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Home » 2000 » #402 » International News » RUSSIA: After Putin's coronation

Russia: After Putin's coronation

By Boris Kagarlitsky

MOSCOW -- In the Russian drama, a new act is beginning. Since the financial collapse of 1998, the “oligarchs” have recognised that the system they have created cannot survive unchanged. But at the same time, they are firmly resolved on maintaining its basic elements.

 

After the innumerable failures of neo-liberalism, and with this Western ideology embraced by the Russian elites in the 1990s now totally discredited, pressing ahead with the restoration of capitalism requires a change of rhetoric. Instead of verbiage about the “common European home" and a “return to world civilisation", the population are now hearing speeches about patriotism and “the rebirth of state power".

In practice, however, all the slogans of the authorities are no more than a cover for the continuing plunder of the country by local financial oligarchs and transnational companies. The new administration of President Vladimir Putin has shown complete indifference to criticism from Western human rights organisations. “Defending sovereignty", Putin style, includes demonstratively ignoring international norms in the human rights field.

Meanwhile, Western leaders, though lightly scolding the Russian regime for its genocide in Chechnya, join in declaring their support for the new authorities in the Kremlin.

The reason is simple: the Russian government is persisting with economic policies favouring the interests of Western capital. Moreover, the Russian authorities have effectively abandoned their objections to the expansion of NATO to the east.

Putin's `program'

For the political fixers in the Kremlin, speculation about what Putin would do after being officially declared president (instead of merely “acting" president) was among the prime methods of election propaganda.

Newspapers with close ties to the oligarchs argued over whether the future national leader would put the oligarchy in its place. On the television, there were reports that whole cohorts of “brilliant minds" were drawing up a program for the next ten years.

This document was being drafted in a highly singular fashion. The economic sections were being compiled by right-wingers, while a few “leftists" had been invited to work on the social provisions. There was no contradiction here, since in Russia drafting a program is also a form of propaganda. No-one has any intention of implementing the social promises, but they are meant to sound convincing.

Leaving the propaganda to one side, we may ponder what is really going to happen. It is clear that neither Putin nor his team have made any serious projections. The absence of a real program is not a trick, and does not reflect a wish by the country's rulers to avoid criticism or hide their intentions.

The simple fact is that today's political bosses have been placed in power in order to do nothing. More precisely, the new administration's bureaucratic activity is strikingly intensive, but totally without content.

Putin holds consultations at which no important decisions are taken. He travels about the country, where people show him one “Potemkin village" after another. He delivers speeches that are general statements interspersed with threats, couched in criminal slang, against Chechen terrorists and his political opponents. None of this has the slightest effect on the economic, social or even military situation.

The situation is certain to change, and radically. Until now the Putin team has operated on the basis of state purchases remaining from the Yeltsin regime. The trouble is that everything must be paid for, and Putin will run up against the long-term consequences of the very decisions that brought him to power.

Putin himself did not take any of these decisions, or at any rate, not on his own. But the war in Chechnya, the early elections, and the turning of orthodox nationalism into a sort of substitute for a state ideology -- these are all his ploys. They were all devised for his benefit and under his direction. As a result, Putin will also answer for their consequences.

Chechnya war

The war in Chechnya was Putin's main ace in the election campaign, and even, in a certain sense, his chief method of campaigning. It has also been the only means found by the regime for consolidating society.

For effective consolidation, however, one of two things is needed: either a clear victory, or for the “enemy” to be at the gates. Neither of these two conditions has applied. The Chechens have not been smashed, and neither are they at the walls of the Kremlin.

For the rulers in Moscow, the war was already hopelessly lost in October 1999, when inadequately prepared federal forces rushed into mountainous areas of the rebellious republic. From that moment, the question was no longer of who would win, but of how soon society would realise that the army had been defeated, and of the consequences of this defeat.

The first part of this question is easy enough to answer: the debacle suffered by the federal forces will be clear by the end of spring. It is not simply that the trees in Chechnya will be covered with leaves, and that the air force will find it harder to operate. Russia's military aviation was not particularly effective in the winter phase of the campaign either.

The problem has been that practically no combat-ready units remain in Russia' armed forces, and that the reserves are exhausted. There are not enough experienced pilots. Helicopters and other aircraft break down, and problems arise with repair and servicing.

The few combat-ready army units have been forced to take on an additional load of operations, and as a result, are suffering heavy losses. The Pskov airborne division, for example, has suffered more casualties in the past four months than in all of the first Chechen war. As the soldiers themselves put it, the division has been left in Chechnya to “deal the final blow."

The motorised rifle units are no longer a real fighting force. By summer, there will be almost no units of the Russian army capable mounting serious military operations.

In other words, it is possible to keep troops on Chechen territory in the capacity of live targets -- the Russian population is large enough to allow Putin to do this for a long time to come. By summer, however, he will no longer have an army capable of putting up a fight.

The Putin team, unlike that of Yeltsin, consists of bureaucrats, very energetic, but quite lacking in imagination and initiative. The result is that most likely, no fundamental decisions will be taken, and soldiers will simply die by the hundreds and thousands.

In this situation, the authorities will immediately be faced with two problems. Anti-war moods in society will increase (that is already part of the trouble), while at the same time, anti-war and anti-Putin moods will begin rising dramatically in the army, including among the rank and file.

Anything can be expected, from mass desertion to mutinies in military units dispatched to the front.

The Putin team has succeeded in crushing the opposition in the electronic media -- but at what cost? Fewer and fewer people now believe what they are told on the television.

