Analysis

Russia: Economy, corruption to fuel pre-poll protests but Putin will remain dominant

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  • Political and Economic Risk Consulting
Botakoz Iliyas

Botakoz Iliyas

Russia: Economy, corruption to fuel pre-poll protests but Putin will remain dominant



Unusually large and widespread anti-government protests rocked many Russian regions and cities in January and February in response to the government’s arrest of prominent opposition activist Alexei Navalny. We assess the political outlook for this year, considering crucial legislative elections in September.

  • Navalny’s increased domestic visibility is likely to make 2021 a more testing year than usual for President Vladimir Putin and his government.
  • The ability of Navalny and his team to tap into public grievances on corruption and the pandemic’s impact will likely help the opposition mobilise protests ahead of the legislative elections.
  • While these issues and any resultant protests will put upward pressure on political stability, Navalny in the coming year is unlikely to become popular enough to genuinely challenge Putin and his government. Putin will retain his hold on power.
  • The government’s rhetoric will likely become more anti-Western and nationalist to discredit these and future protests. The intensification of new Western-targeted sanctions against Russian officials will pose increased contract risks for investors.

Powerful protests

Several anti-government protests have taken place since Navalny was detained upon his return to the capital Moscow from Germany on 17 January. Navalny had spent five months in Germany, where he underwent treatment for his poisoning with a nerve agent from the Novichok family. The Russian government has denied any state-level involvement in Navalny’s poisoning, but open-source research centre Bellingcat in December 2020 published an investigation with detailed evidence suggesting that Federal Security Service agents had poisoned Navalny in a hotel in Tomsk in August 2020.

Navalny’s arrest has triggered some of the largest demonstrations under Putin. Up to 300,000 people across more than 180 cities and towns on 23 January gathered to demand his release. While it is often difficult to estimate exact attendance numbers, the widespread nature of these protests across several time zones and despite sub-zero temperatures was undisputed, as was the government’s particularly forceful response to the demonstrations.

Protesters’ calls have gone beyond the immediate issue of demanding Navalny’s release and included concerns about high-level corruption and Putin’s long time in power. The protests also likely allowed a population fatigued with declining living standards to blow off some steam in a restrictive civil and political environment; parliament in December 2020 had passed laws further restricting the right to protest.

Navalny’s increasing profile

Navalny’s poisoning and arrest have clearly boosted his profile, triggering anger and fear in Russia over the implications of his poisoning for others who attempt to challenge the government. Despite his rise in the past decade to become Russia’s best known opposition figure and the person behind well-known investigations into high-level corruption, he has never been popular enough to present a credible threat to Putin in the polls. Putin has remained the country’s most trusted politician, while Navalny’s approval rating has remained considerably lower than that of Putin.

Same old tale of corruption

Navalny’s and his team’s video investigation published on YouTube on 19 January that suggested that Putin owns a luxurious USD 1.35bn estate on the Black Sea coast has also helped to both fuel recent rallies and boost Navalny’s profile. The video has undoubtedly tapped into public frustration with falling living standards and higher poverty levels in the past few years, and especially since the arrival of COVID-19. The two-hour video provided photographs, a floor plan, aerial images, and documents linking Putin to the estate. The video gathered more than 112m views in less than a month, becoming Navalny’s most watched video. According to the Levada Center polling organisation, only 31% of Russian had not heard about it.

Pre-election protests and tactical voting

Navalny’s increased profile as well as his ability to tap into the population’s grievances with the government will likely help him and his team mobilise protests ahead of crucial national State Duma (lower house) and regional gubernatorial elections scheduled for September. Navalny’s team has previously used elections as focal points to draw public attention to endemic corruption and poor living standards, as well as to urge Russians to vote for candidates not affiliated with Putin’s ruling United Russia (UR) party.

Although oppositionists have now put protests on hold for several months, they will likely seek to organise rallies between June and September to collect signatures required for alternative candidates to run, as well as ensure that – once they have the signatures – these candidates are not excluded from the election because of trumped-up procedural problems.

Navalny’s team will likely back non-UR candidates who have the best chance of beating UR candidates, a strategy called Smart Voting that worked in polls in 2020 and 2019. In 2020, for example, UR candidates won all 18 gubernatorial posts but lost to candidates backed by the Smart Voting campaign in the cities of Novosibirsk, Tomsk and Tambov, and in 2019, UR lost one-third of its seats on the Moscow Duma (city council).

