Russia’s future may be bleaker than what we once thought. Its economic and political structure may be shaken in the coming year. There has been a joke that has been making its ways through Russian social circles lately. “How are Putin, Oil, and the Ruble related? They all turn 63 next year.” And like all bad jokes, it quickly became outdated. Brent Crude Oil now goes for less than $60 dollars a barrel. The Ruble is now pushing 70 Russian rubles per 1 US dollar. And the year isn’t even over.
Russia’s current financial crisis has been caused by two main factors: the drop in oil prices and Western sanctions. Russia’s aggression towards Ukraine and the seizure of Crimea were what caused the West to emplace economic sanctions. Meanwhile, the mixture of low demand, the massive addition of shale oil from fracking, and OPEC’s decision not to cut production have led to a severe drop in oil prices. Combined with its energy reliant economy, Russia will be doomed to face a deep recession for the next few years. And yet, the cult of Putin remains in good standing, as he maintains 85% approval ratings.
In many ways, Russia is on the brink of returning to something similar to the 90’s. Those who could are rushing to buy foreign currencies, get rid of their soon to be devalued rubles, and stock up on needed supplies. Even the Russian bureaux de exchange has ordered several new electronic signs that will now be able to deal with a triple digit exchange ratio.
The damage that is being done to the Russian economy can be good and bad depending on US goals and how Russia reacts to the sanctions. One the one hand, a weaker economy means a weaker Russia. It will hopefully be pressured to end aggression in order to appease the West and work towards removing sanctions. A weaker economy could also possibly cause Putin to lose popularity within Russia. This would pressure him to appease more of the public and possibly move towards removing the sanctions. At the same time, a weak economy can promote extremism and possibly continue to alienate Russia. Already, Russia blames the US for the worst bilateral relations in decades. Extremism is also a possibility with the worsening economy. As people become more strapped for cash and as unemployment rises, more people may become susceptible to extreme ideologies. This may worsen some of the problems Russia already has. For instance, Chechnya may become another powder keg waiting to explode again. And Russia’s recent actions may be accelerating the cause.
By utilizing nationalistic language during its seizure of Crimea and its invasion into Ukraine, Putin may have given Chechnya extremist groups more ammunition in their quest for secession. Already, some ethnic Chechnyans have been attracted to radical Islam, as seen by the thousands of Chechnyans members of ISIS. . The early December firefight in Grozny proves that Chechnyan extremists are active and well. The weakening economy may also allow for more extremist groups to attract the unemployed youth. Without any legal employment, the youth could be attracted to crime or extremist groups that are able pay.
Ultimately, the next year looks bleak for Russia. Its economy will be driven into a deep recession. Russia may also experience the revival of violence in Chechnya.