One of the most ominous questions hovering over democratic politics in the world today is how harsh an anti-democratic crackdown Russian dictator Vladimir Putin would be prepared to support in order to maintain control over the Russian population in the event of an economic downturn.

Recently, Putin has been recording 70+% approval in public opinion surveys, owing largely to the perception that under his stewardship the Russian economy has become much more vibrant. Leave aside the fact that this perception is wholly inaccurate, since virtually all of Russia’s economic growth is attributable to rising world energy prices that Putin had absolutely nothing to do with: The point is that the perception, accurate or not, made the Russian population particularly docile and easy to handle (it has never shown much desire to check the power of its government under any circumstances). No serious opposition was raised when Putin made moves like abolishing the election of local officials, appointing a crush of KGB spies to high positions in his administration or destroying the independence of television news media.

So the question arises: What if the perception of economic vibrancy were to change radically, and the stirrings of opposition were to begin. In that case, Putin would have to adopt a strategy of Stalinist blunt trauma if he wanted to stay in power. How far would he be prepared to go? The month of August, famous among Russians for bringing ill-tidings on the economic front, has removed this question from the theoretical and placed it firmly in the realm of the practical. We must now begin to consider it.

Days ago, both the Russian newspapers Kommersant and The Moscow Times reported that during the month of July, for the first time in nearly a decade, “real ” (or “net”) personal incomes in Russia fell — by nearly 5%. Gross personal incomes have continued to rise at the rate of around 10% or more, but consumer price inflation, particularly for the basic basket of consumer goods people need to survive, has continued to soar at a significantly higher rate of 15% or more (as depicted in the Russian graphic shown above, which is self-explanatory even if you don’t read Russian). In July, inflation caught and passed incomes in a deadly footrace for the Russian future.

A fascinating article in the August 28th issue of the New Yorker by Malcolm Gladwell points out the importance of what are called “dependency ratios” in determining national (and corporate) economic prospects. The larger the ratio of wage-earners to non-wage-earners in a society, the more prosperous it will be; the smaller the ratio, the more destitute. Russia is, and always has been, one of the world’s most victimized countries in this regard; it can almost be said that in Russia only Moscow is employed, and supports the rest of the nation as it languishes in extreme poverty. Russia’s centuries of strict authoritarian rule have bred a pernicious pattern of dependency from which the nation is unlikely to break free, and economic pressure from below requires countervailing autocratic pressure from above in order to prevent an explosion like the one that occurred in 1917 and in the early 1990s when the Berlin Wall fell.

Thus, the inflation/wage vice is most pronounced and grave away from the major cities where wealth has become concentrated, often leading to a stilted picture of Russian economics from Western reporters who rarely venture into the countryside. The Moscow Times reports on the drastic consequences in Russia’s Siberian region of Kamchatka: “When the price of bread jumped by 6 rubles overnight, Vladimir Gaidukas was left reeling. City authorities quickly began handing out bread coupons to him and hundreds of other pensioners in Petropavlovsk-Kamchatsky — the first time food vouchers had been issued anywhere in the country since the dark days of 1992. But the gesture brought little comfort to Gaidukas, 72, who lives on 5,000 rubles ($187) per month. ‘People are in a state of shock,’ Gaidukas said by telephone from the remote city on the Kamchatka Peninsula this week.” The minimum hourly wage in Russia today is a puny $0.25 (based on 1,100 rubles or about $40 for four forty-hour weeks per month) ???????? in other words, the price of bread jumped in day by one hour????????s minimum wages, quite a shock indeed.. But the government claims that the basic subsistence income in Russia is four times higher, and will be $163 per month in 2007. In other words, employers are legally allowed to pay workers four times less than the starvation wages of $1 an hour that subsistence calls for by the Kremlin????????s own definition. RIA Novosti recently asked a deputy finance minister when it could be expected that the government would raise the minimum wage to the subsistence level (it is used to calculate welfare payments as well) and he responded that the country couldn????????t afford to do so, saying ???????if the minimum wage is raised too quickly, regional budgets might not be able to cope with the increase.???????

