The Institute of Modern Russia continues its series of interviews with Russian and Western experts on the situation in Russia, its relationship with the West, and the future of its political system. Journalist Leonid Martynyuk spoke with former chairman of Russia’s Central Bank, economist Sergei Aleksashenko, about the social and political situation in the country, the Kremlin’s propaganda, Putin’s tactics in Donbass, and the efficiency of Western sanctions.
According to Sergei Aleksashenko, economic difficulties and decrease of the Russian’s real income will not bring about political change in Russia. Photo: TASS
Leonid Martynyuk: It has been two months since the assassination of Boris Nemtsov. Who do you think is behind this crime?
Sergei Aleksashenko: It was Vladimir Putin who benefited from Boris’s assassination. But that doesn’t mean he was the one who initiated the murder. It was initiated by Putin’s system. There is a well-known phrase [by Anton Chekhov, referring to theatre] that if there is a rifle hanging on the wall in the first act, then it has to shoot in the last one. During fifteen years [of being in power] Putin has been hanging rifles all over the walls of the Russian political theatre. But in recent years this process has intensified, especially following the protests of 2011–2012 and then the annexation of Crimea. Political repressions against those who oppose [the authorities]; cruel beatings of protesters; posters saying “they are aliens” in the center of Moscow; constant talks by high-profile politicians about “national traitors” and “the fifth column” [both referring to members of the opposition]; brainwashing through federal television networks—all of these were bound to come about sooner or later. Nemtsov’s death is one way in which these political changes came to be expressed.
I’ve come to look at it this way: the fact that it was Boris who was killed was accidental, but a political assassination itself was pre-determined. I’ve got no reason to think that a direct order to kill Boris came from Putin. Putin is a man who has lines that he won’t consider crossing for one reason or another. Political murder is one such line.
LM: Do you think a new political reality has been established in Russia following Nemtsov’s assassination?
SA: I’m afraid it hasn’t, because Russian society is in the state of apathy. Even a 70,000-people march to mourn Nemtsov seemed to be an isolated event, an emotional reaction, but not a trigger for change. On the other hand, as Deng Xiaoping said [200 years after the French Revolution], “It’s too early yet to draw conclusions.” Let’s live a little longer and see what happens—and then we’ll see if February 27th [the day Nemtsov was murdered] was a turning point.
LM: What might serve as an indicator of a changing political reality?
SA: If a tightening of the screws leads to further political murders, then we can talk about a new stage in the society’s development. If the public shows its civil duty during the upcoming elections in the fall of 2015, if people come to the polling stations to vote and demonstrate that they care about what’s going on in the country, then we can say that February 27th has become a special day in our history. Or if during a historically short time—in six months to a year—[law and order are] established [in Chechnya] and Russia’s laws begin to work all over the Chechen territory and for all of its people, then we can say that February 27th has become a turning point. But if none of this happens, then Boris’s death will remain a meaningful event for many people, but no more than that...
LM: Many observers note that since 1999, a sort of a tacit bargain has been made between the Russian people and the Kremlin. It goes: “I, Putin, give you [social benefits, such as] increasing pensions and salaries, and you, citizens, businesses, etc., keep out of politics.” In 2014, for the first time since then, Russians’ real income has fallen. Not by much, for now—it’s only dropped 1 percent over the last year, but at the same time, it was 7.3 percent in December. How will the dissolution of that bargain affect the regime’s sustainability?
SA: I don’t think economic difficulties and the fall of population’s real income will accelerate the political process in our country. Economic problems might affect Putin’s approval rating, but such effects will be very slow and inconsistent. We observed a significant drop in income last December and January due to rising inflation, but it had no effect on Putin’s rating whatsoever. The political rating doesn’t exist by itself in a vacuum. You can’t be a winner at the Olympics unless you beat your competitors—you need to have rivals. But in a political environment with no rivals [like in Russia], one’s rating is obliged to be high. I’m not counting on serious changes in the current political landscape because Putin’s regime has a tight grip on the electoral process. There will be no [“accidental” victories by opposition candidates], neither this year nor at the 2016 Duma elections, and there will be no burst of public emotion or free nominations of candidates, or equal access to mass media or to financing—the opposition will have none of these.
LM: Nevertheless, United Russia’s approval rating is decreasing.
