Putin ups the stakes in Syria as he gets backed into a political corner

Putin ups the stakes in Syria as he gets backed into a political corner
Vladimir Putin inspecting decorated Russian servicemen at the 2014 Victory Day parade on Red Square.
By Ben Aris in Moscow February 10, 2016

"As a direct consequence of the Russian military campaign, the murderous Assad regime is strengthening its position, the moderate Syrian opposition is in retreat and thousands of refugees are fleeing to Turkey and Europe", European Council President Donald Tusk said in Brussels on February 9 in obvious frustration and anger, adding that Russia's actions in Syria, "have made an already bad situation very much worse".

President Vladimir Putin significantly upped the ante in Syria in the past few days, with Russia's air force jointly mounting a major military assault together Syrian President Bashar al-Assad's ground troops on Aleppo, the centre of rebel resistance in northern Syria.

The choice to expand Russia's military campaign at this time was an extremely aggressive move by Putin and carefully timed. Fresh talks had just started in Geneva that were designed to bring all interested parties to the table to find a negotiated solution. The attack on Aleppo effectively killed this diplomatic effort in its cot.

Details from the ground are sketchy, but the upshot is that Putin has again taken the initiative in the Syrian campaign as he is attempting to achieve multiple goals in what increasingly looks like a high stakes gamble. Russia cannot afford even a short war, let alone a long one, and with a general election only six months away Putin is running the risk of losing control of the Russian parliament or provoking a 'coloured revolution' if he is forced to use repressive means to ensure a victory at the polls in September.

Military goals

Of the many factors going into Putin's decision the most obvious are military. First, Russia remains the only outside power with a legitimate right to be in Syria after Assad invited the Russians in.

The EU, US and Turkey have neither a UN mandate nor the invitation to intercede in Syria by the government and hence under international law they have no right to conduct military operations in the country. Russia wants to follow through on this technical point as in theory it could leave it in charge of the political process after the fighting ends.

Secondly, with Russia's powerful air force behind them, it appears that the assault on Aleppo by Assad's ground forces may be successful. This could in theory clear the chessboard of most of the bit players as many of the "moderate" rebels and Kurds are in this area. That would be Putin's preference as if the fight were simplified to a straight forward slugfest between Assad and Islamic State (IS) then the international community would have no choice but to rally behind Russia – again leaving Russia in charge of the post-war political process. This is another reason why Russia purposely scuppered the Geneva III talks, as this would have only cemented the bit players into the political process, all of which are not under Russian influence.

Thirdly, the attacks have turned the screw on Europe, and especially German Chancellor Angela Merkel, by sending a fresh flood of refugees westwards. Within 48 hours of the start of the attack 40,000 new Syrian refugees appeared at the Turkish border. Merkel is already under enormous strain at home thanks to her open door policy to refugees, but the Turks are predicting that as many as one million new refugees could leave Syria as a result of the more intensive fighting. Merkel now needs a settlement as badly as Putin does.

The US also has a weak hand thanks to its reluctance to commit forces to the fight and its risible failure to train more than five soldiers for its "moderate rebel" proxy on the ground.

And Turkey is simply too small to have a decisive impact on the outcome. Indeed, some Turkish commentators are arguing that Turkey's regional policy is already in tatters – the main goal of which was to oust Assad. Despite its talk of invasion, it is unable to mount an effective counter in the face of Russia's military power. Turkish President Recep Tayyip Erdogan has been left railing against Putin, calling him an "occupier" in Syria, while he faces mounting pressure from the fresh wave of refugees at his border, and trying to goad the US into more definite action by calling for the White House to choose between Turkey or the Kurdish nationalist Democratic Union Party (PYD) fighters – threats the White House is pointedly ignoring.

Economic goals

Time is running out for Putin. Russia's government is bleeding money on this campaign, which it can't afford. Putin has dedicated a third of the federal budget this year to supporting the military at a time when its revenues have been decimated by the collapse in oil prices. That's about RUB4.5 trillion ($57bn), out of some RUB13 trillion total spending. Russia is on course to run a budget deficit of 5.1% of GDP this year (RUB3.9 trillion) if oil prices average $40 Economics Minister Alexei Ulyukayev said this week.

