Against the dollar, the Russian ruble has fallen by almost 50 percent in 2014, by 25 percent in the just past three weeks and by 11 percent today alone. Inflation is soaring, the value of savings is disappearing, foreign investment is fleeing and and repayment on multi-billion loans (payable in hard foreign currency) has become much more difficult.
In addition, more than three million people of prime productive age — between 18 and 45 — have left the country in the past few years, taking their talents with them. And thanks to sanctions imposed after the invasion of Crimea and the intervention in Ukraine, Western banks couldn’t help even if they wanted to try.
The crisis is the product of a lot of things, including bad timing. Putin launched his military adventurism just before a global collapse in the price of oil and natural gas, which have been the core of the Russian economy. He also badly underestimated the reaction of Western leaders such as President Obama and Germany’s Angela Merkel, who have joined to establish and enforce much more strenuous sanctions than the Russians expected.
You have to wonder what this economic crisis is doing to Putin’s popularity. Not too long ago, he was being lionized by his comrades for his supposed success in restoring Russia to a prominent place on global politics. Even here in the United States, politicians such as Ted Cruz were complaining that ‘in the geopolitical stage, it is almost as if the Russians have a renowned grandmaster playing chess and the United States is playing checkers.”
“President Obama said that Russia would face ‘costs’ if it intervened militarily in Ukraine,” John McCain said back in March. “It is now essential for the president to articulate exactly what those costs will be and take steps urgently to impose them.”
Are you happy now, Senator McCain?