October 1, 2018

Consequences of Western Sanctions

The Development of the Situation in Russia As a Manifestation of the Weakening of Putin's Positions

 

The analysis of internal processes in Russia shows gradual weakening of Putin's power, which may have a significant impact on the situation in the RF. Recently, the most illustrative manifestations of this tendency have been:

firstly, the Russian population's falling confidence in the leadership of the Russian Federation and, personally, V. Putin. According to sociological surveys by the Russian Public Opinion Foundation, the Levada Center and other institutions, since the annexation of the Crimea and the occupation of the Donbas in 2014, the level of Russian citizens' confidence in Putin has dropped from the highest of about 75 % to 66 % in February 2018, 56 % — in the middle of summer 2018, and 37 % in September 2018. This trend is also recognized at the official level;

Ratings of V. Putin and “United Russia” party, according to the Russian Public Opinion Foundation
Ratings of V. Putin and “United Russia” party,
according to the Russian Public Opinion Foundation

secondly, choosing by a part of the financial and oligarchic circles of the RF more independent from the country's leadership positions. In particular, in August 2018, the Russian presidential administration entrusted the government to consider taking export profits from Russian non-oil and gas companies (that is, part of their income, exceeding the level of profitability of commercial operations) into the state budget. However, during the meeting of the members of the Russian Union of Industrialists and Entrepreneurs with the Assistant to the RF President A. Belousov and the First Deputy Prime Minister A. Siluanov on August 24, representatives of the Russian business rejected such funds redistribution. As a result, this issue was removed and replaced by formal agreement of entrepreneurs to reinvest the surplus profits into the economy of the country;

Weakening of the positions of the ruling “United Russia” party by the results of the local elections in September 2018
Weakening of the positions of the ruling “United Russia” party by the results of the local elections in September 2018

thirdly, weakening of the positions of the ruling “United Russia” party at the regional level. The dynamics of the changes in the rating of the “United Russia” completely corresponds to the change in the ratings of V. Putin. This is evidenced by the results of the local elections in Russia in September 2018, when the “United Russia” for the first time lost in a number of regions. For example, as the governor of Orel region was elected a candidate from the RF Communist Party; of Omsk region — from “A Just Russia”; of Vladimir region and the Khabarovsk Territory — from the Liberal Democratic Party. In fact, representatives of the opposition received the majority of votes also in the Republic of Khakassia and Primorskiy Territory, where re-elections have been scheduled. In addition, the “United Russia” has lost control of the regional parliaments of Veliky Novgorod, Irkutsk and Ulyanovsk regions, as well as Khakassia;

fourthly, the growing ambitions of some local leaders, which exacerbate international problems. For example, at the beginning of September 2018, on the orders of Chechnya's leader R. Kadyrov, a commission was created to “clarify” the borders of the Chechen Republic. In fact, it was a question of unilateral removal of Chechen-Ingush controversies over certain areas of Sunzha and Malgobek districts, which caused mass protests by the Ingush population. Later R. Kadyrov formally withdrew his claims, but this did not change anything, that is, the problem was not solved.

 

The reason for such developments is the complication in the Russian Federation of socio-economic problems as a result of Western sanctions, which keep getting tougher and already concern not only the armed aggression against Ukraine, but also a number of other issues. Thus, additional sanctions against Russia are being introduced over its interference in the US and European elections, excessive use of force in Syria, and politically motivated murders. According to the Russian Academy of National Economy and Public Administration under the President of the Russian Federation, since 2014, the number of Russian citizens who consider themselves poor has doubled (to about 40 million people), which significantly affects the moods in the society.

Meanwhile, within the framework of the “Countering America's Adversaries Through Sanctions Act”, the USA is targeting V. Putin and the leading Russian oligarchs in order to undermine the unity of their interests. Such a policy already has its consequences, which in fact was evidenced by the situation with the profits of Russian entrepreneurs. And even more, there are signs of a possible “plot” of some Russian oligarchs with the United States. In particular, in September 2018, the US Department of the Treasury again suspended the imposition of sanctions against Russian companies “En+” and “Rusal” belonging to O. Deripaska, and this may mean existence of some agreements between them.

Russian society reacts negatively to the plans to raise retirement age and value-added tax
Russian society reacts negatively to the plans to raise retirement age and value-added tax

At this, the increase in revenues from oil exports does not allow the Russian leadership to achieve positive changes in the Russian economy and provide adequate support to the social sphere, as additional funds are directed to replenish the National Welfare Fund. It is precisely this situation that makes Moscow take unpopular decisions, to which the Russian society reacts negatively. First of all, this concerns the plans to raise retirement age and the higher value-added tax.

In addition, as in the 1990s, due to the weakening of the Federal Center's positions, one can see more and more selfish manifestations at the level of some regional leaders. One of these was the intention of Chechnya's leader R. Kadyrov to revise the border with Ingushetia. Against this background, quite illustrative was V. Putin's decision to satisfy R. Kadyrov's demands to transfer to the Chechen Republic 100 % of the shares of JSC “Chechenneftekhimprom”, which was in state ownership. Chechnya's leader has been demanding this since 2015, but has been given the permission only now.

 

With the RF leadership's having no real prospects for rapid resolving the socio-economic problems of the country without changing its external course, the problems will continue to deepen. At this, V. Putin's attempts to preserve his positions in power by further strengthening the repressive regime in Russia and sharpening the confrontation with the West will only increase the internal tension in the country.

 

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