Peskov Says Another 1991 Precluded Because Law Enforcement Agencies ‘Working Intensively’

Paul Goble

            Staunton, April 13 – Faced with new projections of economic and political disaster in the Russian Federation, Dmitry Peskov, Vladimir Putin’s press secretary, has unwittingly added fuel to the fire by suggesting that no new 1991 is in prospect because the country’s law enforcement agencies are “working intensively” (lenta.ru/news/2020/04/13/peskov/).

            The idea that effective law enforcement is sufficient to deal with any problem reflects a Kremlin mindset so out of touch with conditions in the country and what is needed to deal with its problems that it is certain Peskov’s words instead of undercutting the projections will attract more attention to them.

            The projections are indeed dire.  Finanz.ru says “the triple shock” of collapsing oil revenues, the shuttering of factories because of the pandemic, and the absence of a government program to prop up the economy condemns the Russian economy to a crisis “comparable to that of the early 1990s” (finanz.ru/novosti/aktsii/krupneyshaya-katastrofa-s-raspada-sssr-rossii-predskazali-ekonomicheskiy-chernobyl-1029084461).

            McKinsey & Co. is projecting the Russian GDP to fall as much as 10.2 percent by the end of the year, a figure that exceeds the 5.3 percent falloff during the 1998 default and the 7.8 percent decline in the worldwide financial crisis of 2008-2009, the financial affairs portal continues.

            Russian and foreign banks say the Russian economy declined by 20 to 45 percent in April alone and that the second quarter figures will show a fall of 18 percent overall. Russian incomes are down 17.5 percent, according to these same sources. These declines will put ever more sectors of the Russian economy at risk, including the banks.

            Many businesses in Russia are likely to default on their loans, and Russians may add to the pressure on banks by pulling out their money from the banks and possibly seeking to convert rubles into some other currency.

            According to Finanz.ru, Moscow’s “capitulation on the oil market after the short but destructive price war with Saudi Arabia is throwing the country back decades. The reduction in the pumping of oil to which Russia has agreed … “may become the most serious economic catastrophe since the collapse of the USSR,” Kirill Tremasov, a financial analyst, says.

            And because Russian fields are fundamentally different than those in Saudi Arabia or the United States, experts say, Russia will not be able to quickly restore production after several months if it makes the cutbacks that it has agreed to. That means the crisis will be prolonged and have a domino effect on the rest of the economy.

            Nordea analysts add that the recession in Russia in this year will be “deeper than the one in 2009.” The country will lose 10 percent of its export earnings and have to give up 25 percent of its imports, mostly consumer goods and high technology items. Recovering from that is going to take far longer than officials say, the analysts argue.

            Others are still bleaker in their projections. Aleksey Zakharov of Superjob, for example, says that “the situation which existed in 1991 when half of the population lost work could be repeated” given already massive job losses in the airline industry, railways, and long-distance trucking (business-gazeta.ru/article/464108).  

            But those who listen only to Peskov like those who listen only to the leaders of some other countries are being told that all will be well, in Russia’s case because the police and the siloviki are very much at work.