An article last week in the Japan Times observed that the natural result of this pressure is that people like Mr. Gaidukas are fleeing Siberia for the Western cities. The paper stated that “something like 20 to 25 percent of the population have moved out of Siberia and the Far East in the last 10 years.” The depopulation of Siberia is one of the first authoritarian challenges Putin will face: After all, the only reason Siberia got populated in the first place was the brutal totalitarian polices of the maniacal dictator Josef Stalin. If Putin wants any chance of protecting Siberia against the encroachment of China, and can’t rely on bribery based on a dynamic economy, he will have no choice but to implement a Neo-Soviet crackdown. How far will he go?

We got any early indication a few days ago when the Kremlin announced an attempt to prosecute Steven Theede. Theede, a Briton, became CEO of the Yukos oil concern after its Russian boss, Mikhail Khodorkovsky, was jailed by the Kremlin on tax fraud charges widely seen as political, since they arose only when Khodorkovsky started making noises about challenging Putin for the presidency. It was hoped that the presence of Theede, a respected foreigner, could staunch market panic over the fate of Yukos; Putin assured the world that he did not intend to obliterate the company, just its founder. But Putin’s promise soon proved illusory as further moves were made to nationalize Yukos, and Theede resigned in protest, spilling the beans to Westerners and badly embarrassing Putin. Hence the new indictment. Theede responded to the announcement as follows: “This is just an amazing move that the Russian authorities have taken, to open an investigation against individuals who are not residents of Russia. They are trying to impose their will on those of us who have spent the last two years doing nothing but trying to do the right thing in protecting the interests of the company. And it brings up, I think, an important point of what I’ve discovered in the time I’ve been in Russia, and that is that even though my principles have always been to always do the right thing, time after time, but in Russia today the key to success is more doing what the authorities want you to do rather than doing the right thing.”

Indeed, we must now ask: If Theede can be indicted, who’s next? Is the Kremlin getting nervous? Right now, chess grandmaster Garry Kasparov is touring the country giving speeches attacking Putin and calling for his ouster. Most recently, Kasparpov published an op-ed in the Wall Street Journal in which he scaldingly criticized Putin’s economic policies: “I am horrified as I watch my country turn into an oil-and-gas empire. From struggling workers in Vladivostok to top-notch lawyers in Moscow, we are a people proud of our intellectual traditions. Russia is a country of great literature and scientific accomplishments. It should not be our destiny to become another Saudi Arabia or Venezuela, to quite literally fuel the achievements of other nations while we lose ground.”

Is Kasparov long for this world? It’s already been reported by A Different Russia, the opposition movement led by Kasparov, that about 20 of its members have been detained, beaten, or mysteriously fallen ill on their way to a conference in Moscow. When Kasparov tried to host a conference of opposition parties to shadow the G-8 Summit in St. Petersburg, a meeting was raided by the secret police and four attendees dragged off to jail. How long before the authorities come for Kasparov himself?

The answer to that question largely depends on two other questions: How does the Kremlin view Russia’s economic prospects (more accurately, how successful does it think it can be in fooling Russians into thinking their prospects are good), and what does it think the West will do if serious moves are made against people like Theede and Kasparov? If the Kremlin believes the business cycle has crested and hard times are ahead, and if it believes the West will turn a blind eye to a crackdown because it doesn’t want to alienate Russian energy supplies and it is preoccupied with Muslim extremism, then Theede, Kasparov, and anyone else the Kremlin can get its hands on are in great danger.

The fate of democracy in Russia, and hence the status of a new international cold war, hang in the balance regarding these crucial inquiries. It????????s time for those outside and within Russia who are committed to democracy to begin asking themselves how they will respond with the inevitable crackdown comes in Russia. The world was taken by surprise when the Soviet Union appeared and even more so when it crumbled and fell. We ought not allow ourselves to be three times burned.

Kim Zigfeld publishes the Russia blog La Russophobe.