Institute of Modern Russia

1. Elections: Results

The story: Second rounds in the gubernatorial vote are necessary in four regions—Khakassia, Primorsky Territory, Khabarovsk Territory and Vladimir—after last Sunday’s election, for the first time in more than ten years. United Russia also received worse results almost everywhere, given the pension reform. In Ulyanovsk, the party picked up 32.98 percent of the vote, dropping 24.64 percent since the last 2013 election. [RBC] 

The breakdown:

• In order to achieve transparency while still guaranteeing the correct result, the Kremlin lopped off certain candidates who had the potential to shake the predictability of the vote—aided by the municipal filter. But voting day turned into a day of protests and detentions, discrediting the authorities’ promotion of free and fair elections.
• Now the government is fearful of the impact protests against the pension reform may have had on the election, despite their preventive arrests on the eve of the rallies. Though the number of arrests on September 9, which took place in 59 cities out of 71, was lower than in March 2017 or May 2018, their scale was unprecedented.
• Despite the surprises in Khabarovsk and Primorsky, turnout was low—Moscow’s was less than in 2013—even in the regions where the Kremlin choice was readily elected. [Vedomosti]
• A source in the leadership of United Russia said that the party’s results were better than expected—“We thought it would be neck and neck with the Communists.” The party’s Secretary of the General Council, Andrei Turchak, noted that the results were realistic, arguing that no party in power would win after the raising of the retirement age. [RBC]

Experts weigh in:

• Denis Volkov, Levada Center: The popularity of the party of power has been declining for three years now. If United Russia isn’t able to reverse this course before the Duma elections in 2021, it’s possible that it will need to rebrand.
• At the same time, individual victories by opposition candidates are unlikely to lead to stronger systemic opposition (after A Just Russia won the protest vote in 2011 and was punished for trying to saddle the protest wave, it still hasn’t recovered. So it’s unlikely the Communist Party or LDPR want to follow in its footsteps). But overall, the results signal a loss of control over the situation by the authorities. [RBC]
• Alexander Ryklin, editor-in-chief of EJ.ru: Sergei Sobyanin’s victory is a triumph of Moscow’s nomenclature. With slightly more than 70 percent of those who voted in favor of the incumbent, compared to 51.37 percent five years ago, it’s not a result of admiration, but of emasculation of the electoral process itself. [The New Times]
• Dmitry Travin, European University in St. Petersburg: If Lenin had been resurrected on Sunday, he would have concluded that the Russian authoritarian regime has a dubious future. But a democratic future does not mean automatic transition to economic prosperity or unconditional observance of minority rights. [Republic]
• Andrey Pertsev, journalist: Though voters are dissatisfied with the pension reform, falling living standards and increasing taxes, strong candidates are either not allowed to run or prefer to cooperate with the authorities. Under these conditions, the public votes almost randomly—for anyone, but the Kremlin candidates. [Carnegie.ru]

2. Zolotov vs. Navalny

The challenge: On Tuesday, Viktor Zolotov, the head of the Russian National Guard, published a video message to Alexei Navalny, responding to the Anti-Corruption Fund’s August allegations that the Russian Guard had committed large-scale theft in the purchase of food for its employees. The Anti-Corruption Fund’s original message was also in the form of a video, and won Navalny a presidential sanction.

• Interestingly, Zolotov chose to respond to the Anti-Corruption Fund in the same media format, which some experts explain as a way to appeal to younger demographics or to avoid losing loyalty from his own personnel in the Russian Guard.
• Zolotov promised to make “a nice juicy chop” out of the oppositionist. He was also one of the first officials to call Navalny by his name—something that Vladimir Putin, his press secretary and other top officials refuse to do. [RBC]
• By the end of the day of its publication, the video had received more than 620,000views on YouTube and triggered a social media craze, #ZolotovChallenge, in support of Navalny in what some are calling a modern-day duel. [The New Times]

Looking for logic in Zolotov’s message:

• Ivan Davydov, columnist: Zolotov believes he defended his and his organization’s honor, but from the outside, it looks like a high-ranking security official threatening a peaceful citizen. His message sounds like a public confession of his inability to defend the Russian Guard within Russia’s own legal framework. [New Times]
• Vladimir Ruvinsky, Maria Zheleznova, journalists: Until now, no matter how sensitive the blow caused by Navalny’s investigations, the defendants remained silent (Oleg Deripaska), explained their position (Vyacheslav Volodin) or sued (Alisher Usmanov). But Zolotov’s appeal to physical violence in a political dispute points to a Russia that is moving backward. [Vedomosti]
• Tatyana Stanovaya, R.Politik: Zolotov’s video points to fragmentation in the Putin system, where the president is restricting himself to strategic issues and thus devoting less time to operating his patronage network. Each player inside the system will have to choose his own method of survival, instead of thinking about collective security. [Carnegie.ru]
• Editorial view: One has to admit: Russia is governed by horrible people. A system in which some leaders build an innovative economy and others invite every opponent to a duel cannot develop. [Republic]

On social networks, Zolotov’s message caused widespread discussion on all sides. Fellow oppositionist politician Leonid Volkov wrote on Facebook that the politician is currently detained—it’s not so much that Zolotov “challenged Navalny to a duel,” but rather that he threatened his own hostage. At the other end of the spectrum, Chechen leader Ramzan Kadyrov called Zolotov “a real man” on Telegram, approving of his message. [Bell]

3. Ruble’s Troubles

The story: Over the last few weeks, the Russian ruble has notably devalued (by about 10 percent since August 1), with its exchange rate to the U.S. dollar exceeding 70 rubles last week. [Kommersant] 

What is going on?

• This significant fluctuation can be explained by large local purchases of foreign currency by the Central Bank. Another possible factor is the flight of foreign investors in the light of the new anti-Russian sanctions (over the Skripal attacks)and potentially others, currently underway.
• However, earlier this week, the ruble managed to stabilize. Some analysts attribute this correction to a slight increase in oil prices and a certain interference by the Finance Ministry, whose officials also tried to convince the markets in a profound undervaluation of the ruble. [Kommersant]
• Still, following the September 13 U.S. State Department’s announcementregarding the second round of sanctions over the Skripal attack, the ruble exchange rate to the dollar spiked up to 73.48 in less than two hours. [Vedomosti]
• There is also a domestic factor—the accelerated inflation rate of around 3 percent that for a year has been kept below the Central Bank’s target of 4 percent. This period might be over, as the Bank’s outlook for 2019 projects a target-beating inflation rate. [RBC]
• It is also noteworthy that since January 2018, net capital flight from Russia, according to the Central Bank, amounted to 26.5 billion rubles ($390 million), which is 2.8 times more than in the same period of 2017. [Economy Times]

On a different economic front:

• This week, the Stolypin Institute for the Economy of Growth (led by 2018 presidential candidate and ombudsman Boris Titov) published a report that revealed that the Russian economy lost 43 trillion rubles ($630 billion) of potential added value due to a catastrophic decrease in productivity. This amounts to almost half of the country’s GDP (92 trillion rubles in 2017).
• The report notes that extraction of minerals remains Russia’s most efficient industry, with fishing and trade coming second and third. The least efficient sectors are public administration, education, housing, social services and healthcare. [RBC]

Other stories that mattered this week (in Russian)

• “Salisbury Cathedral with a Ticking Bomb”: Journalist Yulia Latynina argues that after the RT interview with the GRU officers named by Britain’s Scotland Yard in the Skripal attack (Alexander Petrov and Ruslan Boshirov), the only way forward for the two is to enter the State Duma. [Novaya Gazeta]
• “The Judgement Day Book: Why the Crimean consensus has ended”: Konstantin Gaaze argues that in the Russia of today, where there is no one left to blame for the woes and poverty, there is only one card left for the Kremlin to play: purges against “enemies of Russia.” [Carnegie.ru]
• “Peter Verzilov Hospitalized, Poisoning Suspected”: The founder and mastermind of protest punk group Pussy Riot was brought to a Moscow hospital on September 12 after he collapsed and started losing consciousness. [Media Zona]