Andrew Osborn








Russian Revelation: The Crisis Strikes

E!Sharp, 1st January 2009 09:52

If we pretend it’s not there, maybe it will go away. That – at first at least – was the bizarre response of the Kremlin to the global financial crisis.

Prime Minister Vladimir Putin touted Russia as “a quiet harbour” for investors, and state TV carried apocalyptic reports portraying the crisis as a phenomenon that afflicted the West and the United States. But not Russia.

In Moscow, officials started to believe their own rhetoric – that Russia had become so rich and powerful that it had quietly decoupled from the world economy. The collapse of US investment bank Lehman Brothers and a rapid drop in global oil and commodity prices changed all that.

The Russian stock market swooned and the country’s oligarchs lost billions of dollars in paper value. Russia had caught America’s cold. It was a sobering experience. It was only this summer that Russia was claiming to have forged a new geopolitical paradigm – with its victorious five-day war against Georgia.

Back then, Kremlin ideologues had lined up on state TV to tell the population that the age of Washington was drawing to a close. And that the age of multilateralism and the BRIC economies – Brazil, Russia, India, and China – was here. Those voices have fallen silent now though. And talk of triumphalism has been replaced with talk of financial contagion.

For aspiring upwardly mobile Russians, it’s been a shock. This year’s annual millionaires’ fair in Moscow – a cocktail of bling and luxury boats, cars and helicopters – was less fizzy than usual.

People I know have not been paid their salaries for months – a peculiarly Russian phenomenon that has its roots in the 1990s. Why do they continue showing up for work? A mixture of apathy and hope. The longer they keep at it the more they are owed, and the more frightened they are of leaving.

Moscow’s transformation into a 21st-century capital built on the proceeds of black gold has also been halted. Developers have stopped work on what they said would have been Europe’s tallest tower and dreams of a new art museum that would have resembled a giant sliced orange have also been thrown into doubt.

The Communist Party, sidelined for almost two decades, is beginning to feel it might again have a shot at power. If the crisis triggers social unrest, it sees itself as the prime beneficiary. Meanwhile the government is banking on its foreign currency and gold reserves – the world’s third largest after China and Japan – to avoid that scenario. So far, that strategy has worked. Discouraged or even banned from using the word “crisis”, Russian journalists have other more life-threatening problems with which to contend.

One case in particular has highlighted the dangers they face. Mikhail Beketov, editor of a small newspaper in a town on Moscow’s northern fringe, was attacked in mid-November. Unknown assailants beat him with baseball bats in front of his house and left him for dead. Previously, his car had been set on fire and his dog beaten to death in front of his neighbours. For more than 24 hours, Beketov lay motionless, ignored by his neighbours. The delay in getting him to hospital proved serious – doctors later had to amputate one of his legs. Beketov had been a fierce critic of local authorities, opposing a lucrative road-building scheme through a nearby forest and probing alleged corruption.

Unlike many other similar cases before, Beketov’s fate got wide coverage in state media. That is so unusual that international media watchdogs are sceptical. Some think it a ploy to deflect attention from the trial of murdered investigative reporter Anna Politkovskaya. That trial has finally got underway. There’s only one problem – the suspected gunman and mastermind are not in the dock.

As Russia’s resurgence stutters, there is much talk of the return of Vladimir Putin to a role he held and made his own for eight years – the presidency. Now prime minister, his power and authority appear undiminished and he regularly upstages his presidential loyalist successor Dmitri Medvedev. Most recently, he did so during an annual question and answer session on state TV. The profile-boosting exercise was a staple of his presidency and it had been expected he would let Medvedev take over.

The sometimes bizarre cult of personality he enjoyed as president also persists and has even been amplified. When he celebrated his 56th birthday in October, state TV showed him playing with his favourite gift – a female tiger cub. Before that, he released a DVD showcasing his love of judo. Not that his macho image needs much work. Earlier this year, images of a bare-chested Putin on a fishing trip delighted female fans.

If he does want to return to the presidency in the role of saviour of the nation, a move analysts believe he is seriously considering, the way back has been well prepared.