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Putin Meets Economic Collapse With Purges, Broken Promises

Discussion in 'Europe & Russia' started by Averageamerican, Dec 14, 2015.

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  1. Averageamerican

    Averageamerican Colonel ELITE MEMBER

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    Putin Meets Economic Collapse With Purges, Broken Promises
    By Peter Sattler 6/28/15 at 10:17 AM
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    Russian President Vladimir Putin attends a session of the Civic Chamber at the Kremlin in Moscow, Russia, June 23, 2015. Sergei Karpukhin/Reuters

    The corrupt bargain on which Russian President Vladimir Putin built his regime—provision of wealth to loyal officials and a decent standard of living to the people—is in dire straits.

    As the economy shrinks and the Kremlin adjusts its expenditures, Putin must be aware that the threat of a coalition of disgruntled officials and powerbrokers—aiming to restore their prosperity—grows daily.

    With no intention of being deposed in a palace coup, Putin has gone on the offensive, striking the Russian political elite off-balance through mass dismissals and early elections. This threatens to disrupt established patronage networks and political stability across Russia.

    Try Newsweek for only $1.25 per week

    As for the Russian people, Putin failed to curb corruption or reform the economy for 15 years. He won't do so now that he is on emergency footing, and average citizens will suffer as a consequence.

    As their situation deteriorates, Russians will not tolerate Putin's fruitless and autocratic tendencies. The coming chaos among the elite—and hardship for ordinary people—will destabilize Russia in the long term.

    Economic Crisis

    The collapsing ruble, Western sanctions, Putin's own ill-designed "countersanctions" and increasing nationalist fervor have prompted dramatic capital flight. By some estimates, capital flight in April was around twice that month's 1.6 percent drop GDP.

    On June 15, the Russian statistics agency Rosstat reevaluated its estimate of GDP shrinkage from 1.9 percent to 2.2 percent. On June 11, Russian Prime Minister Dmitry Medvedev stated that government income had fallen while expenses actually rose by 3.7 percent.

    OPEC's flooding of the oil market ensures that Russian crude production will increase to maintain revenue, swamping the market and depressing prices. Putin's December 2014 budget was based on oil at $100 per barrel. The projected 2015 Brent crude price is $61 per barrel.

    In response to these shocks, Moscow slashed investment projects by a third, including development of the Far East, Kaliningrad and the North Caucasus. Many Federal Target Programs and Federal Targeted Investment Programs will undergo severe cuts and may be seriously underfunded. Should the crisis persist through 2017, the Kremlin could deepen the investment cuts by 42 percent.

    Preemptive Offensive

    Recognizing the danger that these cuts may breed dissatisfaction within the government, Putin launched a preemptive offensive. He kicked off his campaign in April by tearing through the security chieftains, the siloviki.

    On April 6, he gutted the Ministry of Emergency Situations, firing 19 officials from leadership positions across the country without appointing successors. He moved on the powerful Ministry of Internal Affairs, dismissing its Samara office head; naming new leadership for its branches in Krasnodar, Perm and Stavropol; and replacing the chief of its technology and information department.

    Putin also posted two new officials to the St. Petersburg and Transbaikal investigative committees. The next day, he struck at the top of the Kremlin itself, replacing the head of the FSB's counterintelligence division. On April 9, Putin replaced the head of Internal Affairs in the conflict-ridden Kabardino-Balkaria Republic, and on June 10, Putin fired the Novosibirsk oblast chief of police after he permitted opposition leader Aleksei Naval'niy to organize a "Party of Progress" meeting.

    Putin also ran a more nuanced campaign against provincial governors. Between April 16 and June 10, Putin fired 14 governors. Ten of these governors were named "acting governor" until September. Should these leaders fail to adequately support Putin and quell opposition within their regions, they will presumably lose these elections and more malleable people will take their places. Putin offered no such hope for the governors of Krasnodar, Tambov, Penza or North Ossetia, replacing them outright.

    The threat of early elections extends beyond the federal subjects. On June 11, MP Igor Lebedev, speaker of the Duma and member of United Russia, announced a bill to move parliamentary elections forward from December to September. This political disruption will shock established patronage networks. The disoriented political elite will be more unpredictable than loyal.

