Oil will not save Russia
A year ago, in the article “Russia before and after the elections,” we gave several options for the development of the situation. In general, it can be said that the version of the future that we considered the most likely was justified, even though the domestic policy of Russia presented an unexpected surprise in the form of the awakening of a significant part of society to civic activism.Putin, the de facto supreme ruler of the Russian elite and bureaucracy during the entire "reign" of Medvedev, President Zits, and having regained the formal presidential powers following the scandalous elections this spring, did not introduce any significant changes in economic policy. As expected, he remained the president of a large oligarchic business, which is difficult to judge in Russian realities whether he is a state or not - corporate interests in contemporary Russia are so closely intertwined (mainly through the mechanisms of corruption) with the interests of the state bureaucracy. As for the social policy, the state apparatus headed by Putin has embarked on the path of repression aimed at suppressing an independent civil society, which has not yet been able to find worthy leaders who can consolidate and systematize its protest, directing it to a constructive course of non-violent regime change.
With a superficial examination, the socio-economic situation in the country returns to the usual direction of the “oil coma”. High oil prices, supported by ultra-soft monetary policies trapped in the "liquidity trap" of developed economies and fueled by expectations of further monetary incentives, allow Putin to maintain an inefficient and repressive state machine, and even raise the allowances of the security forces and the military. Commodity revenues allow you to pursue an economic course laid down by Kudrin, who today has already moved away from public affairs and is trying to position himself as one of the moderators of the dialogue between the government and the anti-system opposition (the role is minor, considering that there is no dialogue as such, and is not foreseen). The essence of the course, as we have repeatedly said, is the binding of monetary emission to export earnings. A part of the emission goes to the federal budget in the form of taxes, the expenditures of the federal budget stimulate domestic demand across the country, which, therefore, turns out to be strictly determined by external and external economic conditions. Basically, this course has remained unchanged, although it must be admitted that the Bank of Russia today, in moments of short-term exacerbations in the global credit market, has a somewhat more flexible policy than before.
There are, however, changes that began last year. Last year was the first in stories post-Soviet Russia, when the growth of commodity prices and export earnings was accompanied by an outflow of capital from the country. This year, this trend has continued and there is reason to believe that it will increase in the long term. The Central Bank of the Russian Federation in the updated “Key Monetary Policy Guidelines” on 2012-2014 forecasts capital outflow in the current year in the amount of $ 70 billion. Greater outflow was observed only in the crisis 2008-m: $ 133,7 billion. At the same time, the average annual prices for crude oil Brent in 2008 was $ 94, and in the first half of 2012, a barrel of black gold was worth an average of $ 112.
The data for the last two years (pre-election and first post-election) indicate a clear correlation between the dynamics of the global commodity market and cross-border capital flows. With a stable favorable external economic situation, symptoms characteristic of a crisis situation are observed and growing, which allows to conclude that there is a crisis after all, and it is internal, internal. The reason for this negative trend, in our opinion, is simple: in order to continue to believe in the long-term prospects of Putinism, you must either hope to close your eyes to the continuing exacerbation of social and intra-elite contradictions in the country, or to be deceived by state propaganda. Among those who have money and the opportunity to transfer them to foreign banks or real estate, in the event of an almost inevitable, sooner or later, exacerbation of the socio-economic situation in the country, to go into temporary or permanent emigration - there are few such people.
Tops can not
Analyzing the chain of domestic political events that began with the Putin-Medvedev “castling” and ending with the latest scandalous politically motivated lawsuits, it is easy to conclude that the split of the elites in Russia, like the split of Russian society itself, can be considered a fait accompli. The split of the elites was probably brewing last year, aggravated by Putin’s decision to commit a castling with Medvedev, which resulted in Kudrin’s resignation, and finally took shape after the elections, when the government of Medvedev was formed, while some of Putin’s ministers went to the Administration Putin's president.