SA: One can and should, of course, be glad that United Russia didn’t win a constitutional majority in the 2011 elections. It was a big victory for the opposition coalition, but we can see just as well that there are the same old parties that make it to Duma, [United Russia, Just Russia, Liberal Democratic Party, and the Communist Party—all of them “approved” by the Kremlin], therefore it doesn’t really matter how the seats are distributed among them. United Russia can get 49.6 percent of the vote or 29.6 percent—but the quality of parliament won’t change.
I don’t expect that the Russian population will suddenly decide to rise up against the corrupt regime and fight for their economic interests, as happened in Ukraine. I don’t recall any massive protests to defend economic rights in the 1990s, when the Russian population was far more passionate and the economic situation was much worse.
LM: You’ve mentioned rivals. What about the “foreign enemy”? Anti-Western sentiments in Russia have reached a historic high: according to recent polls by the Levada-Center, 81 percent of Russians disapprove of the United States (compared to 44 percent last year), and 71 percent have the same negative feeling towards the European Union (34 percent last year). Those are the lowest approval ratings in twenty-five years. Do you think this is a result of propaganda?
SA: On one hand, the perception of the West as an enemy is surely a result of propaganda. Its work can be seen clearly if you look at the Levada-Center’s statistical series on the issues of Georgia and Ukraine. As soon as the aggressive propaganda leaves the television screens, public attitude will change back to normal.
But sociology is the art of formulating a question. Depending on how a question is put, you receive one answer or another. For example, the Levada-Center conducted another survey [where the question was put the following way]: “What are hopes for Russia’s future economic prosperity associated with?” And three choices to answer: 1) with technological innovation and a rise in labor productivity; 2) with export of raw materials; or 3) with military confrontation. In other words, the three choices mean: 1) cooperation with the West; 2) cooperation with China; and 3) self-isolation. The results of this survey show different attitudes: 60 percent of Russians chose technological innovation, 20 percent the export of raw materials, and 8 percent military power. So when the question is phrased differently from what is being said on television, you receive quite a different answer.
LM: Why has the idea of confrontation with the West been imposed on the people?
SA: If you look at Russia’s political history, you can track similar accusations that the West is responsible for all deadly sins and has nurtured the sole goal of destroying Russia since as far back as the seventeenth and eighteenth centuries. This is consistent behavior of the Russian political elite, which is always ready to accuse anyone but itself. Thus, the Russian public’s current attitudes towards the West might be inspired by propaganda, but the attitudes of the political elite, unfortunately, originated in the past.
The direct effect that economic sanctions have on Russia is that the Russian economy will be losing 3 to 4 percent of its GDP on payments for foreign debt. This means fewer investments in the country, a lower consumption level, a slowdown of growth rates, and a decline in living standards over the long term.
LM: Today, the Ukraine conflict is the main stumbling block in the relationship between Russia and the West. There are two basic ways of viewing Putin’s military strategy. First: Putin engineered a military conflict in Donbass in order to make the world forget about the annexation of Crimea. Second: Putin needs the whole southeast of Ukraine or maybe more—all of Ukraine, Belarus, Kazakhstan, and the Baltic States. Which version is closer to the truth?
SA: Putin lacks strategic thinking; he’s never been good at it. There is an English expression to describe him: opportunistic politician. To speak of some special strategy of Putin’s is to deceive oneself. Events in Eastern Ukraine started with euphoria caused by the annexation of Crimea a year ago. Since everything went so well in Crimea, [Russia decided to] try Eastern Ukraine. This isn’t a strategy. Here are the ideas that Putin keeps repeating: Russians and Ukrainians are the same people; Ukraine is a failed state; and there is a major difference between the East and the West of that country. That is why attempts to tear Ukraine apart started a year ago.
One should remember that beside Donetsk and Lugansk [among regions which declared their pro-Russian position] there were Kharkiv, Dnepropetrovsk, and Odessa. In a country where nothing like this has happened for the last twenty-five years, there was suddenly a synchronized rise of militarized rebels in the largest industrial and political centers. After rebels in Dnepropetrovsk and Kharkiv were harshly rebuffed, and after the tragic events in Odessa, Putin started to act more tactically in Donbass. Donbass became a tool for the destabilization of Ukraine. A war in Donbass is relatively cheap for Putin in terms of the size of the Russian economy, while Ukraine spends a lot on this war, and it has lost plenty. Donbass provides for 20 to 25 percent of Ukraine’s industrial production and export income—it is a very important region for the country’s economy.
