Emerging Europe: The Protest Hot Spots
I am becoming increasingly concerned about the rising threat of strikes and demonstrations in Emerging Europe. Business Monitor International (BMI) has long raised a number of structural problems in the region – endemic corruption, nepotism and flawed election procedures. However, with unemployment set to rise, the erosion of real wealth and governments’ perceived mismanagement of economies could act as a catalyst for public unrest in some of the more shaky Emerging European countries, possibly culminating in the replacement of the government.
Georgia: Judging by recent developments, I believe the risks are rising of protests which could overthrow the government. President Mikhail Saakashvili has become increasingly unpopular with the electorate following the violent suppression of the November 2007 protests and his gung-ho actions which arguably led to the Russo-Georgian war of 2008. However, two other factors are likely to elevate the risks in the country. First, economic growth is forecast to slow to 1.2% in 2009, which will weigh on the population’s real wealth. Second, powerful opposition figures, including former Parliamentary Speaker Nino Burjanadze and former United Nations ambassador, Irakli Alasania, are coming to the fore, and either could act as an umbrella figure for political discontent.
Russia: There has been an unusual level of riots across the country in recent weeks, with the latest held in a number of major cities including the capital Moscow and the far eastern port of Vladivostok on February 1. Demonstrators were united in anger of the hardships inflicted by the global financial crisis. The party of power, United Russia, has sough to deflect criticism and has organised a number of rallies in support of the government’s anti-crisis measures.
Risk Watchdog believes that she has more chance of finding a pot of gold at the end of the rainbow than a democratic revolution taking place in Mother Russia. However, she does believe that the potential for a shake-up of the top echelons of the political elite is definitely on the cards. According to the latest poll conducted by the Yury Levada Centre, Prime Minister Vladimir Putin remains the most popular politician in Russia, with 85% of those questioned approving of his performance, compared to 75% for President Dmitry Medvedev.
If I were in Putin’s shoes, I’d wash my hands of the mess created in the Russian economy over the past 10 years. However, developments are rarely so cut and dry in Russia, and I anticipate that Putin may seek to replace Dmitry Medvedev as President (which is quite simple to orchestrate as Putin is next in line for the throne, sorry I mean presidency!). Also, appointed governors in the Federation Council (the upper house of the Duma) may find their seats are abruptly removed if they fail to reduce the waves of protests and riots in their regions.
EU Acts As An Anchor Of Relative Stability (Hopefully!)
Already, as unemployment has started to rise and real living standards fall, we have seen a wave of protests, often violent, across the Emerging Europe region – in Lithuania, Latvia and Bulgaria. There are likely to be further protests – potentially in Romania and Estonia – but these differ from my two hot picks. ‘Why?’ I hear you cry. The simple answer is the European Union. I believe that the risks to policy stability and government-changing protests are much higher in non-EU members. While opposition parties and groups within EU countries may disagree with the speed or process of reaching an ultimate end goal, on the whole they remain committed to EU norms of market reforms and liberal democracy. This substantially reduces the risks to reforms over the longer term.