MOSCOW BLOG: Putin’s political system is now broken as well as the economic one

MOSCOW BLOG: Putin’s political system is now broken as well as the economic one
By Ben Aris in Berlin September 19, 2016

The Kremlin’s proxy in the lower house of parliament, United Russia, won the biggest majority ever in Russia’s seventh parliamentary election on September 18. Putin’s economic model was already broken, but it looks like his political model is also bust. 

The official turnout was 48%, but few outside observers believe this number, which is still the lowest turnout in all the seven State Duma elections Russia has held since the fall of Soviet Union. The average turnout has been at least 60% in the past. 

The Kremlin’s own initiative to bolster confidence in the vote meant that webcams were installed in almost all polling stations. Authorities promised to run a clean election, but Russia still operates on inertia and regional bosses were sent a conflicting message: the elections have to be clean, but make sure United Russia wins a majority.

Regional bosses are terrified of displeasing the centre. The number of regions not in deficit has shrunk from 11 in 2011 to just nine today; in the worst cases, debt servicing now equals the regions’ entire revenue base. No one wants to get cut off from federal funds.

According to the count at the time of writing, United Russia had 54.2% of the vote, well up from the early exit polls that had the party at closer to 45%. That also tallied with the polls conducted in the last weeks prior to the election by the independent pollster the Levada Center, which was enough to find itself declared a “foreign agent” by the Kremlin, with the dire consequences that will likely bring.

United Russia will be joined by the same three other parties in the Duma: the Liberal Democratic Party of Russia (LDPR), the Communist Party of the Russian Federation (CPRF) and the nominally liberal A Just Russia. None of the other opposition parties got anywhere close to the 5% threshold required to win Duma seats and the veteran liberal Yabloko party has fallen below the 3% needed to even qualify for state funds.

An almost clean sweep of the single-mandate seats will give United Russia 343 of the 450 seats in parliament or 76% of the chamber, versus its 238 seats in the previous Duma. As bne IntelliNews wrote in February in “Putin’s Viagra problem”, this vote was all about the regions, which were told to deliver votes and more effectively hide vote rigging than was done on the federal level in 2011, with such disastrous results.

The upshot is that regional bosses simply reverted to their old methods to ensure United Russia got the most votes: to paraphrase an old Soviet joke: “We pretend to vote and you pretend to count them”.

Broken city

As bne IntelliNews reported on the day of the vote there were multiple violations and blatant ballot stuffing, much of which was caught on the Kremlin’s own cameras. A quick search on YouTube will list several examples, but perhaps one of the worst was the official presiding over the vote in Nizhny Novgorod polling station 2211, who clearly forgot (or didn’t care) that there was a camera trained right on her desk.

The election results are extremely worrying, because until this election the majority of the Russian public had seemed to be on board with President Vladimir Putin’s programme. The attitude has been: “We know they are corrupt and inefficient, but our lives got better and we appreciate the stability after the chaos of Yeltsin.”

That deal has broken down. Living standards have fallen by at least a fifth in the last two years following the collapse of oil prices, and a decade of relentless real income rises has now reversed. At the street level, inflation jumped back into the high teens, although it has fallen more recently, while the value of the ruble crashed. These two changes have cut into Russia’s two favourite pastimes: shopping and foreign holidays.

Putin’s economic model was already broken before the oil price crash and related devaluation of the ruble. GDP growth fell to 1% in 2013, well before the clash with the West began over Ukraine or the economy was hit by the recent shocks.

The need for deep structural reforms was already obvious while oil prices were still over $100 per barrel, yet the Kremlin failed to respond in any meaningful way and Putin committed even more resources to military spending that year, as bne IntelliNews reported at the time.

But this weekend’s election suggests that the political deal where the Kremlin ensures stability in return for its citizen’s complicity is breaking down.

While officially the turnout was high, the early exit poll results showed that the turnout in key cities like Moscow was at a 20-year low. As Professor Mark Galeotti pointed out ahead of the vote, the Kremlin depends on a decent turnout. But with 57mn Russians clearly choosing to stay home, Putin is now facing a legitimacy crisis as his political system starts to come unstitched.

Part of the reason for the lower-than-usual turnout was that the government moved the vote forward from December to the end of summer. “When they made the decision they were afraid of losing the vote and it was the right decision. But now I think the Kremlin realises it was a big mistake,” noted Galeotti.

The new head of the Central Election Commission, Ela Pamfilova, had promised this election would be clean and threatened to cancel the results from stations caught cheating. There may even be a few prosecutions. But even if there are, that won’t change the final result.

While the composition of the Duma in terms of party shares will remain almost identical to that of the last one, one of the big changes is the move to single-mandate voting to allot half the seats (225). While these new deputies are nominally associated with a party, they are from the regions where they all have different clients and will be expected to represent their local interests at the centre as much as toe the party line.

Ironically, this will inject some much-needed reality into the Duma debates. Previously Duma deputies have been cut off from the rest of the country as politics in the Kremlin was all about capturing control of state funds for Putin’s projects or towing the party line. The new single-mandate seat candidates come to Moscow to promote their regional agendas; Russia’s better regions are increasingly in competition with each other to attract domestic investment and have long wish lists of help they would like from the centre to raise their offering above their neighbours. The upshot is the centre will more closely connected to what is going on in the regions than it has been in the past.

Russia’s critics wrote off a potentially positive development as simply making the Duma more “unmanageable”, as if it were a bad thing. This is odd, as the very management of the Duma by the Kremlin has been the issue that critics were complaining about in the first place.

However, the critics may have a point. Single mandate deputies will still need to toe the party line to some extent and with the economy flat on its back, those state funds are now the main source of capital in the country so capturing control of them will remain the goal of most politicians, regardless where they come from.

Most worrying of all is that Putin seems to be well aware his political system is collapsing, as he has been busy reshuffling the entire government apparatus, which suggests he is feeling very insecure. 

It began with a shake-up of the police and interior troops to create the National Guard, a crack military unit that is directly answerable to only the president. Then a raft of top Putin cronies have been sacked and replaced with a younger generation. “Putin has got rid of anyone that can use ‘Ty’ with him and replaced them with a younger cadre that will use ‘Vy’,” says a bne IntelliNews government source, referring to the familiar and formal variants of the word ‘you’ in Russian. “The characteristic that marks out the new team is not their ability, but their unquestioning loyalty to Putin personally.”

And most recently Putin promoted the Federal Security Service (FSB) into a ministry, merging it with a few other security services in the process to re-create, as most observers were quick to point out, the KGB in all but name.

Taken all together, Russia finds itself at one of its many crossroads. If the citizens are willing to accept the vote rigging that has maintained the status quo, then the future of the country will rest on the success of the liberal reformers in restarting the economy.

But if this goes badly, or the people rise up in mass protest, or both, then Russia is set on a path to repression and centralised economic management. The relative freedoms enjoyed under the Yeltsin era will be entirely unpicked and the oligopoly that now runs the country will become deeply entrenched, effectively killing off any hope of domestic investment and political and economic diversification until Putin steps down – if then.