Our crystal ball for 2017

January 9, 2017

Open-Wall---May-2016

Our crystal ball for 2017

What’s in store for Russia in 2017?

Russia will soon emerge from its holiday torpor, and we’ll start to get a sense of the accuracy or otherwise of the forecasts for 2017 made in recent weeks by various experts and politicians.

The most optimistic forecaster has turned out to be none other than our beloved president (no surprise there, then). Rounding off the year with one of his marathon press conferences, the president tried his utmost to hammer home various claims about the economy: GDP has declined less than expected (at the beginning of his speech, the president even described the moderate decline as “growth”); inflation is declining at a record pace; there have been signs of growth in certain branches of the real estate sector; and foreign investment is returning to Russia.

However, as a number of economists pointed out, the president did not mention that the budget is being cut across the board – even in healthcare; the number of people in poverty is growing; real incomes have fallen for the third year in a row; investment is predominantly speculative; and, finally, over two trillion Reserve Fund roubles have already been spent to buttress the economy. If Russia continues to plough through its reserves at the current pace, the Fund will have been depleted by the end of this year.

Economist Natalia Zubarevich argues that, with reduced subsidies from the federal centre, the regions will also be forced into severe social spending cuts, even though a country “that makes such cuts has no future.” For Zubarevich, “the general picture is as follows. People have adapted, but general apathy is ubiquitous and depression is on the rise, coupled with a very faint hope that perhaps things might not get any worse. This isn’t a geographically specific phenomenon – it pervades the entire country, although it’s better understood and articulated in Russia’s big cities. […] This is a slow-burning crisis, and people are responding to it an analogous fashion.”

Most experts polled don’t believe that the structural reforms currently being developed by former finance minister Alexei Kudrin and his team will be launched before the presidential election in 2018. “Unpopular measures will be rolled out,” says political analyst Alexei Makarkin, “but they’ll be selective and targeted in character – so as not to irk the Russian public prior to the election. Otherwise put, unpopular reforms will be postponed until […] the second half of 2018. 2017, meanwhile, will be a year of discussions.”

But, even with the 2018 election on the horizon, the regime isn’t about to let up the pressure on dissenters and dissidents; on the contrary, it may well turn the screw of repression further. Alexander Verkhovsky, head of the SOVA Centre for Information and Analysis (branded a “foreign agent” by the Ministry of Justice in late December), suggests that “the political regime is now configured in such a way that any escalation of pressure is perceived not as momentum but as maintenance of the status quo. Which means that the new year will inevitably witness further repressive or needlessly harsh legislation.”

Hardly surprising, then, that political analysts are increasingly speaking of the vulnerabilities of the Putin regime: “Their control is weakening, as is the state: it cannot handle a battle of thrones within the administration,” says Gleb Pavlovsky.

Be that as it may, economist Vladislav Inozemtsev believes that the Putin regime has very successfully insulated the country from change, and that the current state of affairs could easily endure for several years to come: “The situation is incredibly stable. In spite of declining living standards and falling incomes, the populace has remained silent. And it will continue to remain silent, realising as it does that this is a situation of all-encompassing crisis, and that it has affected almost everyone to an equal degree – making it pointless to rebel or sound off.”

But while staunch supporters of liberal democracy like Vyacheslav Inozemtsev talk up the stability of the regime, the regime’s own agents are fretting. Take this assessment by Mikhail Alexandrov, a leading strategist at the Centre for Military-Political Studies at the Moscow State University for Foreign Relations, who, in late December, made serious calls for a Syrian-style bombing campaign against Ukraine: “Any slackening of the confrontation with the West – which will become inevitable once Trump takes office – will compel Russians to pay very close attention to the country’s internal problems. […] In the absence of any foreign policy successes, the Kremlin will have nothing to boast about to the electorate, and people will increasingly start asking ‘inconvenient’ questions.”

Meanwhile, pro-Kremlin analyst and Institute of Political Studies director Sergei Markov goes so far as to claim that Western sanctions, which the Kremlin has been doing its utmost to get cancelled, are actually beneficial for the Russian regime because they allow tensions to be confined to foreign policy: “A de-escalation of sanctions could lead to tensions bursting beyond that sphere. In 2017, I believe, we will see numerous semi-controlled semi-revolts that will erupt for specific and disparate reasons. […] The West is likely to begin phasing out the sanctions in the summer of 2017, so the autumn will see growing protests.”

And there you have our crystal ball for 2017. Will Putin green-light the economic reforms being prepared at his behest, or will they be put into cold storage yet again? Will this pre-election year prove to be a period of political liberalisation in Russia, or will the screws only be turned further? Will there be a love-in between the Kremlin and the incoming Trump administration, or will Putin and Trump soon come to detest one another, sending shockwaves of alarm across the globe? Depends who you ask…

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