Can Putin Survive?
The Lessons of the Soviet Collapse
Boris Yeltsin's rise from the depths of unpopularity to win Russia's presidential election in July is one of the most surprising feats of recent political history. As of January, only six percent of voters planned to support the incumbent-fewer than half the number intending to vote for his main rival, communist leader Gennadi Zyuganov. Yeltsin's victory broke a pattern observable across almost all the postcommunist democracies of Eastern Europe, in which disenchanted voters rejected the first crop of reformers when they stood for reelection. And it confounded the expectations of a long string of early doubters, ranging from Russian and Western journalists, CIA analysts, and some of the president's closest aides to-by her own admission-his wife, Naina.
How did Yeltsin beat these odds? Public opinion polls cast doubt on the explanations that have been offered in the press both inside and outside Russia. The conventional wisdom-as after any unexpected election victory-is that the candidate conducted an extremely intelligent and professional campaign. But was it really? Handicapped by internal feuding, run at one point from five competing power centers, and lavishly overspending on advertising, the campaign continually seemed to risk falling into the overconfident, patronizing, or office-exploiting style that had undermined pro- government blocs in previous Russian elections. Nor could Yeltsin's victory be attributed to favorable economic trends. During his first term, GDP fell 50 percent, income inequality and unemployment grew, and hyperinflation wiped out many families' savings. Although real incomes picked up a little in the spring-rising four, five, and three percent in February, March, and April, respectively-they fell again by five percent in May on the eve of the election's first round.
Some observers credited Yeltsin's victory to a series of subtle television advertisements in which ordinary people told their life stories and explained why they planned to support the president. However well-conceived these ads were, by the time the official television campaign began on May 14 Yeltsin had already surpassed Zyuganov in the preferences of voters looking ahead toward a second round (see figure). And the pace of his rise started to slacken soon after the advertisements began to air. Second, Yeltsin's appointment of the popular general, Aleksandr Lebed, to head the Security Council, although thought to have won over crucial nationalist and centrist voters, was not followed by any appreciable rise in the president's popularity. Before Yeltsin's dramatic gesture, 53 percent planned to vote for him in the second round, just 0.7 percent fewer than actually did so on July 3.
Although respondents regularly put it at the top of their list of priorities, Yeltsin's efforts to end the war in Chechnya do not seem to have helped him much either. A first attempted truce in late March quickly unraveled, perhaps explaining a slight drop in the president's first-round support in early April. A second, somewhat more successful, cease-fire signed in late May simply came too late to account for much of the rise in his support, as did Yeltsin's decrees eliminating conscription by the year 2000 and making service in hot spots such as Chechnya optional for conscripts. By the time these measures were adopted, Yeltsin was already in the lead and his rise was tapering off.
Some thought Yeltsin's initiatives to speed up reintegration of the former Soviet republics-for instance, an agreement with Belarus to form the Community of Sovereign Republics, which he reached in late March-helped him electorally. In reality, this widely publicized event was followed by several weeks of stagnation or even slight decline in the president's ratings. (Only one in eight respondents listed reintegration among their five top-priority tasks for a new president.) A decree in March establishing the free purchase and sale of land may help explain a sharp rise in Yeltsin's support in the countryside in April. And the nuclear summit meeting of the Group of Seven industrialized nations that Yeltsin hosted in April may have indulged Russian national pride, but this was so quickly forgotten and so little mentioned in the press that its impact on voters is questionable.
One strand of Yeltsin's rhetoric sought to scare voters with the idea of a return to communist repression, rationing, or civil war. This appears to have been effective early on. In February and March, Yeltsin's second-round support was rising simultaneously with a fall in Zyuganov's, and the communist leader's negative rating-the percentage saying they would "never like to see him as president of Russia"-rose by seven and five percent, respectively, in those two months. But by late March, such tactics appeared to be losing force. In subsequent months, Zyuganov's negative ratings rose by only one to three percentage points per month. And even on the eve of the first round of the election, he was vigorously opposed by less than one-third of voters.
