Will there be another Russian revolution?

As the cold, hard realities of the global economic meltdown hit home in Russia's remote industrial 'monotowns', Vladimir Putin is facing the first serious challenges to his authority. Is anarchy just around the corner? Shaun Walker reports from the Urals

These are hard times for the town of Asbest, deep in Russia's Urals industrial belt. For more than a century, asbestos has been mined here on a grand scale. And in recent years, despite an EU ban on the use of asbestos, the 19 factories that make up the world's biggest asbestos mining and processing operation have been working at full stretch, fuelled by Russia's construction boom.

Andrei, a 37-year-old local, has worked in the asbestos industry for 13 years, along with thousands of the town's 76,000 residents. More than 70 per cent of all families here have at least one member working in the asbestos plant. Indeed, without it, the town would be nothing. Across Russia's Urals region, and elsewhere, there are many places like Asbest. In a hangover from the days of Soviet planning, Russia has more than 500 "monotowns" – communities where one factory accounts for most of the local budget and employs the majority of the population.

Andrei's father worked at the asbestos factory before him, and Andrei always assumed that, in time, his son would work there, too. Then the financial crisis hit. This month, the factory has closed down almost completely, with its production lines working two days per week, and thousands of people, Andrei included, put on compulsory leave with two-thirds pay. There's no other work to be found – and Andrei's salary even before his compulsory cut was less than £250 per month. A new magnesium factory that had been planned for the town, to give it a second life and remove its dependency on asbestos, has been put on hold after its European investors withdrew last month.

"We don't have any problems here," says Valery Belosheikin, the town's mayor. Sitting in front of the town flag, which features strands of asbestos passing through a fire and emerging unscathed, he remains defiant. The biggest issue, says Belosheikin, is not the financial crisis, but the fact that Europe has banned asbestos, which he puts down to a conspiracy launched by companies making expensive chemical substitutes. "Whatever happens, we'll find new investors, build the magnesium factory, and everything will be fine."

Not everyone shares his optimism.

"Life is difficult now, and we're scared about what's going to happen," says Andrei, sitting in a café drinking beer in work time. "It was hard enough to provide a good life for my family before, but if I lose my job, I don't know what I'll do."

In dozens of Russia's monotowns, it's the same story. The automobile and metal industries have been particularly hard hit as the crisis has taken hold, and monotowns are particularly vulnerable. If the factory closes down or experiences trouble, the future of the entire settlement comes into question.

Last month, a motley group of Communists, radicals and democrats held protests across Russia to protest against the Moscow government and call for a change of leadership. In the far-eastern city of Vladivostok, more than 2,000 people came out on to the streets. Some have suggested that when things start getting really bad, unrest in monotowns could provide the catalyst for serious uprisings, spilling over into anarchy that will be disastrous for the authoritarian Putin-Medvedev government. Leaders of this small and splintered opposition feel that it's simply a matter of time before these disgruntled people turn against the regime.

"People have had a stable life and still think that things will get better again," says Garry Kasparov, the former world chess champion turned opposition politician. "I expect the first waves of protests to start in earnest in March or April."

But while the crisis might bring a few more thousands on to the streets for protest rallies, few analysts seriously believe mass protests will emerge from monotowns, even if things get really bad. There's no such thing as society in Russia, according to the Moscow-based analyst Leonid Radzikhovsky, and nobody well organised enough to mount a real challenge to the government from below. "Twenty years ago, when the Soviet Union fell, there were people offering alternative ideologies," says Radzikhovsky. "Now, nobody has any alternatives, and there are no structures to organise people.

"Maybe if things get worse for a year or two they will appear, but for now, there is no chance of mass protests bringing down the government."

Others talk about the ingrained political apathy among the Russian population, and its ability to endure hardship.

"However bad things get, ordinary people won't become political," says the editor of a newspaper based in Ekaterinburg, the nearest big city to Asbest. "The women will grow potatoes to see them through the hard times, and the men will drink more vodka, and that's it."

