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LOOKING AHEAD
06.06.2009

June 5, 2009 (the date of publication in Russian)

Alexander Sotnichenko

RUSSIA: THE SPECTRUM OF CRISIS SCENARIOS. Part 1

Economic hardship raises the issue of new ideological priorities

THE CRISIS IS ONLY BEGINNING

Many Russian and foreign experts believe that the global financial crisis has not yet reached its full-blast stage. We have at least ground to assume that the crisis has not affected Russia at a full scale. Domestic production continues to contract, and we are likely to experience the whole range of its implications in the next year. On the global scale, the crisis is fraught with hardly predictable political consequences, comparable with those of the Great Depression of 1929-1933.

In this research, we are going to analyze the probable scenarios of response of Russia's major political forces to the ongoing crisis. In the conditions of globalization, much depends on the international market trends, including world prices for oil and gas, food, real estates etc. At present, it is quite obvious that in Russia, the implications of the crisis greatly depend on global oil prices.

In case the implications of the crisis affect Russia to a relatively mild extent, enabling the country to fulfill the major budget obligations, avoiding critical decline of the gross domestic product and high unemployment, the federal government will not be forced to significantly correct the political strategy. The administrative hierarchy relies upon this mild scenario, being confident of meeting the challenge without strict measures and avoiding a massive social protest. The presently envisaged palliative measures consider expansion of social guarantees, elevation of import duties in order to support the domestic producers and maintain employment etc. Still, the perspectives depend on the ideological evolution of the establishment.

At the same time, we have to admit possibility of direr effects of the crisis than those presently expected. It is noteworthy that the 2009 budget is deficient by on third of GDP. In case the dynamic of the production decline and employment exceeds a critical level, political implications may require extraordinary measures from the executive power.

During the last two decades, Russia has not managed to reach the European level of labor productivity as well as the US level of guarantees of private ownership. Meanwhile, the national economy has got involved into international integrative processes, becoming an unalienable part of the global economic system. Under the conditions of overall growth, even an underdeveloped economy produces a surplus. But in case of a global crisis, especially systemic like in the present case, this economy cannot avoid the impact of global decline, especially in case its revenues highly depend on exports of raw materials.

The decline of world oil prices has already seriously affected the health of Russia's economy. By late 2008, this fact was well understood by the state leadership. At present, the government publicly admits that the economic situation may deteriorate. What implications are going to follow in public policy?

To answer this question, we have to analyze the three subjects of probable response: the political establishment, the opposition, and the majority of the population.

The population will expect certain decisive anti-crisis measures from the political establishment. In its turn, the establishment is likely to invent certain kinds of political simulacra to distract the population's attention from mounting socio-economic problems. Oppositionist groups will try to capitalize on particular and general manifestations of the decline of living standards, blaming the political elite for its incapability to protect the poor and the unemployed, and proposing their own solutions. The scale of political tensions in Russia, as well as the situation in partner nations, will determine Russia's international influence. In any case, relevant implications are going to affect all of us.

 

THE ELITE: AN ATTEMPT TO COMBINE THE INCOMPATIBLE

At the first glance, the federal executive hierarchy seems to be sufficiently prepared to dealing with the crisis and its implications. The Bank of Russia has accumulated large reserves that can be used for mitigation of the effects of the crisis. The vertical of power has integrated most of the influential oppositionist politicians, while others have been alienated and discredited. At the same time, the secessionist sentiment in the Caucasus was largely suppressed, and the notorious regional ambitions were overcome, especially after the political reform of 2005. The leadership of Russia has gained high popularity, unprecedented in the history of new Russia.

It is especially significant that the Russian political establishment has gained a freedom of maneuver by consolidation of social strata, performing in public as the guarantor of interests of loyal corporate circles, as well as the middle class and the intelligentsia, in a strong alliance with the clerical community, and with reliance upon the major political force, the United Russia party that involves almost all the governors of regions. For several years, oil and gas exports revenues were sufficient for this integrationist political approach.

However, the conditions of the crisis will force the government to select priorities in distribution of budget expenses, and thus to display a certain social bias. This compulsory choice raises the issue of ideology that has actually been lately avoided.

