SCENARIOS FOR RUSSIAN POLITICS IN ECONOMIC CRISIS

C O N F I D E N T I A L MOSCOW 003546

SIPDIS

E.O. 12958: DECL: 12/08/2018
TAGS: PGOV PHUM PINR RS SOCI EFIN
SUBJECT: SCENARIOS FOR RUSSIAN POLITICS IN ECONOMIC CRISIS

REF: A. MOSCOW 3242

B. MOSCOW 3375

Classified By: Ambassador John R. Beyrle for reason 1.4(d)


1. (C) Summary. An INDEM survey of top analysts suggests
that the economic crisis has shifted elite opinion on
Russia's course over the coming year, with a growing
expectation that the Medvedev-Putin tandem will either muddle
through or accelerate existing trends toward a "Pinochet"
model - a dictatorship of development. While most of
Russia's political elite see the clouds of economic crisis
worsening, the survey and our own inquiries into opinions
show divergence on the potential impact on the political
system. Some of our contacts, particularly those associated
with opposition liberal and leftist parties, expect that
economic woes will lead to social dissatisfaction and the
potential denting of the tandem's stratospheric popularity.
Others are more skeptical, with concerns that if the economic
situation reaches crisis proportions, the administration will
further tighten the screws and turn inward economically as a
means to distract the population from deteriorating social
circumstances. Declining approval ratings for the
government's handling of the crisis have begun to worry some
political groups as a harbinger of tightening government
control, although Medvedev and Putin have yet to suffer any
significant political weakening. End Summary.

The Revolutionaries (
--------------


2. (C) The INDEM assessment, conducted by INDEM President
Satarov himself, posits that the chances of a revolution
scenario increase only if the country suffers a severe
economic crisis (which it will). (In October, the INDEM
experts gave only a 1 percent chance for a "revolutionary
scenario.") Among our contacts, a distinct minority,
generally marginalized, Western-oriented liberals or hard
leftists, view economic crisis and its attendant social
dislocation as an opportunity to expand their political
power. At a minimum, they expect that a crisis will compel
the population to look for more information and alternative
models of development. As such, both Vladimir Milov of the
"Solidarity" movement and the Gorbachev Foundation's Valeriy
Solovey said that they expected the economic downturn to
precipitate a social and political crisis, which they could
use for expanding the political space.


3. (C) Ultimately, the "radical" liberals hope that an
economic crisis will create the political conditions for a
velvet or "Orange" revolution. Yabloko Youth leader and
Solidarity movement organizer Ilya Yashin told us in late
October that the global financial crisis would motivate
Russians to question the stability on which the current
government has premised its mandate. In particular, Yashin
forecast that previously non-political Russian youth (the
"children of perestroika," he called them) would eschew vague
nationalism in favor of a political force that can deliver
prosperity as well as personal and press freedoms.
Unsurprisingly, he calculated that Solidarity would capture
these newly politicized groups. Fellow Solidarity leader
Garry Kasparov shared a similar prediction with Ambassador on
November 3, noting that those who constitute what
approximates a Russian middle class will flock to Solidarity
when the crisis threatens their personal prosperity (Ref A).


4. (C) Leftist "radicals" likewise see economic crisis as
shifting the balance in their favor. Karin Kleman, a leader
of the newly formed Left Front movement, told us November 7
that the deepening economic crisis would lead Russia
inexorably leftward. In Kleman's estimation, up to 10
percent of Russians stand to fall from the middle class into
poverty since "now their chins are only just above the
water." Since Russia's natural tendency is left-leaning, she
added, these newly-poor Russians will protest in the streets
) along with pensioners and trade unions ) once they lose
access to the lifestyle they had enjoyed pre-crisis.

( and Their Detractors
--------------


5. (C) Those "revolutionaries" remain a distinct but small
minority. Others argued that the Russian public has
weathered difficult economic circumstances in recent decades
without revolt and is too apolitical and fragmented to
coalesce into a revolutionary movement. Aleksandr Auzan,
president of the National Project Institute, told us he had
little expectation of political reaction to an economic
slowdown. Society is atomized, with no faith in others
outside of narrow support networks. Russia suffers from a
moral crisis, with no sense that collective action can affect
change, according to Auzan. In the current environment, the
government can alleviate political stresses by buying out (or
making specific promises) to different social groups, thereby
keeping any opposition from coalescing.


6. (C) Aleksandr Kynev, chief of regional programs at the
Information Policy Development Foundation, likewise said that
he expected little change in public mood related to economic
conditions, until at least the new year. Planned increases
for electricity, housing, and other services will hit in
early January and are likely to affect pensioners and others
on fixed incomes, potentially providing fodder for localized
public unrest. That said, Kynev said that broader social
unrest is unlikely as is any widening of the political space.