    Public Hardship

    While acknowledging that Russia suffers severe economic conditions, Medvedev claims that the government will do more with less on social spending. However, hard numbers refute his claims.

    Rosstat's June 11 report saw a year-on-year increase in Russians receiving less than the living wage by 3.1 million people in 2015, up to 15.9 percent of the population. Food prices are up by 17.9 percent, and the cost of non-food products and services increased by 17.7 percent and 16.2 percent respectively. April saw wages fall by 4 percent.

    Experts are increasingly projecting a sharp spike in the price of medicine. In March, sources from the Moscow city government and Ministry of Health leaked plans to fire around 14,000 health care professionals and close several branches of local hospitals by 2017. Many, including former Finance Minister Alexei Kudrin, claim that the real crisis is still yet to come.

    These new hardships are further exacerbated by the failure to reform the Russian economy or judicial system. For instance, reiderstvo, often translated as "raiding" or "asset-grabbing," continues unabated, allowing local power brokers to seize private assets without reproach. The role of state officials in reiderstvo operations is expanding, and some argue that instances of reiderstvo are increasing over time with tacit official support.
     
  2. Averageamerican

    Averageamerican Colonel ELITE MEMBER

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    The Kremlin may expand such opportunities in place of providing direct pay-offs. For instance, the 2014 "foreign agents" law allows Russian officials to declare any foreign firm an "undesirable," seizing its assets. Predatory officials and the collapsing standard of living will inhibit Russians from improving their lives in any meaningful sense.

    As the drivers of the collapse persist, the economic crisis will grind on unabated. The public supports Putin's authoritarianism because it provides order and prosperity. This crisis undermines the core tenants of Putin's social contract, delegitimizing his regime and widening the gap between the ruling and the ruled.

    And ordinary people are mobilizing. Throughout 2014, businesses banded together to form mutual defense associations in answer to aggressive and corrupt bureaucrats. In November 2014, more than a thousand people marched through Moscow, St. Petersburg and Vladivostok to protest health care cuts.

    And despite the supposed support for Putin and his war in Ukraine, general discontent is spilling over into politics. In September 2014, 20,000 people marched against Russia's aggression in Ukraine. This dissatisfaction held strong through March 2015, with 20,000 marching in memorial for Boris Nemtsov and tens of thousands protesting the war in Ukraine.

    Protests are continuing throughout 2015, with thousands rallying in Novosibirsk and Petrozavodsk against government corruption and censorship. This does not signal a united and coherent opposition to the government, but rather suggests a leaderless and pervasive discontent, which government is increasingly unable to control. This may lead to a push against Putin's regime, but it is just as likely to grow erratic and destabilizing.

    Putin rose to power, and kept it, by promising wealth to his supporters and a better quality of life for the masses. Today, the economic crisis is stripping him of the ability to fulfill his obligations.

    Putin can clamp down on the political elites, but destabilizing the politicians is likely to only cause more uncertainty. Furthermore, restarting growth for the people would require far too much in terms of reform and reorientation to be palatable.

    If Moscow cannot uphold its end of the social contract, it can expect only social unrest and instability to result.
     
  3. Averageamerican

    Averageamerican Colonel ELITE MEMBER

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  4. Zeus_@21

    Zeus_@21 Major SENIOR MEMBER

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    India and China won't allow Russia to sink. We'll keep buying Russian weapons and gas. While China will be investing in Russian economy.

    American dream of Russia falling will be a dream only. We Asians know how stand by their true friends.
     
  5. Averageamerican

    Averageamerican Colonel ELITE MEMBER

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    Kind of like riding a dead horse like the USSR.
     
  6. Zeus_@21

    Zeus_@21 Major SENIOR MEMBER

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    China just needs to ask all its money back. And the US will be a dead horse.
     
