A Shifting Dynamic between the Kremlin and Business?

medvedev031609.jpgAs many of you have gathered from the news over the weekend, Russian President Dmitry Medvedev has spoken openly about the joblessness glut currently hitting Russia, citing the fact that there are some six million are out of work and remarking that the economic crisis will be a “test of maturity.”  Considering how other petrostate leaders are reacting to the crisis – Hugo Chavez for example especially appears to be losing the plot while going on an expropriation spree – everyone is trying to carefully read whether the Russian government is threatening the private sector through these latest comments, or perhaps revealing a whole new dynamic in the balance of the relationship by asking for help.

Some parts of the interview sounded ominous, such as “repaying moral debts,” (!) while in other moments Medvedev seemed less concerned about suggesting consequences and more supplicatory that Russia’s private businesses not fire any employees despite lack of income: “a genuine businessman he can appreciate his employees” and as such, would “survive” the “cleanup.

Funny how Russian government officials always know what’s best for business.

Irony aside, Medvedev’s comments may reveal something more.  It’s difficult to say whether or not that means that if a business were to carry outlayoffs, the state would destroy what’s left of the company, but what’scertain is that both Putin and Medvedev are certainly giving moreinstructions to the business community than politicians in most othercountries, and that this interaction seems to be changing from yearspast.  Furthermore it is worth noting that the beleagured business sectormay no longer even be able to do exactly what they are asked by theKremlin anymore, so we could see a breakdown in the state’s authorityover the market. 

It has long been an argument on this blog that the authoritariancapitalist model as perfected in Russia over the past decade only workswell during periods of high economic growth, and that it’s ratherinflexible nature reacts poorly to crisis and mass public discontent. Not too long ago, it was a punishable crime for a journalist to use theword “crisis” in a news story, but in recent weeks, the politicalleadership is experimenting with slightly more transparent talk withthe public about what is clearly happening to the country (“It would be stupid to say that nothing is happening,” Medvedev said last week.)

We are still miles away from achieving any sort of normalcy in Russia in terms of democratic opening, administration of justice (with the Khodorkovsky case being the central indicator), nor transparency about the government’s crisis strategy, but we are seeing a recognition on behalf of the bureaucracy that the old rules no longer apply, and that a new kind of engagement with the public will be required.  Back when oil prices were firmly set above $90, and economic growth clicking along at close to 8%, it did not matter that much that there was little public and investor trust in the state.  Now that familiar pain of political risk is coming back big time, requiring some different politics.

Photo: A woman tries to kiss a portrait ofRussian President Dmitry Medvedev created by Spanish artist José MaríaCano for the Moscow Fine Arts Fair. Cano has made a series of portraitsof politicians and rich people from Russia emulating the portraits madeby the Wall Street Journal. EFE / Sergei Chirikov.