Sunday, July 31, 2016

Moscow Running Out of Money, Suggesting Putin Stabilization May be Approaching Its End

Paul Goble
            Staunton, July 31 – Tatyana Nesterenko, Russia’s first deputy finance minister, says that Russia is in the eye of an economic storm and that if there are no reforms in the near term, the country will exhaust its reserve fund by the end of 2017, a development that others like Igor Eidman suggest could point to the end of Vladimir Putin’s vaunted “stabilization.”

            Speaking at the Territory of Meaning conference, the deputy minister said that the Russian economy is now “at the eye of the storm” and that its current stability depends exclusively on reserves which she says will be exhausted by “the end of 2017” (

            “The eye of the storm is when everything quiets down” for a time, leading some to conclude that they are not surrounded by storms into which they will soon be buffeted.  Unless there are serious reforms, Russia will again enter those troubled waters – and it will then find it even more difficult to address the problems given the absence of reserves.

            How is Russia to get out of this? She asked rhetorically. “Will this be something chaotic or will we form a policy that will allow us in a less troubled way to escape from the situation?”  Given that in a matter of months, the government will not be able to pay those who work for it, this is now a critical question.

            That means that the stability on which Vladimir Putin has built his authority is now in doubt, and according to Russian commentator Igor Eidman, “ever more people believe that there is [already] no stability in the country,” even though the country has the kind of wealth that properly exploited should allow for that to continue (

            By 2013, the share of Russians who believed that Russia had achieved stability and that Putin was responsible reached its “historical maximum” of 40 percent, Eidman says.  But with the annexation of Crimea, there was a clear sense of “the beginning of the end of ‘Putin stability,’” he adds.

            The euphoria over that event kept Russians from immediately recognizing that they were going to face sanctions, the growth of military spending, the outflow of capital, the collapse of the ruble, and a general economic crisis. But with time, ever more Russians are recognizing that new reality.

            Today, Russians talk about inflation, unemployment, the loss of hope and the fact that even the government says “’there is no money,’” and according to the latest Public Opinion Foundation survey, now only a quarter of the population believes that the country is in a state of stability (

            “It is interesting,” Eidman says, “that no seeing stability in the country, people have begun ever more often to take note of stagnation” with more than 40 percent describing the situation with that term.  “Many Russians,” he says, “view the current situation as the absence of development with an intensification of general instability.”

            “The overwhelming majority of respondents”  in the new poll, however, when asked to choose between stability and “’radical reforms’” choose stability, although that doesn’t mean that “people are against reforms” if they can see that without them, stagnation and decay will only intensify.

            Desire for revolutionary change, something that no open poll now asks about, Eidman points out, is probably about the same as it was at the end of 2012 when 13 percent of Russians said they felt Russia  needed a revolution (

            But “the loss of the population of a sense of stability is [now] the most serious political problem the Kremlin faces.” It could lead to a loss in support for the ruling party and even for Putin, especially as people become more selective in their evaluations of why the country is in the state it is now in.

            But there is a clear and obvious problem: “stability is impossible without a turning away from the foreign policy adventures and extraordinary military expenditures which are destroying it and from the repressive laws which are splitting society as are falsified elections.” But such a change in overall policy is impossible for the current elite.

            Consequently, Eidman concludes, “reforms for overcoming instability and stagnation could be popular in Russian society,” but they could happen “only after radical political changes” that currently seem less likely to occur. That points to growing economic problems and more instability in the coming months.

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