Russia’s New Potemkin Village


by Avi Davis

In 1787 , Empress Catherine II ( known as ” the Great”)  was planning a trip to the Crimea to inspect her imperial territory.  According to legend, Prince Grigory Potemkin, her first minister of state, in order to impress his accomplishments upon his monarch ( and lover)  erected a series of fake settlements along the banks of the Dnieper River so as to fool her into believing that the Southern Crimea was actually far more prosperous than anyone had accounted.

 

 

Although the story might be exaggerated or even mythical – the images of dressing up a dowdy place to make it look spectacular has come down through history as a sleight of  hand designed to hoodwink the unwary.

Apocryphal or not, Russian leaders have used the Potemkin method quite successfully ever since.  Following the Government sanctioned pogroms which raged through the Jewish Pale of Settlement in  the early 1880s – in which thousands of Jews were either murdered or robbed of their possessions, Czar Alexander II, fearing Western retribution, ordered villages to be hastily erected  in which Jews would be imported and be seen to be living happy, prosperous lives.

Stalin, in the midst of the Ukrainian famine, was able to dupe British intellectuals such as George Bernard Shaw, H.G. Wells and Sydney and Beatrice Webb into believing that the Soviet Union had become a paradise on earth where hunger, destitution and extreme poverty had been erased  by taking them only to places where model communities has been established.

 

Modern day Russian leaders have become similarly adept at presenting facades which mask some pretty awful realities.  If you visit Moscow today, you might be dazzled by the apparent hipness of the place –  European fashion stores lining malls together with expensive car dealerships and chic foreign restaurants.  It all  lends an aura of cosmopolitanism to the city which can have you leaving it thinking that Moscow  was the equal of any Western city.

But it is a facade which hides an increasingly desperate reality.  In his new book Nothing is True and Everything is Possible, documentary film maker Peter Pomerantsev  portrays Russia as one big reality TV show, with Vladimir Putin  as its permanent star.   Russia today, he shows us, is all about hierarchy and connections, where laws count for nothing and corruption at the highest levels of government is understood and accepted.   Citizens  are alternately terrorized by the Government but then uplifted by heroic stories of national achievement and their leader’s hubris and temerity in challenging the West. The elite, in collusion with the government, rip off as much money as possible and sock it away in London and Switzerland and elsewhere maintaining bulging bank accounts, multiple homes, yachts and expensive boarding schools for their children.

But in the past week it has become clear that this new Potemkin Village is beginning to see its paint rapidly flake and its brilliant luster fade.

In one extraordinary day last week  the value of the ruble dropped as much as 19 percent in 24 hours, the worst single-day drop for the currency in 16 years. Now Russians are reportedly bum-rushing malls to swap cash for washing machines, TVs, or laptops—anything that seems as if it might hold value better than paper money, whose worth is evaporating in real time. .

Russia’s economy has been hurt by two big things: the falling price of oil and continuing economic sanctions.  The oil and gas industry generates about half of Russia’s revenue, so when a combination of the shale boom in the U.S. and weaker demand worldwide pushed the price from $110 per barrel earlier this year to $65, Russia buckled under the strain. The sanctions imposed by Europe and the U.S., designed to punish Russia’s companies for President Vladimir Putin’s actions in Ukraine, have only poured acid on the wound.

The response of the Russian Central Bank last week was to raise interest rates to crushingly high levels – around 17% – which may only result in a temporary brake on the rouble’s free fall.  Putin’s political response was predictably to lash out against the West and to pinpoint the sanctions as the cause of this latest episode in Russian misery.

But the reality is that Russian economy very much floats on a cloud of natural gas, which proves a particularly unstable and ephemeral vehicle of transit when the winds blow in the wrong direction. In  the past ten years Putin has quashed the development of free enterprise, failing to encourage the growth of Russian industry so that the country has nothing much of substance to offer its major trading partners other than its natural resources.

It places Putin in a very delicate position because his popularity has been built on his ability to sustain muscular economic growth during the years where Russian gas was needed by everyone.  If the U.S. fracking boom continues and its domestic oil and natural gas supplies skyrocket, Putin faces a popular backlash which, even his hidebound personality and talent for silencing his opposition will be unable to stem.  Don’t be surprised then, that with the collapse of the rouble will come the imposition of martial law and a return to the bad old days of Soviet food lines and rationing.

For the  West this might portend a return to the Cold War template of an increasingly desperate Russian elite using domestic repression at home and foreign adventurism abroad to maintain leverage over real and perceived enemies.

 

Mr Putin cannot allow himself to believe that the Kremlin's favoured strongmen in former Soviet Republics are actually unpopular

But it is a different world today.  Russia in 2014 is not the Soviet Union of 1980, dominating a quarter of the world’s land mass and commanding unlimited human and natural resources. its population is now more sophisticated and more knowledgeable about what the rest of the world is like.    The Russian population, having tasted something of Western luxuries, will not go back readily to the deprivations of yesteryear. And the West, confident in its ability to do without  Russian oil and gas could well stand by idly and watch Putin’s Russia thrash around in wild death throes before throwing it a life line –  but not without forcing it to cough up the Crimea, the Ukraine  and the bits of Georgia it has ingested  – while requiring it to behave like a grown up state.

One thing does seem certain:  the building of  beautiful facades can no longer hide some very ugly facts of life about modern day Russia.  A contemporary Potemkin village will only stand as long as the political winds blow in the right direction. Coming from behind, as they are now, they will soon have the whole edifice crashing down around their architects’ feet.
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