The surge of the dollar exchange rate to the symbolic mark of one hundred rubles per dollar is not only this week’s main economic, but also political event. Last Monday, August 14, became a black day for the Russian ruble, as the value of the dollar on the stock exchange exceeded the three-digit mark, while the euro and the yuan, on which the Russian economy is heavily dependent, also showed serious growth. The Central Bank tried to cope with the problem by raising the interest rate to 12%, and this measure partially helped: the U.S. currency fell in price to 93−94 rubles, and the euro exchange rate decreased to 101 rubles. Most likely, the Central Bank’s intervention was not the only «magic fix» that saved the day: the government also informally asked major exporters to «share» their foreign exchange reserves.
The sheer speed of the Russian authorities’ reaction proved that the currency’s appreciation has become a political problem for the Kremlin. Previously, in such cases, propagandists and system politicians would begin to convince the population that nothing terrible was happening: only the rich traveling abroad needed dollars to begin with, and ordinary Russians had nothing to worry about, nothing at all. This time, however, MPs and senators are seriously worried about the ruble’s plunge. Vladimir Solovyov, Russia’s chief propagandist, demanded accountability from the Central Bank. Maxim Oreshkin, an aide to Vladimir Putin and former minister for economic affairs, also called on the Central Bank to act. So why the sudden change of tone? First of all, the fall of the ruble contrasts sharply with the official statements of the Russian authorities that the country’s economy is «confidently recovering» and that the sanctions are not causing serious damage and are even beneficial. Citizens are accustomed to the fact that the figures on the scoreboard of the currency exchange offices are the best thermometer that shows the real state of the Russian economy. When it is healthy the digits are stable, and when the «temperature» rises, the economy is sick and limping. In this sense, Russians trust the exchange rate much more than they trust official speeches and assurances. This discrepancy between the official rhetoric and observable reality should not be too stark and noticeable against the backdrop of Putin’s presidential campaign, which has already begun.
The second reason is again related to Putin’s campaign and is even more important. The Kremlin and the government understand that currency appreciation will inevitably lead to higher prices: the country imports a lot anyway, both from China (and let’s not forget that the yuan has also rose in value) and by «grey», illegal methods from Europe and the United States. The more expensive the dollar, the euro and the yuan, the more expensive clothes and household appliances that Russians buy directly, as well as fertilizers, the price of which affects the cost of food, and so on. A blow to the wallets of citizens always hits the popularity of the authorities, so on the eve of elections the authorities try their best to mitigate it.
The struggle to prevent the ruble from sliding further show us the contours of the new stability the Kremlin is trying to establish. It can be called «stability of poverty» or «short-term stability.» The authorities are trying to rein in the exchange rate and fight rising prices for everyday consumer goods such as groceries, appliances and clothing. However, the rise in interest rates to 12%, with the prospect of further increases, is effectively putting an end to long-term bank loans, especially mortgages and loans for large purchases (e.g. cars). Such loans have long been one of the foundations of «Putin’s stability,» and it was a stability of very different kind: «middle-class stability» that could be called long-term stability. The Russian leadership is finally abandoning it in favor of «the stability of the poor.» And it will probably continue until the presidential elections. Then the exporters, i.e. the representatives of the higher elite, will begin to make their own demands. Today they are still being asked to share their foreign exchange earnings, and they do as they are asked because they realize the importance of the moment. After the elections, the Kremlin is likely to abandon this «stability of poverty» as was the case in 2018 with the so-called «pension reform» that increased retirement age, which the government announced a few months after another «electoral victory» of Putin. Then it all ended with the fall of «United Russia’s» ratings, which still fail to regain their pre-reform values, and the defeat of the government’s candidates for governorships in four regions.
Electoral force majeure
A month before Russia’s single voting day, law enforcement officials raided the homes of activists from the Golos vote-monitoring movement. Criminal cases were initiated against several of its participants, including Golos co-chair Grigory Melkonyants. The movement has long been a thorn in the side of the Russian authorities, even though some of its activists (including Melkonyants) served on the expert panels of the Central Election Commission. The crackdown on Golos proves that the Kremlin feels insecure on the eve of the elections, despite officially declared support figures and record plans for next year’s presidential campaign. It turns out that records are better set in complete silence. The authorities did not restrict access of independent observers and watchdogs to the elections, but they also decided to completely purge their movement. The withdrawal of candidates from party lists who could have competed with the «United Russia» is another indicator of trouble. In the Pskov region, the lists of «Yabloko», whose local branch is headed by the well-known politician Lev Shlosberg, were excluded from the municipal campaigns. Previously, «Yabloko» supporters had won elections even in the rural areas and some even won the elections for district heads. In North Ossetia, the electoral commission excluded the lists of «Just Russia» candidates from the campaign. The regional party brunch is headed by the local charismatic politician Arsen Fadzaev, who was appointed senator in a deal with the Kremlin. In the Altai region, Vladislav Vakayev, a «New People» party candidate who supported the incumbent head of the region, Viktor Tomenko of the «United Russia» party, voluntarily stepped down from the gubernatorial race.
In the case of «Yabloko» in the Pskov region and «Just Russia» in North Ossetia, the forced removal was due to a possible threat from these political forces themselves at the local level (and even the systemic faction members and Fadzaev were sacrificed for the sake of good results for the «United Russia» party). Vakayev from the Altai region cannot be called a popular local charismatic, but his dismissal is also an indicator of Governor Tomenko’s problems. In July, Communist Maria Prusakova, a well-known and charismatic politician who could have successfully competed against Tomenko in the region prone to protests, was not allowed to participate in the campaign. Judging by Vakaev’s withdrawal, Prusakova’s exclusion did not help the UR politician much. His headquarters had to reduce the list of candidates even further in order not to attract to the polling stations any «extra» electorate potentially capable of protest voting. Tomenko and the political technologists of the «United Russia» party are fighting against the spectre of the second round in the elections, where, as 2018 has shown, even «dummy candidates» and little-known candidates can end up.
It seems, that the «stability of poverty» is no longer enough for the «United Russia» party candidates to achieve beautiful percentages and winning results at the elections, that is why the authorities are moderating the exact composition of their campaigns on the fly. They are prepared to break relations with loyal partners like Fadzaev and destroy the pre-designed architecture of their lists of candidates, as it happened in the Altai region. War-time election campaigns are gradually turning from a series of routine ritual events into a series of force majeure events.