THE POPULIST PERSUASION
The crucial period in the campaign came in April and early May, when a steep spurt in Yeltsin's second-round support finally put him above Zyuganov. Observers' explanations-economic performance, television advertisements, Lebed's appointment, policy on Chechnya, anti-Communist scare tactics, or efforts to reintegrate the former Soviet republics-cannot easily account for this rise. Part of it, but only a small part, may be due to Yeltsin's land reform decree and to Russian national pride at the Moscow superpower summit in April. Two aspects of the campaign seem to figure prominently in this crucial rise in Yeltsin's popularity, the more important of which was promises of and an outright increase in social spending. That is to say, Yeltsin won the election in large part through state largess.
Yeltsin issued a dramatic series of socially oriented measures and decrees in April and early May. The tone of this phase of the campaign is epitomized by a comment the president made later. "Russians have already forgotten what empty shelves are," he told the government newspaper Rossiiskaya Gazeta. "Now what's needed is for people to forget about empty wallets."< In mid-April Yeltsin doubled the minimum pension, effective May 1. And he signed a decree ordering compensation for those whose savings had been devalued by the 1992 hyperinflation. On June 10, six days before the first round of the election, the first set of payments was made to those over age 80. These initiatives do seem to have affected voting plans. In the poll after the savings compensation began, Yeltsin's rating among the elderly was notably higher. And both in early May and in early June, as pensioners would have been receiving the increased payments, Yeltsin's vote among the elderly rose.
The scope of Yeltsin's handouts to different social and geographic groups can be gauged by the relative output of his legal draftsmen. In January, February, and March, the president issued seven or eight decrees each month allocating benefits to particular geographic, social, or economic constituencies. In April, he signed 22, and in May and the first two weeks of June, another 34. Students, teachers, medical workers, pensioners, war invalids, veterans, children, single mothers, scientists, the formerly repressed, small businesses, Cossacks, the unemployed, military-patriotic youth organizations, and diabetics all benefited from at least one decree during the last ten weeks of the campaign. So did the agro-industrial complex and the defense, aviation, and space industries. Decrees between April 1 and election day singled out for benefits Siberia, the Central Black-Earth, Far North, Far East, and Baikal regions; the republics of Tatarstan, Udmurtia, and Komi; and Belgorod, Sverdlovsk, Arkhangelskaya, Vologda, Chelyabinsk, Kamchatka, Yaroslavl, Rostov, and Kemerovo oblasts.
Some regional Yeltsin campaign headquarters doubled as patronage machines reminiscent of Tammany Hall. One newspaper described the Center for Reelection of the President in the Sverdlovsk region as "a glorified social services and janitor's office combined" that was working hard to make the president "look kind and fair like Robin Hood come alive."> The center reportedly helped to secure overdue wages for the city's subway construction workers.
An epidemic of unpaid wages had become one of the main irritants for voters in the pre-election months. By February 20 the total backlog had reached about 24 trillion rubles ($4.9 billion). Yeltsin declared war on the problem, instructing the tax police and even security services to investigate enterprises whose directors ran up wage arrears, firing regional officials accused of diverting payroll funds to other purposes, and transferring additional funds from the central budget to pay overdue wages in the state sector. By early April, wage arrears in the budget sector had been eliminated, although they began to recur in the following months.
Unpaid wages in the budget sector, however, were only a small fraction of the total in the economy. The government managed to halt the rise in total wage debt from late February until the beginning of May, but not reduce it much. In two periods (late February to early March and the month of April) total wage arrears actually dropped slightly. One poll taken in mid-April found that Yeltsin's efforts to reduce overdue wages had influenced 38 percent of voters in his favor-the highest figure for any issue listed. Wage arrears started to rise again in mid-May, perhaps explaining the subsequent slowing in the growth of Yeltsin's popularity.
