Publication: Monitor Volume: 6 Issue: 8

While Acting President Vladimir Putin’s popularity rating remains high, and his victory in the March 26 presidential election still seems assured, a growing number of media and politicians have begun criticizing the actions of his government. This has been most apparent in media coverage of the war in Chechnya. The private NTV television channel took the lead in questioning the accuracy of official figures on Russian losses in the military campaign, and has been joined by other media (one instance being the newspaper Izvestia, which until recently was unqualified in its support of Putin). But the criticism has also begun to target other policies. Some media, politicians and exporters, for example, have criticized Putin’s expression of approval last week for a requirement that exporters sell all of their hard currency revenues to the state in return for rubles. The proposed measure, which was floated by Central Bank Chairman Viktor Gerashchenko and is viewed as a way to prop up the ruble by increasing Russia’s hard currency reserves, was criticized by the International Monetary Fund (IMF). Russian government officials subsequently said that it would probably not go into effect until the middle of this year.

Samara Governor Konstantin Titov, who is also the chairman of the Federation Council’s budget committee, warned yesterday that the proposed rule would lead to the “destabilization” of the ruble’s exchange rate and could lead the IMF to withhold the next US$640 million tranche from its US$4.5 billion loan (Russian agencies, January 11). The fund has withheld that tranche since last fall, on the grounds that Russia has failed to meet various conditions, including budgetary, financial and banking reforms. Like Titov, economist Andrei Illarionov, director of the Institute of Economic Analysis, warned yesterday that the new restrictions on export earnings would reduce economic freedom and living standards in Russia. Illarionov said that while the government is hoping to get an additional US$3 billion dollars through this measure, enacting the rule would actually increase capital flight and the growth of the black market and reduce economic growth. He also said that the sharp drop of the ruble’s dollar value over the last few days was a “natural reaction” to news that the measure might be imposed (Russian agencies, January 11). The ruble dropped yesterday to a record low of 28.44 to the dollar, losing 2.5 percent of its value. Likewise, the Russian stock exchange fell by 5.16 percent (Moscow Times, January 12; Russian agencies, January 11). Novgorod Governor Mikhail Prusak, a strong Putin supporter, said that he supported the mandatory sale of hard currency export earnings to the state because it was “better than nothing.” It might bring little good to the economy but would help Putin’s popularity (Russian agencies, January 11).

Interestingly, the move received strong backing from Parlamentskaya gazeta, the State Duma newspaper, which continues to reflect the left opposition views of the last Duma. The paper said that the proposed measure was a move in the right direction and has aroused the antipathy of “those who are used to gaining from the conditions of chaos and irresponsibility in the country” (Parlamentskaya gazeta, January 11). The paper was undoubtedly referring to Russia’s raw materials exporters–in other words, the country’s powerful oligarchs.