Putin’s False Populism: Russia’s Poor Now Being Squeezed to Help the Rich

Paul Goble

            Staunton, November 20 – Many commentators have suggested that a new populist wave is sweeping the world with some of them pointing to Vladimir Putin’s Russia as the origin of this trend. But that populism, especially in its original form, is false: It involves squeezing the poor to help the rich while distracting the poor by playing up cultural issues of one kind or another.

            In a commentary on the Rosbalt portal, Sergey Shelin says that the next few months are going to show whether Putin’s plan of squeezing the poor for the benefit of the rich will work and what diversions the Kremlin may have to come up with in order to avoid a backlash from its victims (http://m.rosbalt.ru/blogs/2015/02/18/1369341.html).

            “With one hand inflation is going to rise because of the money given to state monopolies,” he writes, “but with the other hand, [the Putin regime] will struggle against it by freeing the incomes of the simple people.”  That may not be sustainable for long, but it is clearly Putin’s policy for the next few months.

            Over the last several months, Shelin says, there has taken shape “a not very elegant but in its own way logical economic course,” one that treats those on top very differently than those below and that is prepared to sacrifice the interests and needs of the latter in order to help those on top and to avoid the inflation that aid to the former is triggering.

            The government’s program of assistance to the raw materials giants is by its nature inflationary, something none of the people at the top of the Putin regime want. If inflation takes off in a serious way, they could all face real problems. “Therefore,” Shelin says, “they are conducting exactly the opposite course” with regard to the Russian people.

            They are cutting back on social services and ending the indexation of pensions and pay, thus driving down the real incomes of Russians and putting a brake on inflationary pressures, which various experts say may lead to price increases of more than ten percent in the first months of next year. 

            That possibility is very real, the Rosbalt commentator says, “and it means … a stable reduction of the real incomes of Russians of no less than a tenth” by next year.  If inflation is held in check, the government may be able to lift some of its restrictions; but if it isn’t, then, the Kremlin will push down the incomes of average Russians even more.

            A great deal depends on the price of oil. “The lower it is the more probable that the regime will take more and more from the people, while the higher it is, the greater are the chances that for the time being things will still be limited to a decline in real incomes of ten percent.”

            But “the chief misfortune,” Shelin continues, is that “these deprivations will hardly bring the exit from the crisis any closer.”  On the contrary, “they will put off the search for such an exit” because “the core cause of the crisis is not cheap oil and even not sanctions.”  Rather, it is located in “the increasing inadequacy of all [Russia’s] feudal-monopolist system.”

            The Putin regime is forcing the population to tighten its belts to gain time for itself and thus put off any real reforms.  But as things get worse and there is no prospect for change, an increasing number of Russians are going to recognize that “their sacrifices are for naught,” he suggests. Once that happens, their country could enter a period of real turbulence.