As important as the actual financial aid transferred was the success of the policy at diverting public indignation from the federal authorities to local officials and enterprise directors, who were widely accused of holding up wages for their own profit or political purposes. More than 100 criminal investigations were opened, several dozen directors were fired, and by July two had been convicted. "People were annoyed, unsatisfied," according to Yeltsin's assistant for economic policy, Aleksandr Livshits. "But the direction of their indignation began to change."
The second factor that may account for the rise in Yeltsin's support in April and early May was an energetic series of trips the president made to different regions of Russia. After visiting a couple of regions in February and staying home in March, Yeltsin visited five more in April, ten in May, and six in the first half of June. These visits were almost always combined with offers of largess, which Yeltsin delivered with relish. On a visit to Krasnoyarsk in May, Yeltsin joked to residents: "I have thrown a coin into the waters of the Yenisei River today for luck, but you should not think that this will be the end of my financial help to the Krasnoyarsk region." To residents of Arkhangelsk later that month, he announced that he had "come with full pockets." Some of his generosity was highly personalized. One woman working in a Vorkuta coal mine asked for a car-and got it, along with an appearance on the national news. Television cameras even caught one of the president's aides, Aleksandr Korzhakov, slipping a handful of cash to a bystander who had accosted Yeltsin during one of his campaign strolls. Besides issuing decrees to benefit individual hosts, Yeltsin accelerated a process begun in 1994 of signing bilateral agreements with the regional governments on the division of power between Moscow and the region. During the last three months of the campaign, Yeltsin signed 12 of these, one more than he had signed in the previous two years. Such agreements almost always included additional economic or other benefits for the region.
Such federal aid, along with careful preparation by the local governors, who often doubled as Yeltsin's regional campaign managers, usually guaranteed a receptive crowd to meet the president. This in turn created a positive image and a sense of momentum for the national news shows. Viewers saw an energetic, confident president listening and responding to ordinary people's concerns, and being greeted with respect.
Yeltsin's trips demonstrated that he was physically sound, in touch with ordinary people, and willing to listen. The stamina and high spirits of a president who had suffered two bouts of ischemia the previous year impressed the accompanying press corps. "Every day Boris Yeltsin dances better, kisses ladies' hands more skillfully, jokes with girls in the street more freely," one reporter enthused. Another noted that while in Omsk and Novosibirsk the president had merely danced around during his rock concert appearances, in Rostov he performed "almost a professional twist." Still, it is doubtful that the vigor of his campaigning would have gone very far had Yeltsin arrived empty-handed with lectures on macroeconomic discipline.
The influence of such material benefits on voting is confirmed by the analysis of regional leaders themselves. In the staunchly communist agricultural province of Tambov, Zyuganov won a resounding victory in both rounds of the election. But there, too, Yeltsin's support rose significantly during the course of the campaign. According to the deputy governor, Yuri Blokhin, this was mostly attributable to Yeltsin's late conversion to a more generous social policy. "Just in the last few months, when he started paying pensions and wages, Yeltsin's rating in the oblast rose from 8 percent in January to about 21 percent in the first round of the election." In the northern republic of Karelia on the Finnish border, voters supported Yeltsin, as they had done in previous elections. The republic's head of state, Viktor Stepanov, himself a member of the Russian Communist Party, explained that this was the result of concessions granted by Yeltsin to the region in previous years-considerable economic self-sufficiency, early retirement benefits, and other privileges. "All this created a context in which, despite all the economic difficulties and the political conflict, people expressed gratitude toward the president."
In short, Yeltsin won the election before the start of his main television advertising campaign, before the peace agreement with Chechen leader Zelimkhan Yandarbiyev, and before his appointment of Lebed. He appears to have succeeded in defining the race early on in polarized terms and attracting a certain number of voters with anti-Communist scare tactics. But this was not sufficient to raise his rating above that of Zyuganov. The crucial element that provided his final spurt of support and secured victory was a vigorous campaign of regional visits combined with a new generosity in social and regional policy. This won him the recruits he needed from the undecided, discontented, but moderate center. While the Chechen truce and co-opting of General Lebed may have forestalled events that could have undermined Yeltsin's position, they did not themselves secure his victory.
