How ‘systemic liberals’ became soldiers for the Putin regime
February 10, 2023
  • Sergei Shelin 

    Journalist, independent analyst, until recently commentator at Rosbalt labeled “foreign agent” in Russia 
Sergei Shelin writes about the systemic liberals, who for 30 years have represented the “human face” of the Russian bureaucracy before suffering a moral and ideological meltdown in 2022. However, their competence remains beyond question: while Putin’s generals were losing battles, the “syslibs” loyal to Putin saved the Russian economy from collapse.
Central Bank chief Elvira Nabiullina. Source: Wiki Commons
A year ago, the progressive wing of the apparatchiks surprised even those who thought they had no illusions about this regime. Not a single prominent so-called “systemic liberal” condemned the invasion of Ukraine or disassociated himself from Putin.

Even former associates of Yegor Gaidar from the free-market economic reforms of the 1990s at most stepped aside and kept quiet. Meanwhile, the liberal technocrats in charge of the country’s finances loyally led the transition of the Russian economy onto a military footing and brilliantly handled the tasks assigned to them by the president.

For more than 20 years, Putin has defended the Westernized part of the bureaucracy from attacks by other bureaucrats and sometimes even the security services. And having unleashed an aggressive war against Ukraine, he did not regret that.

While his generals were suffering failure after failure in Ukraine, the talented financial specialists at the Central Bank and Finance Ministry, led by Elvira Nabiullina and Anton Siluanov, respectively, restored a strong ruble exchange rate and broke the back of inflation in just a month. Such a striking combination of professional success and moral failure is unusual even in Russian life, which is always full of paradoxes.

Erased memory

The term “systemic liberals” (“syslibs” for short) came into use in the early 2010s. However, the phenomenon itself arose in the early 1990s alongside Gaidar’s reforms. To move away from the command economy, Russia’s leaders in 1991 were forced to bring in intellectual and liberal-minded technocrats, headed by Yegor Gaidar. Old-school officials were simply not up for the job.

The liberal technocrats, however, did the job. Under the leadership of Gaidar, they created the financial system that is still functioning today. Gaidar’s contributions to the new Russia can be compared with those of Alexander Hamilton in the US in the 1790s or Hjalmar Schacht in Weimar Germany in the 1920s. The portrait of Hamilton adorns the ten-dollar bill. Schacht, a decade after his financial triumphs, became an associate of Hitler before falling out with him; later, he was a defendant at the Nuremberg Trials, and though he was acquitted, the damage was done to his reputation for future generations.

Gaidar died long before Putin’s attack on Ukraine. But the memory of his outstanding contributions has been erased by the stewards of his legacy.

Timid hints

A month and a half before the start of the war, in January 2022, the 13th Gaidar Forum, an annual meeting of Russia’s highest economic managers and biggest commercial magnates, headed by the prime minister, gathered in Moscow. It is no accident that the meeting is named after the father of systemic liberalism in Russia. “I am sure that the current meeting will proceed in a creative spirit, and the proposals of the participants will certainly be heard.” That was the greeting sent by President Vladimir Putin. Yet the participants did not dare to make proposals.

The coming invasion of Ukraine was already obvious to the entire top nomenklatura. Especially the former liberals in its ranks. Gathering for the last time before the war, they feigned ignorance and exchanged ritual recitations. Anatoly Chubais, Gaidar’s chief associate, told his colleagues that “the president, having set forth the goal of achieving decarbonization of the economy by 2060, has chosen the right path.” And that “in the new sectors of the economy, Russia has great prospects for becoming a world leader.”

What he and his colleagues were whispering to each other while looking around fearfully remained hidden. On the stage, however, they talked about “how to make generic drugs and biosimilars even more accessible in Russia.”

A few days later, Central Bank chief Elvira Nabiullina and Sberbank head German Gref were called to Putin’s residence at Novo-Ogaryovo to give a report on the impact of potential Western sanctions, according to the Financial Times.
"They did not even dare to ask what kind of aggression Putin – who had by that time established dictatorial power in the country – was planning."
They just handed him a report listing the problems that could arise from sanctions, timidly hinting at the undesirability of war. Citing sources, the Financial Times reported that they left the meeting without understanding what exactly Putin was planning and whether he would take their opinion into account. According to numerous fragmentary reports, they were notified of the upcoming invasion only one day before it began, and even then in very general terms. Still, this did not prevent them from quickly overcoming the shock and proving themselves to be zealous deputies of Putin.

