With specific reference to the health situation, Russia is still in a severe situation with over 350,000 Covid-19 cases.
Brazil, however, has replaced the Russian Federation as the hardest hit country in the world, while the United States is now firmly at the top of the ranking. Nevertheless, what really frightens the Russian decision-makers are the medium and long-term economic consequences of the health crisis.
Russia’s GDP had already recorded a 1.6% increase in the first quarter of 2020, but all Russian economists expect GDP to fall by at least 16% in the second quarter.
Two-thirds of this GDP contraction, however, can still be attributed to the lockdown, but only one-third to the related fall in oil prices.
With specific reference to the quarantine management, Prime Minister Mishustin thinks that 27 regions can now reduce quarantine restrictions, while the leaders of Rospotrebnadzor, the Russian Consumer Protection Agency, have asked the Governors of the Sverdlovsk and Smolensk regions to restore or even tighten quarantine requirements.
The national average growth rate of viral infections in Russia is currently 3.9%, but a "Plan 2" for the definitive recovery of the Russian economy is already supposed to be in place.
However, there will be three recovery phases: in the third quarter of 2020, the government will ensure that recession does not spread to the sectors which are still scarcely affected and will then refinance, one by one, the hardest hit economic sectors.
The real Phase 2 - hence the real recovery - will take place from the fourth quarter of 2020 to the second quarter of 2021, with Russia trying to recover the pre-Covid 19 standards of living for the entire population. In the Phase 3, which will begin in the fourth quarter of 2021, the economy is even expected to start growing again.
Pursuant to Russia’s current regulations, all proceeds from oil and gas exports are directly deposited into the National Welfare Fund (NWF).
This Russian Sovereign Fund currently holds 11% of the whole Federation’s GDP. When the oil barrel prices are below 42 U.S. dollars, the Fund directly covers the difference by depositing what is needed directly into the federal budget. Above the threshold of 42 U.S. dollars, everything goes smoothly.
Regardless of the constitutional referendum, the central government is likely to decide to take the necessary funds for the new economic expansion directly from the NWF.
In a new crisis situation, the federal budget would directly receive all the oil revenues, which shall be allocated to the reconstruction of the Russian welfare and economy.
Again with reference to oil, unlike other countries, Russia needs a basic oil barrel price of 40 U.S. dollars to "recover its costs".
Furthermore, the high prices reached after the various recent production restrictions within OPEC+ have enabled Russia to increase its reserves, which now stand at approximately 400 billion U.S. dollars.
The Russian Federation’s current resources, however, would still enable the country to sustain even an oil barrel price of 25 U.S. dollars for ten years.
Moreover, unlike Saudi Arabia and other OPEC+ countries, Russia depends on oil and gas exports only for approximately two thirds of its revenues, while the rest is made up of raw materials such as uranium, coal, other metals and minerals, and especially the sale of arms abroad, a sector for which the Russian Federation is second only to the United States.
It is precisely in this geo-economic situation that the forthcoming referendum scheduled for July 1 in Russia will take place.
As you may remember, the announcement of the constitutional referendum made on January 16, 2020, enabled the then Prime Minister, Dmitri Medvedev, to resign on that day and then take on the role of Vice-President of the Russian Security Council, which is obviously chaired by Vladimir Putin.
Medvedev was replaced by Michail Mishustin, who is not a "man of force", i.e. a former director of the Intelligence Services turned politician, but comes from the Federal Tax Service. When Mishustin himself fell ill with Covid-19, from April 30 to May 19 he was replaced by the economist Andrey Belousov.
Hence what does President Putin want to achieve with his constitutional reform? Not just his mere stay in power, which the leader deems necessary, since he has not yet found his true heir apparent.
It is a particularly effective sign that the second reading of the constitutional reform, adopted by the State Duma at the beginning of March 2020, was dominated by the presence of Valentina Tereskova, the first cosmonaut, now an 83-year-old member of Parliament.
In that vote there were 382 in favour, 44 abstained and 0 MPs against.
Therefore, if approved in the referendum, the current reform will be the real constitutional definition of Putin's "vertical of power".
It should be recalled it is a mechanism made up of centre-periphery relations, but also of now stable electoral systems: the prohibition of presenting "independent" candidates; the registration of regular candidates by parties that are officially recognized and have at least 50,000 members in different regions of the country; the 7% hurdle, whereby the votes of those who do not reach said threshold shall always be distributed among all the other parties that have exceeded it.
Certainly the Russian Federation cannot be a democracy. If it were so, it would no longer exist as such.
A great empire, with a surface sixty times the size of Italy, but with a population just below the sum of Italians and Germans, as well as with empty Siberia on the border with the very overpopulated China.
In an "empty country" - as Baron De Custine defined it at the beginning of the 19th century - the fear of foreigners always recurs: Putin's old video, in the 2012 election rounds, showed the Chinese arriving in Khabarovsk; NATO taking Kaliningrad; the Islamists raiding in the Caucasus and finally the skinheads - an evident symbol of Western stupidity - moving freely around St. Petersburg.
