Vladimir Putin spoke at the Russia Calling! Investment Forum, where he was eager to tell both foreign and domestic audiences about the success achieved by the Russian economy. The president quoted the official figures for economic growth (4% according to government agencies), and also talked about the growing GDP and record-low unemployment figures.
«Overall, Russia has a record-low unemployment rate of just 2.3 percent. Compared to the majority of the world’s leading and developing economies, this figure is minimal. For example, in many European nations, it stands at seven percent or higher, whereas in our country, I reiterate, it is slightly above two percent. As a comparison, to back up my statement: it is 7.6 percent in Italy, 7.3 percent in France, a little less in Canada — 5.4 percent, 11 percent in Greece, eight percent in Brazil, and 7.6 percent in Sweden», Putin beamed.
He described supposedly brilliant prospects for investment in the Russian market to the «investors from friendly countries». Putin loves to tout economic successes, trying to prove to Western countries and Russians that sanctions are not working, but are only making the Kremlin and the Russian government better off. Apparently, the Russian leader himself would like to think so: even the most cautious hints of difficulties dropped by various public officials in conversations with him are met with objections and rebuffs. For instance, Alexey Nekhaiyev, leader of the «New People» party, admitted at a meeting with Putin that he was concerned about the budget deficit (which currently stands at 1.17 trillion rubles). Putin immediately replied that «the deficit is small», although the difference between the revenues and expenditure is almost as much as the country spends on education. The president is only eager to listen to those who say the things he likes, and who spread sound bites similar to his own view of the situation, and that in itself is nothing new. Until recently, however, Putin has listened carefully to realists who are experts in the field of economics, and there are indeed many such professionals in the Russian power vertical (for example, the head of the Central Bank, Elvira Nabiullina is one). It is these people who are keeping the situation afloat, although they are aware of the challenges and realize that the budget is largely held together by spending the money accumulated before the war.
Nowadays the ultra-optimists (first and foremost Maxim Oreshkin, the deputy head of the presidential administration) have much more influence on Putin. They know how to «always look at the bright side of life»: for example, the labor shortage, which is having an increasingly negative impact on the Russian economy, is transformed into record-low unemployment figures. The ultra-optimists conveniently fail to mention that the lion’s share of industrial growth is driven by the military industry, which is state-funded. Putin goes public with abstract figures and optimistic interpretations that are in line with his own views and beliefs.
Flexible professionals are adapting to this mode of ultra-optimism. Kirill Dmitriev, who heads the Russian Direct Investment Fund, has said that many Western investors and companies that had left the Russian market regret their departure and are expected to try to return to the country. In reality, however, companies continue to leave the Russian market and their assets are being re-distributed to «deserving» new owners. Putin’s ultra-optimism comes amid statements from Russian businessmen about record-high interest rates on loans that make any business development meaningless. The gulf between those who govern and those representing the real economy has never been so stark to see. And while in the public political sphere it is still possible to create a virtual world in which the course promoted by the ruling party and the government enjoys total public support, in the economic sphere it is impossible to conjure up the same virtual reality of prosperity and well-being.
Shooting high, aiming low
At a seminar for vice-governors on politics, the political bloc of the presidential administration announced the results it wanted to secure for the «United Russia» party in the 2026 State Duma elections. The formula for the new KPI is as follows: 55% of votes for the ruling party with the 55% turnout. After Sergey Kiriyenko joined the Kremlin in 2016, political administrators began to set clear targets for their regional colleagues very much in the spirit of corporate governance that Kiriyenko adheres to. However, we have already seen that the presidential administration always sets itself lower KPI goals. For example, on the eve of the last Duma elections in 2016, the administration broadcast that it wanted the ruling party’s result to be 45% of the vote with the 45% turnout. The official result was 49.8% for the Duma, with a turnout of 51%. For the 2024 presidential election, the public KPI was set at 75% in favor of Putin with the 70% turnout, but the Central Election Commission reported 87.3% of the vote for Putin with the 77.5% turnout. With the help of lower KPIs, the political bloc reports to the top leadership, and above all to the president, that new records have been set. The political managers themselves set the bar a notch lower and then exceed it with flying colours, which is obviously very convenient. The public KPIs can be described as the minimum-minimorum that the political bloc is fully confident of achieving. It has at its disposal the arsenal of corporate mobilization and now also the electronic voting, which is being introduced throughout the country. Most likely, the Kremlin wants the «United Russia» party to «receive» 60−70% of the vote with a turnout of 55−60%. That will allow Kiriyenko’s political bloc to break the records set during the last State Duma elections. At the same time, if Putin tops the list of the «United Russia» party (and this scenario cannot be ruled out, since the «bears», the «United Russia”‘s nickname, enjoy only 40−45% of support and need a powerful locomotive), even the public KPI will inevitably increase: after all, we are talking about voting for Putin personally, and the president wants to see new records figures of support.
