The Russian middle class as a social group is younger, better educated and wealthier than the average Russian population, and its members live predominantly in big cities. But its political influence has, so far, been constrained by relatively small numbers. In the piece, the author examines the emerging relevance of the Russian middle classes.
Putin, the protest movement and political change in Russia
17 February 2012
Simon Saradzhyan, Nabi Abdullaev
Few leaders undertake major reforms in either domestic or foreign policy late in their rule, and Vladimir Putin – who seeks to return to the Kremlin this spring for at least six years – hardly wants to be an exception. However, should the disparate groups behind the recent unprecedented protests in Russia develop into an organised movement leading to a sustained increase in public pressure on the Kremlin, then Putin may end up pursuing far more extensive domestic political and economic reforms than he would wish.
Little doubt that Putin will return to the Kremlin
In spite of recent protests, there is little doubt that Vladimir Putin will be elected president in either the first or second round of the March 2012 presidential elections and hence return to the Kremlin. Recent opinion polls show anywhere between 40 and 50 percent of Russians prepared to vote for Putin in the elections with his closest rival Gennady Zyuganov trailing far behind; indications are that only 10 percent of Russians are ready to vote for the Communist leader. But there is also little doubt that the legitimacy of Putin’s presidency – which was virtually unquestionable during his first two presidential terms – will be contested during his third term, given the scale of recent protests against his return and public anger.
There is reason to believe that the political awakening of Russia’s urban middle class, demonstrated in the recent rallies that drew tens of thousands, will continue. As recently as last summer few experts predicted that this awakening would occur so soon. But then came Medvedev’s September 2011 announcement that he would not be seeking a second term, thus paving the way for his mentor to return to the Kremlin. The prospect of another 12 years of Putin’s rule seems to have been ‘the last straw’ as far as the Russian public was concerned. Even though the December 2011 elections probably did not contain much more fraud than the previous ones, tens of thousands of angry professionals took to the streets to demand a re-run of the parliamentary elections and to protest against Putin’s return. However, even if Medvedev had stayed on, it was only a matter of time before the Russian people demanded sweeping changes.
Russia has already crossed the line of GDP per capita above $10,000, after which the population is generally expected to begin actively demanding democratisation, as a recent study of over 100 countries by Russia’s Renaissance Capital investment bank demonstrates. (See dynamics of Russia’s GDP in Chart III below.) When asked in opinion polls to what social group they belong, over 80 percent of respondents in Russia place themselves somewhere in the middle classes, according to a recent Citibank report. The report predicts that Russia’s urban population, which accounts for 74 percent of the population and which is increasingly wealthy, has grown big enough to demand better governance.
Nevertheless, an Arab Spring-like violent regime change in Russia is unlikely. Regime change of this kind could only succeed if an insurrection was staged in Moscow. Putin’s popularity has, indeed, dwindled in the Russian capital. However, Moscow, unlike Tripoli or Tunis, has an abundance of economic opportunities. The rate of unemployment is considerably below the Russian national level. Other social factors that facilitate revolt, such as a ‘youth bulge’ and relative poverty, hardly apply to Moscow. The average age of Moscow residents was 40 years in 2011 – one of the highest of the Russian regions – and the average Moscow family owns property worth hundreds of thousands of dollars. And while representatives of the growing middle class in Moscow and elsewhere in Russia are increasingly vocal in their demands for liberalisation, better governance and an end to corruption, they want these changes to occur in a peaceful manner. And should these protesters suddenly turn violent in their demands, the authorities have the means to deal with them. Moscow has one of the greater concentrations of law-enforcement and security personnel, which includes not only municipal forces, but also federal staff headquartered in Moscow and a number of Interior Troops units deployed nearby.
