Early winter

Putin's toughening raises Russian uncertainty

Vladimir Putin is intent on mocking the cautious optimists who gave him the benefit of the doubt when he reinstalled himself as Russia’s president last May. They thought that reason would guide him on a path of serious, if slow, reform. Instead, he seems determined to put an end to the half-hearted attempts at liberalisation that his straw-man predecessor and now Prime Minister Dmitry Medvedev timidly advocated. In many respects, Putin is steering Russia backwards, making a show of his defiant clampdown on internal dissent and his contempt for foreign critics. From Russia’s messed-up economy to its mind-boggling diplomacy, winter has come early. And the season could be long lasting.

The two-year jail term imposed on members of the Pussy Riot rock band a month ago was the most emblematic event of Putin’s new presidency, but not the most important. It must be put in the context created by the petty legal persecutions of political opponents, the ousting from parliament of a Putin critic by obedient Putin-party members, and the expulsion this week, under bogus pretext, of the US aid mission in Moscow. More worrying are the signals that Putin doesn’t even pretend he needs the presentable and supposedly reformist Dmitry Medvedev to put a friendlier face on his regime. The president publicly chastised Medvedev’s ministers this week for failing to include in their budget plans the spending he ordered just after taking office. So much for fiscal rectitude. Of course no one is betting on Medvedev’s career prospects, even though his ability to suffer public humiliation seems to have no limit.

This means that it is time for investors to worry seriously about Russia. Those wishing to put their money in the country’s future can do it by choosing one of the many companies considering a London listing. From Sberbank to Megafon, there are ample opportunities to take advantage of immediate, generous, dividends - the only reason to invest in companies that no foreign shareholder will be able to control or influence. Even then, investing should be informed by the clear understanding that Putin’s paranoid toughening doesn’t make Russia more stable, as the short-sighted naïve would like to think. It makes it more unpredictable.