There is an increasing flow of articles that openly discuss the potential for unrest in Russia, and the government’s likely response to it. From Eurasia Daily Monitor:
Vladimir Putin’s government will, understandably, behave very cautiously when it comes to raising gas and electric bills so as not to provoke mass discontent which might threaten the government’s hold on power. It is entirely possible that the 2009 budget might not be able to cover projected social payments as a result of Gazprom’s projected shortfall. The choice between saving Gazprom, meeting the state’s social obligations, and clinging to power will be the bottom line.
Nonetheless, it is apparent that Putin’s ruling “United Russia” party and Putin himself are terrified of popular unrest. One proof of this is a recent change to the Russian criminal code, voted into law by the United Russia party and the Liberal Democratic Party on December 12. The change forbids a trial by jury not only in terrorist cases, hostage taking and the attempts to overthrow the government, but also for “mass disturbances,” “diversions,” “treason,” and “espionage” (Kommersant, December 15).
According to Kommersant Daily (December 15), Russian human rights activists and lawyers fear that these changes in the Criminal Code will make any critic of the regime potentially guilty of “espionage” or “treason” and therefore liable to a trial without jury, as was the practice during the Stalinist era when so-called “troika” tribunals passed sentence on defendants who were guilty until proven innocent.
It appears that the Putin/Medvedev duumvirate is facing the most severe challenge to its oligarchic rule. Will it manage to contain mass discontent in the countryside or will it resort to mass repression in order maintain its hold on power?
In November President Medvedev ordered senior police officials in St. Petersburg to stamp out any social unrest linked to the financial crisis. “If someone tries to exploit the consequences of the financial crisis â€¦ they [the police] should intervene [and] bring criminal charges, otherwise there won’t be order” (Moscow Times, December 12).
From the Christian Science Monitor:
The collapse of oil prices and the Russian ruble have ignited relatively small protests against the government here. But reaction from the Kremlin has been fast and furious.
Nationwide rallies planned for Sunday are expected to draw even larger crowds and will be the next major test of a Russian leadership increasingly anxious over dissent.
Leaders of the still-influential Communist Party, which is staging the upcoming rallies, say the Kremlin’s fears were on display during protests last weekend in Moscow and St. Petersburg, when thousands of riot troopers confronted a few hundred demonstrators from the Other Russia, a broad anti-Kremlin coalition, and arrested 150 of them.
“On its face it seems ridiculous to see thousands of cops beating up a handful of peaceful demonstrators; logic dictates that they ought to ignore us,” says Eduard Limonov, leader of the banned leftist National Bolshevik Party. “But the authorities fear opposition and … [as the economic crisis grows] they have good reason for that. They read the FSB [security police] reports and they know that we are very well organized and ready to lead in the case of mass social unrest.”
. . . .
In the 1990s, opposition parties dominated the Duma, and a more open, robust media existed. Experts warn that the concentration of power in the Kremlin under Vladimir Putin, and the near monopoly held by the United Russia Party, which Mr. Putin leads, leaves few outlets for dissent and no alternative avenues for spreading responsibility in the event of economic failure.
“The authorities argue that social stability has been the great achievement of the Putin era, and they are very much afraid of losing this image,” says Vladimir Gimpelson, a professor at Moscow’s Higher School of Economics. “The political system has become too rigid, and if unrest begins, there is a danger it can be completely broken.”
Prof. Gimpelson’s point about the rigidity of the Russian system echoes my arguments about the brittleness of the “power vertical.”
Prime Minister Vladimir Putin warned Russia’s foes on Friday against trying to destabilize a country facing broadening economic crisis, Russian news agencies reported.
Putin did not specify who might pose a threat to Russia’s stability. But in the past, he has often blamed Western security services of trying to destabilize the country using opposition groups and non-governmental organizations as their instruments.
“Any attempts to weaken or destabilize Russia, harm the interests of the country will be toughly suppressed,” they quoted ex-KGB spy Putin as telling an annual meeting of top spies and security officers ahead of their professional holiday.