Elite Conflict
--------------


7. (C) INDEM's second scenario -- a "palace coup" through
elite conflict -- appears somewhat more plausible, with a 4.5
percent chance that the current circumstances could overthrow
the current regime. Kynev argued that the economic crisis
could lead to independent activity by political players
within elite circles and potentially increase competition
between Kremlin groups. Head of the Mercator Group and
political commentator Dmitriy Oreshkin agreed, telling us on
November 25 that a breakdown in the "Putin consensus" is
likely under the pressure of economic difficulties. He was
dismissive of the idea of any independent "grass-roots"
movement emerging, but noted that social dissatisfaction
could, however, be used as a tool in intra-elite conflict.
He harked back to Kemerovo Governor Tuleyev's use of coal
miners to advance his political agenda and argued that local
and federal elites had manipulated almost all "major" strikes
to achieve narrow political interests.


8. (C) Predicting where possible fractures will emerge
within the elite remains a difficult task. Already, the
collapse of the Russian stock market has wiped away billions
in oligarchic wealth and shifted the balance of power. BBC
Editor in Chief for Russia, Konstantin Eggert, said that he
expected fighting within the elite to emerge as the
administration "picks winners" to award state financing --
those left in the cold are likely to seek recompense or
retribution. Others, like Panorama head Vladimir
Pribylovskiy, see the major fracture within the presidential
team between the "liberals" around Medvedev (including
Finance Minister Kudrin, Presidential Aide Dvorkovich, and
others) vs. the security service group around Deputy Premier
Sechin and former FSB head Patrushev. Thus far Putin has
proved skilled at managing the competition between the
disparate elite groupings, so such a scenario presupposes a
decline in his position as conflict arbiter.

Dictatorship of Development
--------------


9. (C) The most likely scenario for INDEM's experts, with a
56 percent likelihood, was a Pinochet model of increased
political control associated with an even greater
state-driven economic system. Proponents of this view point
to the intensification of political control as a reflection
within the administration about the "low probability, high
impact" scenarios outlined above -- popular unrest and elite
conflict. Center for Political Technologies analyst Tatyana
Stanovaya argued that the main driver in Putin's speech at
the United Russia conference last week and the economic
stimulus package that he outlined was the preservation of
Putin's popularity and political stability. Olga
Kryshtanovskaya of the Institute for the Study of Elites
identified similar objectives as the main drivers in the
tandem's approach to the economic crisis to us in a
conversation earlier in October. Putin's promises to
increase tax breaks, government salaries, and to stop the
devaluation of the ruble are the public "carrots" to hedge
the risk of the souring public mood.


10. (C) Behind the scenes, we have seen evidence of the
"knout" being brought into play as well. Putin's public
threats to the four prominent state-linked bankers against
using government stimulus money for "speculation" and
Medvedev's warnings about economic-related destabilization of
the social order give evidence of their concerns. Those
statements served as a "signal" to the elite across Russia,
likely triggering reactions such as the Prosecutor's office
threat to journalists writing about bank failures. Moreover,
it suggests that pressure on political movements and players
outside the system could be increased -- such as the recent
moves against NDI's democracy programs. Michael Delyagin,
the head of the Institute of Globalization Problems, has
argued that attacks against four leftists earlier this month
were a coordinated strategy by the security services to
undermine left-wing criticism of the regime. (Ref B.)


11. (C) As polling numbers dip -- already, the independent
Levada Center claims that approval ratings for the
government's approach to the economic crisis fell from 33
percent to 27 percent over the past month -- further
tightening of the screws on non-systemic political movements
like the emerging Solidarity bloc certainly seems plausible.
Moreover, regional and local leaders may see the center's
concern about maintaining stability as an excuse to crack
down on "meddlesome" human rights groups and other activists.
In spite of those concerns, public approval ratings for
Medvedev and Putin remain above 70 percent.

Comment
--------------


12. (C) The deepening economic crisis dominates the
political landscape, leading to considerable speculation
about the duration and depth of coming troubles; their impact
on society; and the potential political repercussions.
Despite the calming "things are under control" message from
the Kremlin and White House -- a belated admission that
Russia faces some real challenges in the year ahead -- there
are indications that the deteriorating economic conditions
are stressing the political fabric and changing the tandem's
focus. Current trends suggest that those pressures could lead
to a tightening of the already constrained political freedoms
in Russia, with little pushback from a society focused more
on pocketbook issues and a loss of economic opportunity. We
see this as a likely scenario which will reinforce the
near-term trends toward, and public acceptance of, a
"Pinochet" model of political and economic development
directed by the tandem in order to convey an image of
national stability. End comment.
BEYRLE