Russia's new president

The name's Dmitry

This weekend Dmitry Medvedev will be elected as Russia's new president. Who is he?

THREE years into his presidency, Vladimir Putin walked across Red Square to join the crowd for Paul McCartney's performance of “Back in the USSR”. The man expected to be his successor this weekend, Dmitry Medvedev, prefers Deep Purple. Three weeks ago the heavy-metal group was summoned to the Kremlin as a farewell present for Mr Medvedev from Gazprom, which he has chaired since 2000.

His taste for rock, his knowledge of English and his youth, plus the fact that he has never served in the Russian security services, have all earned Mr Medvedev the reputation of being a liberal. His rhetoric of the past few weeks has strengthened that image. “Freedom is better than non-freedom,” in Mr Medvedev's summary of his beliefs. Even more encouraging, he has said this applies to personal and economic freedoms as well as freedom of speech. A key component of the freedom is the rule of law, he said, which had been absent for much of Russian history. His talk was so liberal as to offend some nationalists.

His record is more mixed. A lawyer from St Petersburg, Mr Medvedev has been by Mr Putin's side for most of his professional life, even running his presidential campaign. In 2000, when Mr Putin became president, his protégé became his deputy chief of staff, and later a deputy prime minister. He was also entrusted with Gazprom, Russia's biggest and most important company. He helped to recover assets that had gone missing under previous management.

A report by two Kremlin critics, Boris Nemtsov and Vladimir Milov, finds that Gazprom has become neither more transparent nor more efficient under Mr Medvedev, even though its market value has risen dramatically. For example, control over Gazprom's multi-billion dollar insurance and (partially) pension funds passed to a private bank called Rossiya. Its largest shareholder is Yury Kovalchuk, supposedly a friend of Mr Putin's. “Rossiya: the country of opportunities,” its advert runs. (The pension fund also gained control of Gazprom's huge in-house bank.) Gazprom says these deals were about optimising the use of its assets. But they look opaque, at least.

According to a former official, Mr Medvedev was also the brains behind a complex legal scheme to allow a state-owned oil company, Rosneft, which took over most of the assets of Yukos, to keep the proceeds from its initial public offering rather than pass them to the state. But Mr Medvedev has always followed the letter of the law. According to one foreign banker, when an American court imposed an injunction on the sale of Yukos's assets, it was Mr Medvedev who pulled Gazprom out of a blatantly fixed auction.

Mr Medvedev's other task as deputy prime minister was to oversee spending on national projects such as health and education. Given the lack of reform in both areas, he has made little difference to the quality of either.

But it would be wrong to blame Mr Medvedev for the failing of the national projects or for the inefficiency and opacity of Gazprom. Over the past eight years, the key decisions for both Russia and Gazprom were made by Mr Putin, who has had unprecedented powers, even by Soviet standards. The big problem for Mr Medvedev is that Mr Putin may continue to make decisions after he steps down as Russia's president and becomes Mr Medvedev's prime minister.

As Mr Putin puts it, Mr Medvedev will “implement” or “complement” the strategy that he, Mr Putin, has set for Russia. The job of prime minister, he says, will give him plenty of power: he will not hang the next president's picture on his wall. Mr Putin recently criticised many of Russia's shortcomings, including corruption, inefficiency of the state's management and dependence on natural resources. “A rare leader would admit the failure of his rule while still in power. But there has never been a leader who, having done so, would then claim to stay in power,” argued Lilia Shevtsova of the Carnegie Moscow Centre in Novaya Gazeta. Many fear the system Mr Putin has designed is highly unstable.

Despite portraits all over Russia showing Mr Putin and Mr Medvedev walking side by side (Mr Putin slightly ahead in his leather jacket), there is a dissonance in their rhetoric. After the past few years of Mr Putin's truculent talk, Mr Medvedev's liberal language may come as a relief. There is hope, if not expectation, among parts of Russia's elite and around the world, that his arrival in the Kremlin will herald a thaw. At least, Ms Shevtsova argues, it could consolidate some of Mr Putin's moderate opponents around Mr Medvedev. But Kremlin infighting, already visible, may widen.

