Tuesday marks one year since President Vladimir Putin took his third presidential oath of office. A year ago, he placed his hand on the Constitution against a backdrop of rising opposition to his autocratic rule. On May 6, the eve of Putin's inauguration, police and Interior Troops used excessive force to disperse a peaceful demonstration at Bolotnaya Ploshchad.
As a result of the protest movement that ran from December 2011 to March 2012, the first year of Putin's third term in office has seen a continuation of his ideology of monopoly power, the further degradation of political institutions and a deeper stagnation of the economy.
Frightened by the mass protests and his drop in ratings, Putin moved even more decisively toward a reactionary and populist platform. Putin exploited the deep-rooted conservatism of the majority of voters and their fondness for living off government handouts. Accordingly, he issued eight populist decrees within weeks after the Bolotnaya protest, calling for federal and regional governments to raise salaries for state employees, build kindergartens, enable the nearly 650,000 Russians living in dilapidated apartments to move into better housing and provide apartments for people who were defrauded by corrupt real estate developers. He also issued orders for a sharp increase in pensions for military and law enforcement personnel and to spend 23 trillion rubles ($770 billion) for upgrades to the military through 2020.
By distributing money to Russians dependent on the state, Putin essentially bought back a few percentage points on his popularity ratings. As of February, 65 percent of all Russians approved of Putin's activities. But the inevitable consequence of those generous handouts has been shortfalls in federal and regional budgets. After implementing the pay raises, regional budgets were left with deficits this year totaling 500 billion rubles ($16.1 billion) and a cumulative debt of 1.4 trillion rubles ($45.2 billion) that continues to grow. Government leaders are openly speaking of a federal budget deficit this year of 360 billion rubles ($1.2 billion) that they plan to pay down by dipping into the reserve fund.
In a frantic quest to boost his popularity, Putin resorted to exploiting the people's main phobias: fear of spies and other saboteurs financed by the U.S. as well as fear or distrust of non-Russians, homosexuals, immigrants and those who insult the "religious feelings of others." Putin also had said that Russia needs a stronger spiritual foundation grounded in close union of the Orthodox Church and the state, despite the constitutional principle of separation of church and state. In addition, the laws restricting human rights that Putin signed during the past year was supported by the majority of Russians, drawing on an authoritarian political model from the dark Soviet past. At the same time, the conflict between Putin and the "creative class" in Moscow and other large cities intensified, while an increasing number of innovative and entrepreneurial Russians have left the country or are seriously thinking of emigrating to the West.
For those businesspeople that have decided to stay in Russia — at least for the time being — the government has already slapped hefty tax increases on small and medium businesses and threatens to increase the burden on ordinary citizens through an increase in property tax. Businesses encounter harassment and often extortion from the police and government agencies . Businesses also face rising internal costs as a result of the diminishing labor pool and an increasingly unqualified workforce. The economy is expected to slow by as much as 2.4 percent this year. This, coupled with capital flight totaling $50 billion in the first quarter of this year alone and the continued decline in direct investment, is a clear indication of how the business climate in Russia is worsening. A record low of only 2.2 percent of Russians are willing to go into business today, according to Kommersant, which cited a joint study by Babson College, the London Business School and the business school at St. Petersburg State University. Even Prime Minister Dmitry Medvedev's report to the State Duma admitted that the authorities had no clear idea of what needed to be done to accelerate economic growth.
In the past 12 months, Russia's political system has shifted markedly toward an authoritarian corporate state. The government has filed criminal charges against leaders of peaceful street protests, and the opposition has been subjected to a highly organized propaganda campaign to discredit it. The authorities are also waging a large-scale harassment campaign against independent non-governmental organizations by ordering inspections. Golos and other NGOs have been hit with 300,000-ruble ($10,000) fines, and the authorities are determined to fine more "foreign agents"who fail to register as such with the Justice Ministry.
The so called "opposition" parties in the Duma — the Liberal Democratic Party, the Communist Party and A Just Russia — are clearly pro-Kremlin and have now become integral elements in Putin's power vertical. They not only provide direct support for the government but openly toe the Kremlin line on every key issue. The registration of the opposition Parnas Party in 2012 has been rendered pointless by the lack of direct elections of governors, widespread electoral fraud and the overwhelming advantage in resources given to the four pro-Kremlin parties in the Duma.
Taken together, all of this is designed to preserve Putin's monopoly on power, even at the cost of economic stagnation, accelerating capital flight, the mass exodus of the country's most talented minds and any hope that Russia will ever reverse the growing gap separating it from the world's leading and most progressive countries.