Ben Judah - Fragile Empire - How Russia Fell in and Out of Love With Vladimir Putin

The short answer as to why Russians shrugged off creeping authoritarianism is – supermarkets. The long answer is that during the 2000s Russia enjoyed the first period of macro-economic stabilization since the mid-1980s, finally bringing dividends to the masses from de-Sovietization. Macro-economic stabilization brought about a social transformation. Between the 1998 default and the outbreak of financial crisis in 2008 Russia ceased to be a shortage economy and became a consumer society. This meant that the 2000s for everyday people was not just a decade of weak institutions and creeping authoritarianism – but globalization. The same trends of opening up to the world, mass foreign travel and foreign investment that were changing China and Brazil, were remaking Russia. This boom helped build an emerging middle class, which now armed with cheap mobiles and computers, was making the leap into the consumer lifestyles that Russians had craved since the USSR began falling short of rising expectations in the 1960s. The people loved it and associated it with Putin. In the Moscow suburb of Zuzino, one housewife once bluntly told me, ‘I lost interest in politics when I stopped having to shop in the market and started to shop in the hypermarket.’ She spoke for millions.

The material hardship that Russians endured during the shortage economy of the late Soviet Union and the Yeltsin depression was endlessly contrasted with the consumer society that has come to Russia during Putinism. For instance, in the 1980s condoms disappeared from Moscow for months; shortages saw toilet paper also disappear. Economic collapse in the late Soviet era meant that by 1989 the average person spent 40–68 hours a month standing in line. 2By April 1991 fewer than one in eight of those polled said they had seen meat recently in state stores, whilst fewer than one in twelve had seen butter. 3In the 1990s millions of state employees were often not paid at all. Others were regularly given their pay cheques in vodka or meat, if they were lucky. There were bread shortages comparable to those last seen in Western Europe immediately after the Second World War. The economy was in such a dire mess in 1998 that large enterprises were doing 73 per cent of their business in barter. 4

In those first few years of Putin, the Moscow that I got to know was a dirty place in a poor state of repair. It felt like a wrecked satellite of Europe, whose people constantly asked you to bring the unobtainable from the West, before apologizing over and over for ‘our Russian poverty’. Its sense of style was summed up in leopard-skin print and leather jackets. The streets were full of the corporations of the dying – whimpering street children by the railway stations, staggering babushkas by the metro gates, shivering prostitutes on the boulevards. Twice, both in winter months, I saw collapsed old women in the metro tunnels. The drab, darkly dressed crowds stepped over them. I was certain they were dead, but I too stepped over them.

This was nothing surprising. The metro was where the homeless usually went to die in winter, to die where it was warm. This Moscow, the one I first criss-crossed, was a city so full of countless disfigured homeless alcoholics, in their thick, stinking, putrid uniforms of dirty, dark clothes, sweating and staggering between the monuments of the defeated and drawn to the bustle of the imperial train terminuses (Belarus, Kazan, Kiev, Kursk, Leningrad, Yaroslavl…), that it was as if a race of zombies lived side by side with the Muscovites. These, the ‘bamjee’, were the victims of the Yeltsin depression and the abandonment of Gorbachev’s anti-alcohol campaign. They had always been many, but as I was told again and again, as I asked about this dying underclass, no one could quite explain how it had undone so many.

In the winter, when the temperature can fall as low as –30ˆC, when car headlamps and the street lights make the snow as bright as the night moon, they would gather around vents, trying to keep going all night so not to stop, not to fall into the exhaustion that turns into frozen death. In the day they would try to sleep in the metro, especially on the carriages of the circle line, in the cavernous marble Stalinist halls, by the baroque mosaics, under austere colonnades, in the dingy light, by the roar of the trains on platforms designed by the red architect Alexey Dushkin after examining drawings of ancient Egyptian tombs. This is where many, in this underground populated by thousands of russet-coloured wild dogs, gave up, especially in February, and died.

This is still the case, but I find I saw it much less, heard it talked about much less, towards the decade’s end. Then it was common, it was unsurprising, to see the elderly, with their forlorn medals, selling their possessions at little hard-scrabble sales within the glint of the red ruby stars of the Kremlin towers. The desperate sold these insignia; the utterly desperate sold everything. Under weak February light I turned the pages of a black-and-white Soviet family photo album that a deeply wrinkled, grey-faced woman in a peasant’s kerchief was selling on the steps of the Lenin Library. The story the pictures told: a burly man smiling at various Soviet civil ceremonies, with a new baby girl, getting married, an earlier shot of young men in uniform in front of a tank: ‘That’s my husband.’ They cost $1 each. As I passed her a note, I saw her gloves were threadbare, her fingers blue.

In 1996 a former Economist Moscow correspondent along with a professor at the London School of Economics co-authored a book called The Coming Russian Boom . Two years later Russia went bankrupt, the book disappeared, the authors were humiliated and foreign investors rushed for the airport. Then the boom happened anyway – remaking Russia’s economy and society, transforming even its ethnicity.

Russia, in 2000, was the world’s tenth largest economy by average value of GDP measured by purchasing power parity, smaller than Brazil, but surged back along with living standards under Putin. 5By 2005 it was bigger than Brazil and Italy, as the eighth largest. 6In 2010 it was sixth, having overtaken Britain. Restoring it to its 1990 position of fourth, ahead of France, seemed likely. 7

The upward cycle during Putin’s first presidency was dramatic even by the standards of Russian history. Everything that could have gone right for Putin had done just that. Thanks to the efficiency gains pioneered by Khodorkovsky, by 2008 oil production had jumped by two-thirds since the 1998 crash. 8More was being produced and it was also worth more as the oil price had risen thirteen times over. 9In 2007 annual oil export earnings were over $173 billion, up from $36 billion in 2000. 10Having eliminated Khodorkovsky, the government had been able to increase oil taxes tenfold to feed the state. 11

The Kremlin was taking its handsome cut. The consumer boom meant a tax boom; the oil boom meant a direct revenue boom. The result was a better-fed state, as oil and gas account for almost two-thirds of Russia’s export revenue and almost half of federal budget revenues. The state was also a market player in its own right. The crown jewels of the hydrocarbons industry were in the hands of the state monopoly Gazprom and the expanded Rosneft, the devourer of Yukos.

The critical oligarch Alexander Lebedev was half right when he described what had happened with this gigantic windfall: ‘One third was pocketed by 200 individuals. One third was spent on improving wages and salaries in the budget sector but they were eaten up by rising prices, and one third was thrown out the window for, say, the [2014] Olympics.’ 12Yet the boom was so huge that most tycoons, investors and citizens looked the other way as this happened.

The boom was not restricted to hydrocarbons – the value of other Siberian treasures soared. Gold was up 225 per cent, nickel rose by 69 per cent and aluminium by over 30 per cent. 13Because the Russian economy is dependent on the success of these key exports, the commodities ‘super-cycle’ hiked up overall GDP, kick-started industrial expansion and trickled down to the consumer. Economically, this was one of the biggest strokes of luck the country had ever experienced and allowed Russia to achieve what in 2007 the World Bank heralded as ‘unprecedented macro-economic stability’. 14