  7. The Drdo Guy

    The Drdo Guy Captain SENIOR MEMBER

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    I've two questions to ask.1- Don't you think Putin knew what is going to happen after crimea episode and ukraine crisis? 2-If Russia and it's economy is in shambels why putin decided to conduct air strikes in syria and building rail/road infrastructure in Iran and developing Cahahbahar port with Funding from India..The fact is pasa ulta pad gaya,Putin got what he wanted and NATO/USA has taken the bait...Obama administration failed on many fronts while countering Russia.Putin thwarted NATO attack on Assad govt.He got Crimea etc etc..
     
  8. vstol jockey

    vstol jockey Colonel MILITARY STRATEGIST

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    Are you a fool or have you chosen to be a fool? USA today is a nation which is a supporter of terrorist and not Russia. Don't you even read your own surveys in USA?
     
  9. Averageamerican

    Averageamerican Colonel ELITE MEMBER

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    After 20 years of economic and technical sanctions, we will see how it all works out.
     
  10. Averageamerican

    Averageamerican Colonel ELITE MEMBER

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    Russian ruble slides to record low in Moscow


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    MOSCOW (AP) — The Russian ruble slid to a record low against the dollar Wednesday under pressure from the low oil price.

    The ruble traded above 81.8 to the dollar in Moscow on Wednesday evening, down by around four percent. That beat the mark of 80.1 set when the currency crashed in value in December 2014 before stabilizing.

    Russia's economy and government revenues are suffering due to the country's dependence on oil, which has traded at 12-year lows in recent weeks because of a supply glut and the return of Iran to world markets.

    The ruble had come close to 80 on Monday but recovered ground Tuesday after Chinese growth data met expectations.

    The IMF predicted Tuesday that Russia's economy will contract 1 percent in 2016 after a fall of 3.7 percent last year before returning to 1 percent growth next year.

    Russian President Vladimir Putin did not comment on the ruble's fall during a televised discussion with business leaders, although he said that Russia's economic foundations are "fairly solid, despite all the external risks and difficulties."

    The Russian Central Bank came in for criticism from Sergei Glazyev, an economist and aide to Putin. He said the bank's refusal to support the ruble "causes surprise and laughter around the world," the Tass news agency reported. However, Putin's spokesman Dmitry Peskov appeared to play down Glazyev's remarks in a Wednesday conference call, saying that Putin does not take sides in economic disputes among senior officials.

    The ruble has lost more than half of its value against the dollar over the last two years, during which time Russia's economy has been buffeted by oil price falls and international sanctions over the conflict in Ukraine.

    The low oil price has also put pressure on other post-Soviet economies, particularly oil producers. The Central Asian nation of Kazakhstan, which relies heavily on oil, saw its tenge currency slip nearly 1 percent on Wednesday to 374.60, close to Monday's record low. Kazakhstan's KASE index closed down 2.4 percent
     
  11. Averageamerican

    Averageamerican Colonel ELITE MEMBER

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    Russian ruble keeps on falling, hits new record low
    [​IMG]
    By JAMES ELLINGWORTH 3 hours ago
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    Done

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    MOSCOW (AP) — The Russian ruble hit another historic low against the dollar Thursday as currencies slid across the former Soviet Union against the backdrop of low oil prices.


    The ruble traded above 85 to the dollar for the first time in Moscow early Thursday afternoon, a fall of more than three percent, which beat the previous low of 82.4 to the dollar set in trading Wednesday evening. It later recovered slightly to trade around 83.85 on Thursday evening.

    Thursday's slip means the ruble is at its lowest level since the currency was redenominated in 1998, during Russia's worst post-Soviet economic crisis. President Vladimir Putin's spokesman Dmitry Peskov insisted, however, that the situation was not critical.

    "I wouldn't use the word 'collapse.' The rate is really changing, the rate is volatile, but it's far from a collapse," he said Thursday in comments reported by Russian news agencies. Putin had no plans for any emergency meetings, he added.

    The steep decline in oil prices — which are trading at 12-year lows — has been a severe blow to Russia's oil-dependent economy. The ruble's new lows this week follow the lifting of international sanctions against Iran, which increases the supply of oil on global markets.

    The IMF predicted Tuesday that Russia's economy will contract 1 percent in 2016 following a fall of 3.7 percent last year, before returning to 1 percent growth next year. The ruble has lost more than half its value against the dollar in the last two years.


