Consumer Spending Spree Dampens Down Russia’s Pro-Democracy Movement

Vladimir Putin (59) has this week chaired his last meeting of the Russian government as Prime Minister. His presidential inauguration for a third six-year term is pending on May 7. The outgoing president, Dmitry Medvedev, is to be approved as Prime Minister at a special session of parliament on May 8, and the key ministers of a new Cabinet are expected to be appointed by Putin’s presidential decree by May 10 (Interfax, May 2). May 6 to 10 are public holidays in Russia, and a grandiose military parade on Red Square in front of Lenin’s tomb and the Kremlin to commemorate V-Day in the Great Patriotic War with Nazi Germany is planned for May 9. Putin, Medvedev, politicians and dignitaries will be attending the inauguration and reviewing the military parade. But despite the holidays, the wheels of power transition are expected to spin smoothly: Putin and Medvedev will change chairs, followed by their cohorts.

The task of moving the VIPs of the present regime – some from the Cabinet into the Kremlin, and others in the opposite direction from the Medvedev administration into the Cabinet and other positions of power (like provincial governors or top diplomats) – is a daunting personnel administration task, complicated by personal rivalries and internal ruling clan intrigue. Some appointments may be postponed for some days, but Putin’s and Medvedev’s relaxed public demeanor in recent days seems to indicate that all essential decisions have been agreed.

The public seems to await the formulation of the new Cabinet and Kremlin administration with overall indifference. The mass pro-democracy movement that emerged in Moscow after the shamelessly rigged Duma elections on December 4 has lost momentum after Putin’s election to the presidency on March 4. According to recent independent polls, only some 20 percent of Russians want to oust Putin, while 66 percent do not understand why he must go. Some 30 percent believe Putin will rule Russia until 2024, and 11 percent expect him “to rule as long as he wishes.” A majority believe Putin’s power will be based on the support of the military, police, secret services, the ruling elite and oligarchs (Kommersant, April 27). Some 66 percent of Russians believe that after Putin’s return to the Kremlin corruption within the ruling elite “will increase or stay the same.” Only some 15 percent believe that personal income declarations by top officials are “true or partially true,” while some 70 percent deem them false (Kommersant, May 3).

May Day marches and rallies in Moscow reflected the present state of public opinion. There were a number of opposition antigovernment protest marches and rallies organized by the Communists, leftists and nationalists that were attended by several thousand activists. The middle class protesters that were the backbone of the massive protests last winter were absent from the streets. A May Day rally and march in downtown Moscow, planned by the same coalition “for just elections” that organized the mass winter protests was allowed by the authorities, but was called off by the organizers, who decided instead to concentrate all resources on the so called “march of millions” planned for May 6, to protest Putin’s inauguration on May 7. Deep divisions are reported within the organizing committee of the “march of millions,” as it is increasingly possible there will be no “millions” of protesters marching, but only a couple thousand activists may turn up at best (Kommersant, May 3).

The authorities were much more successful in filling the streets of Moscow with loyalists. A May Day demonstration organized by the loyal pro-government trade union federation and the ruling United Russia party gathered up to 150,000 participants, according to Moscow police. Municipal and government employees from Moscow and the Moscow region were reportedly ordered to participate, some may have received the equivalent of $10 to $20 for participating or were motivated by the opportunity to take a couple of working days off later on (www.lenta.ru, May 1; Kommersant, Vedomosti, May 2). The mass pro-democracy rallies of the past winter have frightened Russia’s ruling elite, and the scare has not yet fully dissipated. Putin and Medvedev, who in previous years mostly refrained from mixing with large crowds, briefly joined the pro-government May Day march in central Moscow and later had beers in a Soviet relic bar in downtown Moscow with several pro-government Duma deputies in the presence of the press (Kommersant, Komsomolskaya Pravda, May 2).    

While Putin and Medvedev have fun, leading human rights activists are anticipating repression after Putin returns to the Kremlin. A number of members of the consultative Presidential Council on Cooperation with Civil Society, formed in 2002, have resigned after a symbolic last meeting with Medvedev on April 28. Political scientist Dmitry Oreshkin prepared a report describing in detail the mass rigging of votes in last March’s presidential elections, but was not allowed to present it during the meeting with Medvedev. Oreshkin told the press he does not recognize Putin as a legitimate president and is resigning from the Council. A number of leading legal experts, human rights and anti-corruption activists have either announced their intention to resign or told journalists they anticipate being ousted soon as Putin fills the Council with loyalists (Vedomosti, May 2).

The apparent collapse of the mass pro-democracy protest movement has a serious material reason – consumer spending is booming in recent months in Russia, fuelled by high expectations of further economic growth, relatively low inflation and available consumer credit. Savings are decreasing while inflation-adjusted earnings in the first three months of 2012 are some 12 percent higher, than in 2011, according to government figures. Low inflation and inflation-adjusted earnings growth are the result of deliberate government policies to boost budget spending and postpone inevitable utility and energy price hikes during the second half of 2012 so as not to infringe with elections (Kommersant, April 27).

The Russian public is enjoying the warm weather and the consumer spending spree. Inflation will catch up and consumer spending will most likely decrease in the second half of 2012, but the government predicts world oil and metal prices (Russia’s prime export earners) to stay high in the future (oil at over $100 a barrel until 2015), as a result of maintained strong economic growth in Asia (Interfax, May 3). The continuing windfall should allow Putin to spend himself out of any possible internal problems, while continuing to boost defense spending and aggressively spread Russian influence in neighboring countries.