In case you haven’t noticed, over the last couple of days Russia’s economy is shaking. That perked up my day when I learned of it Monday, but I have more sober thoughts since then.
I admit to a feeling of glee when reading that Russia’s Central Bank hiked its interest rates from roughly 10 to 17 per cent, this in the attempt to stabilize the value of the ruble vis-a-vis the American dollar. The ruble had dropped 50% since January and was dropping more. That is a radical step to take and, as someone pointed out, its effect lasted about 10 minutes.
Just heard today that Apple is refusing to be paid in rubles along with all of Finland, I believe. And I imagine that trend continues as I type. A more detailed account of the events can be found in this Theworldpost piece from Monday. And there is plenty more out there to Google.
Why gleeful? Well, I like my beliefs to be validated and have believed Russia’s fragile economy would undermine Putin’s opportunistic foreign policy, while at the same time I did not believe he was another Hitler, only that he was the proudest of Russians humiliated by the weak state Russia had been in after the break up of the Soviet Union.
Now in a much stronger Russia, Putin has welcomed opportunities to push back at the West. He has never wanted to conquer all of Ukraine, but just to keep it in turmoil, unstable and not a prized Western trophy, and not another Russian humiliation.
I was hoping the sanctions would do the trick, but it turns out the foremost cause has been the drop of oil prices from a high in the summer of $107 a barrel to $50-something now. Russia’s main source of income comes from its energy sales, and now much of that income is lost.
The contribution of the Obama-led economic sanctions is hard to parse, though not surprisingly Democrats think they helped quite a bit while Republicans think their effect has been negligible.
Whatever, the good news is Putin should have enough to worry about in keeping his hold on power over the next few months, enough worry that I read he now seems more pliable when it comes to working out some sort of political solution in eastern Ukraine, where Russian supported rebels and government forces continue to battle.
I would like to end this piece on that upbeat note, but feel the need to dampen that enthusiasm because who knows what instability and excesses might arise from an increasingly squashed Russian economy.
Putin just won the Man of the Year award in Russia for the 15th straight year and, though his popularity has slipped a bit of late, it has dropped only a few points to around 80%. EIGHTY PER CENT! American presidents tend to reach those upper limits at one point or another, but not for long.
The Russian hunger for revived national pride still seems to outweigh their economic values and, with Putin controlled media continually developing the narrative, this budding economic collapse will be portrayed more and more like a result of Western manipulation of oil markets as well as sanctions, both aimed at destroying Russia.
What will happen, who will Russians blame and how will Putin react?
I am reading a biography of Putin and am struck by a number of points made, like his describing himself as a thug when growing up and his childhood dream to become a KGB agent, while most other Russian boys dreamed of becoming an astronaut. He often got into fights, and he seems to have suffered from the little-man-syndrome, the need to show he was the toughest guy around to compensate for his small stature.
One childhood friend states: “If anyone ever insulted him in any way, Volodya (Vladimir) would immediately jump on the guy, scratch him, bite him, rip his hair out by the clump – do anything at all never to allow anyone to humiliate him in any way.” (1)
A little tough guy who refuses to be humiliated and I would add identifies so closely with mother Russia that he takes all slights to the nation personally. It seems those are traits the Russians love, but how long will they love him if the predicted deep 2015 recession comes to pass.
And how will he react to it all?
(1) Quoted from: The Man Without a Face: The Unlikely Rise of Vladimir Putin, written by Masha Gessen, a Russian-American journalist who lived in Moscow when this book was published in 2012. Gessen contends that Putin’s rise was largely a freakish accident, a guy who was in the right places at the right times and one so nondescript (“no face”) that it allowed others to envision him to be just what they wanted.