Forbes (USA): "Is Putin Losing His Grip?"
Parmy Olson
Not yet, but things could change if unemployment and social unrest continue to escalate.
It's been hard not to look at Vladimir Putin and see a man who is powerful, and knows it. Yet, things could be about to change for Russia's commanding prime minister.
Recent citizen demonstrations point to a growing discontent in Russia that some say could lead to the unthinkable: a waning of influence from the country's most powerful and popular leader. The startlingly violent backlash against demonstrators in the Northeastern city of Vladivostok last December involved Russian police clubbing and arresting dozens of people protesting against higher taxes on foreign-made cars, taxes which have hurt a local economy that hinges on servicing and selling those vehicles. (See "Russia Frets Over Unrest") Since then, there have been a number of smaller protests around Russia's disparate regions, and geopolitical think-tank Oxford Analytica has said more are likely.
As it stands though, Putin's stellar approval ratings have yet to budge, and no one within the country's political elite has yet to break ranks.
But Dr. Lilia Shevtsova of Chatham House, a think tank, believes that could change over the next two to three months as Russians start to experience the impact of rising unemployment, and stop seeing Russia's economic troubles as entirely the fault of America's subprime mortage crisis. "Part of Putin's popularity has always been the economic situation and high oil prices. The moment that starts to decline, his popularity is doomed." (See "Russia Faces Rising Unemployment.")
She believes that as Russians lose their jobs, governors and regional leaders on the front line of the Kremlin bureaucracy may start to call for changes. "If the elite start to see that Putin's does not have total support from Russian society, they will start to look for another leader," said Shevtsova.
It's hard not to notice the startling losses that Russia's stock market suffered in 2008. While the Dow Jones Industrial Average lost 33.8% and Brazil's Bovespa Index fell 41.2%, Russia's dollar-denominated RTS index dropped 72.0% last year. (Few have fared worse, apart from perhaps Iceland's OMX 15, which lost a whopping 94.4%.) The ruble has meanwhile fallen by 15.0% against the dollar-euro currency basket and the Kremlin has spent a quarter of its currency reserves trying to prop it up.
While Russia is now in a better position than it was during its financial crisis in 1998, workers are worse off if they lose their jobs. Many more have been taking advantage of cheap credit to buy houses, cars and domestic products over the last few years.
Putin, at least, has two things going in his favor: The Kremlin is increasing its influence over the corporate landscape, with billionaire oligarchs like Oleg Deripaska and Mikhail Fridman lining up to get cheap loans from the government in exchange for assets as collateral. Many see this as a step towards the Kremlin taking control of more companies. Putin also benefits from there being few other leadership alternatives on the radar, and an underlying fear that a loss of Putin equals a loss of stability in Russia.
For now, keep an eye on oil prices, Russia's finances and its unemployment levels, along with social moods in the country's different regions, particularly in cities like Vladivostok that depend heavily on one enterprise. "No one in the Kremlin can be sure of what happens next," said Shevtsova. "The tide is not there yet."
