Vladimir Putin unexpectedly ignores Russia’s triumphant World Cup

The Bell

1. Vladimir Putin unexpectedly ignores Russia’s triumphant World Cup

Vladimir Putin at the World Cup Football Park on Red Square, June 28. Photo credit: Kremlin.ru

What happened

Russia’s football team has surpassed even the most ambitious fan forecasts as it hosts the World Cup — for the first time since 1970 (then as team USSR), Russia’s football team has reached the quarter finals. It is surprising that Vladimir Putin missed a simple and easy opportunity to lift his swiftly falling approval rating. After Russia’s opening World Cup match, the president didn’t watch any other games in which Russia played. The main intrigue this week is whether or not Putin will show up to watch Russia’s quarter final match against Croatia this Saturday, which is expected to be the most popular sporting event the country has seen in the past several years. For now, Putin isn’t planning on attending.

  • The only Russia game which Vladimir Putin watched in person was the opening match against Saudi Arabia. During the group phase, no one really expected the president to watch the other two games. But his absence at Russia’s first ever match in the round of 16 seemed strange. Dmitry Medvedev watched Russia’s sensational victory over Spain from the VIP seats together with King Felipe VI of Spain. 24 million Russians tuned in to watch the game on TV and saw this — the broadcast was one of the top three (Russian) most watched sporting programs in Russia in the last 2 decades. After the game, Medvedev probably earned a few more political bonus points when he went down to the locker room to personally congratulate the Russian team on their win.
  • Those bonus points could have gone to Putin — but he continues to ignore this wonderful opportunity. This Saturday, Russia will play in a quarter final against Croatia in Sochi. The broadcast of the match is likely to set a new all time record high rating. Putin has a residence in Sochi where he spends much of the summer. But the president doesn’t plan to attend the match, his press secretary Dmitry Peskov told journalists on Thursday (Russian).
  • Although surprising, the main reason why Putin is ignoring the World Cup is that he loves hockey, and he just isn’t really into football, a highly ranked Russian official told The Bell. Of course, there was another reason why the president was absent from the game against Spain — no one really thought that Russia would win, and Putin didn’t want to be associated with disappointment, the source told The Bell. But the first reason is more important, he believes. The supposed dislike of football, actually, hasn’t prevented Putin from participating in many less well attended events during the World Cup  — for example, the friendly game between stars and Russia’s youth team on Red Square on 28 June.
  • The Bell spoke to government officials and the senior national team’s management, and both are still not sure whether or not Putin will attend the quarterfinals in Sochi in Saturday. Logically, he should be there, says a source in the team management: Putin always avoids being associated with defeats, but a loss at such an advanced stage would be considered a graceful exit, and the team will still be honored as national heroes. On the other hand, he expects that Dmitry Medvedev is going to attend the game, and this casts doubt over Putin’s appearance: it is extremely rare that the President and the Prime Minister both show up at the same event.

Why the world should care

Current Russian politics have only a slight resemblance to the late Soviet era, when Western kremlinologists spent hours determining the level of influence of Politburo members based on the order in which they stood at the Lenin Mausoleum during military parades. However, how Putin uses the World Cup politically might hint at his next foreign policy steps just days before his summit with Donald Trump in Helsinki.

2. Russia’s army of internet trolls shows its true size

What happened

This week, Russian internet users were able for the first time to observe an attack of internet trolls on a national scale. The cause of this was a Facebook post made by the PR manager of a French retail chain claiming that Russian football fans supposedly killed and burned a young woman in the Moscow region. This seemingly insignificant post blew up into a huge scandal and showed just how much you need to be aware of your words on the internet in Russia.

  • The author of the scandalous post, the PR director of the French retail chain, Leroy Merlin, Galina Panina, became infamous in the Russian internet for several days. By the end of the week, Russians googled her name more often than the hero of the football match against Spain, Russia’s goalkeeper, Igor Akinfeev. On 2 July, Panina posted a story told by her intern on Facebook (it has since been deleted) пост a post saying that drunk football fans in Moscow, celebrating the win, burned a young woman alive, and added a hashtag condemning the patriotic excitement which arose after the football team’s victory. Later, it became clear that the young woman set herself on fire, having suffered from depression. She then died from her injuries in hospital. It also became known that the young woman had worked at the same French company.
  • Angered commentators appeared for the record, to which Panina responded by calling them “a cotton ball” (a derogatory name for a Russian nationalist). After that, the post was seen by well known PR specialists close to the Kremlin — and then a total social media campaign was launched using bots and trolls. Social media users, both real and fake, in 24 hours wrote hundreds of posts and thousands of comments, calling Panina Russophobic, announcing a boycott of Leroy Merlin and demanding that she be fired. Dozens of Telegram channels close to the government joined in, as well as even national television. The PR specialist chose the losing strategy of reacting with retaliatory name-calling — and it all ended with Panina being forced to resign from her job.
  • This scandal would never have happened without the surrounding context: since the beginning of the World Cup, the most radical opponents of the Russian authorities (e.g. political emigrants) severely judge Russians who are cheering for their football team, including, for example, opposition leader Alexey Navalny. This already brought on several unsightly social media arguments and gave the trolls a reason to once again accuse the liberal opposition of being traitors.

