Rüdiger Rossig | Journalist | Novinar

Russians are poorer. The transition to democracy and a market economy has failed | By Rüdiger Rossig

On March 10, residents of the Tver district made an "urgent" appeal in a letter to "Dear Vladimir Vladimirovich" Putin, "defender of Russian-speaking peoples the world over" and President of the Russian Federation: "Please send troops here too!"

The reason: "The situation of the Russian-speaking population in Tver is far more tragic than in Crimea." In sharp contrast to the Crimean peninsula – Ukrainian sovereign territory which armed Russian units took control of eleven days earlier – hundreds of towns and villages in Tver had no electricity for the entire month of December, the letter said.

Power supplies were generally unreliable, it continued, and people in Tver are often forced to sit in the dark for many nights on end. Gas supplies are also fickle, it said, and the fuel often fails to reach a building’s upper floors, where heaters and boilers remain cold.

Nor do Tver’s approximately 1.3 million inhabitants earn the monthly average of €600 ($827), the sum Putin cited in his television address marking the annexation of Crimea as the regular earnings of people in Russia. The letter pointed out that in Tver, they don’t even get the €220 which the Russian president claimed was the average Ukrainian wage: "In our villages, you are lucky to earn €120-160, if you have work at all."

But Tver is not located in some former Soviet satellite; the district is on the rail line between St. Petersburg and Moscow – in the very heart of Russia. So is the 1.2-million strong Vologda district, which also wrote to the president because "the rights of our Russian-speaking population" are being violated in the region.

"Those who fall ill do not get the medication they need," the letter said, "education standards are falling further every year, kindergartens are being closed, agriculture has been devastated." Using "dishonest elections, occupiers have seized power": Corrupt politicians and officials plunder public funds and buy themselves fancy cars, it said, while the regional infrastructure has not been renewed since the time of Soviet leader Leonid Brezhnev – who died in 1982.

The appalling deficits described by the people of Tver and Vologda are simply everyday life in Russia. Life in the villages and small towns has become intolerable. Russian men’s average life expectancy is 64 years (Ukraine 65.8 years, US 76.4, Germany 78.7). And although the official unemployment rate has fallen from 8.4 to 5.5 percent since 2009, the real figure is probably much higher, particularly in the countryside.

As a result, such areas are becoming depopulated. When people in Tver see reports of refugees from Ukraine on Russian TV, they think of their own 300,000 people who have left for Moscow and St. Petersburg since 1990. But even there, more and more businesses are closing down. People flee poverty in the villages only to continue living in poverty in the cities.

Twenty-five years after the fall of Communism, it is clear that the transition from authoritarianism and state-controlled shortages to democracy, a market economy and, above all, prosperity for all in Russia has failed. That is Putin’s biggest problem.

When he first became president in 1999, Putin stood for the end of the chaotic years presided over by his predecessor Boris Yeltsin – and for economic prosperity. In those early years the broad base of Russian society managed to get more than a few crumbs of the country’s wealth for the first time in its history.

But that came to an end when the financial crisis began. In 2013 Russia’s GDP grew by just 1.3 percent instead of the forecast 3.6 percent. Since the start of the year, the ruble has fallen to historical lows against the dollar and the euro. In the same period, the price of basic foodstuffs has risen 10 percent.

A glance at the Russian economy demonstrates how little Putin’s Russia has to do with the country under the Czars or with the Soviet Union. While the USSR was an industrialized nation, which in some areas – like the armaments industry – was able to compete with Western countries, today’s Russian Federation lives by selling raw materials.

Economically, Putin’s state is looking more and more like traditional raw materials producers such as Qatar or Saudi Arabia. But people in Moscow, St. Petersburg, Tver and Vologda do not just watch the same TV shows as Americans and western Europeans. They are bombarded with the same advertisements, and have the same desires as consumers in the West. Those are desires that Putin’s Russia cannot fulfill.

Both in the West and in the state-controlled Russian media, the president has come across as an omnipotent force since his lightning grab of Crimea. But in reality, Putin is sitting on a social powder keg. He is part of a structure that runs Russia. This powerbase is often called the "Putin family" or the siloviki (people of power) – most of them in the security agencies, police and army. The siloviki are powerful – but despite stripping the Yeltsin-era oligarchs such as Boris Berezovsky and Mikhail Khodorkovsky of their power, they still have to be careful to take into account what Russia-expert Margareta Momm­sen calls the "pluralism of the administrations" – for instance, the justice system and the country’s enormous bureaucracy.

In practice, Russia’s administrative apparatus by no means implements all of the decrees issued by the supposedly all-powerful president. Nor does the Putin family have any control over Russia’s rampant corruption, or its highly lucrative organized crime structures. The central bank in Moscow estimates that two-thirds of the $56 billion in capital that left the country in 2012 were the result of illegal activity. (In the first quarter of this year, some $70 billion was moved out of Russia, according to the country’s Deputy Economics Minister Andrei Klepach.)

What annoys Putin about Ukraine more than the right-wing party Svoboda, is the pride and confidence radiating from the people on Kiev’s Maidan Square. How can he prevent mass protests like this at home if the already disastrous economic situation should worsen for the many millions of people who have already been left behind?

Putin played the ethnic card first in the Caucasus, then in Georgia, and now in Crimea – it is his standard diversionary tactic to distract an impoverished population from its real problems. But he is playing a dangerous game. Ethnic groups within the Russian Federation – Caucasian and other non-Russian minorities – want increasing control of their own affairs, and will be sure to quote Putin’s Crimea speech back at him.

The strong man in the Kremlin is no doubt mindful of Serbia’s Slobodan Milosevic, who stirred up a war in the early 1990s in order to prevent his own furious people from throwing him out of office. Milosevic had seen what happened to the dictator in neighboring Romania – Nicolae Ceau?escu and his wife were deposed and summarily executed.

Russia is not Serbia and Putin is not Milosevic – but the Kremlin boss surely realizes that a Russian version of the Maidan protests might spell his political end.

In light of all this, the worst "sanction" which the West – above all the European Union – could impose on Moscow would be to create an area of prosperity and democracy in Russia’s near abroad. A Marshall Plan for the EU’s eastern periphery, democratic, flourishing landscapes at Russia’s front door and strong civil societies will make it more difficult for Putin & Co. to maintain their autocratic regime.