Given that Putin has ordered the deficit be held to 3% of GDP (RUB1.7 trillion) and that he has taken cuts to military spending (because of Syria) and social spending (because of the elections) off the table, Finance Minister Anton Siluanov is desperately trying to find several trillion rubles of fresh revenue to balance his books.

He doesn't have many options. The cuts Siluanov has already announced will be in his revised budget plan, due to be released in March, amount to only about RUB500mn. The much talked about privatisation plan that was re-launched in January has a RUB1 trillion revenue target, but given the Kremlin's form with its last attempt to sell the same list of companies in 2008, it will be lucky to get anything; in 2015 the government managed to raise RUB5.3bn ($67mn), not enough to pay for everyone's lunches.

The state is also in the process of trying to float a $3bn Eurobond, which may come off if Russia's friends like China and India step up. But that would also only bring in RUB237bn. There is a line in the budget to raise another RUB800bn from the domestic market, which could work, so borrowing could raise RUB1 trillion in total.

The latest wheeze is a plan to raise taxes on oil production, which could realistically bring in another RUB1 trillion. But even if this works (and it would badly damage the development of Russia's oil industry as the majority of its productive fields are passed their "best before" dates) then the state will have raised RUB2 trillion to cover a RUB4 trillion budget hole.

The obvious answer is to scale back spending on the military and the Finance Ministry keeps suggesting this (indeed, Siluanov's current spending cuts still includes RUB200bn of military cuts).

So if the military campaign is a success, if the chessboard is simplified, if a deal can be done to start the political process on Russia's terms and if the Russian army can be stood down, then that would clear the way for cutting one or two trillion rubles off the budget spend immediately.

Political goals

And Putin desperately needs to make this happen as not only is he spending his country's cash, he is also spending his own political capital at, what must be to him, an alarming rate.

As political scientist Nokolai Petrov pointed out in a recent interview with bne IntelliNews "Putin’s Viagra problem", Putin earned huge popularity with first his annexation of Crimea and then the campaign in Syria, seeing his personal approval ratings soar to an all time high of 86% as of the start of this year.

But these events are one-offs that win Putin a short-term kudos spike. After the dramatic headlines, both have to be maintained and cause nothing but problems and costs: there was a one-time gain in political capital followed by an expensive slow drain on that same capital.

And it seems that Putin has already spent most of his political profit. A raft of new polls showed that the average Russian is becoming increasingly worried about the direction the country is headed. One poll in January found half of the population fears a repeat of the 1998 crisis, another that over half thinks 2016 will be worse than 2015. And now even the president's personal popularity is being affected, falling to (the still ridiculously high) 82% in the last month.

While Putin has maintained his Teflon popularity in the face of mounting disquiet, the government has not – and it is the government that will stand for election in September. In the most recent poll, half of the population disapproves of the government, up from 40% a year earlier.  Putin will not face re-election until 2018.

The Kremlin is already fully focused on how it will keep control of the State Duma after its proxy, United Russia, only squeaked a 50% majority in 2011 (and then only after adding approximately 12% to its tally, causing the first mass protests in a decade).

One obvious fix is to earn another big dollop of political capital if Putin can cash out the capital he has invested into Syria with a clear victory that leaves Russia at the top negotiating table in post-war talks.

In the meantime, it is already clear that the Kremlin is preparing for the elections. Putin is due to meet his economic chiefs on February 10 to discuss a RUB800bn crisis aid package of which the largest part of RUB337bn is earmarked for supporting Russia's failing regions. Another RUB137bn is in an "anti-crisis" slush fund with no specific allocation, but it is personally controlled by Putin and can be used for fire fighting – largess that can be doled out to regions or races which run into trouble.

Can Putin win the elections just by spending money on the regions? It is impossible to say, but if he can't cash out his political capital from his two wars in Syria and Ukraine he is likely to turn to "administrative resources" to ensure victory. And that would be to risk sparking real and widespread popular protest, as the Kremlin is well aware after the events of 2011.

Putin's press spokesman Dmitry Peskov was trying to calm tempers following Tusk's outburst, while Russia plays for time. "Of course, we once again call very carefully and very seriously use some interpretation around the already fragile situation which now exists in Syria and around the Syrian settlement," Peskov said in response to the European Council president's comments.

The game is now on and the stakes are high. Putin is playing with a weak hand but is bluffing aggressively. However, no one at the table is holding any trumps, and Putin sees his pair of deuces as better than only the picture cards he believes all the others to be holding.