MOSCOW BLOG: The risk of democratisation in Russia

By bne IntelliNews January 20, 2011

bne -

In January, protests in Tunisia forced out the autocratic president, Zine El Abidine Ben Ali, who abruptly fled the country for Saudi Arabia. It was one of a string of revolts against autocratic leaders in recent years; those in the former Soviet Union (FSU) have been dubbed "coloured revolutions" and they haunt the bad dreams of leaders from Minsk to Tashkent. The big question for Tunisia now is what sort of regime will take over: a democracy is not a given, but it's what everyone is hoping for.

Renaissance Capital issued an interesting report shortly after the events in Tunisia looking at the mechanisms that drive revolutions and revolts, in which it tries to identify the tell-tale signs for dictators. While the paper focused on African nations, the parallels with the FSU region are obvious.

It identified three basic rules of democratisation:

1. The richer the people are, the more likely they are to revolt, but once a democracy, a country never abandons the system;

2. Large net energy exporters are not democracies;

3. The greater the proportion of young men in the population, the more likely a revolt.

The revolution metrics

Wealth is obviously a key factor. Poor populations think only about where the next meal is coming from. A relatively well-off middle class is more concerned with the quality of life, public services and personal freedoms. Citing a study first done in 1959 and updated in a paper entitled, "Modernization: Theories and facts", by Adam Przeworski and Fernando Limongi in 1997, Rencap's report sketches out the measurable metrics of revolution.

Using 2009 purchasing power parity in dollars as a basis, then the odds of a revolution happening in a country with an average per-capita income of under $2,000 are very low. However, as incomes rise to $2,000-8,000, then the chances of a revolt become a modest 1-2% in any given year. Things get riskier if wages are rising or falling: if wages are rising, then the chances of a revolt go up to 4-5% (because people are more focused on the shortcomings in their quality of living); and if wages are falling, the risk of a revolt goes up even more to 6-11% (because people want political power to change an obviously bad situation).

Tunisia had a 2009 per-capita income of $8,300, which put it at the top end of the danger range. And all across the FSU, the risk of revolt against overbearing regimes is also high, as all the countries are already at the top end of the $2,000-8,000 income bracket. Moreover, in the last two years the odds of a revolt have risen, as incomes fell due to to the crisis: Kyrgyzstan and Moldova have both ousted corrupt presidents since the global crisis hit.

Russia stands out on the wealth score, as its citizens have the highest income in the region, on the order of about $14,000. As a middle-income country, Russia should have long ago joined the "immortal" democracies like those in the West - no country with an income level over $14,000 has ever lost its democracy once established. But then there's the second law of democratisation - big energy exporters aren't democracies. "Of the 20 largest net oil exporters in 2008, according to the data we have from BP, just three were fully free democracies according to Freedom House. Of these, two were democracies before they became large net energy exporters (Canada and Norway), so obeyed the first rule, with only the third (Mexico) being an interesting exception to the rule," the report says.

Still, Russia's population is clearly becoming restless - a natural consequence of the rise in income levels over the past decade. The crisis only made them more agitated, as it caused incomes to dip. In December, central Moscow became the scene of street battles as football fans clashed in inter-ethnic violence over several days following the murder of a fan. The area around Kievskaya was closed and groups of Omon special forces roamed the streets for the first time in more than a decade and half. The riots were the most dramatic manifestation of the palpable unease growing amongst the population.

And it could get worse this year, as the reason why the second law of democratisation holds true is that energy-rich countries make so much money they don't tax their populations. If the people don't have to pay tax, the average man is not fussed about political representation. "With little direct taxation, there are fewer demands for direct representation. Equally, as the UK discovered to its cost in 1776, when you do tax your people, they might protest," says Charles Robertson, chief economist at Renaissance Capital.

Russians pay amongst the lowest taxes in the region, but that too will change this year when a raft of new taxes are introduced to help cover the state's first deficit in a decade.

Man up

Russia is also vulnerable to the third danger: lots of young men. Frustrated youth in poor countries are likely to band together and hit the streets. "The 'youth bulge' theory suggests that when the share of young people in a country exceeds 30% of its population, the risk of war or revolution is particularly high," says Robertson, who takes 15% as the start of the "danger range" when dictators should start to worry about a youth uprising.

Tunisia's share of men aged 15-34 stands at 17.3% and, indeed, most of the Middle East and Africa are already over the threshold. A large, young population is more a problem of the Middle East and Central Asia - Kazakhstan is the only country in the FSU to have hit the 15% level - but a glance at Russia's age distribution chart below from Rosstat for 2007 shows there is a big bulge of trouble-making young men with a medium age of about 20 years now, although the overall average age in Russia is already in the late 40s and rising.

The final point to make is that while wealth, taxes and youth can all coalesce into regime-changing riots, this doesn't necessarily lead to the emergence of democracies. Kyrgyzstan's "tulip" revolution pushed out former president Askar Akayev only to replace him with the autocratic Kurmanbek Bakiyev, who was in turn ousted last year.

The increased tensions, falling incomes and new taxes come at the worst time for the Kremlin. As the events in Minsk in December show, there is no time more likely to catalyse civil unrest than elections and Russia has two big ones coming up - the Duma elections in December and presidential elections in 2012. The trouble is that if the Putin/Medvedev tandem is ousted, there is no obvious opposition candidate waiting in the wings to take over. However, there are lots of well-connected Kremlin insiders who would be prepared to take their place, none of whom would be much of an improvement.

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