Putin Faces Anti-Migrant Tide as Opponents Tap Resentment

November 7, 2012 JRL Russia List Economy, Business, Investment, Trade, Politics, Government, Protests, Elections, Population Disaster, Demographics, Race, Ethnic, Extremism, Xenophobia

(Bloomberg – bloomberg.com – Ilya Arkhipov and Henry Meyer – November 7, 2012)

Russian President Vladimir Putin’s opponents are looking to take advantage of a dip in his approval rating by latching on to rising anti-immigration sentiment.

With the share of Russians wanting tighter immigration rules at the highest in at least a decade, Alexey Navalny, the country’s most-popular opposition leader, has cheered protesters who stopped plans to build a mosque in the Russian capital. Intolerance is spreading, from a nationalist march through Moscow to violence against Asian workers near the Finnish border and militias forming in the North Caucasus.

Stronger nationalism poses a threat to social cohesion in the world’s biggest energy exporter, where unprecedented anti- government protests slammed equity prices after disputed elections last year.

“Nationalism in so far as it impacts potential political risk in Russia is important,” Roland Nash, chief investment strategist at Verno Capital, which manages $200 million in Russian equities, said by phone. “Political risk is clearly something that impacts any asset class and it is viewed as being particularly high in Russia. Putin represents the middle of the road and stability in Russia. Anything that threatens that will be problematic.”

Stocks Hit

Russia’s ruble-denominated Micex (INDEXCF) stock index, which is up 3.3 percent in 2012, plunged almost 7.5 percent in the week after fraud allegations at December’s parliamentary ballot triggered the biggest street demonstrations since Putin ascended to the presidency in 1999. The cost of insuring government debt for five years using credit-default swaps jumped 14 percent that week.

Seventy percent of Russians want stricter immigration rules, the most since 2002, according to the polling company Levada. In Moscow, the epicenter of the anti-government demonstrations, 63 percent say native Russians should have more rights than other ethnicities, while 88 percent back curbs on migrant inflows and 38 percent feel resentment toward them, according to the Public Opinion Foundation, or FOM.

“If you see the external conditions deteriorate further, and that includes the low oil price, then it will be more difficult for Russian leadership to meet expectations,” said Peter Westin, chief equity strategist at Aton Capital in Moscow, said by e-mail. “A combination of not meeting expectations and higher unemployment can be a recipe for increasing nationalism. That’s a risk in the medium term.”

Moscow March

About 8,000 people joined the Nov. 4 “Russian March” through the heart of Moscow, according to police. About 30 people wearing fascist symbols were detained before the rally, in which Navalny has participated several times in the past.

Rising intolerance is also being tapped by Navalny, who presented himself as a champion of democratic values during the anti-Putin demonstrations and received the most votes in an election when protesters picked an organizing committee last month.

An anti-corruption blogger who was fired from the Yabloko party for nationalist views in 2007, Navalny called an anti- migrant video made by nationalists last month “excellent.” In September, he used his Twitter Inc. account to liken women in scarfs in a police waiting room to suicide bombers. Anna Veduta, a spokeswoman for Navalny, declined to comment.

‘Xenophobic Sentiments’

“Navalny is playing on xenophobic sentiments and is trying to recruit more supporters,” Tatyana Lokshina, a researcher for Human Rights Watch, said Oct. 26 by e-mail. “Migration policy represents a very serious political and economic challenge.”

There are more than 10 million migrants in Russia, accounting for at least 6 percent of economic output, according to Federal Migration Service head Konstantin Romodanovsky.

Navalny relies on nationalists for part of his support, according to Gennady Gudkov, another coordination council member, who said “Russian March” participants aren’t necessarily all extremists.

“Many will come not because they’re nationalists but because they want to protest against the existing regime,” he said by phone last week. “We have nationalists on the council because we have everybody who wants political reforms.”

Tensions are also rising outside Moscow. In the village of Pobeda near the Finnish border, the rape of a 45-year-old local woman in August prompted residents to beat up foreign workers from a nearby poultry farm before delivering them to the authorities, who discovered more than 60 illegal migrants during a subsequent raid.

Pig Head

In the Krasnodar region along Russia’s Black Sea coast, Governor Alexander Tkachev formed a 1,000-strong militia to help police solve inter-ethnic conflicts. The parliament of Chechnya accused Tkachev of inciting inter-ethnic tensions.

Authorities opened a criminal case against a man in St. Petersburg for inciting inter-ethnic hatred. They arrested a man who they suspect had put a pig head with a fake bomb at the gate of a local mosque, the Investigative Committee for St. Petersburg said on its website today.

Putin, who led Russia into its 2000 war with the breakaway republic of Chechnya in Russia’s mainly Muslim North Caucasus region and oversaw a five-day conflict with the Caucasus nation of Georgia eight years later, deems national unity “ultra- important,” according to his spokesman, Dmitry Peskov. Any attempts to use nationalist sentiment for political gain would be punished “most stringently,” he said.

Putin’s Support

Putin, 60, whose support FOM put at 43 percent last month after garnering 64 percent of votes in March’s Kremlin election, warned in August that nationalist groups were “raising their heads under the cover of democracy and freedom.”

Putin has also courted some nationalists, appointing Dmitry Rogozin as deputy premier last year. Rogozin, who served as North Atlantic Treaty Organization ambassador from 2008, headed a party that was banned from regional elections for inciting racial hatred after television ads featuring slogans such as: “It’s time to clear the rubbish out of Moscow.”

With the economy losing steam, migration represents a “very serious political challenge for Putin,” according to Vyacheslav Postavnin, a former deputy head of the Federal Migration Service.

“Two years ago the economy was growing fast and migrants weren’t such a source of irritation,” Postavnin said. “But now, with an economic slowdown and a huge number of migrants, the situation has become a lot more serious.”