As Russia’s economy shrinks, Vladimir Putin softens his tone

RUSSIA’S political system is often called a “power vertical”, with authority concentrated in the man at the top. So Vladimir Putin’s yearly presidential address carries a special weight. The address “is not a conversation with the people,” writes Andrei Kolesnikov of the Carnegie Moscow Center, a think-tank, but a set of coded ideological guidelines for the Russian elite. This year’s speech on December 3rd was curiously subdued, a departure from the confrontational course Mr Putin has charted since returning to Russia’s presidency in 2012.

To be sure, Mr Putin started off with the threat of terrorism. As usual, he implied that America was to blame for “decid(ing) to oust the unwanted regimes (in the Middle East) and brutally impose their own rules”, precipitating civil war. He lashed out against Turkey, Russia’s new nemesis since it shot down a Russian fighter-bomber two weeks ago, threatening that further measures would follow the trade sanctions Russia has already imposed.

But most of the speech was more pacific, focusing on the economy, the need to prepare for low oil prices, and social issues. Ukraine was not mentioned; Crimea appeared only briefly. Anti-Americanism was nearly absent. No one expects the Kremlin to make an about-face in its opposition to the West, but the shift in tone was notable.

Mr Putin may simply be reading the weather. Recent polling by the independent Levada Centre finds that 75% of Russians think relations with the West should be improved. Mr Putin may also be reconsidering the wisdom of further antagonising the outside world. Russia’s economy is in a precarious state, as he came close to acknowledging in his speech: “By changing nothing, we will simply run out of reserves and the economic growth rates will linger around zero.”

The economic hardship is beginning to hit groups normally loyal to the Russian leadership. A nationwide protest by lorry drivers has been slowly rolling across Russia since mid-November. The drivers have come out against a new toll system for heavy cargo on federal highways. They also object to the fact that the man paid to run the system is Igor Rotenberg, the son of Arkady Rotenberg, one of Mr Putin’s oldest cronies. “Rotenberg is worse than ISIS (Islamic State),” read the banner on one lorry in southern Russia.

This confrontation between self-employed entrepreneurs and the cronyistic system of Mr Putin’s Russia has powerful political overtones. Russian state media have avoided the story, unable to dismiss the working-class lorry drivers as liberal sell-outs or traitors. The drivers say they simply want some response from the government. “We’re not asking for much, we’re just asking for a back-and-forth between us and the authorities,” Alexander Rastorguev, one of the protesters, told a Russian blogger. Yet such a dialogue is exactly what Mr Putin’s power vertical cannot allow.

While the drivers are unlikely to get their way, their protest is emblematic of problems bubbling below the surface of Mr Putin’s sky-high approval rating. The economic situation is deteriorating. The 2016 state budget has been cut by 8% compared with the year before. Disposable incomes are falling for the first time in Mr Putin’s presidency. Although no Russian officials have dared to take up the lorry drivers’ cause, Alexei Navalny, the opposition politician, has tried to capitalise on the protests.

Even more explosive, however, are the accusations Mr Navalny and his Anticorruption Foundation made last week regarding the family of Russia’s prosecutor-general, Yuri Chaika, in a sleek 44-minute film distributed on the internet. The film opens with footage of the opening ceremony of a lavish resort hotel in Greece, complete with fireworks, performances by Russian pop stars and the attendance of Russia’s minister of culture. It then alleges that the hotel is partly owned by Mr Chaika’s son, Artem, one of a series of business holdings it says Mr Chaika’s sons have amassed via privatisation deals and state tenders.

Mr Chaika denies the entire story, and charges Mr Navalny with carrying out a hit job at the behest of unnamed paymasters; he plans to sue for libel. Mr Navalny, in turn, says he will sue Mr Chaika for slander. Dmitry Peskov, Mr Putin’s spokesman, refused to comment on Mr Navalny’s film last week, saying that the Kremlin had been too busy preparing for Mr Putin’s address to watch it.

That standoffish response may be a sign of tension in the ruling elite. But Mr Putin is unlikely to abandon Mr Chaika, and a real crusade against corruption is out of the question; it would mean dismantling the entire system of “vertical” power. For the same reason, Mr Putin finds it impossible to take the advice of those pushing for liberalisation of the economy, scaling back bureaucracy and promoting competition. Instead, the president may have to opt for more distractions. Russians adore their president in part for making their country a “great power” again, and when asked what makes a country great, they name two qualities: wealth and military strength. The less Mr Putin can provide of the former at home, the more he must demonstrate the latter abroad.

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