In a new report for the European Council on Foreign Relations, Andrew Wilson of University College London concludes that at first the system will have more control over Mr Medvedev than he will have over the system. After that, who knows? The result of this weekend's election may be certain, but its outcome is not. As one weathered tycoon puts it, despite Mr Putin's wish to keep the status quo, Russia will be a different place in a year's time.

The comandante's last move

Fidel Castro has stepped down as president. But the changes that Cubans yearn for will be slow and stealthy while he remains alive.

HALFWAY along Calle Obispo, a long street that links the restored colonial splendours of Old Havana to the crumbling tenements of the 19th-century city, a large red placard shouts its defiance in lime-green lettering in an arresting mixture of Spanish and English. "No hay tregua, compay! You understand: No Truce. Sr Bush: este pueblo no puede ser engañado ni comprado." ("Mr Bush: this people cannot be deceived nor bought.")

The placard advertises the museum of the Committees for the Defence of the Revolution (CDRs), the neighbourhood groups set up by Fidel Castro in 1960 to be the grass roots of his revolution, to organise services but also to inform the newly installed Communist-run state of dissent or subversion. The museum contains glass cases of revolutionary memorabilia. On the walls are blown-up extracts from Mr Castro's speeches, and a chart showing the growth of membership in the CDRs, which in 2007 reached 8.4m of Cuba's 11m people. The highlight, on the first floor, is a scale model in plaster of a typical Cuban street, the houses fronted with the Greek-revival columns that past sugar wealth bequeathed, the façades painted in turn in shocking pink, lime green, toothpaste blue, peach and lemon.

It is a remarkable exhibit of revolutionary kitsch. The museum is new, inaugurated on September 28th 2007. Yet on a recent Saturday afternoon it was empty; not one person among the throngs of Cubans and tourists strolling down Calle Obispo felt inspired to cross its threshold. With the mixture of friendly warmth and necessary opportunism that characterises Cubans nowadays, one of the bored women attendants was soon asking your correspondent's wife if she could spare a packet of antacids ("medicines are very scarce").

Mr Castro, ailing and aged 81, this week announced his retirement from the posts of Cuba's president and its "commander in chief". But his revolution has long since become a shell, a work of theatre in which the old trouper rants on even as many in the bored audience desperately want to slip away—if only they could. As the curtain comes down on Mr Castro's 49 years of rule, change is inevitable. But of what kind and at what pace is far less clear.

It was ill-health and impending mortality, not any sense of failure or repudiation, that obliged Mr Castro to issue his statement that he would not seek to retain his posts. In July 2006, facing abdominal surgery, he turned over his powers to his brother, Raúl Castro. Since then he has not appeared in public. Photographs suggest that while he has been convalescing he remains extremely frail. In November he allowed his name to go forward as a candidate for the National Assembly. But this week he said: "it would be a betrayal of my conscience to accept a responsibility requiring more mobility and dedication than I am physically able to offer."

On February 24th the new assembly is due to meet to unveil the Council of State, and thus Cuba's president and its other top officials. The council's members will be picked by the Castro brothers and a handful of senior advisers. Most Cuba-watchers expect Raúl Castro to be confirmed as the new president. Since Raúl is himself aged 76, a bolder move would be to hand the top job to Carlos Lage, a 56-year-old doctor who is the number three in the hierarchy.

Cuban officials see it as a triumph of their revolution—and a defeat for the United States—that power is being transferred peacefully and in an orderly manner within the regime. Once again, they have confounded those outside Cuba who have so often predicted the revolution's demise. Yet the country that Fidel Castro is bequeathing to his successors is discontented and all but bankrupt. The undoubted costs imposed by the American economic embargo pale beside self-inflicted problems.

