Tuesday, November 11, 2014

Putin Has Plunged Russia Into Economic Decline

While seemingly having based his foreign (invading Ukraine of flimsy claims of protecting "ethnic Russians) and domestic policies (making gays the equivalent of Jews in Germany) on Adolph Hitler's ultimately disastrous agenda during the 1930's, Vladimir Putin apparently forgot what Hitler ultimately brought down upon Germany.  With energy prices dropping across the globe and economic sanctions kicking in, Russia's economy seems headed toward melt down.  One can only hope that Russians will open their eyes and realize that the nation's problems are not due to the west, but rather the result of Putin's failed leadership.  Like so many despotic Russian rulers of the past, Putin has harmed Russia and the Russian people.  He needs to be overthrown.  A piece in Vox looks at the worsening economic picture for Russia.  Here are excerpts:
The Russian economy is in bad shape. On Monday morning, Russia's central bank announced that it expects the Russian economy to grow zero percent in 2015 and 0.1 percent in 2016. The value of Russia's currency, the ruble, plummeted more than 8 percent in the past week alone — and it's down more than 40 percent since the beginning of this year.

The fall in the ruble appears to be mainly the result of two factors: a sharp decline in global oil prices and sanctions that Western countries put on Russia in retaliation for invading Ukraine. Those two things might not appear connected, but in a sense one led to the other. Many Russia-watchers believe that, when Russia's economy began weakening, and, thus, so did Putin's approval ratings, Putin responded in part by trying to increase his popular support by stirring up nationalism. That is likely one of the reasons why he invaded Ukraine, which also distracted from the poor economy.

If that's right, then that would mean that the sanctions meant to weaken Russia's economy are also a result of Russia's weak economy. And that, in turn, should prompt questions about what Putin might do to shore up his support in the face of this new bad economic news.

[T]he value of the Russian Ruble has plummeted since the beginning of the year. It's down more than 40 percent against the dollar since January and down more than 8 percent in the last week alone.

That's a problem for Russian consumers, who have seen the prices of food and other necessities shoot up in recent months. According to the Wall Street Journal, consumer prices rose by 8.3 percent in October, 8 percent in September, and 7.6 percent in August. Food prices have risen especially quickly because Moscow banned imports of Western meat, dairy products, fish, fruit, and vegetables in August. The government is reportedly considering imposing price controls on "socially important" goods.

Falling oil prices have hit Russia hard because the Russian economy is heavily dependent on energy exports. In 2013, oil and gas accounted for a stunning 68 percent of Russia's total export revenues.

Russia's other big problem is that it's under economic sanctions as a result of its occupation of Crimea and other military adventures in eastern Ukraine.   The sanctions cut off a number of major Russian companies and individuals from international capital markets, including the energy giant Rosneft and financial institutions like Gazprombank and Vnesheconombank. The sanctions appear to be accelerating the economy's decline.

Since taking power in 2000, Putin's power has been based on an implicit agreement with the Russian public, in which he delivers high economic growth, and in return Russians accept his government's abuses, which include corrupt cronyism and authoritarian crackdowns on civil and political rights.

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