related to the alcohol industry—this was not so much a benevolent move in the defense of public health, but rather a blatant attempt to defend the market share of domestic vodka manufacturers against predominantly foreign beer companies. Did I mention that before entering the Duma in 2007, Zvagelsky was deputy CEO of Rosspirtprom, and founder of at least three highly lucrative vodka production and distribution companies that would profit handsomely from driving beer out of the alcohol market?51
The picture is becoming clear: Rosspirtprom, the RAR, Duma, and the ministry of health have effectively hijacked another well-intentioned public initiative to serve the private financial interests of high-ranking members of the autocratic sistema, thereby perverting the very intent of an anti-alcohol campaign. If the past 500 years of top–down alcohol control in Russia is any guide, recent increases in the consumption of vodka and dangerous surrogates—even while the Kremlin claims to be fighting against them—are worrying signs that the time-tested pattern of financial interests trumping the wellbeing of Russian society is primed to repeat itself again. And that is even before considering the entrenched interests of the treasury itself.
Since vodka politics has always been about the centrality of alcohol to Russia’s state finances, its ultimate defenders have always been its finance ministers. From Sergei Witte and Vladimir Kokovtsov in the imperial era to Vasily Garbuzov under the Soviets, the ministers of finance fastidiously defended the state’s coffers against all comers. Thanks to the steadily increasing alcohol taxes levied under president Medvedev’s anti-alcohol campaign, by 2012, the treasury was swimming in over two hundred and fifty billion rubles ($8 billion) annually from liquor taxes, more than twice the amount collected in 2007.52
The finance minister overseeing this vodka windfall was Alexei Kudrin, who had capably directed Putin’s ministry of finance since 2000, and had been a Putin loyalist from their time in St. Petersburg many years earlier. This was the same Alexei Kudrin whom Putin left out of the loop about establishing the national champion Rosspirtprom in 2000, which he was forced to bail out in 2006 after Putin’s botched consolidation (chapter 22). Instead of splurging Russia’s incredible oil and gas windfall of the Putin years, the fiscally conservative Kudrin built up the monetary reserves that helped Russia weather the global financial crisis. Still, his defense of the treasury—and of vodka politics—continued under Medvedev, despite growing tensions. It was Kudrin whom Medvedev called out over Twitter for not addressing spending on “national priority” social issues.
In early 2010—while Russia was still being lashed by the global financial crisis—Prime Minister Putin announced sixteen billion in new spending on healthcare. Critics saw it as a populist splurge ahead of the 2012 elections. Admittedly “disappointed,” Kudrin vocally opposed the healthcare plan. “I think we will have to hold serious discussions,” he said, hoping the government would reconsider. When the Kremlin refused, Kudrin looked to make up the expense with cigarette and alcohol taxes.53
What followed was perhaps the most audacious defense of the basic tenets of Russia’s autocratic vodka politics—ever. Completely undercutting Medvedev’s anti-alcohol campaign, in September 2010 Kudrin brazenly declared that Russians “should smoke more and drink more” in the interests of state finance. “People should understand: Those who drink, those who smoke are doing more to help the state,” Kudrin claimed, by “giving more to help solve social problems such as boosting demographics, developing other social services and upholding birth rates.”54
Flabbergasted opponents quickly pointed out to the finance minister that budgets don’t work that way: expenditures on health and social projects aren’
t linked to tobacco and alcohol excise taxes. “Nevertheless,” continued an article in the communist opposition newspaper, Pravda: “Minister Kudrin transferred the message accurately: the state will take advantage of smokers and alcohol consumers.”55 Bemused bloggers joked that Kudrin should at least be awarded the Nobel Prize for Honesty. Instead, the following month the austere Kudrin—who helped Russia weather the Great Recession—was honored as Euromoney magazine’s 2010 Finance Minster of the Year.56
The tensions only increased the following year, as the 2011 Duma elections inched closer, followed by the crucial presidential elections of March 2012. Kudrin proposed dramatically quadrupling the vodka tax. Following public outcry that such heavy-handed measures would lead to the same doom as Gorbachev’s and Nicholas II’s efforts—namely by fueling the underground vodka economy of dangerous surrogates and counterfeits—Kudrin drew a strong rebuke from Putin himself. “You know my attitude to the alcoholization of the population: we have, of course, to fight that. But there is no simple, linear solution,” Putin declared. Kudrin’s plans were dialed back accordingly.57
Yet the biggest confrontation was yet to come. In September 2011—a week after Medvedev announced he would step aside so that Putin could again run for president, Russia’s outgoing president threw down the gauntlet. Perhaps frustrated by the entrenched vodka opposition to his reforms from all levels of government including the treasury, Medvedev gave Kudrin a public dressing-down for his vocal opposition to social spending and publicly second-guessing his competence.
