Putin Gets a Reminder to Turn His Attention Back Home

(Bloomberg Opinion) -- Something strange is going on in Russia: The usually government-friendly polls are registering a significant drop in President Vladimir Putin’s approval ratings. Although he is increasingly assertive on the international front, at home he’s under pressure to soften a pension reform that would sharply raise the retirement age. 

On Thursday, parliament gave preliminary approval to the pension proposal. It also extended by a month the time it will accept amendments. This gives Putin a chance to allow some softening of the initial plan, which would gradually increase the retirement age for women to 63 from 55 and for men to 65 from 60. 

The measure is widely unpopular. According to Levada Center, the last remaining independent nationwide pollster, 89 percent of Russians have a “sharply negative” or “rather negative” attitude toward the retirement-age increase. Just as overwhelmingly, they say there should be no change at all, even when told most countries are requiring people to work longer.

Perhaps more worrying for the Kremlin, even the tame pollsters that have worked closely with the Putin staff, the state-owned VTsIOM and the government contract recipient FOM, are registering a drop in the president’s confidence numbers since the pension proposal was made public a month ago.

Putin Gets a Reminder to Turn His Attention Back Home

The release of this polling data likely indicates that the establishment, and perhaps even Putin’s government and staff, aren’t united behind the retirement measure. Putin has always favored fiscal conservatism over expanding social programs. But that debate is taking on a new meaning. If this is Putin’s  last term in power, he may be doing his potential chosen successor a favor by taking the heat for an extremely unpopular, but necessary, move. But just as easily, it could end in his supporters' ouster from power after he steps down.

The misgivings are especially obvious in Russia’s regions, where some important members of the pro-Putin United Russia party are openly expressing dissent, or trying to avoid showing support for the government plan. In total, according to the St. Petersburg Politics Foundation, 12 of the Russian Federation’s constituent parts have withheld their backing, an unusual display of defiance in an authoritarian country.

So far, the pro-Putin officials’ worries appear overblown. Despite the general unhappiness with the pension reform, protests have been tepid. Leftist parties and the weak, generally pro-government labor unions don’t have much street pull. Alexei Navalny, the anti-corruption crusader and Russia’s most popular opposition leader, has embraced the pension issue, too. He argued that the government’s attempts to save money have less to do with the country’s demographic problems than with the lack of political will to fight corruption and restructure government spending to benefit health care and education rather than defense and security. But even Navalny’s expertise at organizing protest has failed to produce much pushback. 

Yet, looking ahead, the Putinists who hope to hold on to power after 2024, when the strongman’s fourth presidential term ends, can’t help but notice that while Russians are not particularly unhappy about economic conditions, they show less and less appreciation for the government’s performance. If the trend is intensified by measures like the retirement-age increase, political leaders will have be able to sway voters only with coercion and electoral fraud.

After his re-enthronement (or re-election, as the Kremlin prefers to call it) in March, Putin kept almost the entire government in place, allowing it to pursue an extremely conservative fiscal policy. The current plan for this year and the next three is for a budget surplus through 2021, as the government envisages putting aside any windfall revenue from oil price above $40 per barrel (it’s above $70 now).

This outlook is in line with policies proposed by Alexei Kudrin, Putin’s former finance minister and trusted economic adviser, who now heads the Accounting Chamber, the country’s fiscal control agency. Kudrin has long been a proponent of a retirement-age increase, but even he is a little uneasy about the proposed measure. The Accounting Chamber has called for clarifications of the reform that would show that the higher retirement age would result in bigger pensions, which, according to Kudrin, could go up by 30 percent.

Putin, whose instinct is always to limit spending unless it’s for his pet projects like rearming the military or holding major sports competitions, faces a dilemma: Should he hold firm and hope Russians will get used to the idea of delayed retirement by 2024, or should he soften the proposal? Drawing a clear path to higher pensions, as Kudrin proposes, may not be enough to restore the president’s ratings and appease regional allies.

Besides, the political tactic of appearing to stand up to the West appears to be exhausted for Putin, in part because the Donald Trump, the U.S. president, is acting so friendly and the Western alliance seems disunited. Instead of focusing on foreign wars and controversies throughout his third term, the Russian autocrat may have to start paying close attention to domestic economic issues if he wants the system he built to survive him.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Leonid Bershidsky is a Bloomberg Opinion columnist covering European politics and business. He was the founding editor of the Russian business daily Vedomosti and founded the opinion website Slon.ru.

©2018 Bloomberg L.P.