Only two of the key systemic liberals – who were not even in top positions any longer – nevertheless sidestepped working for the war. Still, they did not dare to condemn it. Four weeks after the start of the war, Anatoly Chubais posted on Facebook five carefully thought out phrases. A careful eye can detect a hint of cautious disapproval of what was happening. “Yegor Gaidar would have turned 66 today… In our discussions about the future of Russia, I did not always agree with him. But it seems that Gaidar understood the strategic risks better than I did…”

And that was all that the man who presented himself in the 1990s as the arbiter of Russia’s fate could tell the world in 2022. At the same time, he obtained Putin’s permission to resign from the secondary post that he held and to leave Russia.

Another prominent systemic liberal, Alexei Kudrin, a former deputy prime minister and finance minister (2000-11), in 2022 left public service to go to Yandex (see Nikolai Petrov’s piece on this in RP), which is close to the Russian authorities. He avoided making any thoughtful comments about the war both before his flight and after.

Unlike Chubais and Kudrin, who at least refused to help the regime, Vladimir Mau, another liberal star of the 1990s, provided such help, at least verbally.

Mau was a friend of, and starting in 1992, an official adviser to Gaidar. He was the long-lasting rector of the Russian Presidential Academy of National Economy and Public Administration (RANEPA) for two decades (2002-2022). According to colleagues, he always maintained liberal views and stood out for his readiness to lend support to anything progressive. However, in March 2022, Mau signed an open letter from Russian rectors in support of the war, while in October he spoke in the Duma and proposed “developing a scenario for internal mobilization, specifically economic mobilization.” Seemingly remembering his participation in the liberal reforms of the 1990s, Mau added that “such a model does not contradict the market and does not mean a transition to Soviet management practices.” Have compounded his ethical meltdown with an ideological one, Mau left Russia, and one can hardly expect him to go back anytime soon.

Should we be surprised at what has happened to Russian systemic liberalism?

A rational decision

In a recently published investigation, The Project ironically called Gref, the head of Russia’s largest state bank, “Russia’s most liberal kleptocrat.”

At the beginning of the 2020s, Gref was one of the most successful Russian systemic liberals. Under his flamboyant leadership, the ossified Soviet sberkassas became a well-run financial empire. And in the early 2000s, while working in the government, Gref helped launch the early-Putin-era liberal economic reforms. “Many expected Gref and others like him to disagree with the Kremlin’s decision to wage war on Ukraine, but they did not,” writes The Project.

The explanation, according to the investigation, can be found in the vividly painted picture of Gref’s everyday routine and entertainment, which testify to his deep immersion in system-wide corruption and the fact that he leads the life of a billionaire without technically being one.

Without exception, everyone who wants to make a serious career in the Putin system must take part in corruption. Refusing a lavish lifestyle befitting a dignitary is not actually a matter of choice for Gref and would be seen as a challenge to the system. Meanwhile, the risk of being persecuted for such excesses is also rather systemic.

For example, in the summer of 2022, Mau was charged with embezzling funds as part of an outrageous clan feud known as the Rakova Case. He barely managed to avoid criminal prosecution, having been subjected to searches and house arrest. The regime is built in such a way that it does not allow nobles to leave it when they want. Definitely not to dissociate themselves from it. There is a mafia principle of “one ruble to enter and two rubles to exit.”

Top systemic liberals also understand that a break with the regime means the definite end of their professional and business careers in Russia, and that it would yield no political gain and could cost them their physical freedom. Meanwhile, in the West, they will not be accepted as important figures, while in their minds joining the suppressed Russian opposition means becoming outcasts.

The savviest systemic liberals understand the idea of responsibility well. Konstantin Sonin, a prominent Russian economist based in Chicago, claims to have been in contact for some time with Ksenia Yudaeva, a top financier and first deputy chair of the Central Bank. Sonin, who had known Yudaeva for many years, urged her to quit; Yudaeva replied that “many people in the Central Bank are intrigued by Hjalmar Schacht;” she refused to break with the regime, however, citing her duty to the Russian economy and the need to protect the Central Bank from irresponsible and incompetent reactionaries.

