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It’s the Economy, Mr. President

Published: May 23, 2014 (Issue # 1812)




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Former U.S. President Bill Clinton famously won the first of his two terms in the White House with the slogan: “It’s the economy, stupid.” At the start of the 1992 election campaign, his victory was unexpected. That was because George W. Bush had just presided over what was deemed a successful war against Iraq and the boost to national pride was expected to carry him safely into a second term. But the incumbent president discovered that national pride only went so far. In the end, what people really cared about is whether their lives were improving or not. They cared mostly about the price of food and other goods and how secure their jobs are and prospects for the future were.

The lesson that Bush learned in November 1992 is one that other leaders have paid close heed to since. It is also one of the important reasons why over the past two weeks there have been conciliatory statements from the Kremlin concerning the crisis in eastern Ukraine and the relatively soft line approach. The lesson of November 1992 is also one of the reasons why the leading candidate for the Ukrainian presidential election on Sunday is Petro Poroshenko, who favors a strategy of engagement rather than confrontation with Moscow. The economic impact of a deeper confrontation with Russia is also one of the reasons why core European Union countries are more intent on de-escalating tensions with Russia than in extending sanctions.

Political jingoism and short, successful military excursions can drive the “feel-good” factor for some time, but only a healthy economy sustains a high popular rating for incumbent leaders and gets them safely re-elected.

It is far too early, of course, for any sense of complacency over the Ukrainian crisis, or to expect investment flows to Russia to pick up. Investors and business leaders will likely stick to a strategy of prudent observance for many months ahead to make sure there is no further spark for political or sanctions risk. It will take a couple of quarters to accurately assess the damage already inflicted on the economy, and the government faces extremely difficult challenges in such areas as inflation control and how to reverse the high volume of capital flight reported so far this year.

But it is the pragmatism of Poroshenko which offers a lot of hope that political risks will be lowered between Moscow and Kiev and between Russia and the EU. Otherwise, continued belligerency between Russia and Ukraine would make it difficult to repair relations with Brussels and to restore investor and business confidence. The next president of Ukraine will certainly inherit a huge array of problems and the most difficult challenge is expected to be restoring domestic political unity. The self-empowered protesters on Maidan Square are unlikely to leave just because there is a newly elected president, and the separatists in the eastern regions of Ukraine will expect negotiations to bring some measure of autonomy to the region.

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ALL ABOUT TOWN

Saturday, Oct. 25


AVA Expo, the eighth edition of the event revolving around all things pop, returns to Lenexpo this weekend. Geeks, nerds, dweebs and dorks will have their chance to talk science fiction and explore a variety of international pop culture. Tickets for the event can be purchased on their website at avaexpo.ru.



Sunday, Oct. 26


Zenit St. Petersburg returns home for the first time in nearly a month as they host Mordovia Saransk in a Russian Premier League game. Currently at the top of the league thanks to their undefeated start to the season, the northern club hopes to extend the gap between them and second-place CSKA Moscow and win the title for the first time in three years. Tickets are available at the stadium box office or on the club’s website.



Monday, Oct. 27


Today marks the end of the art exhibit “Neophobia” at the Erarta Museum. Artists Alexey Semichov and Andrei Kuzmin took a neo-modernist approach to represent the array of fears that are ever-present throughout our lives. Tickets are 200 rubles ($4.90).



Tuesday, Oct. 28


The Domina Prestige St. Petersburg hotel plays host to SPIBA’s Marketing and Communications Committee’s round table discussion on “Government Relations Practices in Russia” this morning. The discussion starts at 9:30 a.m. and participation must be confirmed by Oct. 24.



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