Why the world should care

Needless to say, Galina Panina is responsible for the scandal and behaved unintelligently, particularly for a PR specialist, and in a highly unprofessional manner, without thinking about the damage that her personal Facebook posts might do to her employer. But the main thing in this story is not an anti-case study for PR specialists, but instead a warning for all of us: the army of internet trolls watches every word written on social media platforms, and any careless comment at the wrong time might become an excuse for a massive campaign and become the beginning of the end of your career.

3. At a difficult time for the government, Dmitry Medvedev might lose his closest ally

What happened

This week there was another opportunity to talk about the political future of the prime minister and eternal acting successor of Vladimir Putin, Dmitry Medvedev. In the near future, Medvedev might lose a key (and perhaps not just one) member of his team — his press secretary and close advisor, Natalia Timakova.

  • Natalia Timakova has worked with Medvedev since 2007. Most believe that she has more influence on the prime minister than your average press secretary. Journalist Mikhail Zygar described Timakova in his book, All The Kremlin’s Men, “a close secret advisor, the closest and most influential ideologist within Medvedev’s circle” and hinted that in 2011 she was one of the main supporters of Medvedev going for a second presidential term, and she pushed him to support the mass protests against Putin’s third term.
  • Rumors that Timakova might leave her post as Medvedev’s press secretary began to swirl this spring — then it was thought that she might become Minister of Culture in the new government. But this didn’t happen. This week, Russian media reported (Russian) that Timakova might take a lesser role as deputy head of Vneshekonombank — the state investment vehicle which former deputy prime minister Igor Shuvalov took leadership of in June. Journalists’ sources explain Timakova’s departure as her own wish to “change her area of focus”.
  • Timakova’s departure is not the first, and likely not the last, blow to Medvedev in 2018. The first was the arrest at the end of March of billionaire Ziyavudin Magomedov who was believed to be close (Russian) to the ex-president. Two months later, after the presidential election, a friend of Magomedov, Arkady Dvorkovich, was not named to the new cabinet. Dvorkovich was the only deputy prime minister considered to be firmly in Medvedev’s camp. In June, the government announced the first increase to the pension age since 1935, and for now, all signs point towards the responsibility for the unpopular reform being placed on Dmitry Medvedev’s plate.
  • It is most likely that Medvedev would only resign from his post as prime minister under extreme circumstances — for example, if protests against pension reform take on a mass scale and become unmanageable. The role of a prime minister who proved his loyalty in 2011 suits Vladimir Putin ideally: the president can be sure that the second person in the government will not try to take power away from him, and instead will wonderfully play the role of a lightning rod, personally absorbing the population’s discontent.

Why the world should care

Vladimir Putin’s fourth term ends in 2024, and for now it’s unclear if he will choose a successor or come up with a means of preserving not only effective but official power. The most important reason for Medvedev to maintain his post as second in command and formal successor to Putin is that he already handed back presidential power once and is used to his role as a “punching bag”: it was Medvedev who was sent to watch the football game that Russia was widely expected to lose, and not Putin. These qualities, for now, allow Medvedev to preserve his status — but without people whom you can rely on in your own circle, it is difficult to talk about a real political future for the prime minister.

4. Tax increases will fund Putin’s pre-election promises, but will slow down the Russian economy

What happened

While pension reform has attracted all of society’s attention, Russia’s parliament already managed to pass in its first reading a law which will have no less serious of an economic impact on Russians and the country’s economy. For the first time in 15 years, the government is prepared to raise VAT from 18% to 20%. This tax must be increased in order to pay for the social promises Vladimir Putin made during his election campaign, but this will have a negative impact on the economy as a whole. The Russian government already scaled back its forecasts (Russian) and admitted that the GDP growth will slow as a result of the increase in VAT, inflation will go up, and real incomes will almost stop growing. This looks particularly worrisome, given the risk of a new global economic crisis comparable to 1998.

