The Russian economy (catch all)

[Firn]

Some Russians are feeling the price of Putins own success.

Patriotism spurred by President Vladimir Putin's annexation of Ukraine's Crimea still runs deep in Russia, but the cold reality of paying for the Black Sea region is setting in and threatens to test an economy brought low by Western sanctions.

In Tatyana's hometown of Taganrog, the request for hospital workers to sacrifice a day's pay was taken up by only a few - by those people, she says, who wanted to impress their employers.

"The bosses informed us of this in June in a tone which made clear they recommended it ... They distributed and asked us to fill out a form for the donation. People started complaining - why should they donate to Crimea?" said Tatyana, 52, who declined to give her surname for fear of retribution.

"In our department, not one of us made the donation and our boss understood because she was of the same opinion," she said by telephone.

Of course that is only a local snapshot of a large economy which is in deep trouble, even if the stock market bounced back, for now, in the recent months.*

Investment has all but dried up, forcing the government to dip into reserves meant for pensions to finance projects, and the government says it will sell a stake in Russia's state-controlled oil company, Rosneft, to cover some of the costs of developing Crimea.

Finance Minister Anton Siluanov had to backtrack after coming under fire for saying that all the funds accumulated in Russia's personal pension plans in 2014 had been spent on "anti-crisis measures" and on Crimea.

The next day, he said Russians "would lose nothing", but stopped short of saying whether the sum of $8 billion would be returned to the personal pension plans.

While such measures may take a while to hurt the population, Karen Vartapetov, an analyst at Standard & Poor's rating agency, said a more immediate danger was the stagnation of real disposable incomes, which show only 0.2 percent real growth (adjusted for inflation) this year.

"Zero growth of real disposable incomes against continuing growth of public sector pay indicates that salaries in the private sector and non-salary incomes are shrinking," he said.

"The economy outside the public sector has been stagnating."

I noted this increasingly strong divergence of the public and private sector earlier on a paper I cited. It is rather typical for oil states in which state power and ressource wealth are intertwined.

*Needless to say that over the last years those who invested in Russian securities lost a very large percentage compared to the world index.