Putin Battles to Stem Nationalist Tide to Maintain Dominance

By Henry Meyer

Nov. 25 (Bloomberg) -- Russian Prime Minister Vladimir Putin is battling to halt creeping support for nationalist rhetoric to keep his United Russia party’s two-thirds majority from crumbling in Dec. 4 elections.

United Russia’s support has fallen more than ten percentage points to 39 percent this year, compared with 64 percent in a 2007 vote, a poll showed yesterday. The Liberal Democratic Party, which advocates protecting ethnic Russians’ rights, and the Communists, who are appealing to Russian pride, boosted their backing.

As the euro region’s debt crisis spreads, Russia’s government is forecasting slower growth in 2012. Putin, who plans to return to the Kremlin next year, is seeking to maintain United Russia’s parliamentary control, which permits unilateral changes to the constitution, as he may be forced to make unpopular cuts in social spending and raise the pension age to balance the budget.

“The question is how much of a majority the ruling party will get,” Kaha Kiknavelidze, a managing partner at London- based Rioni Capital Partners LLP who manages $55 million in emerging-market assets, said in a telephone interview. “This is important as it will determine how big a mandate Putin has to come back and run the country amid rising risks for Russia from renewed global weakness.”

Losing Seats

United Russia will probably see its seats in the 450-member State Duma, the lower chamber of parliament, fall from 315 to 253, according to a Nov. 18-21 poll by Levada Center released today. The survey of 1,591 people had a margin of error of 3.4 percentage points.

United Russia is likely to win 262 Duma seats, according to a Nov. 19-20 poll by the All-Russia Center for the Study of Public Opinion, or VTsIOM. The survey of 1,600 people had a margin of error of 3.4 percentage points.

The ruble has advanced about 2 percent against the dollar this quarter, the second-best performance among emerging-market currencies tracked by Bloomberg. The benchmark RTS stock index rose 4.2 percent in the same period.

Fifty-eight percent of Russians approve of the Liberal Democratic slogan of “Russia for Russians,” up from 54 percent a year earlier and 50 percent in 2006, according to a 2011 poll.

Exploiting Resentment

Nationalists are exploiting resentment about rising immigration to Russian cities from the Caucasus and Central Asia, and the Russian government’s subsidies for its mainly Muslim North Caucasus, said Masha Lipman, an analyst at the Moscow Carnegie Center.

“The authorities are concerned because they are fully aware of how much of a following nationalist politics can have,” Lipman said. “They take it pretty seriously, not because they expect a nationalist uprising tomorrow but because this is a sentiment fairly common among the people.”

The killing of a soccer fan by men from the North Caucasus last December sparked a riot by more than 5,000 Spartak Moscow supporters near the Kremlin. The gathering turned violent, with protesters throwing metal bars and fireworks at police.

The Liberal Democratic party’s popularity has risen to 10 percent from 7 percent in the fourth quarter of 2010, while support for the Communists advanced to 12 percent from 9 percent in the same period, according to a Public Opinion Foundation survey published yesterday. The poll of 3,000 people gave no margin of error.

People Disillusioned

The opposition parties are soaking up support of people disillusioned after economic expansion fueled by rising commodities prices ended in 2009, said Dmitry Oreshkin, an independent Moscow-based political analyst.

“People are tired of seeing the same people in power and there’s growing social dissatisfaction because real incomes aren’t rising like during the boom years,” he said. “Nationalist ideology is more popular as a result.”

Real wages increased an average of 15 percent a year in 2000 to 2008, according to data compiled by Bloomberg. Including falls for much of 2009, growth has averaged 1.5 percent since.

After balancing this year’s budget, Russia will probably run a 2012 deficit of 1.5 percent of gross domestic product, Putin said Nov. 16. Next year’s pension deficit will double to 3 percent of GDP as payroll-tax cuts kick in and net retirees jump by half a million. Russia, which posted budget surpluses in 2000 to 2008, faces deficits of up to 3 percent through 2014 as oil prices fall, presidential aide Arkady Dvorkovich said in June.

‘Fact of Life’

A drop in United Russia’s approval rating is a “fact of life” and the party has time to regain support before the vote, President Dmitry Medvedev said Nov. 11. Medvedev was asked in September by Putin to lead United Russia’s list in the election and take over as prime minister if the party performs well. He estimated current support at 45 percent to 50 percent.

Putin, whose personal rating is at a seven-year low of 46 percent, according to the Public Opinion Foundation, isn’t concerned about polls, his spokesman, Dmitry Peskov, said in a Nov. 22 telephone interview.

Liberal Democratic party leader Vladimir Zhirinovsky, who gained notoriety by calling for Russian soldiers to bathe their boots in the Indian Ocean, is campaigning with posters bearing his image and the slogan “For Russians.”

Soviet-Era Practice

Communist leader Gennady Zyuganov is demanding a return to the Soviet-era practice of listing nationality on citizens’ national identity documents. Russians have reason to be proud as “the founders of the nation state,” he said on a Nov. 2 trip.

Putin, 59, who was first elected president in 2000 and may return as leader for another 12 years, told lawmakers on Nov. 23 that the opposition shouldn’t “rock the boat.”

“We need to get the maximum result in these elections,” Putin told top United Russia officials outside Moscow yesterday. “If we break up parliament and aren’t able to make the necessary decisions at the right time, it will eventually drag us into the same mess as our partners and friends in Europe.”

Alexey Navalny, a minority shareholder activist who has won a following by exposing alleged graft at Russian state companies and joined thousands of nationalists at a rally in Moscow on Nov. 4, says the elections are a chance to destabilize the government.

“We should use the elections to create as many problems as possible for the authorities,” he said in a phone interview. “The biggest problem they could have is if they get less than 50 percent of the vote for United Russia -- that would be a catastrophe for them.”

--Editors: Balazs Penz, Andrew Langley, Paul Abelsky.