    People walk past an exchange office screen showing the currency exchange rates of the Russian ruble, …
    Also Thursday, the Russian central bank said it had revoked the license of Vneshprombank, one of the country's top 50 lenders, after finding evidence that "persons exercising control over the bank" had stripped its assets, adding that law enforcement would be involved in tracking the missing money. The funds may have been spent in Russia, Europe and the U.S. on property such as real estate, shares and "expensive vehicles," the central bank said in a statement.

    Vneshprombank reportedly holds funds for major Russian state companies.

    Thursday's fall in the ruble was accompanied by slides in other post-Soviet currencies. The Belarusian ruble slid 5.1 percent to the dollar, trading at 21.564 on Thursday afternoon. It has lost around 14 percent of its value against the dollar since January 1.

    In the Central Asian nation of Kazakhstan, another major ex-Soviet oil producer, the tenge currency fell to a record 383.91 against the dollar Thursday as the economy felt the pressure of low energy prices. Central bank head Daniyar Akishev ruled out introducing capital controls and said he did not expect major shocks for the country's balance of payments since "most of the negative scenarios ... have already happened."

    ___

    Associated Press writers Katherine Jacobsen in Moscow, Yuras Karmanau in Minsk, Belarus, and Leila Saralayeva in Bishkek, Kyrgyzstan, contributed to this report.
     
  12. Averageamerican

    Averageamerican Colonel ELITE MEMBER

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    Russians are getting angry about the economy - Jan. 26, 2016Russians are getting angry about the economy
    by Ivana Kottasova @ivanakottasova January 26, 2016: 9:47
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    Russians protest against economic crisis

    Russians are waking up to the harsh reality that the economic crisis is nowhere near over, despite what President Vladimir Putin has been telling them.
    There have even been several protests against the economic crisis -- a rare sight in a country where demonstrations don't happen very often.
    Ordinary Russians are suffering because of the devastating impact of low oil prices and Western sanctions. Real wages fell 9.5% in 2015, with an average Russian earning just over 30,300 rubles ($385) a month last year, official data show.

    At the same time, prices are rising fast. Inflation hit 12.5% in 2015 and could take longer to slow down if the ruble continues to fall. The currency has plunged since the start of the year, hitting an all-time low of 85 rubles per dollar on Thursday.

    Russia: One of 10 worst economies in 2015

    Official statistics show that over 20 million Russians, roughly 14% of the population, are now living in poverty. That compares with 16 million in 2014.

    While Putin still enjoys approval ratings of up to 89%, small cracks are starting to appear in the Russian resilience. Russian long-haul truck drivers have for weeks been protesting outside Moscow against a new road tax they say could destroy their business.

    Pensioners in the Olympic town of Sochi blocked traffic on Friday, demanding free transportation to be reinstated in the city, after it was cut as part of the country's austerity measures.

    Russian official: Some things matter more than money

    Businesses in Russia's crucial oil and gas industry are also complaining about punishing conditions. The price of oil has collapsed in the last 18 months, sending their revenues plunging.

    The sector has been somewhat insulated against the drop because of favorable tax conditions. But the government is now mulling a change to the system, which could mean the oil companies would have to cut down on investment in order to pay their rising tax bills.

    Energy is crucial for the Russian economy, with nearly half of the government revenue coming from the oil and gas exports.

    The Russian economy shrank by 3.7% in 2015, putting it deep into recession and making it one of the world's 10 worst performing emerging markets for the year. The International Monetary Fund expects a further contraction of about 1% this year.

    -- CNN's Matthew Chance in Moscow contributed to this report.
     
  13. Averageamerican

    Averageamerican Colonel ELITE MEMBER

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    Russia has just joined a club it would rather not belong to.
    Official data published Monday confirmed that its economy shrank by 3.7% in 2015, putting it deep into recession and making it one of the world's 10 worst performing emerging markets for the year.
     
  14. Averageamerican

    Averageamerican Colonel ELITE MEMBER

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    For some reason Russia sold homes in dollars and now the payments of home mortages have doubled due to lost in value of the Ruble.
     
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