Ryzhkov on the Economic Crisis

Opposition leader Vladimir Ryzhkov holds forth in his latest Moscow Times column on the significance of the economic crisis for the Putin regime:

In 2009, as the frequency and intensity of protests across the country increase, the people will start demanding fundamental changes in the country’s political course and leadership.

Russians are increasingly worried about the economic crisis — and rightfully so. A Dec. 15 survey by the Levada Center found that 60 percent of adults feel uncertain about the future, and 88 percent consider the condition of the economy to be from “fair” to “very bad.” More than half of the respondents feel that the worst is yet to come. Almost 40 percent believe the crisis has already hit Russia, and another third believe it hasn’t hit yet, but will. Furthermore, 75 percent of respondents expect unemployment to increase in their regions, and a whopping one-fourth of the respondents reported that they either had been laid off, hit with pay cuts or experienced delays in getting paid on time.

The government’s attempts to play down the seriousness of the crisis are becoming increasingly difficult to pull off. There is simply too much bad economic news hitting Russia from all sides.

For example, industrial output fell 11 percent in November. The AvtoVAZ, KamAZ and General Motors auto plants have announced temporary halts to their production lines. There have also been major production cuts in the construction, metallurgical and chemical sectors. The crisis has struck hard in regions that had shown strong export-oriented growth over past years, such as Kuzbass, Chelyabinsk, Lipetsk, Belgorod and Cherepovets. After the long New Year’s holiday, hundreds of thousands of employees will learn that they have just been laid off. An even larger number of workers will face cuts in their salaries even though the average salary before the crisis was only $600 per month.

Exacerbating the problem is the fact that the economies of about 700 Russian cities are dependent on a single major local industry or factory. If those factories shut down, the majority of the people in those cities will have no way to make a living. Kremlin leaders do not have a clear strategy for coping with this looming disaster.

As the crisis is spilling over into the real economy, the people’s tolerance level for government policies is reaching its breaking point. Even before the crisis, the people’s anger over runaway inflation and their eroding purchasing power had been building up over the past few years. In addition, corruption has gotten markedly worse as the level of monopolization in the economy and bureaucratization of government has increased. All of this is pushing people’s discontent to the surface.

Prime Minister Vladimir Putin’s decision to raise import duties on used foreign cars in an attempt to support the country’s struggling automakers unleashed a wave of demonstrations by drivers who will now be forced to pay through the nose for their favorite foreign models. In essence, the government is trying to force new car purchasers to buy far more inferior Russian models — something they would have never done absent the import duties. Drivers protested all across the country — from Kaliningrad to Vladivostok. Riot police brutally dispersed demonstrators at protests in Vladivostok during the past two weekends — a rare example of police using force against ordinary citizens defending their everyday interests. This marks an escalation in the government crackdown on dissent, which up to now was limited largely to breaking up Dissenters’ Marches and roughing up and arresting their members.

The anger over increased import duties is particularly strong among residents of the Far East, the majority of which — perhaps as high as 80 percent — make a living either directly or indirectly connected with the sale or servicing of imported automobiles. The government’s decision only exacerbates the region’s sense of alienation from Moscow. It also strengthens the region’s separatist tendencies and increases the already high rate of emigration from that area.

In Alapayevsk in the Sverdlovsk region, 17 miners are staging a hunger strike to protest unpaid wages. In Magnitogorsk, people have held rallies against layoffs at the city’s iron and steel works and against price hikes for utilities and public transportation. People are also staging rallies in the city of Senezh in the Karelia region where the local pulp and paper mill is on the verge of closing, and the cost of heating and water have shot up by 20 percent and 27 percent respectively.

Moreover, hundreds of banks across the country might go bankrupt in January and February. That could lead to protests by depositors who are unable to retrieve their money, despite the limited government guarantees on bank deposits. In addition, people are upset with the government’s decision to increase utility prices for all homeowners in 2009. This might have been tolerable during a time of steady economic growth and rising standards of living, but it is unacceptable in the midst of a crisis.

For the first time in eight years, demonstrators not affiliated with marginal opposition parties are making harsh political demands. Drivers in Vladivostok demanded that Putin step down, that media censorship cease, that the government reverses its decision to amend the Constitution on increasing presidential and State Duma deputy terms, that the proposed changes to the Criminal Code broadening the definition of treason be annulled and that popular elections for governors be reinstated.

Despite the increasing number of protests against the government, Putin is still maintaining a 83 percent approval rating. But this won’t last for long as the crisis spreads and the protests intensify next year. When Putin gathers with his friends and family on New Year’s Eve, he should forget about raising his glass of champagne and toasting to his eternal popularity. Instead, he should make a wish for a lot of good luck in 2009 — the only thing that can get him out of this terrible mess.