Putin warns of ‘bitter pills’ for Russian economy at party congress


Russian Prime Minister Vladimir Putin delivers a speech during the MAKS-2011 International Aviation and Space Show in Zhukovsky, outside Moscow, Russia, Aug. 17, 2011. (Alexei Druzhinin/AP)
September 23, 2011

Russia’s plunging stock market and suddenly crumbling ruble provided an unexpected backdrop to the much-anticipated ruling party congress that kicked off here Friday.

The meeting of United Russia, which stands virtually no chance of losing December’s parliamentary elections, has been the object of a great deal of speculation as to whether Prime Minister Vladimir Putin will announce a decision to reclaim the presidency from his protégé, Dmitry Medvedev. Everyone understands the decision is Putin’s to make.

But that will have to wait. Here was Putin on Friday telling the assembled delegates that Russia, unlike some other countries, wasn’t going to go begging for financial handouts, which seemed to be an answer to a question that no one was asking. He talked about “bitter pills” of economic retrenchment. He said wages had outstripped productivity, threatening inflation. (That’s largely because of government policies.) He said the government can’t pour honey on every problem.

Medvedev, who is expected to address the congress Saturday, spent Friday in emergency meetings over the sudden and sharp decline of Russia’s economic pillars. The stock market dropped more than 8 percent Thursday and was down nearly 7 percent Friday before a late rally brought it back up about 2 percentage points.

The ruble fell to a two-year low against the dollar. It has lost more than 10 percent of its value since the beginning of September, and more than 16 percent since the end of July.

Russia depends on oil revenue, and with commodity prices declining generally, investors are pulling out of emerging markets like Russia’s. The turmoil in Europe hasn’t snared the Russian economy directly, but the indirect effects of general anxiety have been damaging enough.

“The situation is difficult, we should be very attentive,” Medvedev said before his meetings, the RIA Novosti news service reported. “We must understand what is happening, which objective and subjective factors are influencing the situation.”

Putin’s warning of tough medicine ahead lent a sobering tone to the opening day of the United Russia congress, although even in the sunniest of circumstances it wouldn’t have had the hoopla and emotional appeal and cheerleading that U.S. political parties strive for. Putin was being honest about the economic challenges and perhaps also displaying his confidence in victory, no matter what the message.

He said the government has to be careful about spending and take more steps to limit corruption, all of which he has said before. But he warned specifically Thursday about a renewal of inflation. Keeping it in bounds will require fortitude, he said: “If we want to be responsible and honest people in regard to the citizens of Russia, then we need to tackle issues that might not be comprehensible to some.”

Putin also dropped in on a breakout session devoted to civil society — a phenomenon that his government has gone to great lengths to stifle. Of course, he said, he supports civil society. He mentioned, as a shining example, the Popular Front, a group he founded this year to provide more support for United Russia. Many outside the party view it as a sham.

“I am very glad that we have such active people, and our aim is to help them find themselves,” he said. “The authorities should hear the heartbeat of the people.”

He ended the session with a ringing endorsement of the difference between the sexes, as in, there are some things women can do better than men and vice versa.

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