  • New economic slowdown. According to the Ministry of Economic Development’s new forecast, as a result of the VAT increase, the Russian economy in 2018 will grow by 1.9% (and not by 2.2% as was forecast earlier). Goldman Sachs, which is traditionally bullish on Russia, re-evaluated its GDP forecast at the beginning of May: instead of 3.3% growth for 2018, it now expects 2.0%. In 2019, the Ministry of Economic Development expects growth of 1.4%, but Bank of America Merrill Lynch forecasts only 1.2%. Before the election, Vladimir Putin promised that the Russian economy will grow faster than the world economy before 2024, which would imply a minimum annual growth rate of at least 3% per year. In the next two years, this promise definitely won’t be kept: all forecasts (including the government’s own) suggest growth of 1.0-1.9% in 2018 and 1.0-1.5% in 2019.

  • Rising inflation. The head of Russia’s Central Bank, Elvira Nabiullina, believes her greatest achievement to be Russia’s lowest level of inflation for the past 30 years – 2.5% in 2017. However, she, on her own admission, will not likely be able to maintain this result: the VAT increase will drive inflation by two percentage points, so Nabiullina finds even 4% to be acceptable. The Ministry of Economic Development expects that annual inflation will rise from the current 2.3% to reach 3.1% by the end of 2018, and that by the end of 2019 it will hit 4.3%. This means that the Central Bank’s key rate (currently 7.25%) will also not be decreased.
  • Declining real incomes. Vladimir Putin, just like at the beginning of his last term, promised during his election campaign to increase state spending — this time he promised $150 billion over 6 years. Last time, state money was spent on raising salaries of those working in the government sector — salaries were increased, but much of this was achieved through a reduction (Russian) in the number of public sector employees. Now, the plan is to inject the economy with state funds in the shape of investments to build infrastructure, rather than raising salaries, said Vladimir Osakovsky, lead economist for Russia with Bank of America Merrill Lynch. The positive effect for citizens will be felt only indirectly, but the negative impact will be felt head on. This is supported by official figures: because of increasing prices, driven by the VAT hike, in 2019 real salaries will grow by only 0.8% (vs. 6.3% in 2018), according to the Ministry of Economic Development’s forecasts.

Why the world should care

The new forecasts look disappointing for all foreign investors, except for those who make their money on carry trades: for those, that the key rate will not fall further is a chance to make a profit on the spread vs. the U.S. Fed rate.

5. New legislation: Western media reporters will become foreign agents, citizens’ correspondence and phone calls will be saved for six months

What happened

After their pre-election break, Russian lawmakers have returned to a familiar pastime — their fight with foreign media and monitoring the activities of their own citizens. This week, the State Duma suggested that authors of articles in publications which have been deemed to be foreign agents could themselves also be named foreign agents. At the same time, two laws came into effect which allow the government to collect information about its own citizens.

  • At the end of last year, the State Duma passed (Russian) a law allowing media with foreign financial backing to be deemed foreign agents (now there are 9 U.S. media outlets on this list, including Radio Freedom and the Voice of America). This status implies compulsory financial reporting to the Russian authorities and many other unpleasant consequences. The law was a reaction to Russia Today being named a foreign agent in the U.S. Already then, Duma deputies promised that soon they would be able to name individuals as foreign agents — and this week they finally approved their own legislation. Any individual may be named a foreign agent who wrote, for compensation, material for these “foreign agent” media outlets. All of these must report on their funding, and once every six months discuss their activities and mention in their reporting that they are agents of foreign governments. If these rules are not complied with, the offending parties may be banned or fined.
  • On 1 July, one of the most repressive laws of recent years took effect — the so-called “Yarovaya law” which requires communications operators to record and save all telephone conversations, chats and data on the internet traffic of all Russians for a period of six months. All of this information should be passed onto security services upon their request. Luckily, the law for now still won’t work — Russian bureaucracy works slowly and without coordination, so the government still hasn’t certified the necessary equipment for storing the data. But users will feel the impact of the law coming into effect already now: each major communications operator will have to spend up to $1 billion to comply with the law, and that means that internet and mobile communications will become more expensive in Russia.

Why the world should care

The law on recording conversations and chats was passed three years ago, but new delays with its implementation support our prediction that Russia can’t fully imitate the success of the “Great Chinese Firewall”.

Anastasia Stognei, The Bell

This newsletter is made with the support of the Investigative Reporting Program at UC Berkeley.

Support The Bell!

The Bell's Newsletter

An inside look at the Russian economy and politics. Exclusively in your inbox every week.