It’s not easy these days to be Vladimir Vladimirovich Putin. Everywhere he turns — economically, politically and militarily — he, and Russia, has problems.
Putin has tried to make the best of a bad deal. The head of Russia’s strategic missile forces announced that they would suspend the development of certain, unnamed, strategic weapons if the U.S. plan to deploy an anti-missile system in Europe, initially in Poland and the Czech Republic, were similarly halted.
In reality the Russians have already cut back expenditures on strategic weaponry as part of the defense portion of national belt tightening currently under way. Prime Minister Putin’s statement that there would be no reduction in defense spending is regarded by most observers as merely rhetorical cover fire.
Defense Minister Anatoly Serdyukov has instituted a serious reshuffling that reportedly alters the General Staff control of the army so as to make it more responsive to the civilian leadership. The deputy minister of defense, General Vladimir Isakov, who is also in charge of the logistical command, has been pushed out. Similarly removed were said to be the head of military intelligence and the commanding officer of the Central Command Center District. In turn their staffs and other commands have been hit by large numbers of unexplained retirements, an old Red Army device for “sterilizing” the general officer ranks.
Russia’s current economic instability derives in great part from the precipitous drop in oil and gas prices along with trade losses in commodity exports, all due to the global financial crisis and industrial development cutbacks. During the eight years of his presidency Putin was favored with a seemingly unstoppable national economic growth.
The bottom is now falling out of the Russian economy, leaving Putin spinning first in denial and afterward blaming the United States. Analysts from the Russian financial concerns and government offices have been instructed to play down negative findings at pain of losing their jobs.
The Russian industrial figures in November showed a 10.8% drop from October and an overall fall of 8.7% on the year. Expectation of a devaluation of the ruble is a parallel development of the continued descent of oil prices. At current price levels of oil well below $40 per barrel, and falling, there is a real danger that concomitant fall of investment in oil development will only feed the decline in the overall economy.
Meanwhile there are signs that the Russian working public is exercising its political muscle by staging demonstrations against punitive increases in duties that raise the cost of imported goods in general and new and used automobiles by 50 percent. Rallies were held in thirty cities across the country and riot police beat back protesters with their clubs in Vladivostok.
Unused to this form of public reaction, Putin spoke out openly in condemnation of the public protests, fearing the potential of growing social unrest. He was obviously alarmed that the public reaction would expand exponentially in these volatile times.
Moscow is putting pressure on its near neighbor, Ukraine, prior to the annual January gas contract deadline. The issue as usual is money — $2.4 billion is said to be owed by Ukraine to the Russian energy giant, Gazprom. The matter has become politicized beyond the strict Russia/Ukraine disagreements by Russian criticism of the European Union.
Russian official sources have been quoted as saying the EU seems more interested in bringing Ukraine into NATO than helping economically. The fact that Europe receives approximately 25% of its Russian-sourced gas through Ukraine’s pipelines is a major point of Russian leverage. In these parlous financial days, however, it is leverage that is self-defeating.
As the financial crisis deadens the exuberance of Putin’s leadership, there also has been an increase in dissension between the military/security factions on one side and the economic/business elements on the other. Each is pushing for ascendancy in the Putin-Medvedev bipolar leadership system. There may be no real division between the two men personally, but among the political classes there is a constant effort to test any nascent differences.
For Vladimir Putin’s part the forthcoming year carries severe tests. He was very unhappy with command and control during the Georgia conflict. This has been one of the reasons for the military shuffle. The economic crisis is well beyond his ken and he is counting on Medvedev to keep in line the politically liberal but fiscally conservative finance minister, Aleksei Kudrin.
In strict political terms Putin must rule Russia for the first time with a diminishing economic hand. He is unable to reward his favored supporters with the economically related political favors of the past.
The question exists for the forthcoming Obama administration whether an economically weakened Russia is more or less of a danger.