This split of the elites cannot be called a split into a “liberal” and “conservative” wing. “Liberalism”, as well as “conservatism” in Russian political realities, cannot be understood as they are traditionally understood within the framework of Western political culture, from which these terms migrated to the Russian one. In Russia, rather, we can talk about society in favor of an open society and the state of the rule of law, and traditionalists, “sovereigns,” whose ranks are quite variegated, but are united by the rejection of the western experience of building society and the state, and the West, as a whole. As for the elites, mired in corruption equally regardless of political affiliation and civilizational sympathies, there was a split between supporters of globalization and property legalization in the process of intertwining local interests with foreign capital, and supporters of moderate isolationism, and imparting legitimacy to property through proximity to power resources. The former are ready to rely on the conditionally “liberal” part of society, the latter, the siloviki and the circles close to them, on the conventional “conservatives”.
Last soc. Surveys show that the social base of security forces and traditionalists is declining today, and this process is unlikely to be impeded by an increase in raw export earnings, because the efficiency of converting these revenues into domestic demand drops sharply. Income growth, if any, will mostly settle in the offshore pockets of the elite, contributing to capital outflows.
The maneuvers of Igor Sechin indicate the direction in which intra-elite processes will develop. Starting as an expropriator of YUKOS in favor of the state, today he turned from a state official to the head of that defeated YUKOS, which now exists under the Rosneft brand, whose state package is scheduled for privatization. It seems that the conditional “liberals” will be crushed by the security forces, and the formally victorious forces together with Putin, gaining control over corporate state property, which will eventually become private, will gradually move into the camp of conditional “liberals”. This will inevitably happen, because as the social base is lost, there is no other way to preserve status and influence within the framework of the existing Russian economic system, which is inseparably and tightly connected today with export-import financial flows and, as a result, with the global financial system not. Traditionalists cannot offer Russia, which today is tightly integrated into world trade and the global financial system, a realistic and workable program of socio-economic development that would reflect their nostalgia for the times when Russia in the form of the USSR represented a successful and autonomous economic autarky. To indulge in the illusions that the “damned West” is about to be bent under the weight of its paper debts (which will open the way for Russia to a new “bright future”) while these debts are, according to the balance of the Bank of Russia, the lion’s share of providing Russian ruble, it gets harder and harder.
In the light of the emerging intra-elite tendencies, it is not surprising that Putin, who was the main brake on Medvedev’s ambitious presidency for large-scale privatization, now, following the interests of the “liberalized” siloviki, has turned into its supporter. Those naive people who saw Putin as a defender against the power of an oligarchy, who, relying on the will of the majority, can restore justice that was violated against the people in 90, will be frustrated if not yet disappointed. Putin’s victory means only that the security forces have received a window of opportunity for the next few years to en massely sit in the “liberal train” of new privatization.
This process, however, will not go smoothly, and not everyone will be able to get on the “liberal train”, simply because the property, given the appetites of the most senior and not yet “well-groomed” members of Putin's elite, is not enough for everyone, even if robbed all those in the country who have it since Yeltsin's times. Tickets to the future are in short supply. In the light of this, both the excessive zeal of the investigative committee and its scandalous head, and the zeal of the “party of power”, which stamps out repressive laws as soon as possible, are understandable and fully explainable. All those who do not belong to the highest league of Russian politics, the entrance to which is possible through the control of large property and the corresponding financial flows, have today to show their loyalty by all means. Otherwise, do not deserve your place in the caste of the elect, or among them. And for those who do not fall into this caste, it’s not at all the large blocks of shares of privatized corporations, but the “Magnitsky list” and the exposure of criminal and corruption activities within the framework of the inevitable future sequestration of the elite, which today is preparing a new bill prohibiting officials from having accounts and real estate abroad.
Bottoms will want
The split of elites and opposition protests is not the only risk of social unrest in 2012. Few people pay attention to inflationary trends in the modern Russian economy. As is known, the rise in prices, especially for products and essential services, beats the most on the least well-off citizens, in the consumption structure of which products and housing and utilities services occupy a priority place. In just a few months, grain in Russia went up in price by more than 20%, sugar by 12%. The growth of utility tariffs from July 1, according to Deputy Economic Development Minister Andrei Klepach, will add another 1-1.5% to the official annual inflation, and significantly more from the social one calculated using the basket of average Russian consumption. According to surveys of the Levada Center, in July of this year, 85% of Russians expected further price growth at the same pace, and a third of them feared inflation acceleration in the coming months. It seems that these expectations will be met.
