August 2, 2019 Special Dispatch No. 8209

Russian Economist Inozemtsev: It's Economic Distress, Stupid

August 2, 2019
Russia | Special Dispatch No. 8209

MEMRI recently published an opinion piece by Russian economist Vladislav Inozemtsev, the founder and director of the Centre for Research on Post-Industrial Societies, where he expressed his pessimism that the protests in Moscow against the disqualification of candidates for the Moscow City Duma would not amount to much. He argued that in Russia "the traditions of democracy are such that the struggle for them is not deemed important, and the right of choice is valued by a very small fraction of citizens."[1] However, in an article that he wrote for the media outlet, "Fee [hikes] are worse than elections" Inozemtsev sounded a somewhat different tune. While he did not see demands for civil and political rights triggering mass protests, the issue of economic distress was another story. Popular protest has been growing and precisely in the periphery over a situation where incomes are decreasing while fees for government services are on the rise. Instead of taking corrective action to mollify the protesters, the government mistakenly believes that it can use its control of the media to paint a rosy picture of the situation. But the government controlled media is losing its power to influence people, who rely on the internet and their own personal situation to form judgements. Once social protest merges with political protest, the authorities will have a tough time keeping a lid on the situation.

Below are excerpts from Inozemtsev's article.[2]

Vladislav Inozemtsev (Source:

"The dramatic events in Moscow showed that the situation in the country is gradually changing: people are open to political protest, and the authorities (despite all the differences between the [conservative and liberal political] towers) send a clear signal to the public that they do not intend to restore genuine competition to the sphere of public policy and make any concessions. Will the current protest wave be suppressed as the larger-scale demonstrations of 2011-2012 [following Putin's victory in an election marked by fraud]? Most likely, yes: the rallies in Moscow were not similar to [Ukraine's] Maidan, they were not well organized, and it is not yet clear whether they could be repeated in other cities in an analogous situation of election irregularities. People in Russia have already learned voting to spite the authorities, but few people will go out to the streets to register popular opposition candidates. However, the unpredictability of political processes in the near future will continue to grow and the main question for the authorities: how to prevent it?"

The Bureaucracy Treats The Budget As Its Personal Property

"In recent years, the main cause of discontent is not the 'ossification' of the political space, but the decline in the standard of living and the ongoing economic crisis. Despite the relatively high oil prices and the record surplus of the federal budget in 2018, the population's real income continues to decline and a reversal of the trend is not in sight. And although the opposition did not appear in Russia in the usual sense of the word (I would rather talk about the growing dissident movement), the financial hardships can lead to such social cataclysms that Moscow protests will look like an innocent stroll in a park by a small group of citizens. Therefore, instead of searching for new political technologies, the Kremlin should think about building new relations with society.

"On the one hand, in order to ease the pressure at the political front, it would make sense to make concessions at the economic one. After all, large protest rallies are expected in the near future not only in Moscow; in early August in Novosibirsk, citizens intend to take go the streets due to another increase in charges for heating and hot water. In the capital of Siberia, charges increased from July 1 by 8.9% (while real income in the region has increased only by 1.4% over the year). It should be recalled that in Novosibirsk people won the "charges war" of 2016–2017: the 15% increase in utility charges was canceled, and Governor Vladimir Gorodetsky soon lost his post.

"But in the center, apparently, only average statistics are being estimated (according to it, the growth in utility charges in the Novosibirsk region will not exceed 3.2%), but [the authorities] are not gazing upon the situation on the ground. And it is very dangerous, since the most problematic situation is not in Moscow or St. Petersburg: in 10 out of 15 Russian cities with a population of over a million (from Samara to Krasnoyarsk) charges have increased by 6–9%, and the highest growth was recorded in Omsk, whose entire budget is 10.7 (!) times less than the assets that Moscow channels to beautification.

"Rallies similar to the planned one in Novosibirsk have already been held in Belgorod, Tomsk, Nizhnevartovsk and dozens of other cities in the country, but such issues are ignored by the federal agenda. The federal authorities prefer to make seemingly impressive decisions, such as raising children's allowances, but it turns out that 40% of Russians do not notice such changes at all, and such measures are incapable of reducing the degree of discontent.

"In the current situation, it would be worthwhile to reduce the financial burden on the population where it has reached an unacceptable level. First of all, we are talking about housing and public utilities, transport charges, gasoline prices, numerous fines and bribes, as well as various kinds of benefits, which are often associated with demeaning and even impracticable procedures. It is probably worth thinking about the abolition of income tax on incomes below one and a half the minimum subsistence level (such a measure would affect up to a third of the entire population of the country) and expanding targeted assistance to the poor (from increasing benefits to, for example, the long-discussed introduction of food stamps). The population has formed a solid impression that officials consider budget funds to be their property. Without prompt changes in this approach and without the limitation of the bureaucracy appetites and businesses associated with them, one should hardly expect that ideological political protest will not merge with practical economic one. And if this happens, the authorities' chances of keeping the system unchanged will prove to be close to zero.

Government Should Replace Futile PR Campaigns With Social Awareness

"On the other hand, today the government is losing and not only in Moscow, but also in Yekaterinburg and, most likely, in Shiyes [the site of an illegally constructed garbage dump], because it stubbornly does not want to respond to the agenda that is being formed in society. We constantly hear what gigantic budgets are spent in the center and regions on the press and bloggers in order to create a favorable image of the authorities. However, with each new failure in domestic policy - from pension reform to removing unwanted candidates from elections - the effect of such [sponsored media] activity decreases. Trust in the pro-government media plummets, and Internet users easily distinguish genuine posts from the paid ones. The constant destruction of the spontaneous memorial [to the murdered opposition leader] Boris Nemtsov, the construction of a cathedral in Yekaterinburg, the arrest of [investigative reporter] Ivan Golunov, the non-admission of independent candidates for the municipal elections in St. Petersburg and even the redrawing of the borders between Ingushetia and Chechnya: all these topics would never have achieved their recent relevance if the political elites with senseless persistence did not impose their ideas of what is due.

"Under conditions of political instability, the authorities should change tactics: the forces of all loyal experts should not be used to produce familiar information content, but to effectively monitor public sentiments and determine the extremely sore points. In every city and every region there are questions and topics that concern hundreds and thousands of citizens "here and now". Today it is extremely important to identify these topics in order to either solve problems in a way that meets the aspirations of the socially active part of the population, or, on the contrary, try not to implement a scenario perceived by these groups as undesirable. In modern society, this can only be implemented if a system is introduced, which I call preventive democracy. Taking into account the existing possibilities of monitoring public opinion, social network contents and protest activity patterns and mass mobilization, it should not pose a problem to summarize the signals coming from the population and react to them preventively, avoiding the emergence of acute conflict situations.

"By shifting the emphasis from reaction to prevention, the elites would send an important signal to society that society can influence the situation, and this in turn would give rise to serious non-political social movements that play an important role in any modern society. Now, when the authorities seek not to help the formation of such movements, but simply to simulate and parody them, the indignation amongst certain groups of citizens only increases and can turn into a mass protest.

"The Moscow protests were perceived by many commentators as evidence that the government not even trying to negotiate with someone and create a semblance of political competition. However, such a position looks extremely weak and only gets [us] closer to a decisive clash between the authorities and not a group of disgruntled, but society as a whole."

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