THE PAYOFFS OF POPULISM
Given its apparent efficacy, it is surprising how few observers had anything positive to say about Yeltsin's "Santa Claus" strategy in the last months of the campaign. Many accused him of populism and pointed to the very real economic costs of such a strategy. The governor of Nizhny Novgorod, Boris Nemtsov, said the election campaign was "a 'nightmare' for the Russian economy, because it has caused a surge in federal spending, while scaring away foreign investors." Former prime minister Yegor T. Gaidar, head of the reformist Russia's Choice bloc, in February demanded as a condition for his support that "budget policy must not be made a hostage to the election campaign." An editorial in The New York Times in January had warned Yeltsin not to "recklessly try to spend his way back to popularity, thus undermining economic reform" and causing "lasting damage to the economy in a vain effort to save his own skin." What these critics overlook is that Yeltsin's social spending probably played a crucial role in keeping Zyuganov out of office, and that social welfare programs and promises have been a normal part of the politics of most Western countries.
Between March and May, the central bank had to issue more than 25 trillion rubles, and sell $3 billion of its reserves supporting the ruble. The federal budget deficit shot up to 9.6 percent of GDP in April, from 5 percent in the first quarter. Another 8 trillion rubles had to be paid out in inflation compensation to depositors of Sberbank, Russia's largest savings bank, and for wages and aid to teachers. Electoral considerations also softened the federal government's resolve in collecting taxes, and enterprises underpaid a total of 75 trillion rubles (about $15 billion) in the first six months.
Not only was Yeltsin's approach criticized as economically dangerous, but both Russian and Western analysts also thought it could not work politically. According to one Russian political commentator, the strategy of "trying to beat the communists on their own playing field and at their own demagogic logic," was doomed to fail. "Cash handouts during a campaign do not bring additional votes. That is, the voters take the money from the government, of course, but they vote for candidates who are the harshest critics of the government."
As early as February, one Western analyst accused Yeltsin of having "given in to the communists on virtually all fronts-apart from cleaning up corruption." Such an approach, he added, "makes no sense as an electoral strategy. To communists, he remains a traitor. To liberals, he has abandoned all the values that made him popular. Thus, he has eliminated his political base." Another argued in April that for reformers like Yeltsin and economist Grigori Yavlinsky, trying to appeal to the communists' voters by making lavish promises to pensioners or by firing liberals from the government would not work and might in fact be self-destructive. "To appeal to . . . potential swing voters, a reformist candidate must convince them of the virtues of reform and the dangers of radically altering the status quo. . . . Attempts to sway these voters by acting more like the opposition not only will fail, but at the same time will alienate the core supporters of reform."
Perhaps surprisingly, the strategy seems to have been viewed with a certain understanding by the International Monetary Fund, which agreed to keep disbursing monthly tranches of its $10.2 billion loan negotiated in February. In part this was because, despite the additional spending and ineffective tax collection, the government for the most part avoided inflation by selling ever more government bonds on the state securities market. As a result, lavish promises could be combined with a steady fall in monthly inflation rates.
The victory was won largely on credit. Between the beginning of the year and the first round of the election, the government increased the nominal value of the main outstanding state securities by 80 trillion rubles (about $16 billion). But Yeltsin's triumph was bought on credit in another sense. Most of the initiatives in social and regional policy and most of the campaign promises had costs attached that would materialize only after the election.
Such promises were highly non-credible, especially when made by a president who, if elected, would be serving his last term permitted under the constitution. Yeltsin's success can only be explained in relative terms: the promises of his rivals may have been perceived as even less credible. As the incumbent, Yeltsin could at least begin to fulfill his promises before the election. Asked during one campaign stop whether he was visiting as a leader or a candidate, he replied: "I cannot separate those two functions. As a candidate I can promise, and as a president I can deliver." This did not guarantee that Yeltsin would not renege after the election, but it was still more than Zyuganov could do. "I know that campaign promises of politicians aren't particularly believed," the president told an interviewer in June. "My program is not campaign promises, but a plan of concrete actions, which are already being carried out and will be carried out further." Indeed, at times Yeltsin went so far as to reverse the usual order and carry out his promises before he made them. His electoral program was published on June 1; appended to it was a list of 49 decrees implementing it that had been signed in the previous four months.
