Russia has never been easy. Will the present global financial and economical crisis nonetheless pave the path to a new period of thaw or even to some change of the"System Putin"? Last week, in discussions with a group of Americans and Germans in Moscow organized by GMF, representatives of the declining number of still active NGOs and the opposition champion Garry Kasparov were outspokenly optimistic."Putinism is dead" was their overall message. No doubt, the economic crisis hits Russia hard, harder than the other BRICs (Brazil, Russia, India, China). The unemployment rate officially rose to more than 8 percent, and independent Russian economists speak of more than 15 percent.
In the more than 500 Russian monotowns -- a hangover of Stalin's Sovietic industry policy in which a whole city depends upon one industrial employer -- the closure of a factory turns more than 70% jobless and leads to growing social unrest. The Central Bank and State Pension Fund reserves of more than U.S. $600 billion last summer officially dwindled to U.S. $385 billion in a desperate struggle to stop the free fall of the Ruble. At the beginning of the crisis, Putin fiercely blamed the United States for causing this crisis and fortified an illusion to the Russian people that Russia will not be affected. Now it turns out that Russia is more intertwined with the global economy than previously admitted and that Russia is harder hit than others because of their own omissions. The hard currency revenues raining out of commodity exports were used for buying into new pipeline projects abroad for foreign political objectives than for the diversification of the domestic economy.
This crisis breaks the"Contrat Social" on which Putin's political system was based. The deal called for a rebuilding of authoritarian power at the Kremlin coupled with a reduction of basic human rights against an increase and spread of prosperity for the people. Will this break of the social contract change Putin's System? It remains doubtful. The government -- as a former Russian minister predicted -- will purchase important industrial complexes to save the employment and invest into public works. This renationalization of key Russian industry sectors fits into the long-pursued goal of the"Putin System" to strengthen the political control about major industry areas.
Growing social unrest will be oppressed by a stronger authoritarian fist. The valves where the growing discontent and frustration find their psychological way out are, according to the well-repudiated Russian poll institute Levada Center, a rising inner cynism of Russians, a turn to the Orhodox church, and rising nationalism and xenophobia. This makes the new charm offensive from the new U.S. administration so tricky for the Kremlin. On one hand, there are obvious advantages for Vice President Biden's"reset" in U.S.-Russian relations for Russia, too, as I said in an interview with the Russian Regnum news agency.
The Russian diplomats seem to envision euphorically a new period of thaw, in particular in the area of arms control and nuclear arms reduction. On the other hand, the"Putin System" needs legitimation for its increasingly stronger authoritarian oppression of social discontent, the constant Anti-Americanism, and the perception of the United States as the global foe against Russia's rise. As an NGO representative put it,"Independently from what the U.S. is doing, they are always perceived as Russia's enemy." This is Russia's dilemma today: the longer the crisis lasts, the more Putin's system is compelled to cooperate with the United States in some foreign, financial, and economic policy matters, while at the same time domestically bashing the United States as Russia's great evil.
How Putin will balance this dilemma will be probably his most serious task in his whole political career. Any mismanegement could easily create the strongest risk to his system or to Russia's re-created global power.
The views expressed in GMF publications and commentary are the views of the author alone.