Prosperity Analysis, 21 Mar 18

Russian presidential election 2018 – the outcome was never in doubt

I have witnessed six Russian presidential elections and in most cases there has been little excitement. The most uncertain was the 1996 election where Yeltsin's unpopularity gave the communists a real chance of winning.

That was also certainly the most unfair election in terms of foreign meddling and ballot stuffing, but as the Western world supported Yeltsin it was still seen as a victory for democracy.

In 2000, there was considerable uncertainty as to whom Yeltsin and the oligarchs would support and a serious challenge from a group of influential governors supporting former premier Primakov, though ultimately Putin won through. Since then it has been mostly plain sailing, with Putin winning easily and the only issue arising in 2008 as to whom Putin would promote as his protégé. That choice fell on Medvedev who then gave up his post when the constitutional demand for no more than two successive terms had been fulfilled.

It is encouraging that a culture of civil society has developed since the Duma elections in 2011, when there were reports of widespread irregularities. Now there are opposition election monitors - including some Prosperity employees - in most polling stations and the process is incomparably more transparent than before. It is true that media coverage has not been evenhanded, but the voting itself now looks relatively authentic. In the end, Putin received 77% of the vote - his highest ever number - and participation was around 68%, up 4% from the previous presidential election. It is perhaps worth noting that we did not see improbable high numbers from some National Republics, such as Chechnya, which have marred previous polls. Where there were no independent observers, there may still be some instances of ballot stuffing, but far less than before. It is frustrating that media reports in some Western countries still speak of widespread cheating while that was clearly not the case. It is also interesting that traditionally, Putin-sceptical cities like Moscow and Saint Petersburg, are now firmly in the Putin camp. The results from Crimea, which could well be seen as another referendum on incorporation into Russia by proxy, were also intriguing; Putin received 92%, indicating an overwhelming support. As a curiosity, the location with the greatest increase in Putin-support was London, where it grew from 28% in 2012 to 52% - illustrative in my view.

The main weakness of this election was that Navalny was prevented from participating. He is the most charismatic of the opposition politicians and would certainly have gathered many more votes than Sobchak or Yavlinsky did. However, I doubt that his results would have had a major impact on the overall outcome. Opinion polls have him in low single digits and even with the opportunity to participate he is unlikely to have received more than 10% of the vote. The main effect of him participating would have been for the future. Putin is largely unbeatable in Russia, but next time he will not be on the ballot. Having Navalny consolidate the opposition in this election would have been a significant platform for future elections. On the other hand, perhaps he was saved from an embarrassing result that might have undermined him later. Now he can at least say that he would have done well and keep his mystique.

Many readers may ask themselves why Putin so easily wins elections in Russia. We are presented with an image of Russia and Putin that is quite negative and on those grounds it is hard to understand why Russians happily give him large majorities. Various explanations are put forward. The first is that Russia is authoritarian and people are somehow coerced to vote. This version is easily dispensed with; I have personally visited polling stations and voters clearly come as they please and they vote in private. There is a sophisticated system of volunteer observers - often from opposition camps - and there are web cameras in polling stations covering 80% of voters. Everything is observable. Large-scale, systematic ballot stuffing would be uncovered if it was taking place. Whilst there were reports of irregularities in some places, these were limited, widely publicised and generally corrected. Although it is true that TV media overwhelmingly provide a positive picture of Putin and that certainly helps him, there is a far greater diversity in other parts of the media, most importantly on the internet, but also on the radio and in print media. Some of this coverage is very harsh towards Putin and, in any case, if people were genuinely unhappy with Putin’s leadership it would still be very hard to hide it through positive TV coverage. Most Russians are quite sophisticated, well educated and able to recognise propaganda.

