Pension reform continues to concern Russian people and experts the most, with about 90 percent of Russians disapproving and Vladimir Putin’s rating falling to its pre-Crimea level. Another development is the update of the presidential envoys system, which experts see as a devaluation of this bureaucratic institute. Finally, with OPEC-plus agreeing to increase oil production, Russia may rip some significant benefits from the new deal.

 

90 percent of Russians disapprove of the pension reform. Photo: Aleksei Sukhorukov, ZUMA Wire | TASS.

 

  1. Pension Reform Protests 

The story: The approximately 90 percent of Russians who do not approve of the pension reform has translated to 100 applications for protests in 70 cities across the country and collected nearly 2.5 million signatures on an online petition. Many trade unions and political parties—including Yabloko, the Communist Party and the Liberal Democratic Party—seek to rally against the reforms after the World Cup ends in July. Unsurprisingly, United Russia was banned from criticizing the reform. [Vedomosti]

What it means:

  • Financially speaking, the increase in the retirement age is meant to preserve the status quo—and this is exactly what the protesters are against. Instead of protesting the reform itself, they are calling for more significant changes in the Russian economy and society. [Kommersant]
  • But the protests will benefit the Kremlin, both by placing more control in the government’s hands—in terms of how many people participate and where they take place—and providing it with a good reason to follow through on the rumored pre-planned concessions.
  • To “concede” in response to popular discontent, the Kremlin may reduce the retirement benchmark by a couple of years, for example. It’s likely that the government sees the protests as part of the implementation process itself. [Vedomosti]

Experts weigh in:

  • Sergey Khramov, head of the Union of Trade Unions of Russia: We should not forget that the Federation of Independent Trade Unions of Russia is not only loyal to the authorities, but is also the largest employer of the Russian Federation. [Novaya Gazeta]
  • Sergey Aleksashenko, economist: The retirement age is the most important aspect of the pension reform for Russian citizens, but not for the pension system. The fact is that Russia does not need to raise the retirement age—it needs to raise labor productivity in order to raise pensions and improve life in the long term. [Ekho Moskvy]
  • Andrei Movchan, Moscow Carnegie Center: Raising the retirement age is a way to delay today’s problems, which will lead to a catastrophe 20 years down the road at the expense of Russia’s vulnerable elderly population. Russia’s backward pension program needs to be gutted. [Carnegie.ru]

Putin’s ratings fall: Though pension reform continues to be publicly recognized as Medvedev’s, rather than Putin’s issue, the president's electoral ratings dropped from 62 percentto 54 percentin the span of a week, according to a poll by the Russian Public Opinion Research Center (WCIOM). [Vedomosti]

 

  1. Presidential Envoys Update 

The story: Putin updated half of Russia’s plenipotentiary representatives this week, removing Oleg Belaventsev from the North Caucasus Federal District and Igor Kholmansky from the Ural Federal District. They were replaced by former KGB official Alexander Matovnikov and former presidential advisor and governor of Kaliningrad Nikolai Tsukanov, respectively. The fate of Volga representative Mikhail Babich remains unknown, and the representatives in the Southern, North-West, Siberian and Far East Federal Districts have not changed. [New Times]

Spotlight on Kholmansky:

  • Kholmansky, who was appointed to the Ural District in 2012, emerged in the public eye in 2011 when he expressed support for Putin during a teleconference.
  • According to political scientist Alexander Kynev, Kholmansky’s appointment was purely experimental—Kholmansky himself was a worker, with no experience in politics. He simply signed up for Putin’s electoral campaign and was rewarded.
  • Yevgeny Roizman, former mayor of Yekaterinburg, mentioned that presidential envoys are judged on the activity of their representatives and influence on the region. Though Kholmansky didn’t do anything wrong, he wasn’t active either.
  • Tsukanov, Kholmansky’s replacement, is a stranger in the Urals and unaffiliated with the local elite. Thus, the presidential envoy in the region is further devalued. [Novaya Gazeta]

On the envoys system:

  • Alexander Kynev: The institution of presidential envoys is an extraneous bureaucratic and sluggish superstructure that is inherently redundant. Though there was hope it might undergo reforms and begin to cater to regional development, this was never realized.
  • Andrei Kolyadin, political scientist: The personnel shifts in the envoys system mean that its function will not change. The president appoints well-known people whom he’s comfortable working with and their task is to monitor and implement decisions made on the federal level in the regions. [Kommersant]

 

  1. The Oil Consensus

The story: at a Vienna meeting on June 22-23, members and non-members of OPEC agreed to relax the current restrictions on oil production by increasing output by 1 million barrels per day. Russia’s quota in this increase will amount to 200,000 barrels per day.

  • According to Russia’s energy minister Alexander Novak, the first bump in production could be observed as early as July.
  • This decision, however, was not supported by many OPEC members (especially those dependent on oil exports—Venezuela, Libya, Iran) as it goes against the agreed-upon 2016 strategy of limiting the global oil glut (by reducing production by 1.8 million barrels) to ensure higher oil prices. [Vedomosti]
  • The increase in oil production may attract foreign currency to Russia and boost its GDP by 0.1 percent. [Novaya Gazeta]

What it means: 

  • Peter Kaznacheyev, economist: the agreement was largely based on oil diplomacy conducted by Saudi Arabia with regards to Russia. But closer ties between these two countries actually signify a weaker, not stronger OPEC. In light of the shale revolution in the U.S., Riyadh can no longer single-handedly balance oil markets and needs Russia’s assistance. [Vedomosti]
  • Mikhail Krutikhin, RusEnergy: Russia and Saudi Arabia are trying to curb growing U.S. competition by bringing oil prices down and thus limiting shale production thriving at higher prices. At the same time, Russia’s bump is laughable, as oil production in the country will only return to its normal level—it peaked in 2016 when the agreement was made [Novaya Gazeta].
  • Andrei Konoplyannik, economist: According to Bloomberg, the 1 million barrel increase pursued by Saudi Arabia is directly linked to a request made by the U.S. administration, which anticipates a reduction of oil supply following the reintroduction of the Iran sanctions.
  • These developments also highlight a deeper trend on the energy market. There might be a growing consensus among the key players (United States, Saudi Arabia and Russia) that a more acceptable oil price level would be $60 per barrel as opposed to the current $80. And it seems that for the first time Russia is among the countries which will determine global oil prices [RBC].

 

Other stories that mattered this week (in Russian)

  • Shadows of the solstice”: Political technologist Gleb Pavlovsky comments on the recent revelation that former Yeltsin aide Valentin Yumashev has been advising Vladimir Putin since 2000 [Carnegie.ru]
  • Secrets of Donbass: What the FSB suspects Karina Tsurkan of”: RBC reports on the arrest of the board member of Inter RAO Group, who is accused of espionage [RBC].
  • Party like a Russian. World Cup as legitimization of Putin’s Russia”: Historian Sergei Medvedev discusses the international embracement of the soccer championship in Russia, which serves as a direct encouragement of the Kremlin’s domestic and foreign policies. [Republic]

 

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