Putin Under Pressure?
Political and Business Implications of the Russian Parliamentary Elections
An Oxford Analytica Open Conference Call, Thursday December 8, 2011
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In the December 4 parliamentary elections, the United Russia party failed to gain a nationwide majority of the vote, suffering its worst election performance since 2003. It will maintain a narrow majority in the new Duma (lower house of parliament), but with far fewer seats than in the last two parliaments, where it could count on constitutional majorities of more than two-thirds. The party’s poor performance was expected, but no less unwelcome in the Kremlin, as Prime Minister Vladimir Putin positions himself to secure re-election as president in March.
United Russia’s future is under scrutiny as it negotiates with opposition parties over key posts in the next Duma. Another round of elite turnover and policy changes is in prospect, exacerbating investors’ risk perceptions against the background of huge capital flight from the country.
Significance of parliamentary elections
The elections confirmed that the authorities are losing popular support. This will not affect Putin’s prospects for the presidential election in March, but will force the elites to rethink their governance strategy. Which direction they choose will become an important theme in Russian politics in the upcoming elections and beyond. Three possible scenarios are:
- a return to ‘managed democracy’, which is the most likely outcome;
- a democratic scenario where authorities engage with the systemic opposition – though this seems unlikely, as Putin did not favour coalition politics during his first two presidential terms; or
- a return to full-scale authoritarian control and the use of populist measures to galvanise voters.
The third scenario is especially high risk, as it relies on large outlays of budgetary resources and so is susceptible to external financial shocks. Such a course of action would also alienate figures in the political establishment who are keen to introduce welfare reforms. While a return to managed democracy is the most likely, it may not be as effective as the first time around.
The tandem of Putin and Dmitry Medvedev did not yield the problems of sustainability or conflict that were expected by some in the West, but it did diminish the image of a singular source of authority within the elite and among the population.
Run-up to March presidential election
Putin will therefore aim to recreate a stronger and more populist presidency, which will in the short term focus on fixing particular constituencies’ complaints. Commissions and committees set up in the regions had 700,000 petitions submitted, with one-quarter of requests met, a figure Putin has hailed as a sign of successful governance. He approves of this very traditional, tsarist-like approach to public complaints.
This selective response to parochial problems also demonstrates Putin’s preference for paternalism, an approach that goes down well with most voters – yet Putin will also be willing to manage a constellation of elite interests, which can be adapted in light of public opinion.
Whither Medvedev?
Medvedev is likely to stay on as prime minister, but his authority and political credibility have been damaged by United Russia’s poor performance; former Finance Minister Aleksei Kudrin is waiting in the wings as a possible (though currently unlikely) replacement. Regardless of Medvedev’s personal political prospects, at least part of his modernisation agenda will continue, with momentum already gathering to improve transport and other infrastructure in advance of the 2014 Sochi Winter Olympic Games and 2018 World Cup.
In terms of Medvedev’s role, if he stays on as prime minister, he will have to become more of a political manager with the new, more pluralist Duma, something with which he has not been particularly comfortable in the past.
Foreign policy implications
There has been an attempt to divert pre-election problems to externally funded and inspired ‘subversion’. This approach emphasises Russia’s distance from and opposition to ‘outsiders’ -- which has already had an impact on Moscow’s stance towards Syria, as well as its wider engagement with the United States and Europe.
This rhetoric became all the more prominent as the elections approached: Putin emphasised the ‘malign intents’ of the West and the need for Western interlocutors to ‘mind their own business’. However, this does not necessarily constitute a decisive rupture; there will be opportunities for rapprochement after the presidential election.
In terms of Russia’s relationship with China, the parliamentary elections appear to have confirmed Beijing’s prejudice that Russia is not particularly well run. However, Russia’s rhetorical emphasis on its right to handle its own sovereign affairs as it sees fit aligns well with Beijing’s foreign policy posture; this should help bolster the two countries’ ‘axis of convenience’, at least in the short term.
Economic and commercial policy-making
Policy-making will be determined by the country’s fundamental problems:
- first, managing oil and gas exports and wider dependence on the global economy; and
- second, how to transcend this dependence.
In 2009, Russia was badly affected by the global crisis and its economy shrank by nearly 8%, but GDP is now close to its pre-crisis level. This recovery is due to a policy of capital accumulation and a relatively rapid recovery in the oil price. Conversely, Russia will have a hard time balancing its budget if there is an oil price crash similar to 2009. Total sovereign debt remains under 10% GDP, so the authorities could easily issue more debt if fiscal constraints become acute.
Successful individuals and small businesses are constrained by a relatively ineffective government that does not provide collective goods particularly well. The government now has to decide whether to try to appeal to this group of people, who are in some sense the economic future of Russia; the other option is to try to appeal to constituencies in the lower half of income distribution. If the task is to become more populist, and thus appeal to lower income brackets, it will be harder to accumulate money in good times. If the authorities instead interpret their agenda as one of winning over the middle classes, the key task is to boost innovation, diversify the economy and thereby transcend dependence on energy.
State capacity?
As regards the government’s capacity to undertake a hard-line authoritarian crack-down, there is a distinction between the primitive power to do so, and the degree of public and elite sensitivity to casualties. Even very low numbers of casualties would be taken seriously and impact the elite’s self-image as one of keeping order and unity. As for public opinion, the ‘heartland’ would not want to see even small numbers of people killed in direct clashes with the authorities. This risk of backlash makes a violent crackdown on protests much less likely.
Managed democratic response
The prospects for long-term success of the recent protests in Moscow and St Petersburg are bleak. While the demonstrations have attracted large numbers, the likelihood of parliamentary opposition parties supporting the movement decreases as time wears on. They will focus more on negotiating and coalition-building with United Russia. The risks posed by divisiveness are undesirable for the elite, with the parliamentary opposition having a strong preference for dealing with those in power, rather than the ‘anti-systemic’ opposition that is taking to the streets. Putin will continue negotiations behind the scenes, even as he distances himself publicly from United Russia.
Despite the probability that the Communist leader, Gennady Zyuganov, will run for president, his inability to attract more than 20% of the electorate makes his ‘challenge’ to Putin not particularly serious. Indeed, the state of the political landscape suggests that there are no serious contenders who can credibly threaten Putin, let alone successfully unite the country. Putin will cultivate his image as being above party politics – a relatively difficult task given how closely he has been identified with United Russia in the past, but one that should easily secure his re-election in March.