In the event of serious economic difficulties and a drop in the «United Russia» ratings, the political bloc will focus on the lower limit of 55% of the vote /55% turnout, in which case it will act as a kind of safety net. Kiriyenko will report back to Putin that he has achieved the goal he has set for himself. It is pointless to speculate now on how the situation with the State Duma elections will develop in practice, and it is also pointless to set any KPIs in advance. The prospects for the war and the economy are vague, and it is on this that the entire course of the Duma and United Russia campaigns will depend, and over which the Kremlin’s political bloc has no control. This is shown by the discussion at the above-mentioned seminar about the ‘image of victory" in the war against Ukraine. So far, the political bloc of the presidential administration has recommended that regional politicians present any outcome of hostilities or peace talks as a victory. Ordinary Russians will be told about the successful «demilitarization and denazification of Ukraine», although the Kremlin has not been able to decipher any of these terms so far, so the media will stress the importance of territorial gains. Discussing «victory» in this context tells us that the Kremlin ideologists have not been able to come up with any ideological explanation for the war: why it started and how it is supposed to end. The main hope of the authorities is that «the silent majority» will tacitly agree with all the statements made by the authorities and not oppose them. This model does not anticipate and is not prepared for real crisis situations. In the event of a crisis, the authorities will only be able to confront the disgruntled citizens with a repressive machine of suppression, and it is not certain that it will work as it did before: the law enforcement agencies openly complain about the shortage of manpower.
A spin-doctor for Kursk
Alexander Khinshtein, member of the State Duma from the «United Russia» party, has been appointed the acting governor of the Kursk region. The previous head of the region, Alexey Smirnov, had spent just over three months at his job after being elected. The Kremlin’s decision was both unexpected and logical. Smirnov was appointed governor before the AFU invaded the Kursk region, succeeding the previous governor, a representative of the Rotenberg clan, Roman Starovoit. The former head of the region can be described as a bureaucrat to the core, who has never been involved in public politics. He was elected on the wave of expectations that the Ukrainian army can be swiftly pushed back from the region. However, the AFU gained a foothold in this territory, and evacuees from settlements in the Sujansky and Korenevsky districts began to publicly complain to the authorities about the lack of compensation for lost housing. The system tried to make ritual sacrifices in the form of sacking the heads of the municipalities, but the scheme apparently did not work and bigger (higher-ranking) sacrifices were needed to please the public.
Alexander Khinshtein began his career as a journalist, but eventually moved closer to the security forces and became a Duma deputy. He is a member of Rosgvardiya head Viktor Zolotov’s influential clan and serves as Zolotov’s informal PR manager. In this sense, Khinstein’s appointment seems logical. Rosgvardiya will guard the borders of the Kursk Oblast in case the AFU is driven out. Meanwhile, the frontline Belgorod region is headed by Vyacheslav Gladkov, a PR manager from Sergei Kiriyenko’s clan who has been quite good at crisis management.
Khinstein’s appointment can be seen as an attempt to replicate Gladkov’s scenario, but it is unlikely that the experience will be repeated in this case. The main factor is the lack of funds to provide sizeable compensation to the residents of the territories occupied by the AFU who have lost their property and became refugees, and no matter how experienced in PR Khinstein is, he will not be able to alleviate citizens’ discontent without solving their problem. This frontline region will see a reshuffle of the leadership team, which is hardly a good thing in times of war. It is therefore difficult to speak of Khinstein’s new appointment as a promotion within the power vertical. Instead of chilling in the comfort of Duma meetings in downtown Moscow, he was catapulted into a troubled region with angry, rioting residents and a front line nearby.
