Russia’s ruling United Russia party, led by the prime minister, Vladimir Putin, suffered a sharp fall in its share of the vote in a parliamentary election last weekend. Despite resorting to electoral fraud, the party has now lost its two-thirds majority. Russian markets slid as post-election street protests were crushed by police and opposition leaders detained. Putin has ruled Russia since the turn of the century.
What the commentators said
The Russians are clearly tired of managed democracy, as the Kremlin likes to call it, said Stefan Wagstyl on FT.com. There was a warning for Putin earlier this month when he was booed at a wrestling match. He brought stability after the chaos of the Yeltsin years, but has ruled by “channelling to the general public a slice of the money generated from growing oil and gas revenue [and] cracking down on political critics”. Russians are sick of pervasive corruption and “no longer satisfied with their own modest material gains” amid rising inequality.
As far as the economy is concerned, the issue is whether the government “can re-invent itself” and turn recent talk of modernisation into action, said Capital Economics. There’s plenty to do. Investment is comparatively low because of weak property rights and an underdeveloped financial system. Transparency, red tape and corruption are ongoing problems.
Progress on these fronts would offset reliance on oil, which in turn helps conceal government overspending. Strip out oil revenues and the budget deficit is worth 12% of GDP. These days, oil needs to trade at $117 a barrel for Russia to balance its overall budget. Three years ago the figure was $50.
With foreign capital now leaving the country as the global outlook darkens, it’s especially important for Russia to make an effort to woo investors, said Andrew Peaple in The Wall Street Journal. Unfortunately, there’s a danger that Putin could do exactly the opposite. He may well “resort to pre-election giveaways and more nationalist rhetoric to shore up support”, further undermining the budgetary position and the investment climate. “Even strong men don’t like being booed for long.”