The State of Affairs in Russia

[CountDeMoney]

Ruble at an all time low. Which made me think, if things got bad enough you think Putin would ever have an unfortunate accident? Could he be toppled legitimately?

Lulz, Vlad's not going anywhere, ever.

[Jacob]

The problem with the Eastern European mini-nations (which include Poles and Ukrainians, despite being more numerous) and Russians is that they have (and still do) considered themselves victims, and react hysterically whenever anyone suggests they have been anything but martyrs. So entire nations are suffering from a deep psychosis.

Sounds like somebody we know in the Pacific.   

Sounds like all of 'em, really. Except maybe Taiwan.

[Tonitrus]

Ruble at an all time low. Which made me think, if things got bad enough you think Putin would ever have an unfortunate accident? Could he be toppled legitimately?

Lulz, Vlad's not going anywhere, ever.

A good op-ed touching on the issue, and those who think the oligarchs might outs Putin if the economy goes south too far....

http://www.nytimes.com/2014/12/11/opinion/masha-gessen-the-myth-of-the-russian-oligarchs.html

The Myth of the Russian Oligarchs
DEC. 10, 2014
Continue reading the main story
Contributing Op-Ed Writer
By MASHA GESSEN

Moscow's most popular joke today is unfunny: "Next year Putin, the ruble, and a barrel of oil will converge at just over 63." Allow me to translate: The ruble will soon be trading at 63 to the dollar, or nearly double what the dollar was worth in Russia a year ago (meaning most Russians will be roughly 50 percent poorer); a barrel of oil will fall to $63 a barrel, roughly 2005-level prices, devastating the Russian economy; and President Vladimir Putin will turn 63. All three predictions are depressingly realistic: The Russian economy appears headed for disaster just as certainly as Mr. Putin will most likely celebrate his next birthday in October 2015. And more likely than not, he will still be president of Russia then.

Conventional wisdom — or conventional hope — among many of the people who would like to see the end of the Putin regime has long been that a turn for the worse in the Russian economy will make the moneyed elite turn on the Russian president. Journalists, pundits and Mr. Putin's political opponents in Russia have predicted that Western sanctions and the economic disaster they hasten will result in a coup d'état staged by oligarchs. There is just one problem with that argument: There are no oligarchs anymore.

When Mr. Putin became acting president 15 years ago this month, Russia was an oligarchy — indeed the oligarchs, a small group of men who had grown very rich in the preceding decade, were instrumental in picking Putin out of obscurity and installing him at the helm. But within months, he made the oligarchs an offer they could not refuse: give up all of their political power and some of their wealth in exchange for safety, security and continued prosperity, or else be stripped of all power and assets.

He meant it. The media mogul Vladimir Gusinsky, who rejected the new rules, was forced into exile in the summer of 2000, and uber-oligarch Boris Berezovsky followed him a few months later. When the richest man in Russia, Mikhail Khodorkovsky, refused any such bargain, he was jailed and his company was taken away. The process of destroying the Russian oligarchy was completed.

In the 11 years since Mr. Khodorkovsky's arrest, Mr. Putin has consolidated power into what the political scientist Karen Dawisha calls "kleptocratic authoritarianism." Its essential characteristic is all-encompassing corruption, which makes all the moneyed men of the Russian elite — and they are all men, and all moneyed — profoundly interdependent. Many of them have held public office during this time, but it has invariably been subject to three interlocking conditions: They had to pay to get into office, and though they could use the office for accumulating greater wealth, they could not use it to wield or gain political power.

Giving up any pretense of independent political action has remained a condition for staying wealthy and safe. When the billionaire Mikhail Prokhorov tried, and rather modestly, to test this condition by reshaping an essentially pro-Kremlin but populist political party three years ago, he was yanked back harshly. Faced with the threat of losing his assets, he then fell back into line. In the new era of economic hardship, he has stayed in line: In his most recent demonstration of loyalty to the Kremlin, a media company Prokhorov owns has just kicked the tiny, embattled independent television company Dozhd (Rain) TV out of a temporary studio on its property.

