By SPIEGEL Staff
If anyone has a receptive ear for angry grumbling in the streets, it is governments like those in Beijing and Moscow. Both China and Russia experienced serious crises in the 1990s, when their old communist, state-owned enterprises were shut down. In China, 50 million people became unemployed within a short space of time, and in Russia the economic crash almost cost President Boris Yeltsin his reelection in 1996. But both regimes persevered, because both the Chinese and the Russians, after long years of communist planned economies, were undemanding. But in the wake of the economic boom of recent years and the growing prosperity of large segments of the middle class, those days are over.
Ironically, in the year in which the Chinese Communist Party plans to celebrate the 60th anniversary of its rule with a great deal of pomp, the country, for the first time in a long while, will not be able to boast impressive economic statistics. The economy grew by only 6.8 percent in the last quarter. To keep high-school and university graduates employed, China must increase its manufacturing production or the services it provides by about 8 percent annually.
No one truly believes that Communist Party leader Hu Jintao or Premier Wen Jiabao could suffer the fate of former Indonesian President Suharto, who was swept away by the 1998 Asian economic crisis after ruling the country for more than 30 years. Nevertheless, "Chinese society will likely be confronted with more conflicts and clashes in 2009, which will test the abilities of the party and government even further," warned the government-owned magazine Outlook.
Preventing unrest is the order of the day, and to that end Beijing has approved an economic stimulus package worth €460 billion ($598 billion). A portion of the money is to be spent on better social insurance programs, so that people will save less and consume more. A plan to raise the minimum wage has been postponed. Nevertheless, local governments handed out so-called "red envelopes," each containing 100 to 150 yuan (€11-17 or $14-22), to the poorest of the poor during the spring festival so they can buy food.
In addition, Beijing came up with an unusual program. As of Feb. 1, farmers are receiving a cash rebate from the government equivalent to 13 percent of the purchase price when they buy television sets, washing machines, motorcycles or refrigerators. The Communist Party hopes the program will increase consumption -- but also that it will buy it patience and sympathy.
The party is especially concerned about migrant workers, who are losing their jobs at a breathtaking rate. There is hardly any one left in their native villages for farming. The tenseness of the situation is palpable in China's so-called "job markets," such as the one in Canton's Huadu district. Last week, on a side street wedged between factories, shops and apartment buildings, hundreds of men and women jostled up to tables at several leather factories that make bags for the domestic, Russian and American markets. Jobs were available -- for a 10-hour day and without employment contracts.
Nevertheless, the mood in Canton still seems relaxed. And yet no one can predict how long the public's confidence will last. Those who, despite all efforts, can no longer afford the tuition to send their children to school or their parents to the doctor may eventually lose patience with the authorities. In recent weeks, several protests in front of factory gates have turned violent, with police vehicles going up in flames and workers ransacking party offices.
The party is especially concerned about students, who have rarely dared to take to the streets since the 1989 Tiananmen Square massacre. But this could change when their dreams of enjoying a successful career in return for the hard work of their student years threaten to evaporate.
Of the roughly 5.6 million Chinese who graduated from universities and technical colleges in 2008, about a million are still without work. This year, the number of graduates entering the job market will be even higher, at 6.1 million. "If you are worried, you can rest assured that I am even more worried," Premier Wen told a group of students.
Strong Steps
These are not the kinds of words Russians hear from their prime minister. Since the fall, when Putin was still publicly denying that the world financial crisis posed a threat to Russia, Moscow has primarily been preparing itself for one thing: to keep its own people in check if worse comes to worst.
The rulers' fear of the ruled has plagued every Russian government since the days of the czars. It suddenly reappeared when Yevgeny Gontmacher, a respected social economist, published his essay "Novocherkassk 2009," in which he warned against uprisings in the provinces. The essay alluded to the riots that broke out in the southern Russian industrial city of Novocherkassk in June 1962, following price increases. Five thousand angry workers took to the streets, and the police and army were ordered to shoot the protestors. More than 20 people died, and seven ringleaders were executed.
The mere mention of this long-suppressed drama was enough for the authorities to threaten to withdraw the license of the liberal business magazine Vedomosti, which had published Gontmacher's article. The magazine was accused of "incitement to extremism" -- and this despite the fact that the author had held an important post under Putin.
But in taking this approach, the Kremlin merely confirmed Gontmacher's core thesis, namely that the Putin system, which increasingly emphasized central control and repression of political foes already during times of economic growth, is incapable of responding flexibly in a serious crisis. Indeed, the government reacted in panic immediately after the first demonstrations by angry merchants in Vladivostok, who were incensed over an increase in import duties for Western used cars, by portraying the protestors as the victims of foreign intelligence services.
Pavel Verstov, a member of Putin's United Russia party until recently, can also attest to the Kremlin's helplessness. Verstov, a local journalist, had reported on suicides at the largest steel mill in Magnitogorsk, an industrial city in the Ural Mountains region. Four workers had killed themselves because they could no longer repay their debts. Hundreds of thousands of Russians are now under similar pressure, after having taken out euro or dollar loans from banks to buy houses or cars. But now that the ruble has lost 47 percent of its value against the dollar since last September, the borrowers' salaries are no longer sufficient to service their debt.
Verstov was expelled from the government party. A local party official branded him as a "troublemaker" and declared: "the security forces will take strong steps to thwart all attempts to destabilize society." He called upon his fellow party members to stand behind President Dmitry Medvedev and Prime Minister Vladimir Putin.
The two men are still strong in the polls, with Putin's approval rating at 83 percent. However, polls conducted by the public opinion research institute Levada Center show that confidence in the government is vanishing almost as quickly as the country's financial reserves. While only 27 percent believed that the country is moving "in a wrong direction" in October 2008, that number had already risen by half by the end of December. Almost one in two citizens fears that "the government cannot effectively combat inflation and salary losses."
To bolster the banks, the ruble and heavily indebted major companies, the government has already spent a third of its once formidable foreign currency reserves. After a still-respectable economic growth figure of 5.6 percent in 2008, German Gref, a former economics minister who now heads the country's largest bank, now expects three years of recession and stagnation. "The government does not have a plan to cope with the crisis," says Gref.
In this situation, it is not Garry Kasparov, the leader of the extra-parliamentary opposition, who poses a threat to the Moscow power elite, because the former world chess champion has far more supporters in the West than in Russia. And Communist Party leader Gennady Zyuganov, for his part, has made his peace with the powers that be.
The real threat comes from another direction. The Kremlin fears that members of the middle class, loyal Putin supporters, will withdraw their support if the prosperity of recent years vanishes. In December alone, disposable income sank by 11.6 percent, and 5.8 million people are already officially unemployed. Arkady Dvorkovich, economic advisor to President Medvedev, believes that the unofficial figure is closer to 20 million.
So far, few have protested in Putin's giant realm. But the fact that there have already been open calls for Putin to resign -- as in Vladivostok -- shows how quickly supposedly stable power can be eroded.
A respected Moscow political scientist points to a dangerous disaffection between the "ruling elite" and the passive majority, warning that there are no longer any functioning relations between the country's rulers and its population, television excluded. In times like these, he says, this could prove to be devastating -- and it could ruin the Putin system.
THOMAS HÜETLIN, ANDREAS LORENZ,
CHRISTIAN NEEF,
MATTHIAS SCHEPP,
STEFAN SIMONS
Translated from the German by Christopher Sultan
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