Bloomberg News

Putin Is No Madman to Russians as Power Play Trumps Economy

March 17, 2014

Vladimir Putin

Russian President Vladimir Putin watches the closing ceremony of the 2014 Sochi Paralympic Winter Games on March 16, 2014. Photographer: Sasha Mordovets/Getty Images

Western leaders may think Vladimir Putin is crazy for threatening to annex Crimea and invade other areas of Ukraine. Most Russians, still bitter about the Soviet Union’s demise more than two decades ago, couldn’t be prouder.

Putin’s approval rating, bolstered after Russia hosted its first Winter Olympics last month, reached a three-year high as he poured troops into Crimea amid the overthrow of the Kremlin-backed government in Kiev. The tensest showdown with the West since the fall of the Berlin Wall has proved to be good for the business of governing in Moscow.

“Putin is just defending his country’s interests,” said Yaroslav Batashev, 32, a manager at a Moscow-based trader of consumer products who says he isn’t necessarily a fan of his president. “Crimea is historically important for Russia and it’s Russian.”

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Since overcoming the biggest protests of his 14-year-rule to win a third term in 2012, Putin has reasserted his power at home and abroad. Even at the risk of sanctions that could tip the economy into recession for the second time in five years, Russians see his defiance of the West over Ukraine as a sign of strength, reinforcing his image as a leader who restored his country’s greatness from the post-Communism chaos of the 1990s.

Putin’s Backing

Seventy-two percent of Russians approve of the work Putin is doing as president, the independent Levada Center said March 13, citing a survey of 1,603 people that had a margin of error of 3.4 percentage points. A March 8-9 poll by the state-run All-Russia Center for the Study of Public Opinion, known as VTsIOM, also gave Putin 72 percent.

“The involvement of the U.S. in a situation with which it has nothing to do with is very irritating,” said Ilya Knyazev, a 31-year-old sales director at a food distributor in Moscow. “I support Crimea joining us because otherwise NATO would be in Ukraine, hurting Russia’s security.”

How the Crisis Began, Where It's Headed

Part of that support has been drummed up by the attacks by Putin’s vast media apparatus on the “fascists” who took power in Ukraine and the portrayal on state-run television of the protests that led to the ouster of President Viktor Yanukovych.

“Russians were deeply astonished by the pictures they saw on TV from Independence Square in Kiev -- the shootings, killings, burning tires,” Alexander Oslon, head of the Public Opinion Fund, said by phone yesterday.

‘Overwhelming Support’

“Those pictures created the fear that it may happen in Crimea, where the majority of the population is Russian,” Oslon said. “Now Putin has the overwhelming support of the majority of the population.”

Putin, who came to power in 1999, the year after Boris Yeltsin defaulted on $40 billion of domestic debt, averaged economic growth of 7 percent a year in his first two presidential terms as oil prices and output surged. The former KGB colonel reasserted state control of the economy and media and gained popularity as he reined in the oligarchs -- men who became billionaires overnight by acquiring some of the country’s most valuable assets at rigged auctions. He jailed the richest of them, Mikhail Khodorkovsky.

Crimea has been home to Russia’s Black Sea Fleet since its founding by Catherine the Great in 1783, after the Ottoman Empire ceded the peninsula. It was part of Russia until Soviet leader Nikita Khrushchev gave it to the Ukrainian Socialist Republic in 1954, when Putin was 14 months old.

Leaving Ukraine

A total of 96.8 percent of voters in the Black Sea peninsula yesterday backed leaving Ukraine to join Russia, the head of the election commission, Mikhail Malyshev, told reporters. The results exclude one city, Sevastopol. The U.S. and the EU have both called the vote illegal.

Crimea may be incorporated into Russia by the end of this week, Alexander Ageyev, first deputy head of the Russian State Duma lower house of parliament’s committee for constitutional affairs, said in a phone interview today.

