Auto protectionism lead to revolt against Putin

Observer/Guardian:

Russia's prime minister, Vladimir Putin, is facing the most sustained and serious grassroots protests against his leadership for almost a decade, with demonstrations that began in the far east now spreading rapidly across provincial Russia.

Over the past five months car drivers in the towns of Vladivostok and Khabarovsk, on Russia's Pacific coast, have staged a series of largely unreported rallies, following a Kremlin decision in December to raise import duties on secondhand Japanese cars. The sale and servicing of Japanese vehicles is a major business, and Putin's diktat has unleashed a wave of protests. Instead of persuading locals to buy box-like Ladas, it has stoked resentment against Moscow, some nine time zones and 3,800 miles (6,100km) away.

"They are a bunch of arseholes," Roma Butov said unapologetically, standing in the afternoon sunshine next to a row of unsold Nissans. Asked what he thought of Russia's leaders, he said: "Putin is bad. [President Dmitry] Medvedev is bad. We don't like them in the far east."

Butov, 33, and his brother Stas, 25, are car-dealers in Khabarovsk, not far from the Chinese border. Their dusty compound at the edge of town is filled with secondhand models from Japan, including saloons, off-roaders and a bright red fire engine. Here everyone drives a Japanese vehicle.

Putin's new import law was designed to boost Russia's struggling car industry, which has been severely battered by the global economic crisis. It doesn't appear to have worked. In the meantime, factories in other parts of Russia have gone bust, leading to rising unemployment, plummeting living standards and a 9.5% slump in Russia's GDP in the first quarter of this year.

An uprising that began in Vladivostok is now spreading to European Russia. Last Tuesday some 500 people in the small town of Pikalyovo blocked the federal highway to St Petersburg, 170 miles (270km) away, after their local cement factory shut down, leaving 2,500 people out of work. Two other plants in the town have also closed. The protesters have demanded their unpaid salaries, and have barracked the mayor, telling him they have no money to buy food. They have refused to pay utility bills, prompting the authorities to turn off their hot water. Demonstrators then took to the streets, shouting: "Work, work."

Putin visited Pikalyovo on Thursday and administered an unprecedented dressing-down to the oligarch Oleg Deripaska, throwing a pen at him and telling him to sign a contract to resume production at his BaselCement factory in the town. He also announced the government would provide £850,000 to meet the unpaid wages of local workers. "You have made thousands of people hostages to your ambitions, your lack of professionalism - or maybe simply your trivial greed," a fuming Putin told Deripaska and other local factory owners. But Deripaska had had little choice but to shut his factory, since Russia's construction industry has now virtually collapsed.

Across Russia's unhappy provinces, Putin is facing the most significant civic unrest since he became president in 2000....

The events of last week in Pikalyovo also set a dangerous precedent for Russia's other 500 to 700 mono-towns - all dependent on a single industry for their survival. When their factories go bust, residents have no money to buy food. Seemingly, the only answer is to demonstrate - raising the spectre of a wave of instability and social unrest across the world's biggest country.

Most embarrassingly for the Kremlin, the latest demonstrations took place just down the road from the St Petersburg Economic Forum, an annual global event designed to showcase Russia's economic might and its re-emergence as a global power. But after almost a decade of high oil prices - until last summer - Russia has done little to invest in infrastructure, or to help its backward, poverty-stricken regions.

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Russia is still suffering from a combination of protectionism and the failures of a command economy to adapt to new economic realities.


It was the command economy that caused the Soviet Union to implode and now its legacy is failing the Russian people again. Protectionism has never really worked and Putin is just one of the latest to fail with it.