Teaching Comparative Government and Politics

Saturday, January 03, 2009

Economic growth equals political stability

The Economist (January 3) contains a good article about the changing political situation in Russia which also points out similarities between Russian and Chinese political-economic policies.

Uncle Volodya's flagging Christmas spirit

"The Russian government is beginning to run out of the goodies that it has traditionally used to buy popular acquiescence...

"Russian interior ministry officials admit that the country’s worsening economic situation could spark further protests among the working population over unpaid wages or threats of lay-offs. The risks are especially high in 'monocities' that depend on a single large factory or industry for employment...

"What Russia’s economic crisis certainly marks is the end of an implicit social contract between the Kremlin and the people. This was based on rising real incomes and selective repression. Economic growth, which has averaged 7% a year recently, has now come to an abrupt halt. Indeed, Russia faces a real risk of recession, as industrial production is declining fast. Real incomes, which have been growing even more rapidly than the economy, fell in November by 6.2% on a year earlier; wage arrears have almost doubled. The rouble is steadily losing value against the dollar. There is little doubt that Russia is heading into one of its most difficult years.

"Television propaganda, which has portrayed improving living conditions as part of the Kremlin’s grand design for lifting Russia off its knees against the ill wishes of the West, has proved helpless when it clashes with cold reality. One recent opinion poll shows that, over the past two months, trust in media coverage of the economic situation has declined dramatically. Only 28% of Russians now think that their media coverage is objective (against 37% two months ago)...

"It is unclear what a new social contract might look like, but some political shift is inevitable... But if Russia runs out of money before oil prices recover, Mr Putin’s magic will quickly run out."

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