Talking to Andrei, it's easy to see why the prospect of large-scale protests seems remote. He is worried, and angry, but he scorns the idea that he might take part in a protest against the Russian government and its handling of the financial crisis. "We just hope that this crisis will pass and everything will be OK. What would be the use of protesting? Protests just lead to trouble, and it's not like they're going to change anything or make things better."

If the work situation doesn't improve, there is a chance of social unrest, admits Andrei Kholzyakov, the head of Asbest's trade union, but it will take a long and sustained period of economic gloom. "Workers are still living in hope. The next stage after that is disbelief, when you realise that things won't get better. After that comes nihilism, and that's when we might see real protests. We are still a long way off that stage."

"But there's a saying in Russian – 'God is high above, and the Tsar is far away,'" Kholzyakov adds. "People will most likely put the blame on regional leaders. The Kremlin is too distant a concept."

"People don't really expect anything from the authorities, so they are likely to feel that protest is fruitless," agrees Eduard Abelinskas, a political analyst based in Ekaterinburg, the nearest big city to Asbest. "At the very most we might see protests against regional leaders, but the idea that thousands of people are going to march on Moscow is just fantasy."

All of this is not to say that the governmental structure that Putin has built up since he came to power in 2000 is safe. Increasingly, Kremlin-watchers are noticing signs of a split between the macho, tough-talking Prime Minister and his chosen presidential successor, the more measured and liberal Dmitry Medvedev. And the position of both men could be under threat from disgruntled regional elites and political clans.

"This 'power vertical' that Putin has built, the situation where people don't have their views taken account of, doesn't suit regional leaders any more," says Abelinskas. The "power vertical" is the name widely used for the rigid chain of command built by Putin where discussion is limited and dissent is not tolerated.

With all regional leaders and important political figures pushed into the pro-Kremlin United Russia political party in recent years, there is little space for real debate without appearing subversive. In more prosperous times, this was a trade-off that the political class was willing to make in exchange for prosperity and the possibility to siphon off part of the wealth for themselves. Now, that bargain may be over.

"If there is a danger for Putin, don't look to find it in the population, look to Medvedev," continues the analyst. "And if there is a danger for Putin and Medvedev, look to within the elites, to people whose names we might not have heard of yet."

Even Kasparov admits that the impetus for change could come not from popular uprising, but from frustrated elites.

"It's a very fragile system, and Putin could well become a scapegoat for a lot of people inside the elites," says the grandmaster. "Whether or not he genuinely wants to, we could see Medvedev emerge as a sort of perestroika leader."

On Sunday, Medvedev gave an address in the form of a lengthy television interview. In the latest of a long line of messages that can be interpreted as criticisms of his Prime Minister, Putin, he said it was necessary for people to talk "openly" and "truthfully" about the financial crisis, and appeared to belittle what Putin has trumpeted as the achievements of his years in office. "It's easy to work when there are high revenues, above all from oil and gas exports," said Medvedev. "It's like you're not doing anything yourself, yet the profit just keeps coming in. That's great. But now it's important, first, to show that we can learn to spend money – budget money – rationally, and second, to be competent managers."

Yesterday, in an apparent follow-up to his statements in the interview, Medvedev announced that four regional governors would be replaced. The Russian media linked the move to high unemployment in these regions and suggested that it was a signal to the regional elites that the Kremlin is still in charge, for now.

It may also fit into a pattern of Medvedev appointing his own men as local leaders, most notably seen in the troubled Caucasus republic of Ingushetia, which neighbours Chechnya and suffers from frequent terrorist attacks and kidnappings. Much of the region's strife was put down to the hugely unpopular local leader Murat Zyazikov who, like Putin, was a former KGB man, and who had the support of the Russian Prime Minister, despite fierce local opposition and allegations of widespread abuse of power.

Medvedev engineered the removal of Zyazikov last October, and replaced him with a new leader, Yunus-Bek Yevkurov, who enjoys the confidence of large sections of Ingush society, and appears to have calmed the situation at least marginally in the tense region. The President paid a visit to Ingushetia and has received Yevkurov in the Kremlin. Medvedev has not, however, visited Chechnya recently, where local hardman Ramzan Kadyrov says he still pledges allegiance to Putin. It's a sign that the two men are developing their own client base among the regional leaders.