LM: What is Putin’s current goal in Donbass?
SA: Putin’s behavior looks rather traditional—taking a hostage to twist the arms of the Ukrainian authorities. I think Putin wants Ukraine to voluntarily enter the sphere of Russian influence—through the Eurasian Union or in some other form. What he doesn’t understand is that the Ukrainian people have passed the point of no return and feel political disgust towards any union associated with Russia.
LM: In response to Russia’s annexation of Crimea and the war in Donbass, Western countries imposed economic sanctions against Russia. Are those sanctions fair, in your opinion?
SA: I think the word “fair” doesn’t really apply to sanctions. Russia violated many international agreements, invaded a territory of a foreign country, and is leading a hybrid war in Donbass. In the opinion of Western leaders, all these actions are unacceptable for the contemporary world because they threaten both the European security system and the whole system of international relations established after World War II. The West’s position is that Russia, who obviously doesn’t seem to be backing off from the invaded territories, must pay some sort of price. Sanctions are such a price.
LM: Is it an effective measure?
SA: Sanctions are hardly very effective. They were first imposed right after the declaration that Crimea was about to join Russia, but they could stop neither [the annexation] nor escalation of the conflict in Eastern Ukraine, nor turning Donbass into a territory of frozen conflict. It would be wrong to say that sanctions achieved their political goals. I think that Western countries themselves didn’t really believe that they would reach those goals.
The influence of economic sanctions is more viable, but it shouldn’t be exaggerated, since [as they were imposed], simultaneously, oil prices started to fall, and all this coincided with the highest payments for foreign corporate debt due at the end of 2014. As a result, [we saw] serious shocks at the exchange market in December that many observers rushed to explain as the work of sanctions. But now that these developments are in the past, the Russian exchange market has stabilized. However, the dynamic of the Russian economy became clear: the general trend is downward. The direct effect that economic sanctions have on Russia is that the Russian economy will be losing 3 to 4 percent of its GDP on payments for foreign debt. This means fewer investments in the country, a lower consumption level, a slowdown of growth rates, and a decline in living standards over the long term. The West is clearly aware that sanctions cannot “bring Russia to its knees,” nor can they destroy the Russian economy. The goal is still to stop escalation of the conflict in Eastern Ukraine and bring Donbass back under Kiev’s authority. But everyone knows that this process might take years.
LM: Which sanctions are more effective—those that target industries or those that target individuals?
SA: Today, the number of individuals affected by sanctions is less than a hundred people. For a country with a population of 140 million, the scale of such sanctions is close to zero. There are 170 members of the Federation Council who voted for deployment of Russian troops in Ukraine, and there are deputies of the State Duma who voted for the annexation of Crimea—none of those individuals has been subjected to sanctions. Sanctions against individuals are unpleasant for those who are affected, but they still have no impact on their behavior or the development of the situation in general.
As for the industries, like homeopathy, sanctions work slowly. They remove opportunities for bringing in Western technologies and equipment for Russian industries (oil, gas, and defense), and force Russian authorities to make irrational decisions—like spending financial resources on dubious (in terms of economic efficiency) projects under the influence of lobbyists. All of this decreases the already bleak prospects for growth of the Russian economy. Comparing economic and individual sanctions, the effect of the former is clear, while that of the latter equals zero.
LM: What are the chances of Russia being cut off from SWIFT (Society for Worldwide Interbank Financial Telecommunication)?
SA: Discussions of cutting Russia off from SWIFT, as well as the toughening of sanctions against Russia, are only hypothetical, because no one really wants to toughen those sanctions, neither Europe nor the United States. The U.S. stance is that Ukraine is a European issue, so let the Europeans sort it out. And Europeans think that economic sanctions hurt the EU economy and its business interests, so further toughening of sanctions is not beneficial and therefore not of interest to them. So if there is no serious aggravation of the military and political conflict in Ukraine, there will be no new sanctions imposed.
LM: So, until Putin takes over Mariupol, there will be no new sanctions?
SA: I even think that if he takes over Mariupol very slowly, district by district, there still will be no new sanctions. But if Putin makes a rapid breakthrough, let’s say 300 kilometers [towards] Crimea, then, of course, new sanctions will be imposed.
