Russia faces up to its woes | Stalled factories and fireside chats | The Economist
RUSSIA’S president, Dmitry Medvedev, has taken to giving televised fireside chats about the financial crisis. Not before time. As unemployment spirals, industrial production slumps, inflation gallops, the rouble slides and the budget creaks, ordinary Russians are wondering what is going on. Polls show that many—over half the population—have little idea of what the government is doing to help them.
When Russia’s oil-fuelled economy began to slump last autumn, later than many other countries’, the Kremlin stifled public debate, dismissively blaming America for “infecting” the world. The infection proved catching, though, and soon world oil prices slid and hundreds of thousands of Russians lost their jobs. Peremptory silence no longer works. “It is very important to tell the truth,” Mr Medvedev now tells Russians on state television. The Kremlin has become more candid about the severity of their economic condition. Having spent weeks predicting that the economy would show zero growth or perhaps a small contraction this year, the economy ministry now admits it will “probably” shrink by 2.2%. That, it says, is because investment in 2009 will fall by 14%.
For a country that has boomed for the past eight years, with annual GDP growth reaching 8%, this is a particularly harsh blow. Independent economists think that even a 2.2% contraction in GDP is wildly optimistic. Depending on the price of oil, it could shrink by 5% or even 10% of GDP. The two main stockmarket indices have lost nearly 80% since their peak last year. The rouble has lost more than 30% of its value against the dollar. At the same time the price of food, most of which is imported, has continued to rise.
The falling oil price is causing other problems, too. Officials have said Russia faces a budget deficit this year of around 8%. Mr Putin has spoken of “optimising” the budget. Even the 2014 Winter Olympics in Sochi, which the Kremlin hopes will bring glory and gold, will have its budget cut by 15%. Nevertheless, the belt-tightening has not stopped Russia from doling out billions of dollars’ worth of loans to former Soviet republics such as Kyrgyzstan and Belarus to extend its geopolitical interests.
The Kremlin has also spent over $200 billion of its reserves to cushion the devaluation of the rouble and avoid public panic. It still has more than $380 billion left, the third-largest reserves in the world, prompting a fierce debate over how best to use them. Some, like Moscow’s mayor, Yuri Luzhkov, are frustrated that so much of the money seems to have been held back and want it to be poured into the economy. Others, such as the liberal finance minister, Alexei Kudrin, disagree. About 500,000 Russians are waiting to be paid late wages, which, with inflation running at 13%, are fast diminishing in value. Many more have seen the factories on which their livelihoods depend cutting production or even halting assembly lines. The conveyor belt at the giant Avtovaz car factory, which produces the ubiquitous Lada, has spent much of this year motionless. In January industrial output plummeted by 16%, its steepest fall in years.
Russia’s unemployment rate rose to 7.7% in December, the highest rate since November 2005. That, the government said, meant 5.8m Russians were out of work. The unofficial unemployment rate is, however, much higher and many Russians who say they have jobs are in fact on indefinite unpaid leave. Even oligarchs are feeling the pain. A new rich list published by Finans magazine said the number of dollar billionaires had fallen by more than half to 49 because of the crisis.
There are some signs of discontent. In the far-eastern port of Vladivostok, thousands have taken to the streets to protest against higher import tariffs on second-hand Japanese cars, the sale of which is the backbone of the local economy. In a sign of the Kremlin’s nervousness, riot police from Moscow have been sent to deal with the trouble. Pundits predict more unrest in towns, of which there are many in Russia, that rely entirely on one ailing factory or industry. But so far the signs are limited.
That said, the economic misery may be taking the shine off the stellar ratings of Mr Medvedev and Vladimir Putin, now prime minister, even though opinion polls suggest they still enjoy approval ratings well above 65%. The Kremlin’s obscure politics are stirring too. Some see Mr Medvedev’s new activity as an attempt to pull away from Mr Putin’s influence. Others think the prime minister is pushing him forward to take the opprobrium. Either way, heads have begun to roll. Mr Medvedev has fired four regional governors. More sackings can be expected as the economy sinks.
esto debe de ser un mantra de los politicuchos:
" es culpa de Bush" , a quita , que ahora no esta. Sustituyamos Bush por USA.
funcionanrá si mi parienta me pilla con otra?, no mira cariño, lo que ha pasado es culpa de Bush, su economía me ha infectado.