Putin was speaking ahead of “The Day of Security Officers” which “is marked annually on December 20, a day when in 1917 Bolshevik rulers created the CheKa secret police to suppress their foes.” Tell me again what countries have holidays commemorating secret policemen to be held on the anniversary of the formation of an organization that committed mass murder and terror for seven decades.
From the WSJ:
The Kremlin has tried in state media to downplay the impact of the global financial crisis. Yet popular discontent is growing.
Last weekend, thousands of angry residents in the far eastern city of Vladivostok took to the streets and blocked traffic to protest government plans to raise tariffs on secondhand foreign cars, which are one of the impoverished region’s biggest moneymakers. Similar protests have been attempted in Moscow, St. Petersburg and Kaliningrad, and further demonstrations are planned for Sunday in Vladivostok.
Public anger also spilled onto the streets this fall in the Siberian town of Barnaul, as thousands of pensioners who had lost their right to discounted public-transport tickets staged noisy protests.
The government’s response says a lot about the Kremlin’s growing angst over the financial crisis. After several tense days, the pensioners got their discount tickets back, police detained younger protesters who had joined the demonstrations, and state media made little mention of the events.
The prospect of further unrest poses what could be the biggest challenge yet to the authoritarian system built by Mr. Putin. It also foists a stark choice on the Kremlin: to stifle dissent, or to placate protesters to provide some kind of pressure outlet. For now, the Kremlin has decided on a mixture of both. But the government’s options may narrow as its financial reserves shrink.
“They’re incredibly scared of this,” says Yevgeny Gontmakher, an economic adviser to the Kremlin. “They don’t know how to operate in this environment.”
. . . .
This fall, Barnaul, an ailing Siberian industrial hub some 2,000 miles south of Moscow and one of the last regions to benefit from the oil boom, became one of the first to feel the crisis.
As the credit crunch poisoned Russia’s economy, supply chains broke down on a lack of cash and trust, and orders dried up at the town’s factories, which churn out diesel engines, heavy machinery and tires.
Three months ago, workers say, several factories sent workers home on reduced salaries until better times. Government data show over 1,000 workers in the region are in the process of being laid off; opposition lawmakers say hundreds more layoffs are likely.
In late October, when authorities revoked subsidized transport tickets for more than 200,000 pensioners in Barnaul, they gave no warning or explanation. When the pensioners — among the poorest groups in Russian society — learned the tickets were being axed, they panicked.
On Oct. 26, about 1,500 gathered in front of the regional government building to protest, according to people who attended. The pensioners blocked the town’s main thoroughfare, Lenin Avenue, for three hours, and only dispersed after a local government official invited a few of the leaders inside for a chat, promising the tickets would be reinstated.
Still, protesters came back the next day. This time, they numbered only a few hundred but demanded the resignation of the local Kremlin-appointed governor, Alexander Karlin.
In a third protest, a crowd of 2,000 again blocked Lenin Avenue as regional lawmakers debated the decision to do away with the discount. Some demonstrators tried to storm the government building, but police lines held. The governor tried to calm the crowd, but was forced to retreat.
Eventually, the government decided pensioners could keep their discounted transport tickets, while a new system allowing them to choose between cash payments and free transport passes is introduced.
. . . .
But political opponents believe remote regions and towns like Barnaul are the Kremlin’s Achilles’ heel. “They can only control what’s within the Moscow ring road,” says Vitaly Boldakov, a left-wing activist in Barnaul. “But beyond that road, their control collapses.”
Boldakov’s point about the center’s tenuous control over the regions is well taken. Several governors are already asserting their independence in small ways. Others are voicing their fears to the central government.
With domestic and foreign companies curtailing car production in Russia and warning of potential layoffs, the Kremlin is increasingly worried about the fate of car manufacturing and its related industries, which altogether employ more than 1.5 million workers.
Putin called for setting up a national leasing company to buy locally made cars and for compensating the state rail monopoly for transporting Russian cars thousands of miles to distant regions in the far East.
He made a show of moral support for truck giant Kamaz Friday, visiting its plant in the central Tatarstan region Friday.