Putin is ready for only cosmetic adjustments in the short-term
Putin’s initial reaction to the December 2011 protests, which drew together politically disparate forces, including followers of corruption fighter Alexei Navalny, ultranationalists, and members of established opposition parties, was dismissive. However, after initial scoffing, Putin has begun to show more signs that he is taking the public demonstrations of dissent seriously. While pro-government media and spin doctors continued their attempts to discredit protesters and play their leaders off each other, Putin began to make some gestures in the direction of liberalisation, including promises of the introduction of semi-direct elections of governors, the establishment of administrative courts to hear complaints by citizens against the state, the installation of video cameras at polling stations, and even the creation of the post of a business ombudsman. Putin also made promises to ‘mobilise the middle class’s enhanced demands and its readiness to assume responsibility for its own welfare,’ to create 25 million new innovation-based high-tech jobs for educated Russians and to fight corruption. Putin’s protégé Medvedev proposed easing registration rules for political parties and presidential candidates intending to participate in federal elections in 2015-2016, as well as to restore popular elections of governors. Medvedev has also agreed to meet organisers of the protest rallies. The Putin-Medvedev tandem have also demoted some of the high-ranking officials that were particularly unpopular with the opposition, including Vladislav Surkov, the architect of ‘managed democracy’ and deputy chief of the Kremlin staff, and Boris Gryzlov, a top figure in the United Russia party and speaker of the State Duma.
In addition to trying to accommodate the less radical demands of the protesters through cosmetic adjustments, Putin has also moved to court those voters who engineered the success of the leftist and nationalist opposition parties at the expense of the pro-Putin United Russia in the parliamentary vote of 4 December (see Charts I and II below). He has recently promised higher wages and pensions and proposed that oligarchs pay a fee for the unfair privatisation of lucrative state assets in the 1990s. Putin has also vowed to introduce greater and tougher restrictions on migrants and installed well-known nationalist Dmitry Rogozin and conservative commentator Aleksei Pushkov as deputy prime minister and speaker of the State Duma’s international affairs committee respectively.
However, none of the measures that Putin (or Medvedev) have proposed so far suffice to create a plausible impression that the presidential vote will be free and fair, which is what Putin will need to ensure his legitimacy as president. Equally importantly, these measures do not significantly alter the system of managed democracy that Putin has built in Russia and that the protesters now want to be dismantled. Putin’s appointment of such well-known proponents of managed democracy as Sergei Ivanov and Vyacheslav Volodin to two top posts in the Kremlin administration indicates he has no intention of pursuing meaningful liberalisation of the system that Russians increasingly distrust. The share of Russians who believe that the ‘vertical of power’ which Putin has built is beneficial for Russia slipped from 38 percent in early 2011 to 30 percent in early 2012 while the percentage of those who think this cornerstone of managed democracy is harmful for Russia increased from 27 percent to 35 percent over the same period of time, according to polls conducted by the independent Levada Centre.
Putin has no appetite for structural reforms in the long run
Putin has vowed on a number of occasions to modernise Russia’s stagnating economy, which lags behind the economies of global powerhouses (see Table I). But while pursuing some modernisation Putin should not be expected to seriously alter the system of state capitalism that he built in 2000-2008 and that was only marginally affected by Medvedev’s modernisation programme. This system is designed to protect the interests of the ruling clan by preventing any redistribution of property or loss of control over state-controlled companies that dominate the national economy. Putin’s instinct will be to fine-tune rather than overhaul this system, while honouring the social contract between the Kremlin and the population.
There are a number of factors, however, that may send the Russian economy into a protracted crisis that could lead to the rupture of this contract: the dependence of the economy on energy exports (oil accounts for 50 percent of Russia’s budgetary revenues) and the dominance of inefficient state-controlled giants; rising public expenditure (which have increased the budget tenfold in 11 years to account for 20 percent of GDP) and the creeping pension fund deficit (which already totals $40 billion per year); social inequality (Russia has a Gini Coefficient of 42.2); severe regional disparities (where the GDP of one region is 440 times smaller than that of another); depopulation and labour shortages (Russia is forecast to lose 10 million workers by 2025). (See Chart IV below).