When the Soviet Union collapsed, Cuba lost the patron, protector and paymaster that had allowed Mr Castro's Communist regime to survive the United States' embargo and its persistent efforts to kill or topple him. Cuba's economy shrank by around 35% between 1989 and 1993. Many outsiders expected Mr Castro swiftly to go the way of the Berlin Wall.

He responded by declaring a "Special Period" involving a mixture of drastic austerity and pragmatic economic reform. His government encouraged mass tourism and foreign investment, mainly in hotels, nickel mines, telecoms and oil exploration. It allowed farmers markets, to supplement the meagre official rations, and, for the first time since the 1960s, licensed family businesses such as restaurants (known as paladares) or plumbers and electricians. It also legalised the use of the dollar, tapping a new source of hard currency in the form of remittances from the million or more Cuban-Americans. State companies were given more freedom to run themselves.

Chávez replaces the Soviet Union

These measures, implemented by Mr Lage and a group of reformist economists, stabilised the economy and saw a modest return to growth. But they brought rising inequality to Cuban society, and undermined party control. In 1996 Mr Castro halted the reforms. Finally, in 2004 he declared the Special Period over and rolled back some of the changes. The dollar was replaced by the "convertible peso" commonly known as a CUC and now valued at $1.08. The welcome for foreign investment became more selective; many small businesses had their licences withdrawn.

Along with counter-reform came a political crackdown. The few dissidents on the island, supported by the United States but infiltrated by the Cuban security services, pose no threat to Mr Castro. Not so the Varela Project, a push for constitutional change led by Oswaldo Payá, a Christian democrat. The project gathered 11,000 signatures for a petition handed in to the National Assembly urging changes to the 1976 constitution to allow free elections and civil and political rights. Unlike the dissidents, Mr Payá opposes the American economic embargo and refuses help from American diplomats.

Mr Castro reached for his sledgehammer. He organised a referendum to approve a constitutional change declaring socialism "irrevocable". And in March 2003, while the world was distracted by the American invasion of Iraq, the government arrested 75 opponents, most associated with the Varela Project, and in summary trials sentenced them to long prison terms. When coincidentally three Cubans hijacked a ferry in a desperate attempt to get to Florida, they were executed.

Cuba's shuffle towards the market was far more timid than the bold steps taken by China or Vietnam. Mr Castro felt able to retreat from it because new allies appeared. Venezuela's Hugo Chávez has gone some way towards replacing Cuba's lost Soviet sponsor. Under a web of barter deals, up to 20,000 Cuban doctors, sports trainers and security specialists work in Venezuela; in return Mr Chávez has provided the island with 92,000 barrels per day of oil, and with other aid worth some $800m in 2006 and $1.5 billion in 2007, according to a recent book by Germán Sánchez, Cuba's ambassador in Caracas.

With Naomi Campbell, a British fashion model, in tow Mr Chávez turned up in November to inaugurate a mothballed Soviet-era oil refinery near the southern city of Cienfuegos, completed with Venezuelan money. He also paid for 100 three-room houses for the refinery workers, and has offered aid to restart defunct industrial plants, such as a rusting fertiliser factory near the refinery.

Venezuelan aid has boosted economic growth (see chart 1). It has also allowed the government to overhaul the electricity system (as well as replacing 52m incandescent light bulbs with energy-saving ones). A few years ago, power cuts were frequent and lengthy; now they are rare. Along with Venezuelan aid has come Chinese credit. Cuba is gradually augmenting its fleet of thirsty Soviet buses and trucks with new, more fuel-efficient Chinese models.

Mr Chávez may still believe in Mr Castro's revolution, but talk to ordinary Cubans and grievances well up. Top of the list comes low wages and high prices. Salaries typically range from 400 (non-convertible) Cuban pesos a month for a factory worker to some 700 for a doctor. But that amounts to only 16-28 CUCs ($17-30) at the unofficial (but legal) exchange rate. Pesos are good mainly for buying the subsidised official rations, handed out through the CDRs. Each month these comprise 5lbs (2¼ kilos) of rice per person, half a litre of cooking oil and, when available, beans, sugar, sardines, pork, chicken, soap and toothpaste. This lasts only a week or so.