“Now that our producers are forced to slash production, I think it is absolutely unacceptable to spend money on acquiring foreign cars,” he said, according to a transcript posted on the government’s Web site, referring only to foreign imported cars, not foreign cars manufactured in Russia.
Putin said foreign manufacturers operating in Russia might also be eligible for state support if they meet “production localization requirements.”
While few government bureaucrats drive Russian-built Volga sedans, Putin himself is chauffeured around in a black Mercedes limousine.
The government had earlier announced it would raise tariffs on imported cars, including used cars.
That issue has sparked a grass-roots uproar in many regions, where importing and using used cars is big business, such as the far Eastern regions of Primorye and Khabarovsk, where the cars are almost entirely imported from Japan.
Last weekend disgruntled motorists in Primorye’s capital city, Vladivostok, staged a large protest against the higher tariffs, which come into effect in January.
That demonstration â€” and others planned for this weekend in more than 40 cities â€” are the largest show of public dissent in some time in Russia, where vocal opposition to the Kremlin has been all but silenced.
Putin tried to address some of those concerns during his visit to the Kamaz factory.
“I regularly visit the Far East, meet with people there, and I think they have reasons for their concern. Many people asked me: ‘Why should we buy Russian cars at prices that are two or three times higher than in European Russia?'” Putin said.
As the economy sputters, Russia’s car industry has floundered as people hoard their cash, banks stop offering credit and demand for big-ticket items plummets.
Major Russian car and truck makers have announced production shutdowns and have appealed for a government bailout. Foreign carmakers Renault and Ford have announced a temporary suspension of production at their Russian plants.
Russia was expected to emerge as Europe’s largest car market next year, but sales of foreign brands fell 15 percent in November year-on-year, the first decline in at least four years, according to figures produced by the Association of European Businesses. These included cars not made in Russia.
Russia is heading into its toughest economic period in a decade as oil prices tumble and falling demand for metals, cars and other goods has resulted in thousands of job losses and production cuts.
The uproar over import tariffs could be the tip of the iceberg, as civil unrest pops up in other regions. Migrant workers recently protested wage arrears in the Urals city of Yekaterinburg. In the Siberian town of Barnaul, pensioners took to the streets to protest the withdrawal of discounted fares on public transport.
Putin also announced a plan to subsidize car loans for domestic economy brands. This, plus the transport subsidies, place more strain on an already stretched budget.
Finally, from Vladimir Frolov in RP:
There appears little the government can do now to fight the recession other than to devalue the ruble sharply, perhaps, by as much as 30 percent, in one drastic move to promote import substitution and prevent the depletion of currency reserves. This move, however, poses serious risks of social and political instability, and will obviously undercut Vladimir Putin and Dmitry Medvedev’s popularity. The Kremlin, aware of brewing unrest, has instituted a sweeping system of social monitoring and rapid reaction that involves all levels of political power and even the United Russia party.
Ethan Burger adds:
Attempts to control the flow of information to the citizenry only make it more anxious. At some point, a government’s lack of credibility will come back to haunt it. There is more to fear than fear itself. In the absence of information, people are clueless as to what they should do as workers, savers, investors and consumers
I could go on, but I think the point is pretty clear. Discontent is rising, albeit slowly, and the authorities are very, very nervous. What is remarkable is that the full economic impact of the crisis has not been felt. The layoffs are just beginning. The prices of real estate are just beginning to fall:
lMoscow residential property prices fell 2.3 percent to $5,972 a square meter in November. By December 15, prices had dropped another 6.9 percent to $5,558 a square meter, according to data compiled by Bloomberg.
Analysts from UniCredit suggests that prices will fall 25 to 50 percent, and Goldman Sachs is predicting a 32 percent fall in dollar terms.
Absent a rapid rebound in the price of oil–not something that appears to be likely in the near term–the situation will only worsen. The price of oil depends on what happens in the US and Europe, and the picture here/there is still grim, with no immediate prospect for a turnaround. That means no immediate prospect for a turnaround in Russia. I remain very pessimistic as to how a brittle political system that has not dealt honestly with the citizenry will withstand a prolonged economic trial.