Russian economy has slipped into recession in 2015. The gross domestic product had shrunk by 3.8 or 3.9 percent, the news agency Tass on Monday quotes Economy Minister Alexei Ulyukayev as saying.
The oil price-slip threatens Russia a budget gap equivalent to 36 billion euros. This may force the government in Moscow to fall back on its reserves (DWN 16. Jan. 2016).
Opinion polls show Putin´s popularity is about 90% – if more reliable than opinion polls in the Communist days. But that does not mean that Russians are happy and 100% pleased with Putin´s policies. They seem to blame Putin´s domestic policy failures on the Jewish oligarchs in his govenment and entourage. But observers think Putin´s popularity could soon fall – unless he comes up with some kind of surprise.
Right: Crude oil futures 15 Jan. 2016
Acc. to Finance Minister Anton Siluanow the budget would be balanced, at most, at an oil price of 82 dollars a barrel. The state has, however calculated with 50 dollars – current prices lying just above the 30-dollar mark, these calculations are now long waste. Ministers have to make 10% cuts. This does not apply, however, to sacred cows’ like pension payments and salary remuneration in the public service.
Acc. to Economy Minister Alexei Ulyukayev, Russia is preparing for this: “It is to be feared that the oil price sags to 15 to 20 dollars.”
The Russian state derives half its income from petroleum
Russia has chosen guns instead of butter – while the population is sinking into poverty.
In recent years, Russia has failed to diversify its economy and is, therefore, getting scared because of the heavy reliance on the commodity markets under pressure.
Moscow Times 15 jan 2016: Only 25 percent of Russians think they would manage to find a position similar to the one they lost with little effort, while in January 2015 the number of respondents sharing this opinion stood at 35 percent, a poll by the state-run VTsIOM pollster revealed.
Russia a police state
Moscow Times 15 Jan. 2016: With Russia’s international isolation deepening over the Ukraine crisis, the country’s authorities have begun actively persecuting those who, in the state’s opinion, use it to help foreign countries harm Russia.
According to Supreme Court data, the number of high treason cases tripled in 2014:“Last year the media have reported there were at least 20 cases,” Ivan Pavlov, “captain” of Team 29 – an informal association of St. Petersburg-based lawyers and journalists devoted to protecting freedom of information in Russia- and a lawyer specializing in treason and espionage cases, told The Moscow Times.
“Every year the FSB, Russia’s Federal Security Service, opens more and more cases of high treason. The processing of these cases is hidden from public view and fraught with arbitrariness. Lawyers of ‘Team 29’ will tell you what to do if the security services take an interest in you,” reads the web page titled “If They’ve Come for You.” The domestic intelligence and security service can show up, according to the website, anytime, anywhere and to, almost, anyone, “whether you published an article in a foreign media outlet, met with a foreigner you know or emailed your relatives abroad.”During Kravtsov’s trial, the defense made 30 motions, all of which were denied. “They didn’t allow us (Team 29) to question experts who concluded that Kravtsov revealed classified information [by sending his resume to Sweden] — and that was the crucial point of the charge! We basically weren’t allowed to argue our case,” he said.
Poverty in Russia
International Business Times 10 Sept. 2015: Almost one in every seven Russians is now living in poverty
In the first six months of 2015, the number of Russians living below the minimum income of 10,017 rubles ($147) a month grew to 21.7 million people — an almost 15 percent increase from the same period last year (Rosstat).
However, an August survey conducted by the state-run VTsIOM polling service found that the average figure cited as the minimum livable wage was 22,700 rubles ($334) – meaning more poor.
The rise in poverty has been fueled by spiraling inflation, which hit a 13-year high in March and consumer prices rising almost 17 percent from last year. The country’s GDP also plunged by 4.6 percent in the second quarter of this year, its largest fall since 2009.
According to a poll by the Levada Center, economy is a major concern for most Russians, dwarfing the ongoing conflict in eastern Ukraine. It also found that 78% of respondents were worried about inflation, 42% about increasing poverty and 36% about unemployment.
A March report from Russian investment bank VTB Capital predicted that spending on food would account for 50% of all household income by the end of the year, up from 40 percent last year.
Moscow’s sanctions on imported Western food, combined with its weak economy, have caused the cost of several staples to skyrocket.Despite expanding its food imports from Latin American countries, Russians may soon be facing shortages of food, which could trigger social unrest, the Stratfor report cautioned
Right: Dollar increase on rouble over the past 3 months
Even the most optimistic ones are disappointed by lacklustre economic performance, and they blame the government of Prime Minister Medvedev and his liberal monetarist team.
Meanwhile Putin rises above the blame game, but the government is less and less popular.
Putin being increasingly criticized by his supporters
As the Rouble drops the KP published a call for the economy and finance ministers to resign or to be fired, but Putin is stubborn and unusually loyal to his colleagues – even to the most hated politician of Yeltsin’s era, Mr Anatoly Chubays. Financial Times called him Father to the Oligarchs. Putin saved him many times over from prosecution – and gave him a fat job.
At the opening of Boris Yeltsin’s Memorial Centre, people were furious seeing their president enjoying himself among the carpetbaggers of Yeltsin’s regime.
At Putin’s recent press-conference, the journalists asked why the Russian Central Bank keeps buying US bonds and supports the US Dollar at the expense of the Rouble. They asked why import substitution does not work etc.
The supporters are upset by Putin’s condoning thieves, by his apparent cronyism, by his oligarch friends.
These are the early swallows. Dr Stepan Sulakshin, the head of a Moscow think tank, publicly accused Putin of knowingly leading Russia into further degradation.
This bubbling dissatisfaction of Putin’s supporters may yet turn more dangerous for the president than the 2011 Fronde of his hipster enemies.
On the other hand, Putin can be glad: He has tamed obama – a castrated US-Präs.
Putin feared to react by military adventures
The Daily Mail 18 Dec. 2014: The fact that economic collapse now threatens the Putin regime means the situation is terrifyingly volatile. Given his past form, it’s more than likely that Putin’s KGB-trained instinct will be to try to repress all opposition to his rule – even though it is growing by the day.
Worse, there’s a strong possibility that he will attempt to distract the population with a military adventure. The fact is that Russia’s failed economy and increasingly restive population(?) mean Putin is cornered, like a wounded animal, with very few options left. That is why, right now, he is more dangerous than ever.
Right so. Putin did interfere in Syria – which will only further impoverish Russia, especially as he is rapidly modernizing Russia´s armed forces.
Apparently, he makes the money by occupying draftees in his military industrial complex and by sale of his advanced weapons.
The Russians are accustomed to suffering. Will the accept the logoan “guns instead of butter” as long as the Germans did during WWII?
But Putin does have domestic problems – or health problems. At least he was gone for more than a week last year from the scene – without explanation. His confident, Ewgeny Fyodorov, has stated that Putin does have problems in the Kremlin, where some oligarchs want to lean to US business. The Moscow Times think Putin will have to switch into Stalin mode. The opportunity might be approaching.