Other things can be bought nowadays in Cuba—but at a price. At the bustling Cuatro Caminos market hall near Havana's main railway station, onions cost 5 ordinary Cuban pesos each, a pound of beans costs 10 pesos and a similar quantity of chicken and bacon go for 23 pesos.

To make ends meet, Cubans are forced to rely on a vast informal economy. It is greased by remittances from abroad, which are estimated at between $500m and $1 billion a year. "Everyone has their business on the side," says a transport inspector in Aguada de Pasajeros, a dusty farming town of small one-storey houses that would not look out of place in the poorer countries of Central America.

These sidelines range from market gardens to shoemending, or to running a taxi service using the horses and carts that are ubiquitous in places like Aguada. Rodrigo, an engineer in a small town in central Cuba surrounded by cane fields, says there is no point in practising his profession for a pittance. Instead, he deals in second-hand clothes, and raises chickens and pigs. He dives into the bedroom in his two-bedroom house and shows off an attaché case full of euros and CUCs. In any other country, he would be a successful businessman. He and his partner, a psychologist, are desperate to leave Cuba.

Since the informal economy is officially illegal, it is wrapped around by harassment, bribes and bureaucracy—what Cubans call the "internal embargo". It also breeds absenteeism, cynicism and ingenuity. These are eroding the little that remains of revolutionary morale. In Cienfuegos, when your correspondent went to the official exchange house, he was ushered into a shop next door by a muscular young man in dark glasses who offered to swap euros for CUCs. "It's illegal, but there's no problem," he said. This transaction took place right opposite the local headquarters of the Communist Party. Rodrigo says his dissident sympathies are well known in his town, but he is not denounced by the president of his local CDR because he sells clothes to the man's wife. Use of the internet is restricted, but government workers rent out night-time access.

The informal economy is one way in which Cuba is becoming more like the rest of Latin America. Another is growing inequality. Jobs in tourism or at foreign companies are coveted, as giving access to tips or bonuses. But only around two-thirds of Cubans have access to hard currency from one source or another. There is no malnutrition but poverty is palpable: at night, at a tourist restaurant in Cienfuegos, a chef hands a basket of food through a window to hungry relatives waiting outside.

Other grievances include the shortages of public transport and housing. On the outskirts of every town, would-be passengers wait for an hour or more for a ride. Alberto, a driver, tells of his frustration that after 30 years of work he must still lodge in the house of his sister.

Many Cubans still praise their free health and education services. But they add that these are of deteriorating quality. Schools have been hit by the loss of teachers to tourism jobs (and by a decision to halve class sizes to 15). Their replacements are ill-trained student teachers. Hospital buildings are dilapidated, while medicine and equipment are often in short supply. Next to the shabby maternity hospital in Havana stands a trim, freshly painted eye hospital—used mainly for Latin American patients flown in by Venezuela for cataract operations. This is a propaganda success for Mr Castro and Mr Chávez, but breeds resentment among Cubans.

Raúl and the renewal of reform

Since taking over the reins, Raúl Castro has given signs that he understands many of these frustrations. But Raúl is no liberal democrat. He is a lifelong Communist: he was in the Communist Youth when Fidel was still just a leftist nationalist. Immediately after the revolution, his brother charged him with forging a new army, which he has run ever since. It is the country's most efficient institution. Raúl differs in temperament from Fidel. He keeps regular hours, is a tidy administrator and is more at home in small gatherings than giving long public speeches. Where Fidel is an obsessive micro-manager, Raúl is a delegator. He is also more pragmatic.

