Putin Seeks to Calm Russians' Economic Fears as Vote Nears

  • President holds annual `direct line' phone-in with people
  • Prices, wages, social questions are top issues, Kremlin says

Putin Pressed on Prices, Wages, Economy in Annual Call-In

President Vladimir Putin assured Russians that the economy will resume growth next year in his annual call-in show Thursday, using the Kremlin-controlled exercise to shore up his support as the country’s longest economic downturn in two decades pushes more people into poverty.

“The situation hasn’t been resolved yet but the trend is positive,” Putin said, pointing to forecasts that the economy will contract by 0.3 percent this year and expand by 1.4 percent in 2017. “We have ground for optimism.”

Despite the almost 50 percent plunge in oil prices, Russia is rebuilding its international reserves, which now total more than $387 billion, he said. Unemployment remains low, the Russian leader added.

Putin’s seeking to reassure Russians as the world’s largest energy exporter endures its second year of recession, the longest economic downturn of his 16-year rule. The economic hardship comes as parliamentary elections in September present the Russian president with his biggest electoral test since he returned to the Kremlin in 2012 after unprecedented protests against him.

“In a fortress situation and at a time of crisis, this allows him to communicate with the people,” Igor Bunin, director of the Moscow-based Center for Political Technologies, said by phone. “This is a populist format with almost everything stage-managed and that’s why Putin likes it.”

Economy, Poverty

Social issues and the economy dominated the more than 3 million questions submitted for Putin’s 14th call-in show, according to state television. Putin, who in recent years rallied sentiment against the U.S. and the European Union amid the worst stand-off since the Cold War over the Ukrainian conflict, this time devoted most of his attention to domestic policy.

While Russians enjoyed rising prosperity during Putin’s first two presidential terms from 2000, when the economy grew at an annual average of 7 percent, the number who fell into poverty in 2015 rose by 3.1 million to 19.2 million, the most since 2006, as wages fell and the ruble tumbled following the collapse in oil prices.

People chosen for the studio audience that’s also part of the live show were given instructions and training after being gathered at a hotel outside of Moscow since Tuesday, the RBC daily reported Thursday, citing people close to the organizers. Questions were screened and dozens of people selected to pose them to the president from among hundreds of participants, it said.

Elections, Sanctions

While Putin’s personal ratings remain above 80 percent, the government and regional authorities are becoming targets of popular discontent. Parliamentary elections in September begin a new electoral cycle that will culminate in the 2018 presidential contest, when Putin can seek a fourth term.

The Russian central bank sees the economy contracting by as much as 1.5 percent in 2016 and it won’t grow faster than 2 percent a year after that without economic reforms, even if oil prices recover to $100 a barrel from around $45 currently, central bank Governor Elvira Nabiullina said Tuesday.

Putin said sanctions imposed on Russia by the U.S. and the EU over Ukraine are unlikely to be repealed “for the forseeable future.” He defended the rise in food prices provoked by Russian countermeasures introduced against some foreign food imports in 2014.

Food Prices

After a Muscovite, Lyudmila Safronova, complained that her weekly family food basket had doubled to 10,000 rubles ($150) this year, Putin said the import ban was partly responsible for rising prices though it would help Russia’s food security by creating “conditions for the development of our agriculture.”

Putin wasn’t asked about the ruble, after telling Russians during his 2015 show that the currency would rebound from a 30 percent slump the previous year. Oil, Russia’s main export earner, instead continued a freefall and sent the ruble plunging 20 percent.

In response to a question about wage arrears, Putin said that many companies aren’t paying salaries on time as they try to preserve jobs. Police detained a worker from the Vostochny cosmodrome on the eve of the show, the opposition Novaya Gazeta newspaper reported Thursday, citing the employee. He’d been planning to take part in a protest with others building the space-launch facility to mark the anniversary of their appeal to Putin during last year’s event over unpaid salaries, it said. Although Putin promised to deal with the issue, the back wages still haven’t been paid, the newspaper said.

‘Trump Card’

Putin fielded anxious requests from residents of Crimea, who have suffered from falling living standards because of high inflation and frequent power shortages since Russia annexed the Ukrainian peninsula in 2014. From a windy island half-way along the Kerch Strait, across which Russia is building a 19-kilometer (12 miles) bridge to end Crimea’s isolation, one woman asked when reliable electricity supplies from the Russian mainland will be established.

Turning to foreign policy, Putin promised Russia will do everything to ensure that “the situation doesn’t worsen” in Syria. Russian forces have bolstered President Bashar al-Assad as peace talks sponsored by Russia and the U.S. aim to end the five-year conflict.

Declining to endorse either of the front-runner candidates to become U.S. president, Hillary Clinton and Donald Trump, the Russian leader praised President Barack Obama as a “decent man” and a “strong person” for his admission that he’d mishandled Libya.

The tightly-scripted event, which lasted about three hours and 40 minutes, didn’t captivate Vadim Bit-Avragim, a money manager at Kapital Asset Management in Moscow. “Putin hasn’t impressed me at all, very boring conference,” he said by e-mail.

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