Nothing to Celebrate
When Bush meets Putin this week, he'll have to take a closer look,
and plumb the darker depths of Putin's soul.

By Frank Brown

Feb. 28 issue - An odder couple used to be hard to imagine. The term "politician" described Vladimir Putin the way "career KGB man" applied to George Bush. Not at all, that is. Still, the two presidents somehow managed to hit it off from the start. "I looked the man in the eye," Bush said after their first summit, in June 2001. "I was able to get a sense of his soul—a man deeply committed to his country." This week the two leaders will meet again, in the Slovakian capital of Bratislava. But the view into Putin's soul will be a lot murkier.

Putin has lost faith in nearly everyone around him. His circle of advisers has narrowed to two tiny groups, each numbering about six members—three of them belonging to both. One group gathers on Mondays to weigh economic and social policy, and on Saturdays the other discusses national security. On big decisions, especially matters of foreign policy and top-level appointments, even those insiders are regularly shut out. Hardly anyone dares to contradict him. Everyone saw what happened to Andrei Illarionov in late December when he objected to Putin's decision to appoint rather than elect provincial governors. "Competition in politics is just as important as competition in the economy," Illarionov told a packed press conference. "Limiting competition—in all aspects of life—leads to one thing: stagnation." Less than a week later he was replaced as Russia's G8 representative.

The inner circle is split into two feuding factions: the siloviki ("powerful ones") and the "liberals." The siloviki are a tight-knit band of mostly military and KGB veterans. The liberals believe more in Western-style market reforms, yet also favor tight political controls. They include the likes of Vladislav Surkov, a reputed leader in efforts to fix the Constitution so Putin can rule the country indefinitely. At first the idea was to hold a national referendum to shift the balance of power from the president to the prime minister, a position that would exempt Putin from term limits. A team of lawyers in St. Petersburg was assigned to draft a resolution. But now the Kremlin views the plan as too risky. Instead the St. Petersburg team has been told to find a way to do it without a referendum.

Both factions believe that democracy is hard to control and potentially dangerous. Case in point: as of Jan. 1, Putin's rubber-stamp legislature scrapped the country's Soviet-era subsidy system for pensioners and military personnel. Street protests erupted in nearly 100 cities over the loss of basics like free public transportation. The Kremlin quickly allocated more than $4 billion to placate the pensioners, but the upheaval continues. The Duma's approval rating plunged to 3 percent, and the president's own popularity has sunk from 65 percent a year ago to 43 percent now. Putin is a changed man, says one close adviser: "He's lost his decisiveness. It seems like he's in a quiet panic."

Putin's world began falling apart last September when Chechen terrorists stormed a grade school in southern Russia, and a botched rescue left more than 300 hostages dead. The sense of embattlement grew worse in December, when Viktor Yushchenko swept to victory in Ukraine's presidential election, despite massive vote fraud and all the support Putin could muster for his opponent. The siloviki blamed Washington, but other observers pinned the fault on Putin's own advisers. "It's ludicrous to think of this as an American plot—we're not that good," says a senior administration official. "Nothing could be as devastating as what they've done to themselves."

Will Bush speak so bluntly when he meets Putin on Thursday? Not likely. The two leaders have a long list of urgent issues to discuss, including Iran's nuclear ambitions, the former East Bloc states' rush into Europe and the future of the Central Asian republics. The situation is delicate, senior American officials say. Putin needs to be coaxed out of his shell—gently.

With Andrew Nagorski, Richard Wolffe and Eve Conant in Washington

© 2005 Newsweek, Inc.