Putin's grand gesture cannot hide Russia's woes

Vladimir Putin fixes his stare on Oleg Deripaska at last week's meeting in Pikalyovo

World Agenda:

It was a captivating snapshot of Russia’s deepening economic woes: Oleg Deripaska, once the country’s richest man, stood bowed and cowed before the furious stare of Vladimir Putin, the Prime Minister.

Both men had gone to Pikalyovo, a town near St Petersburg, in response to a revolt by impoverished residents over unpaid wages. Two days earlier, angry crowds had blocked a major highway causing a 250-mile traffic jam.

Pikalyovo’s three cement plants, including one owned by Mr Deripaska, have shut down in the economic crisis, making most of the town unemployed. Mr Putin criticised the owners of the plants for their failure to resume production, casting himself as the defender of ordinary Russians.

“You have made thousands of people hostage to your ambitions, your lack of professionalism or maybe simply your trivial greed,” he said in his televised speech last week. “Why was everyone running around like cockroaches before my arrival? Why was no one capable of making decisions?”

Mr Putin has agreed to pay the unemployed cement workers 40 million roubles (£790,000)out of government funds. While the people of Pikalyovo are pleased by his intervention, those in thousands of other towns all over Russia are in equally dire straits and growing increasingly frustrated.

Days later, workers went on hunger strike over unpaid wages at another of Mr Deripaska’s businesses, a paper mill near Lake Baikal in Russia’s far east. The billionaire needed no visit from Mr Putin this time before announcing that 2,000 workers would get what they were owed.

There have been protests in Vladivostok and a dozen other cities in the far east over new import tariffs on foreign cars imposed by Mr Putin to protect domestic manufacturers. Many depend on the import business for their livelihoods and took to the streets brandishing posters calling for Mr Putin to be sacked.

Pensioners protest over soaring inflation, students struggle to find loans for their studies, and wage arrears are rising in many industries. Even the Putin middle classes, which got used to a comfortable lifestyle in the oil-fuelled boom years, are discovering the terror of unemployment and an inability to repay mortgages and personal loans.

It is a potent cocktail that has the Kremlin fearful that discontent in an anonymous town such as Pikalyovo could spark a wider revolt.

Hence Mr Putin’s furious denunciation of Mr Deripaska — long seen as the Kremlin’s favourite oligarch. The broader message he sent to business leaders was that they would be held responsible if neglected workers in towns dominated by single industries or companies took to the streets in anger.

Most discontent has been isolated and focused principally on economic rather than political grievances. But Mr Putin may have inadvertently fanned the flames of wider unrest.

As the financial crisis continues, with little sign of an upturn, more and more people will be desperately looking for help as their personal resources run out. Hunger and winter are a potentially lethal combination, particularly if the economy is hit by a much-discussed “second wave” of the crisis triggered by rising defaults on bank loans.

Unhappy workers across the country are drawing the lesson from Pikalyovo that protest works. With his dramatic helicopter dash to the town Mr Putin has also set a standard for government action to resolve people’s problems. He can not throw money at every town and factory in trouble, but those who do not get the help they demand now have an additional reason to take to the streets.