Roughly half a year ago I stated
in this post:
I think it is now plain that Russia's center of gravity is indeed it's economy, which has run out of steam due to various issues discussed in this thread. Putin's model, based on a large public sector and tight control of the 'strategic' big players of economy was only possible due to high oil prices created in part by an increasing global demand in the wake of robust global growth. Demographic reserves and the usual well-know macro mechanisms after a collapse played it's part in the recovery. It brought great economic and social benefits to the Russian people as a whole, even if the share was quite uneven, especially in comparision to the hard years after the Soviet crash. It's cost in democracy and liberty seems so far small to many.
Nobody can predict what exactly will happen to the Russian economy as it depends on quite a few variables but obviously it looks pretty grim if you take the currently available facts into account. Just look at the start of the thread, created in a difficult time for Russia during big global shock. Clearly the Russian economy survived through big stimulation, aggressive RCB action and mighty oil price swing up. The structural Russian weaknesses were already obvious there and deepened in good times only to resurface strongly in the current situation. This doesn't mean that Putin's model has to collapse soon and certainly not that we know how the public will react in that case. If however Putin continues to wage war and the Ukraine and the Western countries don't give up easily the conflict will continue for a long time. In that case is highly doubtful that Russia will be able to grow much, if at all, in the next years. I seems that what Gaidar feared has become true, Russia has become
a threat to the world.
That is the worst thing that could happen to Russia, he stated, short of a terrible (nuclear) war I suppose.
What internal consequences this will have I don't know but everything passes in some way or the other. Of course this can take sometimes a surprisingly long time. It would be quite naive to expect 'results' in a quarter or a year.
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