PUTIN’S FEAR OF ELECTIONS AND FEAR OF INVESTMENT

Every recent election in Europe has severed a connection with Moscow, allowing Russia to drift further and further away from the rest of the continent. Italy is the latest point in this trajectory since Prime Minister Silvio Berlusconi’s defeat this week signifies for Russian President Vladimir Putin the loss of a key European ally and the end of a carefully cultivated personal friendship (Vremya novostei, April 11; Gazeta.ru, April 13). The March 26 parliamentary elections in Ukraine, inconclusive as they are, have confirmed Kyiv’s European vector and shown the steady retreat of the pro-Russian forces in the multi-colored political arena (Lenta.ru, April 11). Presidential elections in Belarus on March 19 and the swift suppression of public protests against the crudely manipulated voting left Putin, who rushed to congratulate Alexander Lukashenka on his victory, alone against the broad European condemnation of this authoritarian regime (Ekho Moskvy, April 11). Even the elections in the Palestinian Authority fit the pattern, since Moscow’s readiness to embrace the Hamas leadership has generated mild disapproval in Europe and bitter acrimony in Israel (Kommersant, April 12).

The trend could easily be traced further back: Parliamentary elections in Poland last September were dominated by parties that hold serious suspicions about Putin’s Russia, and elections in Germany forced the departure of Putin’s closest and most privileged partner, Gerhard Schroeder, from the Bundestag. Some electoral results that were unfortunate for Moscow were decided by margins slimmer than the “hanging chads” that decided Bush’s victory in 2000, and both Berlusconi and Schroeder could complain about bad luck. In other cases, Belarus being the prime example, Moscow was clearly set to lose because of its own political choices. Lukashenka enjoys solid enough popular support to win a free and fair election, but the very possibility of creating a space for uncontrollable political opposition was unacceptable, and he opted to show the “monolithic unity” of the quasi-Soviet regime (Ezhednevny zhurnal, April 1).

Putin is in much the same situation and shows equally deep mistrust in election mechanisms, but he feels the need to hide his true preferences behind many layers of “Euro-correct” rhetoric. This habitual hypocrisy serves to make him an acceptable partner for Western leaders, but the Russian public apparently prefers a more frank expression of political views; a recent poll by Ekho Moskvy radio (March 20) showed that 82% of listeners would vote for Lukashenka as the president of a hypothetical union of Russia and Belarus, while only 18% preferred Putin. Finalizing the text of his annual address to the parliament, Putin now may take a clue from this rather unexpected choice and add a few explicitly populist condemnations of his own bureaucracy (Vedomosti, April 12). He also knows that he has no real competitor in the country so that the officially discarded idea of a third presidential term remains far more popular than any of his potential successors; 45% of Russians are now ready to amend the constitution accordingly (Kommersant, April 12).

Each setback with elections in the near and far neighborhood, however, increases Putin’s distaste regarding the proposition that his tightly hand-managed system of power should be subjected to the test of competitive — even if only formally — decision-making by the general population. This entirely unnecessary procedure goes directly against his self-perception as the CEO and the chairman of the board of a corporation comprising all structures of the Russian state. This self-perception, which in fact is not that different from how Berlusconi had seen himself until last weekend, probably informed Putin’s first words to the “captains” of business that were gathered in the Kremlin last month: “Dear colleagues” (Vedomosti, April 4). Russian state/corporate culture could be quite relaxed and the discipline in the hierarchy should not necessarily be draconian, but the idea that the top management must be exposed to electoral choices of the “lower ranks” is simply alien. Berlusconi’s scandalous resistance to his removal from a position of power only reinforces the conviction among Putin’s entourage that undesirable surprises must be prevented at any cost.

Elections, however, remain a source of grave risks and the possibility of a sudden shift in the electorate’s mood cannot be eliminated. Amassing “administrative resources” and employing every available “political technology,” the Kremlin still cannot overcome the pervasive fear of elections. While perhaps not entirely rational, this feeling is driven by growing mistrust among Putin’s courtiers and rooted in their common knowledge that the Russians indeed have very good reasons not to trust any of them. The only way to exorcise this fear is to spread it not only through the business elite, which constitutes less than 1% of the population, but also across the middle entrepreneurial class that has grown to about 20% (Kommersant, April 12). Uncertainty about the immediate future, which can bring any kind of semi-official offer that cannot be refused, including the sell-off of prime assets, is an irreducible feature of Russian business climate. Fear is the main instrument of establishing dominance of the 1.462 million strong army of bureaucrats, which increased by 10.9% in 2005, over the oppressed, abused, and potentially hostile class of middle and small business (Lenta.ru, April 12; Ezhednevny zhurnal, April 11).

This instrumentalization of the fear factor creates various distortions in Russian economic activities, from the increase of “informal taxation” to the speculative growth of the Moscow property market. Such respected experts as Yevgeny Gavrilenkov and Yevgeny Yasin have argued this week that the abnormally low level of investment affects the dynamics and the quality of economic growth and generates huge inflationary pressure (Nezavisimaya gazeta, April 11). Entrepreneurs have no confidence in their own businesses and are reluctant to invest, so money flows into the stock market, which expanded by some 20% since the start of the year, or into the accelerated growth of consumer imports. Corporatist politics invariably translate into deformed and stagnant economics. Putin’s team of managers may try to hide their fiasco by doctoring accounts and spinning new slogans, but Berlusconi was a grand master of these tricks — and they helped him only so far.