‘Hardline’ reaction to crisis feared

Rising unemployment and increasing social unrest bring a real risk of a return to "hardline Putinism", according to an influential think tank.
Ian Bremmer, head of the Eurasia Group, believes that Russia's concentration of power in the hands of a few top officials makes it almost uniquely vulnerable to a sharp change in political direction over the next 12 months.
"Vladimir Putin is the most powerful human being on the planet, in terms of what one person can do," he said in a telephone interview from New York on Tuesday. "Russia is more vulnerable than similar countries because of the ability of the government to take these steps.
"Here, if the government wants to introduce capital controls, nationalise a sector or industry, one person can kind of do that on his own."
The scenario drawn up by Bremmer in his recent book "Fat Tails in an Uncertain World", suggests that a wave of prominent liberals - including Alexei Kudrin, Igor Shuvalov and ultimately President Dmitry Medvedev himself - would be forced out of office, paving the way for a Putin-led siloviki faction to implement hard-line policies before the end of the year.
"Anyone investing in Russia needs to actively think about this," Bremmer said. "The current crisis is unprecedented in the last 50 years. It creates potential scenarios that didn't exist before. This type of change was a tiny possibility - now it's a 20 per cent possibility. The precise percentage could have been grabbed from the air, but it's no longer a 1 per cent theoretical outcome."
One potential brake on the process could be the recent rapprochement between Russia and a Barack Obama-led United States. "International opinion could affect Russian behaviour," said Bremmer. "Obama's attitudes are more favourable, which makes it hard to take an aggressive nationalist stance. It's harder to find an external enemy compared with a year ago."
In a week when unemployment topped 10 per cent in Russia and the May Day holidays are set to bring protesters onto the streets, some political activists are talking about the start of a wave of protests forcing the government to change course.
But Bremmer's vision is of "top down" changes rather than revolution on the streets. "There isn't any one tipping point - the danger here lies in the reaction to any social unrest caused by the downturn. There are fewer institutional controls on the Russian leadership than in almost any major country, and if there are large-scale public demonstrations then a hard-line response is quite feasible."
That view is shared by Yevgeny Gontmakher, head of social policy at the Russian Academy of Sciences. "I don't know about an official dictatorship, but there is a very high chance of some conflict within our political elite happening maybe in the autumn or at the end of the year," he said. "It will happen earlier than some big riots from beneath."
Fears of an exodus of foreign business from Russia are wide of the mark, though, according to Chris Gilbert, director of the Russo-British Chamber of Commerce.
"Our position is pragmatic: if there's a 20 per cent chance of this happening, it means there's an 80 per cent chance it won't," he said. "Our message would be simply ‘don't panic'."
The chamber has more than 600 members, and Gilbert would not expect to see that number reduced regardless of changes in the Kremlin.
"As an organisation we've been in Russia for 93 years and we've seen plenty of ups and downs in that time," he said. "People are well aware of the political side of doing business here, but at the same time it is understood that Russia wants and needs to be an international player.
"The government has to deliver a careful balancing act between being seen to defend Russia's interests and having a separate agenda whereby they are fully aware that they need international investment - particularly now when nobody is doing very well."