The government risks being in a situation of zugzwang: an attempt to compensate for the rise in prices by increasing social benefits will further increase inflation and provoke an acceleration of capital outflows, which will lead to higher interest rates, deterioration in lending and a negative impact on business activity. An attempt in this situation to balance the traditional budget in such cases with ruble devaluation will support the producer and the financial sector, but for the population it will only worsen the situation. If you do nothing, you will have to accept the fall in real incomes of the least protected part of society, namely, it is so far the main social support of the Putin regime. Thus, this fall, if macroeconomic stability is not sacrificed for social stability, social protest will feed not only on dissatisfaction with the political system, but also on dissatisfaction with the social and economic situation. If macroeconomic stability will be sacrificed to populism, it will only accelerate the development of the economic situation in the direction when populism in the future will not afford the regime.
Who will be extreme?
Summarizing the tendencies outlined above, one can foresee the emergence in the country of a double revolutionary situation, reflecting the growth of tension between the people and the elites, and between different layers of the elite. On the one hand, the popular "bottoms" will no longer be inclined to accept the life of the "old", on the other hand, the "elite tops", responding to the challenges of their security, both from the masses and on the part of external factors, they will begin, nevertheless, to act in a new way and in a new capacity. But at the same time, the “extreme” will turn out to be the “elite bottoms”, which, very much, really want to live the old way at the budget and corruption feeders. They risk being between the hammer of the supreme power and the anvil of popular anger.
In some ways, the situation was similar to the end of the USSR, and it was no coincidence that the internal party processes that had disorganized the USSR were later called the “revolution of the second secretaries”. Then the center's elite, unable to convert their party power in anything in the new conditions that had arisen during democratization, lost to the regional elites. If you look at the current elite of Russia, the situation is somewhat similar, in something - diametrically opposed to the one that developed at the time of the collapse of the USSR. Today, the higher part of the elite has something to convert their power in changing conditions, but the middle and lower link are at risk of being out of work. Will they want to become an uncomplaining victim, which the top echelon will present to the people in the form of a tough anti-corruption company, or in any other way that will allow Putin and his entourage to gain legitimacy in such a sacrifice in such a new way?
The end of Gorbachev's “perestroika” cannot be called the velvet revolution that those who dream of Putin’s non-violent removal from power would like to accomplish today. Moreover, its finale was completely at variance with the wishes of the majority of Soviet citizens and Soviet elites. The future finals of Putin’s Russia may also be unexpected. It is unlikely that this will be the “velvet revolution”. It is not excluded that the government, which is devalued in the course of the loss of popular support, legitimacy and institutional forms, ultimately will not be retained either by Putin’s conditionally liberal elite, or by that part of the security forces that will join it. Because, having come into conflict with the middle link of the elite, they will destroy that vertical, on top of which they are, thanks to which, in fact, they are “higher” in the hierarchy of power. Moreover, the leaders will not be picked up by the leaders of oppositional public opinion, who may be successful in anti-Putin propaganda, and are catalysts for exacerbating the situation, but are powerless in organizational quality in the management of the bureaucratic apparatus.
What forces can emerge from the depths of the rotten state apparatus, what people will be able to put enough fish in troubled waters to be heroes of the coming troubled time? The answer to this question is no, the situation in this regard is unpredictable. The risk corresponding to this unpredictability will gain momentum, and comparing the dynamics of oil prices with the dynamics of capital outflow from a country, we must conclude that this risk is quite comparable with the risk associated with the volatility of the global commodity market.
Alexey Vyazovsky, leading analyst FG Kalita-Finance
Dmitry Golubovsky, Independent Analyst
Dmitry Golubovsky, Independent Analyst
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