Before a bank of television news cameras at a ministerial meeting, an emotionless Medvedev announced that Kudrin’s “insubordination” was “inappropriate and inexcusable.” He went on.
Mr. Kudrin: if you don’t agree with the president’s policies—and it is the president’s policies that the government implements—you have only one choice, and you know yourself what that is: you should tender your resignation. So I will ask you right here: if you think that your view on the economic agenda differs from those of the president, you are welcome to write a letter of resignation. Naturally, I expect you to give an answer here and now. Are you going to resign?
Turning on his microphone, the stunned but steady finance minster replied: “Mr. President: indeed there are differences between you and me on some issues.” Figuring that he held the trump card by way of his strong personal relationship with Putin, Kudrin defiantly added: “But I will make a decision on your proposal after I consult with the Prime Minister.”
“You know what?” Medvedev continued, unbowed. “You can consult anyone you like, including the Prime Minister—but as long as I am president, decisions such as this one are up to me.” Medvedev added that, until his term as president ended and Putin’s began, “I’ll be the one making all the necessary decisions. I hope this is clear to everyone.”58
And with that, the most audacious modern defender of Russia’s autocratic vodka politics, the reigning finance minister of the year, was gone by the end of the day.
24
An End to Vodka Politics?
“Drunken hooligans and thugs, every one”—the neighborhood thugs were always loitering in the courtyard where Vladimir Putin grew up. “Unwashed, unshaven guys with cigarettes and bottles of cheap wine. Constant drinking, swearing, fistfights—and there was Putin in the middle of it all.” Putin essentially grew up in Leningrad’s Fight Club, where the scrappy kid held his own against the biggest and the baddest. “If anyone ever insulted him in any way, Volodya would immediately jump on the guy, scratch him, bite him, rip his hair out by the clump.”1
Coming from the mean, drunken streets, Putin developed an affinity for judo and sambo at a young age and the human cockfight that is mixed martial arts (MMA) later in life. When, in 2007, Russian heavyweight sambo champion Fedor “the Last Emperor” Emelianenko finally fought in Putin’s hometown of St. Petersburg, Putin sat ringside flanked by “the Muscles from Brussels”—Belgian kickboxing actor Jean Claude Van Damme—and Silvio “the Italian Rapscallion” Berlusconi. Putin, Van Damme, and Emelianenko later reconnected to kick off the Mixed Fight European Championship in Sochi in 2010, and when the Russian champ Emelianenko looked to end a three-fight slump against American Jeff “the Snowman” Monson at a packed Olympic Stadium in Moscow in late 2011, Putin again looked on approvingly from the front row.