The incumbents and the authorities are not making things easy on the opposition. They are hampered in various ways, though generally allowed to operate. The most prominent opposition figure, Navalny, was prevented from standing in the election based on a fraud conviction. Most see this conviction as politically motivated and it probably was, but that does not necessarily mean that Navalny was innocent. It is striking that Navalny, without previous experience, decided to go into the lumber trading business and that his counterpart was a municipal lumber company in a region controlled by a friendly opposition governor. Maybe it was all just a bright idea, but if they really believed that the government is as venal as they say it is, perhaps it was naïve to think that there would be no issue with this. That governor has since been caught on some more obvious corruption charges. The opposition generally does not help itself by putting themselves in various compromising situations and fighting viciously amongst themselves. Liberals again failed to consolidate around one candidate, as Navalny withheld support from Sobchak - the most liberal of the candidates. Having the support of people like Khodorkovsky, Kasparov and various former oligarchs in London does not help, as they are not seen as acting in the best interests of Russia. I can understand that being in opposition in Russia can be frustrating, but there are few functional short-cuts and taking funding from oligarchs has its downsides in the eyes of the Russian public.

Another often proposed reason for Putin’s popularity is particularly offensive. The gist of it is that Russians vote for Putin because they are not ready for democracy as they have never experienced it and therefore cannot appreciate it. Instead, they long for a strong hand and follow their leader under any circumstances. This reasoning comes up fairly frequently formulated in different ways. It is astounding that it is considered acceptable to disparage a whole nation in this fashion. These types of contemptuous sociological generalisations are also easily disproven. There are several nations with limited democratic experience that have become democratic. Another obvious flaw in the reasoning is that the same people who put such ideas forward often express themselves very positively about the democratic processes in Ukraine, where the people have a very similar background.

Perhaps it is necessary to try to understand Putin’s popularity with a more open mind. One needs to start with considering how Russia looked when Putin came to power. The Russian population had gone through an extraordinarily painful decade. Society had been fundamentally disrupted during the collapse of the Soviet Union, people had lost their jobs and income. Nothing was certain and people feared for their future, to the very level of how they would survive. Life expectancy had plummeted and society was in disarray. GDP had declined by two-thirds.

For the benefit of our UK readers, one could compare those circumstances with loosing the whole empire and, in addition, Northern Ireland, Wales and Scotland gaining independence and Scotland even taking Northumberland with them. All of this in two years and with the whole world cheering. This would have been pretty traumatic. It is therefore not surprising that whichever leader returned Northumberland would be popular - international law be damned.

One might intellectually take the stance that all of this destruction was ‘creative’ and necessary for a new modern Russia to emerge. Whilst that may or may not be true, there were probably other ways of achieving this. In any case, such an argument is hard to make to the Russian population who suffered - and often died - through the transition. It is probably true that whomsoever were to take over from that point was in a good position, but counterfactual history is not an easy subject and it was certainly not the impression of the Russian population at the time that the only way was up.

In general, one can say that Putin’s legitimacy stands on three legs;

Economics

The economic situation in the country has improved immensely since Putin came to power. GDP and wages are up 8-10 times, unemployment is very low and under-employment far lower than it was. Whilst a large part of this can be explained by higher oil prices, it is incorrect to say that this is the only driver. We have seen a broadening of the economy, substantial productivity gains, modernisation and better use of technology. Collectively, this has all had an important and positive impact on the overall economy. Some commentators have tried to explain all of Putin’s popularity on the grounds of economic improvement and were expecting to see it decline with the lower economic growth of the last few years. This is also the implicit objective of the various sanctions regimes imposed on Russia; to weaken the economy and thereby losen Putin’s grip on power.

Quality of life

An important driver is that it has become far easier and more pleasant to live in Russia. There are many statistics to support this, such as dramatic improvements in life expectancy, nativity, crime and infant mortality. One can also point to the sharp rise in the World Bank’s Doing Business ranking from 112th to 35th place in just a few years. There are lots of digital initiatives that make public interactions witht the government easier and less exposed to corruption. There are very clear improvements in city scapes, parks and infrastructure. The general levels of service and entertainment are also much better. Whilst this has mainly been provided by the private sector, it still adds to the quality of life. When Putin took over, Russia was largely derelict, now it is much more vibrant.

