Plummeting oil prices are doing to the Kremlin what sanctions could not: forcing a grim rethinking of Russia’s economic future.
Nine months into the worst relations between the West and Russia since the Cold War, the plunging price of oil is causing deeper and swifter pain than the Western sanctions that have targeted key areas of Russia’s economy. Russian leaders said Tuesday for the first time that their economy will head into recession next year. In a nation where oil and gas exports largely determine the bottom line, lawmakers are slashing spending promises. And the ruble is hitting historic lows every day.
President Vladimir Putin, who took office in the wake of his nation’s 1998 financial crisis, has made economic stability a cornerstone of his nearly 15 years as leader. He has vowed that Russia will survive the current decline in energy prices — but he has also accused the West of waging pocketbook warfare over the cost of a barrel of oil. Putin’s approval ratings remain near record highs, but opinion polls also show new economic fears, a warning sign for the future.
“We simply need to implement our agenda calmly,” Putin said last month in an interview with the state-run Tass news agency. “Many say that oil prices are falling because a tie-up is possible among traditional producers, particularly between Saudi Arabia and the United States. They say this is being done especially to let the Russian economy down. . . .
“Does this damage us? It does partially, but not fatally,” Putin said.