Of these challenges, it is the dependence of the Russian economy on oil that may come to pose the most serious challenge to Putin in his third presidency. To break even, Russia’s 2012 budget needs oil prices to average $100 a barrel, but if fears of another global recession become a reality, prices could fall as low as $60 – which was the figure during the previous crisis in 2008, when Russia’s GDP shrank by 7.8 percent in one year, more than that of any other G-8 or BRIC country.
A combination of these flaws may lead to a protracted crisis that no band-aid solutions, such as borrowing money or trimming expenditures, would be able to resolve. Such a crisis would require deep economic and social reforms, some of which would run contrary to the interests of some of the entrenched clans that support Putin and would risk destabilising his system of governance.
No tectonic shifts in foreign policy
Russia should not be expected to initiate tectonic shifts in its foreign policy under Putin, since the latter has had a major say on most major issues during Medvedev’s presidency.
Still, given Putin’s taste for tongue-lashing against Western powers, his comeback may result in a toughening of Russian rhetoric vis-à-vis the West. The fact that Putin’s power base at home has shrunk considerably in the past several years as well as the inevitable questions about the legitimacy of his upcoming election may lead him to project himself as a more fervent guardian of Russia’s interests and its allies on the international scene.
It is rather unlikely, however, that Russia under a President Putin will take steps to intentionally reverse the reset in US-Russian relations even as Moscow and Washington exchange barbs over ongoing contentious issues, such as Syria and missile defence. One fundamental problem with the reset, however, is that both sides have already picked all of the low-hanging fruit. And while there is hope that Moscow and Washington will eventually work out a deal on missile defence if President Barack Obama remains in office, deep reductions in nuclear arms, including non-strategic weapons, a new round of substantive UN Security Council sanctions on Iran, or any other substantial advances in the bilateral relationship would be much more difficult to attain, especially given the approaching election cycle in the United States.
Should Obama be voted out of office, however, there will be a greater probability that US-Russian relations may sour, given that all leading Republican contenders advocate a tougher stance on issues of importance to Russia, including missile defence. Toughening of US policy towards Russia will force Putin to reciprocate also in order to secure support in the State Duma, where all opposition parties are more anti-Western than the party of power.
As for the European Union, Putin’s Russia should be expected to seek deepening of economic, educational and cultural cooperation with the EU, pushing for a visa-free regime while at the same time focusing on bilateral cooperation with individual European powerhouses, such as Germany and France. The new/old Russian leadership will also, when building relations with the EU, need to take into account the fact that Russian political and business elites have personally invested in Western European assets and have family members living in the West. A protracted economic crisis may make Russia more inclined to seek cooperation with the EU, if only to attract know-how and investment to modernise the Russian economy.
Putin has already indicated that he wishes to deepen ties with the rest of Europe. For instance, while lashing out at the United States during his annual live call-in show on 15 December, Putin was much more accommodating when speaking about Europe, acknowledging that there are steps that Russia itself needs to make to integrate into Europe. ‘I still believe that it is inevitable. Life itself demands integration in Europe,’ he said. ‘Does Russia have to do anything? Yes, it should scare its neighbours less; it should work to rid itself of this imperial image which prevents even Europe from cooperating with us’.
While pursuing closer ties with Europe, Putin should also be expected to continue cautious cooperation with Beijing, wary of China’s rise, which contrasts sharply with Russia’s sparsely populated and economically stagnant far eastern provinces. Putin is also to try more actively to tie down post-Soviet neighbours, primarily Ukraine, which Moscow wants to join the Eurasian Economic Community.
Putin – who has been in power for over a decade already and who emphasises stability – will hardly want to launch deep reforms on his own during his third presidency, especially since his supporters in the bureaucratic and business elites benefit from the status quo.
However, while largely staying the course in the foreign policy sphere, Putin may have to concede to considerable changes domestically. The ongoing protest rallies demonstrate that the demand for deep and far-reaching change is growing in Russia. Some liberal figures in Putin’s entourage, such as First Deputy Prime Minister Igor Shuvalov, believe that Putin is sincere in his belief that the political awakening of the middle class requires an engaged response and that he will pursue reforms to accommodate the protestors’ demands during his third presidency. However, more conservative elements in Putin’s team believe that the recent protests do not represent a qualitative change and that their leader does not need to drastically alter course since the majority continues to support Putin’s previous policies. Some of these conservatives may even advocate using force to quash the protests if they continue past the presidential elections.