Last July he launched an open debate on the shortcomings of Cuba's economy, saying that it needed "structural and conceptual changes". So far more has been said than done. But the government has quietly turned more state land over to family farming and paid off a debt to dairy farmers. It is also spending more money on transport—buying more Chinese buses—and on doing up hospitals. Provincial officials have been given more autonomy. The police inflict less harassment on the private taxi drivers who take tourists around in 1950s American cars. The government has decreed that workers in foreign companies must pay tax on their unofficial bonuses—a way of accepting that companies should be free to vary pay according to performance.

With Raúl installed in the presidency, change may accelerate—but only a bit. An economist involved in the reforms of the mid-1990s expects their resumption, but at a slower pace. "I think there will be a move towards greater decentralisation and the use of market mechanisms," he says. Foreign investment and small business will be encouraged again.

It is hard to discern clear factions within the regime. But there are powerful groups that benefit from the status quo. And some officials are seen as orthodox Marxists. Not all of these are elderly: they include Felipe Pérez Roque, the foreign minister, a protégé of Fidel. Even reformers worry that change will intensify inequality and create instability. Under Fidel Castro political logic has always trumped economic logic: three times since the 1960s he has reversed more pragmatic, decentralising policies and reimposed central control, as Carmelo Mesa-Lago and Jorge Pérez-López, two Cuban-American economists have pointed out.

Although he is retiring as president, Fidel Castro remains first secretary of the Communist Party. If a long-overdue party congress is held this year, that may be another harbinger of reform. But Fidel is still likely to exercise a veto power behind the scenes. He plans to continue writing regular newspaper columns. "I am not saying goodbye to you. I want only to fight on as a soldier of ideas," his statement said. Raúl is not going to do anything that might embarrass his brother, says a foreign academic in Havana.

Nevertheless, two things are now acting as motors of change. One is a realisation that Venezuelan aid may not last forever—especially following the defeat last December of a constitutional referendum that would have allowed Mr Chávez to stay in office indefinitely. Without his payments for Cuban doctors (classed as a service export), the balance of payments would be under unbearable strain (see chart 2). The island spent $1.6 billion on food imports last year, and imports much of its fuel. Having repeatedly defaulted on its foreign debt, its credit is restricted.

The second motor of change, recognises the economist, is "popular discontent". Whatever else Cubans might think of Fidel Castro, many respect and fear him as the man who led the revolution and successfully defied the United States. A successor regime cannot count on those advantages. Already there have been small signs of defiance. Officials explaining the decree taxing bonuses were greeted with jeers and complaints.

The revolution has lost the loyalty of young people. One youngster publicly questioned Ricardo Alarcón, the president of the National Assembly, as to why the recent election did not include candidates with different views. Parents of teenagers, having struggled through the Special Period, find it hard to offer their children any hope that things will improve.

Since Raúl Castro took charge, there have been several, small signs of political relaxation. Writers and artists seem to have carved out a small niche of autonomy. When former officials associated with the Stalinist cultural crackdown of the 1970s surfaced in a television programme, Raúl Castro publicly apologised for the excesses of that period. "The Lives of Others", a film about the Stasi secret police in Communist East Germany, received several packed screenings at the Havana Film Festival last year. (Havana wags quickly adapted its Spanish title La Vida de Los Otros to La Vida de Nosotros or "Our Lives".) One or two Cuban bloggers have survived without being molested.

The government announced in December that it would sign the United Nations covenants on human rights. And it has begun a formal dialogue about human rights with Spain, its main European trading partner. On February 15th, it freed four of the prisoners arrested in the 2003 crackdown. But human-rights groups say there are still more than 200 political prisoners in Cuban jails.

Grumbling about the economy, about corruption and bureaucracy is tolerated. Grumbling about politics is not. As Rodrigo says, his mother who lives in the United States can stand on a street corner and denounce Mr Bush but "if here we talk ill of Fidel we go to jail." Cuba remains a police state. Asked for their political opinions, most Cubans will respond by rolling their eyes. It may be true, as officials assert, that Cubans care about everyday issues and not about democracy. But nobody can be sure of that.