In fact, the incumbent governing circle has got an ideology that is not directly verbalized. The major trends in the legislative process, as well as the public statements of ministers and MPs on particular issue reveal that the ruling elite is still dominated with liberal ideology, though modified with integrationist priorities. By late 2008, the United Russia has completed the structure of party ideology, managing to bypass the most sensitive issues related to inviolability of private property, definitions of the nation, the community, success, and consensus, as well as the relationship between the society and the state. Still, this ideological concept cannot be regarded as comprehensive and self-consistent: it rather reflects an attempt to combine the incompatible – namely, liberal principles in the spheres of property and civil rights, maintenance of integrity of the state, and deterrence of foreign expansion.

This combination reflects a gap between the ideal and reality, between the desirable and the available. In practice, liberal values are hardly compatible with the nation's political independence, security, and geopolitical concerns. Like centuries before, the national establishment performs as "the only European", while the population is intrinsically opposed to liberal transformation. Ideological schemes like the mentioned United Russia concept, in which liberal values are encrusted into an Eurasianist framework, are supposed to alleviate this contradiction.

According to polls, only 15% of the population regards Russia as an element of the larger European civilization, and 75% believe in originality and uniqueness of Russian civilization. Looking back at the experience of 1990s, Vladimir Putin realized that direct transplantation of Western values on the Russian soil is impossible. Besides, he required an Eurasianist approach for a more efficient and comprehensive foreign policy.

However, the combination of liberal approach in economic policy and predominantly anti-Western conservative rhetoric creates an ideological vacuum in between that can be easily filled with anti-government populist slogans like those used for canalizing the energy of protest in the so-called "color revolutions".

 

IN SEARCH OF NEW IDEOLOGICAL LANDMARKS

The ideology of power services the algorithm of the state's function, including the machine, producing public benefit and satisfying the basic public demand. The essential lubricant for this mechanism is money. The more perfect is ideology, the higher is the performance index of the machine. At the same time, the higher is the access to material benefit, the less an individual requires an articulated system of ideological values. While the monetary supply was sufficient, the state did not much care of elaborating an articulated ideology. In its turn, the population supported Vladimir Putin (and Dmitry Medvedev as his selected successor) as a source of authority and the guarantor of stable growth of well-being. The latter factor dominated in determination of the people's positive perception of the incumbent President and Prime Minister and the political institutions they govern. The state establishment also associated their authority primarily with the nation's economic success. Thus, the political elite have got accustomed to strong connection between authority and well-being. However, this linkage is making the state leadership highly exposed to social changes, originating from global perturbations.

Under the new conditions, the deficiency of monetary supply induces the state establishment to determine its political orientation and to articulate national priorities that can be shared by the troubled majority. In fact, this is essential for filling the gap between the liberal values of the establishment and the conservative views of people.

Despite the deficiency of articulated ideology, the presently functioning mechanism of the state contains a number of flaws that complicate Kremlin's capability to deal with problems emerging from the global financial crisis. The incumbent power does not have necessary experience in anti-crisis management, at least in the economic sphere. In fact, the government has been lately occupied mostly with redistribution of oil and gas export revenues. Improvements were undertaken in a number of economic branches, but all of them suggested excessive avail of monetary supply. The establishment has not developed a custom of economizing, and has not taught the population to economize. This custom has now to be introduced.

The population has become psychologically too careless and relaxed to efficiently deal with unexpected social challenges. In the times of Boris Yeltsin and Victor Chernomyrdin, the people considered the possibility of a sudden outburst of inflation, deficiency of basic goods, as well as failures in foreign policy and military campaigns. From Putin and Medvedev, they mostly heard reports about new achievements. Therefore, negative implications of the crisis, especially if the crisis is protracted, can sharply undermine the authority of the state leadership.

Regardless from statements of marginal politicians, the Russian population enjoys a high level of freedom of expression and political activities. Though the non-systemic opposition is not supposed to be given floor in state TV air, massive police crackdowns upon demonstrators, not speaking of using tanks against the Parliament, are unlikely. However, the incumbent leadership hasn't got experience of dealing with massive social protests that may emerge in the conditions of the crisis.

The national establishment in a whole is ready to confront the crisis while the political situation is well controlled by Kremlin. Efficiency of this control depends on a number of factors, some of which may perform in the new situation in an unusual way. In case of a split of the establishment, induced by the crisis, the stronger side may canalize the destructive energy of protest against the opponent, personifying the fault for economic recession, inflation, and unemployment. In the next part, we'll focus on the possible response of the Russian elite to unusual developments provoked by the crisis.

(To be continued)


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