The Russian soccer team may have been defeated by Croatia during its quarterfinal match on July 7th, but Russia has, once again, emerged from this athletic competition a winner. The celebrations of the World Cup have afforded President Vladimir Putin additional room to navigate the international pressure and domestic tensions that are beleaguering the country.
From the Football Pitch
Only recently emerging from a state-sponsored doping program, American election interference, and attempted murder of a former intelligence official, international pressure had reached new heights against Russia with fresh rounds of sanctions being levied against the Kremlin. For a (very) brief period in the wake of these scandals, some western leaders even threatened to boycott the World Cup. In the end, only the UK’s Theresa May maintained course.
Diversionary tactics and sports are a familiar combination for the Kremlin, most recently having annexed the Crimean Peninsula just weeks after hosting the Winter Olympics in Sochi, 2014. Despite international condemnation in response, Russian popular opinion of Putin remains steadfast with a large portion of respondents indicating strong confidence in his ability to manage foreign relations. Russians increasingly feel that their country is getting the respect it deserves from abroad.
To Russian Homes
On domestic matters, public opinion is far more critical of his performance. According to the Pew Research Center, Putin’s ratings on a variety of issues at home have slipped: such as energy policy (from 73% approval in 2015 to 60% today) and the economy (from 70% to 55%). Putin’s approval rating for reducing corruption has also fallen over the past two years, from 62% to 49%. Surprisingly, only a 57% majority approves of Putin’s approach to civil liberties.
This problem also leads us to the other diversionary benefit of the World Cup: changes to the retirement age. In a drive to increase the sustainability of its financial position, the Kremlin moved to raise the minimum retirement age from 60 years old for men and 55 for women to 65 and 63 respectively (just a year and a half shy of a man’s life expectancy). The retirement age was highlighted as a contentious policy issue that had not been revised since 1933 and would have certainly led to civil protest. In this way, the World Cup served a dual purpose. As citizens were glued to their television sets, political protests were banned, and the law was implemented.
Reforms versus Diversion
Rising consumer concerns regarding prices and inflation are all adding pressure on the government. With a budget as heavily invested in the exportation of a single product as Russia’s, it remains sensitive to geopolitical shifts in its sphere of influence, particularly where natural resources are concerned. As of 2016, according to the Observatory for Economic Complexity, mineral products accounted for 151 billion dollars of Russia’s exports, 75.7 of it in crude, and 43.1 in refined petroleum.
As highlighted previously by our analyst Frederick Maranda-Bouchard, Turkmenistan and other Central Asian suppliers of petroleum products are now emerging as direct competitors to Russian exports. In response, Russia has invested in the modernization of its oil infrastructure to maintain market dominance in Europe and abroad. Emerging from a low of 27$ (Brent crude oil in Europe) in 2016, the Kremlin is now looking at a five-fold jump in oil revenue and will be posting a budget surplus for the first time since 2011.
What’s Next for Russia
The rise in retirement age was meant to be part of a larger set of economic reforms that is taking place in Russia. For years since the financial crisis, experts have reiterated the need for these reforms, so that the country will place itself on track to balance its accounts and sustainably reposition itself. The effect of distractions such as the World Cup, and the windfalls of shifts in oil exports, will effectively permit Putin to delay these reforms. So long as the current market conditions can continue without disruption, oligarchs will continue to stymie progress by incentivizing the status quo.
The Kremlin’s resiliency to external pressure, whatever its source, will prove to be crucial to the continued stability of government in Russia. Going forward, Vladimir Putin will maintain his firm grip and, despite some repercussions from raising the retirement age, public opinion will maintain and perhaps rally. Western observers forecasting an early withdrawal from the political scene for Putin will continue to be disappointed.
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