There have been other signs of divergent approaches. Medvedev met with Dmitry Muratov, editor of the opposition paper Novaya Gazeta, at the end of January, to express his condolences over the murder of one of the newspaper's reporters. Muratov later revealed that the President had told him how much he values Novaya Gazeta and is genuinely thankful for the few remaining opposition media outlets in the country. The paper's editor said it was clear that the President's words were meant sincerely. Such a statement would be unthinkable coming from Putin, who has made his distaste for investigative journalists known.

Additionally, Medvedev has ordered that a bill designed to tighten the definition of state treason, and backed by Putin, be revised.

"This was a key piece of Putinist legislation," says Gary Kasparov. "It would've meant that people like me could easily be rounded up and arrested for treason. It's very significant that Medvedev and his allies have blocked it."

Major foreign policy challenges such as the gas crisis with Ukraine have shown that Putin is still the most important person in the country and calls most of the shots. But the image of Medvedev as merely a puppet who is ready to step aside to allow his master's return should it be necessary is beginning to look a little naive.

For people like Andrei in Asbest, that is neither here or there: "Putin's a good leader. He made Russia strong again," says the factory worker. "And Medvedev – he's OK, too."

Whether the business and political elites will be so happy to bury their heads in the sand as the money dries up, and whether or not they will be able to change the system without going down with it, all remains to be seen. But signs of stress on the "power vertical", that seemed so infallible with high oil prices, are beginning to emerge.

"This is a house that is falling down," says Eduard Abelinskas. "The cracks were always there, but before they could just be painted over with oil. Now that there is less oil to go round, the cracks will soon be visible to everyone."

Falling fortunes: The oligarchs' decline

The Russian magazine 'Finans' published its annual list of rich Russians yesterday, with the number of dollar billionaires more than halved from last year's rankings, down from 101 to 49. The biggest loser is Oleg Deripaska; the magazine estimates that he has lost about 90 per cent of his fortune. Top dog is now Mikhail Prokhorov, estimated to be the richest Russian in spite of losing more than $7bn (£4.9bn) over the year.

1. $14.1bn Mikhail Prokhorov (loss of $7.4bn)

With a reputation for partying and living the good life, Russia's most eligible bachelor made his money in gold and metals. He becomes Russia's richest person for the first time.

2. $13.9bn Roman Abramovich (loss of $9.1bn)

The owner of Chelsea Football Club, Abramovich toppedthe list for four straight years until last year, when he fell to second place. He keeps the No 2 spot in spite of his losses.

3. $7.7bn Vladimir Lisin (loss of $14.5bn)

Another metals magnate, the reclusive Lisin keeps his third place on the list from last year.

4. $7.6bn Vagit Alekperov (loss of $5.9bn)

Born in Azerbaijan, Alekperov started out as a drilling operator on an oil rig. He is now part-owner of the vast Lukoil empire.

5. $7.5bn Suleiman Kerimov (loss of $10.5bn)

A parliamentarian and businessman, Kerimov has kept a low profile since crashing a Ferrari in Nice in 2006.

6. $6.1bn Mikhail Fridman (loss of $16.1bn)

Banking billionaire and one of the shareholders in TNK-BP, BP's troubled Russian joint venture.

7. $5bn Vladimir Potanin (loss of $16.5bn)

The former business partner of the new Russian top dog, Mikhail Prokhorov.

8. $4.9bn Oleg Deripaska (loss of $35.1bn)

The fortunes of Deripaska, head of the Basic Element empire, fell spectacularly in 2008 after the businessman took out vast amounts of credit from Western banks that he is now struggling to repay.

9. $4.6bn Dmitry Rybolovlev (loss of $7.1bn)

Regional businessman with major interests in fertilisers. He reportedly paid $100m in 2008 to buy Donald Trump's California home.

10. $4.5bn Alisher Usmanov (loss of $8.8bn)

Metals magnate and a shareholder in Arsenal Football Club.

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