The Russian Constitutional Court, however, has already made it clear that Putin's reform is legal.
Hence what does Putin want? Firstly, a stronger system of central State controls over the federal and peripheral governments, so as to create the constitutional legislation of the "vertical of power" which is currently based only on Putin's personal energy.
Secondly the considerable strengthening of the status and role of the Russian Federation’s State Council, which is at present only an advisory body, not prescribed in the Constitution. It shall also be given the powers of orienting domestic and foreign policies, as well as identifying the main areas of future development in the country.
Thirdly, Vladimir Putin's proposal would mean that the regional Governors could automatically be members of the State Council, obviously after having established a pact with the Kremlin.
Fourthly, the statute of the State Council shall be fully incorporated into the Constitution. The vast "nationalisation of elites" will be strengthened, since those who hold important positions for ensuring the country’ security, such as President, Ministers, members of the State Duma, regional Governors, judges or any other high-ranking State official, shall not have foreign citizenship or even a residence permit in other countries, either at the time of their work in office or, in the case of the President, at any time before.
A presidential candidate, however, must prove he or she has been permanently living in Russia for at least 25 years (currently 10 years) and cannot serve more than two consecutive terms. Ex post, of course.
The Constitution shall take precedence over international law and over the provisions of international treaties. Here the Russian concept of "sovereign democracy" is reaffirmed, which sometimes departs from the Western mythology of "human" and hence "universal" rights and states its clear opposition to dealing with the internal affairs of any other country.
In the proposed constitutional reform, there is also the clear prohibition to transfer and alienate part of the Russian Federation’s territories.
The Federation Council (the Upper House of Parliament), which now becomes the primary government body, shall also have the right to propose to the President to dismiss federal judges by providing a reasoned assessment and motivated opinion on their activity; in some cases, upon the proposal of the President, the Federation Council shall have the right to remove judges of the Constitutional and Supreme Courts.
The State Duma (the Lower House of Parliament) shall have the right to approve the Prime Minister’s candidacy (currently it only gives consent to his/her appointment). The State Duma shall also approve the candidates of Deputy-Prime Minister and Federal Ministries; the President cannot refuse their appointment, but in some cases he/she will be able to remove them from office
Hence the two directives of "United Russia", Putin's traditional party, become constitutional rule, i.e deržavnost' - the 'great power' - and gosudarstvenničestvo, the 'strong State'.
Moreover, as always happens in current political propaganda, there is the issue of family relations.
The new Constitution proposed by the President defines marriage as a relationship between a man and a woman - and even the TV propaganda of the referendum underlines this aspect.
Furthermore, the State has the explicit duty to "preserve and honour the memory of the Defenders of the Fatherland, as well as honour the pan-Russian cultural identity and show faith in God" as a value sacredly received by ancestors.
Sobianin, the mayor of Moscow, the city which is still the epicentre of the COVID-19 infection, wanted to hold the referendum in September, but Putin wants it now.
Why? Because Vladimir Putin is aware of the political and personal tensions within the apparata.
In the Secret Services and in the Armed Forces - which, over the last few months, have been the origin of indirect and veiled attacks on him. A series of events has also revealed how the Military Secret Service (GRU) is no longer entirely in Putin's hands, as was previously the case.
Certainly, now that the Covid-19 is in a phase of controlled expansion, Putin has anyway regained popularity.
Still today, 63% of the Russian population shows strong support for Vladimir Vladimirovic Putin. In the referendum case, however, the voter turnout is estimated at 65%, which is always too little to ensure a real and definitive success to the President. Nevertheless, by paraphrasing Blaise Pascal, it should be recalled that democratic elections have ways "of which reason and the heart know nothing".
About 47% of Russians, however, states to be in favour of the reforms proposed by Putin to the Constitution.
Too few? We shall see what the future has in store. Only 53% of young people is expected to vote, while 77% of elderly people is expected to go to the polls.
Nevertheless, 41% of young people will always vote against Putin's amendments to the Russian Constitution, with 45% of them living in Moscow.
It is currently foreseen that 35% of voters will not go to the polls.
Is Putin in danger? We do not believe so, considering that - if this happens because of his poor electoral performance - the President will find a way to recover. However, we do not think this will be the case.
Hence centralization of true power in Putin's hands, up to two terms and even beyond but, on the other hand, distribution regulated by the central power to the regional governments.
A new configuration of power in Russia, until Putin finds his true heir apparent.
If he ever finds him, of course.
The State is "a work of art", as an old and valuable book by Jakob Burkhardt, "The civilization of the Renaissance in Italy", reads.
Therefore, every State does not reproduce as a photocopy, but only through the Author, the Artist.
If voted and adopted, the amendments to the Russian Constitution will enable Putin to be regularly re-elected for over two consecutive terms, but, with the current changes, we can think of additional 12 years and more in power, but only for Vladimir Vladimirovic Putin.
Professor Valori is President of the International World Group