Over these years of helping Mr. Putin solidify his regime, the Russian rich have not only become entrenched in this corrupt system, but they have lost the very ability to form and pursue a political agenda. Those who predict an imminent coup — a coup by oligarchs as independent actors who can form a coalition to pursue their economic interests — are far off the mark. Imagine, rather, a large number of spiders all living in a single web. As the economy takes a dive, they are compelled simply to hold on for dear life. As the web begins to shrink, they can kick off it some of their weaker comrades — as has already happened with two major Russian entrepreneurs, Vladimir Yevtushenkov and Maxim Nogotkov, whose companies were taken away from them by men richer and more powerful than they. Meanwhile, Mr. Putin, who still sits in the middle of the intricate system he has woven over the course of 15 years, faces no such risk.

Russia's economic troubles probably mean that the moneyed elite will suffer, with more of its members going into exile or even to jail while their assets are redistributed. As for the rest of the Russian population, more than 140 million people, bad economic news is just bad economic news: It spells out-of-control inflation and real daily hardship. But neither the self-cannibalizing rich nor the newly poor are likely to pose a challenge to Mr. Putin's power.

[Zanza]

Looks like the combination of sanctions and massive oil price decline will really fuck up the Russian economy. They are losing reserves fast and their currency becomes worthless in international trading.

Russia's fast track to ruin

Here are the numbers that explain why the Russian economy is imploding in the face of a tumbling oil price and Western sanctions.

Oil and gas energy represents two thirds of exports of around $530bn (£339bn). Without them, Russia would have a massive deficit on its trade and financial dealings with the rest of the world - which is why Russia's central bank expects a capital outflow of well over $100bn this year and next.

And public expenditure is almost completely supported by energy-related revenues. In their absence, the government would be increasing its indebtedness by more than 10% a year, according to IMF data.

So the massive and unsustainable non-oil deficits in the public sector and trade explain why investors don't want to touch the rouble with even the longest barge pole.

http://www.bbc.com/news/business-30491170

Russia makes drastic rate rise to 17% to stem rouble decline

Russia's central bank made a drastic interest rate move overnight, raising its key rate from 10.5% to 17%.

The bank said the move was to try to ease the rouble's recent fall in value.

The rouble has lost almost 50% against the US dollar this year as falling oil prices and Western sanctions continue to weigh on the country's economy.

Before the move, the dollar bought 67 roubles. The rate rise moved it up to 58 against the dollar, although it has since slipped back to 62.

http://www.bbc.com/news/business-30490082

Some economists are concerned that Russia is now stuck in the quagmire of stagflation, or high inflation and low growth. The government expects inflation of 10 percent or more by the end of this year and for the country to fall into a recession next year.

[...]

Earlier Monday, the Russian central bank said it expected the country's economy to contract 4.5 percent in 2015 if oil prices averaged $60 a barrel. Oil is now hovering around that level.

http://www.nytimes.com/2014/12/16/business/international/russia-central-bank-abruptly-raises-key-interest-rate.html?_r=0

[Liep]

Well, maybe Moscow won't be so fucking expensive when I visit it again.

[Martinus]

[Martinus]

The rouble has lost almost 50% against the US dollar this year as falling oil prices and Western sanctions continue to weigh on the country's economy.

Before the move, the dollar bought 67 roubles. The rate rise moved it up to 58 against the dollar, although it has since slipped back to 62.

Crossed the line of 76 one hour ago. 

[Tamas]

[Martinus]

Apparently, this is the lowest rouble has ever been since Russia introduce free currency exchange in 1993.

[Martinus]

Incidentally, the 10% to 17% overnight central bank interest rate increase - that must be painful to anyone with bank financing.

[Martinus]

"Christmas present - one rouble for a cent"? 

[Berkut]

Wow.

Is this a reflection on the actual power of economic sanctions, or was the Russian economy totally fucked up absent sanctions anyway?

[Tamas]

Wow.

Is this a reflection on the actual power of economic sanctions, or was the Russian economy totally fucked up absent sanctions anyway?

AFAIK it was the plumetting oil price that did them in.

[Martinus]

Wow.

Is this a reflection on the actual power of economic sanctions, or was the Russian economy totally fucked up absent sanctions anyway?

AFAIK it was the plumetting oil price that did them in.

Yes, although sanctions helped push them off the cliff, imo. Russia could have withstood plumetting oil prices alone (and, absent Russia's situation, I don't think the US would have helped in bringing the prices down the way they did over the last year). However, the plumetting oil prices, coupled with the sanctions and the deteriorating investor confidence and flight of capital put them in a free fall situation.

[Martinus]

I think France should now announce that it will deliver those warships after all. I mean, I expect the price is agreed in Euros.