Yeltsin was able to turn even mass discontent with the war to his advantage, when the press, after bolstering their authority by campaigning against the war, then set about boosting the president's rating. With Putin, everything might happen the other way round.

In gagging his opponents, Putin has sacrificed any chance he might have of controlling public opinion once the propagandist lie comes to the surface.

New slump in economy

Putin's second problem is the economy. The growth of production which is providing the basis for propaganda both of the word and of the rouble (increases in pensions, pay rises. and so forth), rests on the actions of preceding governments. The cheap rouble they created encouraged economic growth, and the economic growth created the conditions for Putin's rise to power.

The trouble was that the growth turned out to be relatively weak, and now appears to be heading into stagnation or renewed decline. A fall in output has already begun, and this is being concealed -- on the statistical level -- only through unprecedentedly high oil prices. These prices will not last beyond mid-April, as the onset of warmer weather in northern hemisphere countries always causes oil prices to fall.

Moreover, the OPEC countries have decided to increase production. If oil prices fall from US$25 a barrel to US$18, Russia's oil industry will still be highly profitable. But it will no longer be able to subsidise other branches of the economy.

By spring, the Moscow city government will be threatened with default on its debts, and this, more than likely, is one of the reasons for the unexpected loyalty shown to the central authorities by Moscow's mayor, Yury Luzhkov. Moscow will no doubt be saved; the only question is who will pay for this, and what the cost will be for the country's economy as a whole.

Russia's hard currency reserves are continuing to decline, and the domestic market threatens to contract. Add to this the usual problems with agriculture (the Soviet strategic reserve has practically been consumed, and an exceptionally large quantity of grain will have to be bought), and it can easily be seen that we are threatened with a new financial crisis late in the spring.

Money will be needed to buy grain on the international market; to meet the financial obligations taken on by the authorities in the heat of the election campaign; for investment; and to continue fighting the war. This money simply does not exist. As a result, pressure on the rouble will increase sharply.

In this situation, a fall in the rouble rate and increased inflation are inevitable. The only question is how long the Central Bank will be able to keep the situation under control.

Central Bank chief Viktor Gerashchenko is an extremely capable individual, but he is not a magician. Most likely, he will hold out for a couple of months, but by early summer the situation will spin out of control.

If Gerashchenko shows real genius, the rouble will collapse not in the spring but in the autumn. For the Central Bank, this will represent an extraordinary achievement, but the results of such a collapse will be even worse than if it happened in the spring. In the event, a repeat of the situation surrounding the 1998 default seems likely.

In 1998, the rouble should also have fallen in April, but was artificially propped up. In August, it collapsed anyway, and a financial crisis was turned into a full-scale economic catastrophe.

The difference between a 1998-style default and a new wave of inflation lies in the fact that those who suffered from the default were importers and the financial sector, while the “real economy" -- national producers creating goods for the domestic market, and large numbers of exporters -- came out ahead.

The crisis this time could be somewhat less dire, but its eventual consequences more drastic. The coming crisis will hit the real economy, since the buying power of the population will fall dramatically. The people who in 1998 and 1999 were able to expand their sales at the expense of foreign competitors on the Russian market will lose everything, or at least a great deal, in 2000.

The grapes of wrath

The economic difficulties presage a new wave of social crisis. Here, we also encounter a new and peculiar situation. In the years from 1994 to 1998 the labour movement was in total disarray. Where was the point in striking, if the enterprises were idle in any case?

But now, in the second year of economic recovery, labour struggles have begin to revive. Moreover, their effectiveness has risen sharply as well.

Sociological theory holds that workers' actions tend to rise during an improving market conjuncture, and to decline when the market is contracting. The class struggle reaches its peak at the point of transition from upswing to decline. At such times, the movement still has the momentum from its period on the offensive, but at the same time is encountering new sources of discontent.

To put this more concretely, it is one thing when people are used to not receiving their wages for six months, but it is something quite different when they have grown used to receiving their wages on time, and payments again cease. The latter situation arouses far greater anger.

When masses of people start doing one and the same thing at different ends of the country, there is a temptation to invoke conspiracy theories. This will be the case with labour struggles as well.

There will be searches for agitators, and efforts to discover which of the oligarchs has been putting money into workers' protests. In reality, the conspiracies are all woven within the Kremlin and round about it.

Controlling large masses of people through such methods is impossible. In the absence of the notorious subjective factor, either embodied in a “vanguard party", or simply in the form of a workers' party, the processes will most likely prove completely ungovernable.

At the risk of seeming repetitious, it must again be stressed that the resources of patience of the Russian masses are limited, and more than likely, are close to exhaustion. There is little point in making predictions here, since people's behaviour cannot be calculated in detail even by the most subtle psychologists.

It can be stated with certainty, however, that there are extremely unpleasant surprises awaiting the authorities here. It is only a question of time.

Ultimately, everything boils down to the question of whether the labour movement will succeed in organising itself as a political force.

Gennady Zyuganov's Communist Party of the Russian Federation (KPRF) has few attractions for workers, as has been shown in numerous elections. Nevertheless, it is one thing to get angry, and quite another to get organised.

Giving effective support to the war and to Putin, the KPRF will continue to be discredited, but Zyuganov's party is extraordinarily durable, and so long as it fills the space of the official left opposition, it prevents the left movement from really becoming established. The viability of the KPRF, in other words, is a crucially important resource for Putin.

If the situation is destabilised here as well, things will become truly lamentable for the Kremlin.

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