Political stability under pressure

Combined, these developments will put upward pressure on political stability. The government’s shift from rarely mentioning Navalny to unveiling a direct information campaign to discredit his work underscores how concerned the government is about Navalny’s return to Russia. In the past few weeks, the government and state-backed media have engaged in efforts to discredit both the poisoning allegations and the YouTube investigation. State television channels have released reports suggesting that the palace is actually a hotel undergoing construction work that belongs to oligarch Arkady Rotenberg – widely considered to be Putin’s long-time associate.

Anti-Western rhetoric worsens

The government will also double down on its nationalist and anti-Western rhetoric, which – along with Western governments’ criticism of Navalny’s prison sentence and the Russian government’s brutal dispersal of demonstrations – is likely to further strain Russia’s relations with these countries. State media have painted Navalny and his Anti-Corruption Center investigative organisation as foreign-funded spies, and argued that the US, UK, and German intelligence agencies funded and fabricated the YouTube palace investigation. All these countries have condemned Navalny’s conviction and the government’s crackdown of peaceful protests. Putin in a televised interview on 10 February accused the West of using Navalny’s arrest to organise recent protests to “contain” Russia, which has “successfully managed the pandemic” and developed “the world’s first COVID-19 vaccine”.

The intensification of anti-Western rhetoric will likely lead the government to impose further restrictions on Western involvement in sensitive sectors such as the media and NGOs. However, the government remains unlikely to restrict Western investment in non-political sectors of the economy due to continued interest in raising foreign direct investment.

Meanwhile, the EU on 22 February announced plans to impose targeted sanctions on top Russian officials implicated in Navalny’s conviction. New sanctions will almost certainly be limited to asset freezes and travel bans and are highly unlikely to target European trade and investment in Russia due to extensive economic ties. However, a further government crackdown on the opposition and on peaceful protests in the coming months will increase the threat of Western countries imposing more extensive targeted sanctions, raising contract risks for investors.

Change in government unlikely

That said, while anti-government protests in June-September will likely draw large crowds, neither the protests nor the Navalny movement’s campaign activities are likely to substantially undermine the current government and political system. The government is prepared to continue using violent tactics to both break up and prevent demonstrations, as evident from recent and earlier protests. Police have detained more than 11,000 people this year alone for participating in rallies, including journalists. The tactic appears to be working; numerous local media reports cite detained participants expressing fear and reluctance to join further protests.

Putin still has the edge

Notably, Putin’s reputation has not suffered much. According to a recent Levada Center survey, 77% of Russians who saw Navalny’s palace video said their attitude towards Putin did not change, and only 17% said it worsened; the same survey showed that 17% of those who saw the video believed that Putin owned the palace. As for approval ratings, 64% in January said they approved Putin’s work, a decline of just one percentage point from the previous month.

The state rhetoric and information campaign depicting Navalny’s movement as a foreign-funded project appears to be working. Navalny in the coming year is unlikely to become popular enough to genuinely challenge Putin. Levada on 8 February published a study showing that Navalny’s disapproval ratings between 29 January and 2 February had increased from 50% in September to 55%, while his approval rating in the same period dropped from 20% to 19%. The difference in attitudes towards Navalny correlated with the respondents’ main source of information; his approval ratings were lower among those who reported getting news from television, which is mainly controlled by the state. 

Outlook

While 2021 is likely to be more turbulent, as Putin’s party seeks to retain its majority in the State Duma elections and pave the way for Putin to contest another presidential election in 2024, Putin’s hold on power for at least the next year will not be threatened.

Navalny’s visibility and the opposition movement’s reach more generally are slowly but undoubtedly expanding – not least because the share of the population relying on the internet rather than state-controlled media for news is growing, and corruption is a problem that most Russians want addressed. However, the government’s determination to suppress dissent and avert demonstrations capable of genuinely threatening its hold on power is also growing. With Navalny in jail for the foreseeable future and many of his associates detained or pressured into giving up their work, and with many Russians reluctant to risk arrest by participating in demonstrations, a large-scale protest movement that would significantly threaten the status quo remains unlikely.

For more on the situation in Russia, listen below.

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