SIM Report: Central & Eastern Europe, Issue 3

RUSSIA: Constitutional amendments will shift the balance of power in political system, while securing Putin’s long-term ambitions 

On 11 March, the Duma – Russia’s lower house of parliament – approved a series of constitutional amendments, including legislation that allows President Vladimir Putin to stand again for election after his term ends in 2024. On 14 March, Putin formally signed off on the changes, which will be put to a referendum initially scheduled for 22 April. Under the amendments, power will be transferred from the President to Parliament, while the State Council – an advisory body made up of regional governors and chaired by Putin – will also have a more important role.

The ongoing coronavirus (COVID-19) outbreak, however, has delayed the process, with Putin announcing on 25 March that the 22 April vote would be postponed to an undetermined date later this year. The amendments have ended some of the speculation following the initial announcement of the plans in early January and Prime Minister Dmitry Medvedev’s subsequent resignation. In theory, the changes mean that Putin could extend his rule until 2036. While opinion polls have indicated a recent decrease in public support, Putin remains extremely popular, which means that a majority of people will likely vote in favour of the changes in the upcoming plebiscite.

For Putin’s critics, including rival Alexei Navalny, the referendum will provide a strong opportunity to voice their concerns. In recent months, the country has experienced simmering unrest over local-level grievances, including the construction of a church in a public square in Yekaterinburg and the disposal of waste from Moscow to nearby towns. Opposition figures, however, have so far been unsuccessful at co-opting community anger into wider discontent against the government. Moreover, a divided opposition could dilute criticism over the plans; Navalny has called for a boycott of the referendum while other Putin critics will likely campaign to reject the changes.

Compared to other major countries, the number of officially confirmed COVID-19 cases in Russia remains relatively low. Until recently, the country had also refrained from imposing the wide-ranging travel restrictions elsewhere in Europe, helping the government project an image of stability and control. The timing of the outbreak, as the country is set to undergo profound constitutional changes, means that the two issues have become increasingly intertwined. A poor handling of COVID-19 in Russia will likely be reflected once people are asked to vote in the referendum.

Beyond containing the outbreak, the Russian economy also has an added level of resilience while major disruption to global trade flows continues. The US and EU have both imposed sanctions on Moscow following the 2014 annexation of Crimea, effectively leading to a more economically isolated Russia. A key beneficiary has been the domestic agriculture sector, which has since increased output to meet with local consumer demand. In this sense, the government is well-positioned to extol the benefits of its economic policies and overall performance. 

The regulatory landscape for foreign businesses operating in Russia will largely remain unchanged as a result of the constitutional amendments. Indeed, the likelihood of Putin, who will enjoy broad legitimacy in the aftermath of a successful referendum, serving another term will ensure some level of continuity. However, it also means that Russian foreign policy – in which attempts to destabilise neighbouring countries such as Ukraine have worsened relations with the West considerably – is also unlikely to undergo a major shift in the short-to-medium term.

WANt to read more in this latest sim edition...

REGIONAL: COVID-19 outbreak imperils EU unity as suspicion grows that some governments are using the pandemic to strengthen powers

UKRAINE: Planned overhaul of green energy tariffs likely to harm investor confidence