The Globe And Mail (Canada): "Putin pays a price"
A confident Vladimir Putin, Russia's Prime Minister and former president, vowed on Thursday to protect his country from a return to economic chaos. After years of comparative stability and rapid economic growth based on high commodity prices, Russia has been hit especially hard by the global economic crisis. The Moscow stock market has lost two-thirds of its value in five months, normally buoyant industrial growth has stagnated, and unpaid wages are piling up. Most worryingly for Mr. Putin, who became president in the wake of a disastrous run on the ruble in the chaotic 1990s, Moscow has spent something close to $58-billion, and counting, to prop up the currency this fall. Though Mr. Putin and President Dmitri Medvedev remain popular for now, if the pain continues, the Kremlin's social contract, whereby Russians accept restrictions on democracy in exchange for prosperity, could begin to unravel.
Much of this was unavoidable. As Canadians are learning, even the best-managed economies are in for a rough ride. But the particular severity of Russia's trouble is the direct result of Mr. Putin's economic management.
With the Kremlin and its friends profiting heavily from investments in oil, gas and other resources, Mr. Putin did far too little to diversify the economy. Commodities make up 80 per cent of Russia's exports, and 30 per cent of government revenue. Infrastructure, even in Moscow, is still a shambles. And despite undertaking much-needed banking and tax reforms, Mr. Putin has been alarmingly willing to deploy the muscle of law enforcement and state-owned companies against his opponents. In short, Russia remains a largely backward economy.
Some may see it as a good thing. Many Georgians, Ukrainians and Poles will sleep a little bit easier with the bear next door so distracted by domestic problems. But ordinary Russians will be sleeping less well, and for that they only have themselves to blame.
Last week, the Russian parliament backed a constitutional amendment that would extend the presidential term to six years from four. Already, Moscow is buzzing with talk that Mr. Medvedev will soon resign, and hand power back to his predecessor. Yet even with all of his influence in the backrooms, Mr. Putin depends on the support of ordinary Russians. A happy byproduct of the financial anxiety would be a weakening of Mr. Putin's grip on Russia and an opening for his opponents.