Could voters be so easily "bought"-and bought on credit? To pose the question in these terms simplifies the psychological reality. The decision on which candidate to support is influenced by a voter's values and perceived interests, but also by his current mood. A certain number of voters early in the campaign were planning to vote for Zyuganov or "against all" in the second round, not out of conviction but out of irritation. While the sort of social policy and largess Yeltsin could promise on the campaign trail would hardly change the values of voters or their understanding of concrete interests, they could win over those already inclined to support Yeltsin-either as a reformer, or out of deference to the incumbent-but who had been aggravated into supporting Zyuganov or not voting by unpaid wages, miserly pensions, and a sense that the president did not care. By paying people their back wages or increasing social aid, Yeltsin's team hoped to make it possible for generally sympathetic voters to vote out of hope-at least temporary hope-rather than annoyance.
This was not the first Russian election in which state financial aid appears to have improved the performance of incumbents. In the 1995 parliamentary election, in those regions that had enjoyed larger increases in net fiscal transfers from the center the previous year, the vote for the most pro-government bloc, Our Home is Russia, was significantly higher. And in the 1993 parliamentary election, the vote for the most pro-government bloc, then Russia's Choice, was higher in regions where regional state spending had increased the most the previous year. Central aid to the regions-and higher state spending-is one of the factors that explain the voting in Russia's regions.
AFTER THE VOTE
Analysis of trends in support for Yeltsin during the election campaign suggests a surprising conclusion. While the president's strategy of polarizing the electorate and raising the fear of a return to communist repression helped him beat out "Third Force" centrist candidates for leadership of the noncommunist camp, that alone probably would not have been enough to defeat Zyuganov. His campaigning with "populist" promises, generous social policy initiatives, and regional aid-harshly criticized by economists at the time as irresponsible and by some political observers as counterproductive-played a crucial role in securing majority support. These tactics apparently changed the mood of many voters reaching their final decision and convinced a sufficient number of waverers, despite economic hardship, to vote for Yeltsin rather than an opponent.
The economic costs of such a campaign strategy are significant. A certain-although limited-danger remains of resurgent inflation, a banking crisis, or a collapse of the market in state securities. The budget is in chronically poor shape, with taxes in the first half of the year collected at only 60 percent of the planned level. Soon after the election results were announced, the president's economics aide, Aleksandr Livshits, signaled a new approach to policymaking, announcing that "the all-Russian cashbox for paying out money to the regions has been closed for stock-taking." Even in the most optimistic scenarios, there will be some bumps along the road to resumed economic growth and stabilization during the next few months.
But these costs seem minor compared to the greater chance of high inflation, a collapse in investors' confidence, and capital flight if the communist candidate, Gennadi Zyuganov, had won. And the prospects for continued economic reform, while complicated, are better than under any of the other realistic election outcomes. The lesson of 1996 in Russian politics seems to be that moderate populism may work-and may be a price worth paying, when the alternative is a much more incompetent and dangerous attempt to reverse reform. And, whatever textbooks on governance may say, the targeted allocation of "pork" in order to secure votes is something Russia's new democracy shares with many of its more developed, stable, and economically successful counterparts in the West.
The credit on which Yeltsin's victory was won-both in terms of election promises and increased government bond issues-will come due later this year. The government's hope is that the start of economic growth and an influx of foreign investment will provide it with the resources necessary to redeem its debt. And the kind of democracy that develops will depend on whether this occurs. The speed with which economic improvement gets moving will determine whether the Russian electorate has its cynicism confirmed by yet another set of unkept promises and starts looking around for charismatic outsider candidates, or whether the idea of a political bargain between electors and elected begins to become a reality. In any case, this election-both its occurrence and its results-gives one reason to believe that, for all its problems, democracy is now entrenched in Russia.