Russian Public Worried About Economy, Not Caucasus

Russian Public Worried About Economy, Not Caucasus

August 28, 2008

RFE/RL Russian Service correspondent Kirill Kobrin spoke with Dmitry Travin, deputy editor in chief of the St. Petersburg business weekly "Delo," about the impact of the Georgia war on the Russian economy and the business community's attitude toward recent events.

RFE/RL: What are the main consequences of the events in Georgia for the Russian economy?

Dmitry Travin: The events in the Caucasus are having a fairly serious impact on the Russian economy. The stock market has fallen catastrophically. And this looks particularly strange considering Russia's high economic-growth rate and its oil and gas reserves, which theoretically should be attracting capital. But capital is running away.

But I don't think that [Prime Minister Vladimir] Putin is seriously worried about this because it won't have an impact on the day-to-day lives of ordinary Russians. The public has shown considerable support for the Kremlin's actions in the Caucasus, since it was a short, victorious war. People aren't thinking much about the economy right now.

The problem of entering the World Trade Organization [WTO] is a very serious one. Inflation, which has been a problem in Russia for the last year, can be brought under control in part by boosting international competition and, to do that, WTO membership is essential. But the general public doesn't understand such complex economic connections. Moreover, international organizations, including the WTO, have bad reputations in Russia. People think, "why should we join the WTO?" They think the WTO will undermine the competitiveness of Russian producers. Therefore, Putin can make harsh, even reckless foreign-policy decisions without worrying too much about the economy.

RFE/RL: But there is the business community. Share prices -- that is their work and their profit. How are they going to react? Will this undermine their solid support for the government?

Travin: Business's support for the government is a very strange thing. After the case of [former Yukos owner Mikhail] Khodorkovsky, everyone became obedient. They are constantly swearing their loyalty to the authorities. But when you start speaking to people privately, it is hard to find anyone who does not hate this regime and the position in which it has placed Russian business. I don't think anything is going to change in this regard. If the regime is weakened, business will be the first segment of society to stick a knife in its back. But until the regime is weakened politically, business has to play by the rules of the of the game that were laid down in October 2003 during the Khodorkovsky case.

RFE/RL: So, are you saying that the authorities, by destabilizing the foreign-policy situation, are risking instability at home?

Travin: I think this risk is pretty small. The stability of the authorities rests on oil, gas, economic growth, and the expectations of the public, which are more or less satisfied at present. But if economic growth disappears and real incomes cease to grow, or if public expectations become so great that even oil and gas cannot satisfy them, then affection for the authorities will wane. But this does not depend to a great extent on the current events in the Caucasus.

Source: http://www.rferl.org/content/Russian_Public_Worried_About_Economy_Not_Caucasus/1194610.html

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Russian Public Worried About Economy, Not Caucasus