Russian President Vladimir Putin, who loves to strut on the world stage, appears intent on regaining his nation’s lost stature. But the reality is that Russia is a nation in decline.
Global oil prices have tumbled to a five-year low, and Russia’s ruble has fallen 40 percent against the dollar so far this year. Economists predict that inflation may soon reach 9 percent and continue climbing.
Even more serious for Putin, although likely to draw less attention from the Russian people, is another prediction by economists: Capital flight is expected to reach $128 billion.
In other words, Russia has serious financial problems that Putin had not anticipated. It is something for which he is to blame, however.
“It is a completely new reality for him,” said Sergei M. Guriev, an economist who chose exile last year.
“Whenever Russia wanted the oil price to go up, it has gone up,” Guriev said. “He has always been lucky, and this time he is not lucky.”
In the United States, we have long worried about our nation’s dependence on foreign oil. In Russia, there’s an even more striking dependency on domestic oil production, which provides 60 percent of the nation’s exports.
Though Americans may rejoice in the recent drop in prices at the gasoline pump, these low prices represent a clear threat to Russia’s economy and, if less directly, to Putin’s stewardship.
In the wake of the Western sanctions, Moscow thought it would find financial help in China, but the banks there apparently do not have the capacity. Thus the debt could deplete Russia’s $400 billion in foreign currency reserves.
Vedomosti, Russia’s most respected business daily, last week published an editorial that suggested that “the biggest problem of Russian leadership is inability to admit mistakes” and declared that “the economy is seriously ill, and the ruble rate is one of the indicators crying about the illness.”
And it added this potent comment: “Russia’s leadership refuses to admit there is an illness, and pushes it into the depths.”
The West’s big fear? That Putin may see war as a way out of his troubles. Then our present domestic worries would seem insignificant.
— Tampa (Florida) Tribune,
Dec. 9
