MOSCOW (Reuters) - When a Russian sociologist wrote a newspaper column last month suggesting the global financial crisis could cause social unrest, the state media watchdog advised the paper not to spread extremist sentiments.

A woman looks at magazines at a newspaper stall in Moscow in this November 26, 2008. The financial crisis is presenting Russia's ruling elite with the most serious challenge to its power in a decade. The Kremlin has responded by offering a bailout package and economic stimulus measures between them worth over $200 billion. But journalists and critics say the Kremlin has deployed another weapon too: using its grip on the media to try to prevent ordinary people from finding out how bad things really are. Picture taken November 26, 2008. REUTERS/Denis Sinyakov

“This is censorship,” said Yevgeny Gontmakher, the author of the column and the head of the Academy of Science’s Social Policy Center. “The situation in the country is changing; you can no longer utter the word ‘crisis’.”

The financial crisis is presenting Russia’s ruling elite with the most serious challenge to its power in a decade. The Kremlin has responded by offering a bailout package and economic stimulus measures between them worth over $200 billion.

But journalists and critics say the Kremlin has deployed another weapon too: using its grip on the media to try to prevent ordinary people from finding out how bad things really are.

Russia’s sovereign debt was downgraded by Standard & Poor’s for the first time in 10 years on December 8, stocks have lost about 70 percent of their value since May, and the central bank has spent $160.3 billion in a bid to support the rouble.

A reporter for a major Russian newspaper said editors told staff at morning meetings to exercise care when reporting on the impact of the crisis inside Russia.

“It comes from the top, via the meetings the top editors have with the government and the Kremlin,” said the reporter, asking not to be named because he feared he could lose his job if he spoke publicly on the issue.

“The reasoning is to prevent panic from spreading inside Russia. We can still report on the crisis but we have to be very careful of how we term things, so it is a way of reporting rather than an outright ban.”

At the end of last week Russia’s chief macroeconomic planner was overruled by Prime Minister Vladimir Putin after saying Russia was already in a recession. Within hours, Putin told a different story, trumpeting growth of around 6 percent for 2008 and predicting Russia would weather the financial storm.

CRISIS ... IN RUSSIA?

Asked to comment on allegations the government was dictating how the crisis should be reported, Dmitry Peskov, the chief spokesman for Prime Minister Vladimir Putin said: “That is absolutely not true.”

Russian officials are not ignoring the crisis. President Dmitry Medvedev has acknowledged problems on the financial markets will spread to the real economy and Putin says the downturn will test the country’s mettle.

Vigorous debates on the topic can be found on internet blogs and in some newspapers. Some of the reporting holds little back, with unsourced details about firms’ financial health that in many other countries may spur a legal challenge.

But on the three main television stations -- the principal source of news for most Russians -- the crisis is often treated as a problem that is happening somewhere else.

On November 24 last month, when U.S. President-elect Barack Obama formally set his economic team with a pledge to act “swiftly and boldly” to avert recession, the 9:00 p.m. bulletin on Russia’s most-watched television station Channel One only directly referred to the crisis six items into the broadcast, in an item about the threat of layoffs in the United States.

It did not mention that on the same day, the central bank had conceded it would have to let the rouble depreciate for the second time in two weeks as investors fled the currency.

“It’s amazing. You don’t hear anything about the crisis,” said former world chess champion Garry Kasparov, now a vocal Kremlin critic.”

“It is a total virtual reality. There is a crisis in America, the United Kingdom, (but) Russia?” Kasparov told Reuters in an interview.

A spokeswoman for Channel One, which is controlled by the state, denied the existence of any government orders on how to cover the crisis.

PATRIOTISM

Russia is not the only ex-Soviet state where the financial crisis is testing the limits for freedom of speech.

In energy producer Kazakhstan, hit by falling prices for oil and a liquidity crunch in its banking sector, one senior official concerned about undermining confidence suggested that President Nursultan Nazarbayev stop using the word “crisis.”

In Belarus, accused by the West of squeezing democracy, the central bank advised commercial banks last week to call in the police if they heard any customers inside branches talking loudly about the bank’s liquidity.

Police in European Union member Latvia jailed an academic for two days for saying in an online debate people should not trust the banks, and launched a case against a singer who made similar comments at a concert.

But the crisis is especially sensitive for Russia, because it may spell the end of a decade-long economic boom that allowed many people to feel a sense of national pride again after the humiliations of the Soviet collapse.

Putin, who served eight years as president before stepping down in May, promoted that feeling of resurgence with steps such as reviving Soviet-era military parades on Red Square and urging officials to quote figures in roubles, not dollars.

Sergei Polonsky, chairman of property developer Mirax, wrote an open letter to journalists on behalf of the troubled construction sector, telling them negative coverage could destroy his industry.

“Look around you and think how much Russia has been transformed over the past 10 years,” he wrote. “Now imagine that construction comes to a halt ... It’s a frightening picture.”

One senior foreign exchange trader in Moscow said he did not want to comment on the central bank’s efforts to support the falling rouble because if he did, it would add to the bad news surrounding the currency.

“I am a Russian patriot and I would not like that,” he said.