Beamed live on the Rossiya-2 television channel, the no-holds-barred battle between these “two enormous sacks of rocks” (as David Remnick artfully described them), lasted the entire three rounds. An early-round kick broke Monson’s leg. Another ruptured a tendon, further limiting his mobility. A flurry of punches caused the fight to be stopped to tend to the blood pouring from the American contender’s mouth, which poured all over his anarchist and anti-capitalist tattoos. Still, online MMA aficionados panned the fight as “a bit of a snoozer.”2
Each fighter’s corner was conspicuously emblazoned with the VTB logo of the fight’s primary corporate benefactor, Vneshtorgbank. At the end, both returned to their corners as trainers tended to their injuries—Monson’s being far more apparent than Emelianenko’s—before the latter won by unanimous decision. Only then did Prime Minister Putin climb through the ropes to congratulate “the genuine Russian hero,” Emelianenko. What happened next was a shock to the cocksure Putin, who just two months earlier declared his intention to return to the presidency in the 2012 elections. Unexpectedly, yet unmistakably, Russia’s most powerful man was booed. Taken aback, Putin puzzled momentarily before continuing his judo kudos. During the previous twelve years in power Putin had never been booed by his own people. Now it seemed that his return for at least one (and, more likely, two) newly extended six-year presidential terms did not sit well with some. Something had definitely changed.
Suddenly, the global media took an interest in MMA, trying to gauge what just happened. Were they booing a bad fight, as Putin’s spokesman claimed? Were they booing the pre-fight singer, as the organizers claimed? Or were they booing the long lines at the bathrooms, as the pro-Putin youth movement Nashi claimed? As far as I can tell, MMA blogger Michael David Smith has never been one to take sides in Kremlin politics—or any politics for that matter—but it was clear even to him that “No one floating those alternate explanations has explained why, if that’s what the fans were booing about, they began their booing at the exact moment Putin began talking. And if the fans weren’t booing Putin, it’s hard to understand why Russian state television broadcasts felt the need to edit out the booing.”3
From the other side of the blogosphere, anti-corruption activist Alexei Navalny claimed that the booing heralded “the end of an epoch.” Navalny’s campaigns had brought him toe to toe with Putin’s regime: his re-branding of United Russia as “the party of crooks and thieves” resonated with a wide swath of a new Russian middle class that had grown tired of duplicity, corruption, and the bizarre, neo-feudal system of Putinism. The erosion of support could not have come at a worse time for the Kremlin: the December 2011 Duma elections were already upon them. Despite ratcheting up both nationalist rhetoric and pressure on independent monitors and critics, United Russia received only forty-nine percent of the votes—the party’s first ever backward step. Despite the frigid Moscow winter, first thousands, and then hundreds of thousands, of protestors condemned the vote rigging, ballot-stuffing, and biased media coverage that marked the “dirtiest elections in post-Soviet history”—suggesting that even United Russia’s forty-nine percent was a greatly inflated figure.4 Even more telling, tens of thousands of Russians—part of an increasingly active civil society—trained to become election observers in polling stations throughout the country.
These “for fair elections” protests were the largest Russia had seen since the collapse of communism, leading many to wonder whether the autocratic regime would respond with repression and bloodshed. Thankfully, it did not. Despite a sizable security presence looming nearby, the largest protests between the December 2011 Duma elections and the Ma
rch 2012 presidential elections all passed without confrontation. Other signs of accommodation followed: the protests were reluctantly covered on state-run TV, and once-blacklisted opposition figures were allowed to air their grievances.5 Outgoing President Dmitry Medvedev met with opposition leaders and even proposed liberalizing reforms, such as reinstating the direct election of governors. The state even promised greater transparency in the presidential elections by installing webcams to monitor each of Russia’s nearly one hundred thousand polling stations.
Whether the webcams deterred the widespread voter fraud of previous elections or simply pushed it off camera is still unclear. What is clear is that Vladimir Putin easily won the 2012 election, due primarily to his enduring popularity beyond the capital and the lack of an opponent who could unite the diverse streams of anti-Putin discontent. Nationalist posturing and promises of increased social spending further bolstered his appeal.
But while the opposition did not sink Putin, they certainly fired a warning shot across his bow. Where Russia goes in Putin’s third term and beyond will largely be determined by whether the Kremlin heeds the shot or ignores it.
Vodka Politics: Alcohol, Autocracy, and the Secret History of the Russian State Page 54
