Putin Set to Weather Russia's Economic Storm

Russia’s deepening economic crisis – driven by falling oil prices and Western-imposed sanctions – has been cited as a potential catalyst for substantive political change which could end President Vladimir Putin’s 15-year grip on power. Although Russia’s economic downturn in 1998 was arguably a factor in ending Boris Yeltsin’s presidential term, Putin has emerged from the 2008-2009 financial crisis largely unscathed. Although some civil unrest is to be expected if Putin introduces austerity measures, his position is unlikely to be seriously threatened as a result of Russia’s current economic downturn.

Russia is currently grappling with a falling rouble, inflation which has risen to double digits and a significant forecast contraction in GDP over 2015. Due to Russia’s heavy reliance on oil and gas exports for federal revenues, plunging oil prices will likely force cuts in government spending. The escalation of the conflict in eastern Ukraine means that Western sanctions are unlikely to be lifted in the short term, preventing Russian banks from accessing Western financial markets and further eroding investor confidence in the country. In light of these challenges, Putin recently admitted that it would take the economy at least two years to recover, with average Russians likely to face a drop in living standards. 

Under such testing economic conditions, conventional wisdom suggests that Putin will have to contend with civil unrest, similar to the mass anti-government protests seen between 2011 and 2013. However, these protests, which were restricted to major cities such as Moscow and St. Petersburg, did not translate into meaningful political change. The authorities not only violently clamped down on protesters but also passed laws making it difficult for people to participate in demonstrations. Similarly, there has been increased pressure on political opposition, particularly the prominent opposition leader Alexei Navalny, who is currently under house arrest and was recently convicted of fraud in a trial widely viewed as politically-motivated. Russian authorities have also forced NGOs that receive foreign funding and engage in what the government views to be “political” activities to register as “foreign agents”, restricting their ability to operate freely. 

Furthermore, mass protests in major cities are generally not indicative of Putin’s popularity on a national level. Although surveys show that the majority of Russians believe the economy is performing poorly, Putin’s approval rating reached an all-time high of above 80 percent in December 2014. While he is genuinely popular amongst many Russians, who blame external factors for the country’s economic struggles, the heavily-censored media also prevents the spread of opposing narratives. The majority of Russians rely on television for information, and most channels are either state-run or owned by the Kremlin’s allies. Putin’s government has also ramped up its censorship of opposition websites and blogs.

Although these factors do not entirely negate the possibility of civil unrest if economic conditions were to decline substantially, they nonetheless hinder opposition activists from forging a concerted movement to challenge the status quo.

Whilst significant change is unlikely to occur from a grassroots opposition movement, some have suggested that Putin could come under pressure from his inner circle, which includes prominent politicians and wealthy oligarchs who have been negatively affected by the downturn and Western sanctions. However, Russia’s political and business elites are interdependent, and rely on Putin to maintain their influence. Putin’s first years in power were epitomised by bringing oligarchs in line, for example, by the exile of Boris Berezovsky and Vladimir Gusinsky, as well as the imprisonment of Mikhail Khodorkovsky. The remaining oligarchs were forced to abandon political ambitions in order to preserve their business interests. Despite Khodorkovsky’s promise not to involve himself in politics upon his release in 2013, he has re-launched Open Russia, an organisation that connects civic activists inside and outside Russia, and recently expressed an interest in being president. Nevertheless, Khodorkovsky remains exiled in Switzerland and does not pose a credible challenge to Putin at present.

Since returning to the presidency in 2012, Putin has consolidated his power. Accordingly, it is unlikely that deteriorating economic circumstances and the threat of civil unrest will pressure the Russian President into implementing significant political reforms in the short term. Despite the challenges he faces, Putin is set to dominate Russia’s political landscape for the foreseeable future, particularly as no credible successor seems likely to emerge from amongst the country’s political and business elites.