There are, indeed, grounds to believe that Putin – who in the past ordered the use of force in critical situations, such as the Beslan and Dubrovka hostage-taking crises – may employ law-enforcement and security agencies to suppress political violence. However, we believe that Putin will not resort to brutal repressive measures as long as protests continue to attract tens of thousands if only because use of force against such large numbers of people would generate a powerful backlash.
Moreover, we believe that Putin may heed demands for deeper domestic reforms should the main groups behind the ongoing protests become organised as a single force with a clear-cut common agenda to not only sustain, but to considerably increase, pressure on the Kremlin beyond the March 2011 elections on a scale similar to what Ukraine saw in the latter days of Leonid Kuchma’s rule. Apart from the increase in public pressure, a deep and protracted economic crisis that would empty state coffers may drive him to pursue structural reforms not only in the economic, but also in the socio-political sphere, given the principle of no taxation without representation.
Whether Putin’s government will be capable of implementing profound changes will depend on how rigid the government’s social contract with the poorer sections of society is as well as on how entrenched the bureaucratic and business elites – that support him – become, when the need for such reforms becomes as critical as it did, for instance, during the final years of the Soviet Union.
Source: Compiled by Simon Saradzhyan on the basis of data available on the official website of the State Duma.
Source: Compiled by Simon Saradzhyan on the basis of official results released by the Central Elections Committee of Russia.
Source: Compiled by Simon Saradzhyan from ‘World Development Indicators & Global Development Finance’, World Bank, undated.
Source: Compiled by Simon Saradzhyan from World Development Indicators & Global Development Finance, World Bank, undated.
Simon Saradzhyan is a research fellow at Harvard University’s Belfer Center for Science and International Affairs.
Nabi Abdullaev is a researcher and deputy editor of RIA Novosti’s international news department.
A recent nationwide poll conducted by the independent Levada Centre shows 57 percent of Russians support a ban on a third presidential term while only 22 percent oppose it. See Sergei Smirnov, ‘Two Terms Are Enough’, Gazeta.ru, 7 February 2012.
 The report asserts that democracies are ‘immortal’ above the per-capita GDP level of $10,000. ‘The revolutionary nature of growth entrenches democracy’, Renaissance Capital, 22 June 2011.
 ‘Russia’s rising middle class’, Citibank, 12 January 2012.
 For a more elaborate comparison of the situation in Russia and the southern Mediterranean countries see Simon Saradzhyan and Nabi Abdullaev, ‘Alternative futures for Russia: the presidential elections and beyond’, Occasional Paper no. 92, European Union Institute for Security Studies, May 2011.
 ‘Putin calls for courts for complaints against state’, RIA Novosti, 12 January 2012.
 Vladimir Putin, ‘Russia is Concentrating’, Izvestia, 16 January 2012.
 Alexander Bratersky, ‘Putin Pledges to Fight Own Legacy’, The Moscow Times, 13 January 2012.
 Dmitry Medvedev, ‘Address to the Federal Assembly’, Official website of the President of the Russian Federation, 22 December 2011.
 Lyudmila Sergeeva, ’Vertical No Longer Loved’, Vedomosti, 9 February 2012.
 Saradzhyan and Abdullaev, op. cit. in note 4.
 ‘A Conversation with Vladimir Putin’, Official website of the Prime Minister of the Russian Federation, 15 December 2011.
 See Russia Insight piece by Andrei Zagorski, ‘Russia’s neighbourhood policy’, EUISS, 14 February 2012.
 It should be also noted that one of Putin’s role models is Tsarist Russia’s Prime Minister Pyotr Stolypin in 1906-1911 who did not hesitate to violently suppress revolutionary activities.