Facing Putin in Bratislava

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MOSCOW -- President Bush's summit with Vladimir Putin in Bratislava Thursday Feb. 24 will be the most difficult meeting two men ever had. A year after Mr. Putin handily won a second presidential term, his domestic and foreign challenges are snowballing, and his aura of an almost-superhuman invincibility is quickly dissipating. This is not to say Mr. Putin should be looked down upon or counted out: He is still in control.

Meetings with key Russian officials in Moscow reveal that the Putin administration faces a crisis of confidence. Russian Prime Minister Mikhail Fradkov's Cabinet survived a Duma no-confidence vote Feb. 9. But the real target of the abuse heaped on the prime minister by the nationalist and leftist opposition parties, which are artifacts of power elites, was never in doubt: Mr. Putin himself.

Moscow politicians are uneasy with the country's perceived lack of domestic and foreign policy direction. Consequently, a 2008 transition to a successor hand-picked by Mr. Putin is no longer a given. Neither is passage of constitutional-legislative changes to guarantee Mr. Putin's continued rule as prime minister after two presidential terms -- with enhanced powers, such as control of defense, the security service and the legal system.

Russia's political malaise has set in despite high oil prices and a robust growth of around 7 percent in the gross domestic product. Still, a 20 percent drop in Mr. Putin's popular support leaves one to speculate how quickly the situation could deteriorate if oil prices tumbled.

The stagnation and uncertainty manifest themselves in many areas, including failure to attain economic growth to realize Mr. Putin's goal of doubling the GDP by 2010. Elites perceive this as failure to achieve an important national target. Deteriorating investor confidence quadrupled capital flight last year.

The state power is monopolized by a small group of Putin loyalists, primarily from the St. Petersburg security services and mayor's office. This group has overtaken state-owned companies, the justice system and courts, and even private businesses. If Mr. Putin's group perceives him as too weak, it may try to remove him. However, this total control raises stakes for an anti-Putin coalition in the future, and increases the incentive to dilute or terminate St. Petersburg group's power -- by the ballot box, or other means if necessary.

There is a widespread perception in Moscow that the current Prime Minister Fradkov and his Cabinet failed. Most recently, the Cabinet bungled social welfare reform that was supposed to replace in-kind benefits for the elderly with monetary payments.

Inadequate planning and poor execution led to the largest street demonstrations since Mr. Putin came to power in 1999.

The forthcoming reform of subsidized housing and utilities could further damage the regime's prestige. Mr. Putin's attempts to appease the protesters by paying off officers, military retirees and students, while boosting FSB and military budgets, have created an image of weakness and indecision.

Protectionism and economic nationalism are rampant. Recently, the minister of natural resources announced that "non-Russian resident companies" will be denied access to Russian natural resources, such as oil, gold and other minerals. This approach will allow Russian companies with dubious connections to the Ministry or the Kremlin to successfully bid for lucrative licenses while foreigners are excluded.