Putin’s focus is already shifting to eastern Ukraine, which is also largely Russian-speaking. The Foreign Ministry in Moscow, which called the overthrow ofYanukovych a “coup” by “fascists,” said March 15 people in eastern Ukraine asked for Russian protection after a series of deadly clashes in Donetsk and Kharkiv.

To be sure, many educated Russians are aghast at Putin’s policy over Ukraine. Organizers of a peace march against Russian actions in Ukraine drew tens of thousands of people to central Moscow on March 15, according to organizers and media reports. Police put the number at 3,000.

‘Aggressive Quest’

“Moscow’s aggressive quest for its ‘near abroad’ has become an ideological mission to fight the West, one that has left all rational grounds and that ignores all costs and consequences, including those to Russia itself,” Joerg Forbrig, a senior program officer at the Berlin bureau of the German Marshall Fund of the U.S., said by e-mail.

Ukraine in general and Crimea specifically represent the latest and, for Putin, the most crucial step in his crusade to halt what he sees as the West’s relentless encroachment on Russian interests since the end of the Cold War.

Most of the buffer states between Russia and Germany, where millions of people died during World War II, has been absorbed by the North Atlantic Treaty Organization and the European Union since the Soviet Union disbanded in 1991. Sevastopol, home to the Black Sea Fleet, is a symbol of Russian heroism not unlike the Alamo for Americans. The city was under siege by the British and the French during the Crimean War in the 1850s and then by Nazi forces in 1941-1942.

Syria, Iran

In just the past year, Putin has cemented Russia’s role in the Middle East by brokering a deal that averted U.S. strikes on Syria and kept in power President Bashar al-Assad, a Soviet-era ally and buyer of Russian weapons. He’s also encouraged the West to make concessions to Iran over its nuclear program and struck a multi-billion arms deal with Egypt’s new military rulers after the U.S. suspended aid.

Putin, who once described the breakup of the Soviet Union as the biggest geopolitical catastrophe of the 20th century, was named “Person of the Year” in December by the Times of London for the accord over Syria. That effort “propelled the president back into the front ranks of effective world statesmen,” the Times said.

For now, most Russians are shrugging off Putin’s crackdown on what’s left of independent media, which includes forcing out the longtime head of the country’s biggest talk radio station, Ekho Moskvy, and the editor-in-chief of one of its most popular news sites, Lenta.ru.

‘In Ruins’

“The country was in ruins under Boris Yeltsin,” said Batashev, the Moscow trader. “Despite all of Putin’s disadvantages, he’s a tough and uncompromising leader who managed to transform Russia into a better place than it was a decade ago.”

With the presidential term extended to six years from four, Putin, first elected in 2000, may stay in power until 2024 if he runs and wins again in 2018.

Even within the government, some officials are hoping Putin will moderate his response to the crisis, though they are afraid to speak out against what they see as a course already chosen, according to two people familiar with the situation.

Russia retaliating with sanctions against the West could wipe out 10 years of achievements in financial and monetary policy, one of the people said. Such escalation could erase as much as a third of the ruble’s value, another said.

Ruble, Peso

The ruble has slumped about 10 percent against the dollar this year, the worst-performer after Argentina’s peso among 24 emerging-market currencies tracked by Bloomberg.

“I don’t want Russia to be in isolation again and be in the opposition to the rest of the world,” said Anatoly Kapralov, 29, the founder of an advertising agency in Moscow.

That kind of sentiment isn’t likely to sway Putin, said Nicholas Spiro, the managing director of Spiro Sovereign Strategy in London.

“For Russia, it’s about national and cultural pride,” Spiro said by e-mail. “That is what is emboldening President Putin to face down the West.”

To contact the reporters on this story: Henry Meyer in Moscow at hmeyer4@bloomberg.net; Yuliya Fedorinova in Moscow at yfedorinova@bloomberg.net

To contact the editors responsible for this story: Balazs Penz at bpenz@bloomberg.net; Hellmuth Tromm at htromm@bloomberg.net Brad Cook, Paul Abelsky, Balazs Penz


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