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For the Kremlin, winning a supermajority in the Russian parliament was the easy part
Keywords: Russia, Putin, United Russia Party,
Tags: Current Focus, Russia,
Andrew Roth describes a situation in Russia where president Putin is more popular than the ruling party. The United Russia Party was shown having support of 45% in pre election polls. The election campaign used Putin posters and the slogan "the party of the president," to increase voter support. Some voters see Putin working really hard to improve the economic situation. Samuel Greene, director of the Russia Institute at King's College, London, says that even after efforts to increase support United Russia Party has failed to generate voter enthusiasm. Voter turnout was low especially in Moscow and St Petersburg. The election result is seen by experts as a way to give Putin support to tackle the economic problems facing the country, and ensure stability. About 343 members of the parliament out of total 450 are from the United Russia Party. The budget shortfall of 3% is being met by the government by using state funds, and one of the sovereign funds is likely to be exhausted in 2017. One of the options is to cut back on social entitlements, increase the pension age. Prime minister Medvedev has already said state pensions cannot be indexed because "we don't have the money right now."
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This account of life in the Kaluga region, a provincial city 110 miles south of Moscow, shows how Russia is coping with the 50% drop in the value of the ruble and the drop in oil prices below $50. Anatoly Karmanov, the able and energetic Russian who once ran a collective in the Brezhnev era, says its stupidity to have to hide that he talks to business people in other parts of the world to attract investment. VW plans to continue investment in the country, Continental AG is continuing production based on replacement demand for tires. The auto industry which provides about half of the output in Kaluga is hit hard, with the Association of European Business estimate of about 39% drop in production in Feb. 2015 compared to Feb. 2014. Only about 40% of production cost is from local parts at assembly factories, the rest is imported parts at the new ruble exchange rate, leading to a jump in prices and slumping demand.
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As one Russian economic expert put it we are just days from needing external help if no serious action is taken to restore public and business confidence in the ruble. On Dec. 17, 2014, Russian leaders took action to improve confidence and the ruble recovered by 11%. The role of Kudrin, Medvedev, and other advisers from the first and second terms of Putin is increasing as Russia faces increasing economic risks and deep recession.
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For the Kremlin, winning a supermajority in the Russian parliament was the easy part
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The careful management by Nabiullina has enabled Russia to avoid the worst effects of a collapse in oil prices. Experts say what Russia needs even more than a recovery in oil prices is the improvement in business conditions after interest rates of as high as 17% are bringing inflation closer to the target of 4%. Russia's rainy day fund of $500 billion in sovereign wealth fund, the devaluation of the rouble, help to the banking system to recapitalize, Russia's vastly expanded pension funds as a source of capital, and assistance to poorer sections of society, have enable Russia to cope with the collapse in oil prices. Yet much more needs to happen for a diversified economy and better relations with European Union to increase foreign investment and improve business climate.
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For the Kremlin, winning a supermajority in the Russian parliament was the easy part
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In an opinion article before the presidential election Putin told Russians that two or three missteps could undo all that has been achieved to reverse the hardships of the 1990's.
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