Foreign policy

This subject is more controversial. It is important to keep in mind the disarray when Putin came to power and that Russia and Yeltsin were international laughingstocks commanding little (if any) respect around the world. Many Russians had prided themselves in the standing of the Soviet Union. The more assertive foreign policy that has been pursued in the last few years is essentially very popular in Russia as it is widely seen that ‘Russia is back’ and has regained its international respect. There is much to discuss here but from a Russian perspective, the West has been encroaching on Russian national interests for a long time and the Ukrainian events of 2014 were a culmination of this, when a president friendly to Russia was unconstitutionally replaced by one aligned with the West. This was one bridge too far and Putin felt that Russia needed to put its foot down. An overwhelming majority of Russians agreed. That Putin acted in the way he did was probably necessary for his internal political position. People felt that this was the end of humiliations in the international arena. The next step of intervening in the Syrian war has also been relatively popular. People compare Russia’s success with the limited achievements of other nations engaged in the Middle East. They also note the relative effectiveness of the Russian armed forces.

These three drivers collectively go a long way toward explaining Putin’s popularity. There is however one more factor in play at present; most Russians see Russia and Putin as being under foreign pressure. Many of our readers may consider this well deserved for a number of reasons, but most Russians see the allegations against their country as either incorrect, unproven or hypocritical. As entering this discussion now would be long and out of the general purpose of this note, I will pass over it, but it is not surprising that people would rally around the president when he is being vilified internationally. Most likely this last item is what caused the significant increase in support in Moscow and London. Russians have historically been through a lot and they pride themselves on their resilience; sanctions or harsh words will only strengthen the position of their leadership. This is probably true in most countries and is a real weakness of the sanctions regimes in general.

The question now arises as to what Putin will do with his new mandate. The election program was quite reformist, but will these ambitions translate into action and, if so, who will execute them? There will almost certainly be a government reshuffle after the inauguration and there is a lot of speculation as to who is in and who is out. In the last year, we have already seen significant changes amongst governors and expect that some of the younger ones are probably being prepared for higher office.

During his address to the parliament on 1 March 2018, Putin outlined some of the areas he wants to focus on, amongst them further improvements to the business climate, a nationwide program to make towns and cities more liveable, additional investment in infrastructure - including road networks and regional airports – and reductions in military expenditure in favor of spending on education and healthcare. Another core focus area is on steps to liberalise the Russian economy further and to introduce more competition in various sectors. These broad themes will be turned into specific decisions as Putin starts his new term.

In our view, some of Putin’s priorities may be changing. Up until now Putin has not needed to plan for who will take over after him, but now in his final term he will need to seriously think about who comes next. There is still some time and he can probably afford to wait two or three years, but that is not a very long time in itself and so some preparations are likely required.

Considering the current top echelons of the government, quite a few people have been in position for a long time and are not likely to be part of a post-Putin era. As such, they may well be replaced now. Whilst all of this is speculation, my view is that Putin will keep a trusted lieutenant as prime minister. This may perhaps even be Medvedev, but we think that he is not the most likely candidate. The prime minister should be competent and executive, but not immediately seen as a probably successor. There are a number of these, and if forced I would place my bet on Kozak - a proven problem solver and current deputy prime minister – though it could just as easily be someone else. The government would then promote a new crop of ambitious people as deputy prime ministers and see who executes their role well enough to earn promotion as the ‘anoited one’ in the final two years of Putin’s term. It is interesting to consider that most of the Soviet educated politicians are on the way out and a new generation will increasingly take over - people with a different experience and outlook. We are hopeful that we will see an acceleration of reforms under the reshuffled government, where a lot of people will feel that they need to show results.

Mattias Westman

Founder