In such situations, people will always justify themselves. However, what is important is that
"Systemic liberals, faced with a choice between the system and liberalism, have chosen the system, and in their minds it was an entirely rational decision."
Alexei Kudrin, a former deputy prime minister and finance minister(2000-2011). Source: Wiki Commons
The systemic liberals who condemned the first Russian campaign against Ukraine in 2014 had fallen out from the system long before that. The most vibrant of them, Boris Nemtsov, once considered a possible successor to Boris Yeltsin, was assassinated in 2015. Leonid Gozman, another Gaidar friend and associate, was forced to leave Russia in the fall of 2022 after a series of arrests.

The current systemic liberals, of course, are not ready to repeat their fate. Therefore, their systematic and predictable behavior is less interesting than the fact that Russian intellectuals expected something different from them.

An old legend

From the very beginning, the phenomenon of systemic liberalism existed not so much in reality as in the minds of the Russian intelligentsia.

In 1991, when Gaidar and his friends were at the head of the government, the Russian intelligentsia was shocked by the fact that the levers of power wound up in the hands of “stylistically similar” people. Such people had not been included in the highest administrative rungs for many decades. Thus, Russian systemic liberalism from the very beginning was seen by intellectuals as something much more than just a variation of the system, which it actually was. Later, as the popularity of the reformers declined, their supporters – through the literary prism of looking at the world that is inherent to intellectuals – began to see them as romantic heroes driven out by an unreasonable mob.

This legend made it difficult to see the diversity across the first wave of managers, along with their rapid stratification and the subordination of most of them to the corrupt and clan practices of the Russian elites. The same myth led the reformers themselves to stylize their behavior to fit the plot. Gaidar and Chubais – the former reluctantly and the latter eagerly – began to present themselves as demiurges of the new Russia, responsible for the key governmental decisions of those years, including those with which they had nothing to do.

The result was that in the second half of the 1990s, Chubais gradually came to be seen as the shadow leader of the country and the reformers (by this time, contrary to the chronology, they began to be called the “young reformers”) as the secret makers of all key governmental decisions.

Over time, most of the first-wave systemic liberals disappeared into the mass of the Russian bureaucracy. The idealistic minority in the country felt deceived by history.

This was a tragedy for Gaidar, a selfless and romantic-minded technocrat who, having fulfilled his mission in the early 1990s, unsuccessfully tried to become a politician. It was a tragicomedy in the case of Chubais, a long-term contender for the leadership who was never able to independently find his way politically and, with his talents and inclinations, never became anything more than a skillful implementer of policy.

Trying to adapt to the mutating system, as early as the autumn of 1999, during the Second Chechen War, Chubais was delivering incantations indistinguishable from the rhetoric of state propagandists in 2022: “The Russian army is being resurrected in Chechnya, and any politician who does not think so cannot be considered a Russian politician. In that case, there is only one term for him – traitor…” And then: “There is a label ‘Chubais is pro-Western,’ but why should I make my actions fit that label?... Putin gave the army the opportunity to do its job... In Chechnya, the army is doing what is supported by the people... Vladimir Vladimirovich, in my view, perceives the Chechen problem as an absolutely personal mission... He is himself offended that they attacked Russia...”

It would seem that the phenomenon of systemic liberalism should have ended there, seeing that it had been publicly buried by its then-leader. However, it was revived and flourished at the beginning and from the middle of the 2010s, after the first invasion of Ukraine – right when the monstrosity of the regime became obvious. It was then that the term “syslib” became widely used, pushing aside other, older names.

The reason for the revival was the understandable but unfulfilled hopes of the intelligentsia that “sensing the ever-growing threat of losing power and capital, the current elite will be forced to look for someone to whom to transfer power on the guarantee that there will be no personal persecution. A compromise figure may emerge at this moment from among the systemic liberals who remain in and cooperate with power.” The people at the top who then looked sane – for example, Alexei Kudrin – would become the country’s saviors.

But they only managed to save themselves. The system and Putin needed them to be obedient soldiers, not political intermediaries. One of the longest lasting, soulful legends of the Russian intelligentsia, that of the “syslibs,” has elapsed.
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