There's a Storm Coming: Vladimir

Russia is in trouble. Perhaps few took note of the announcement this morning by Andrei Klepach, Russia's deputy economy minister, but what he said should raise the eyebrows of those foreign policy analysts whose jobs require them to predict coming convulsions among nations. Billions of dollars in assets, he warned, are being yanked from the already stagnant Russian economy by fleeing foreign investors worried over rising tensions with neighboring Ukraine, the prospect of further military action by President Putin, and retaliatory sanctions by western leaders. The tally is expected to reach $70 billion by the end of the first quarter. The upshot according to Klepach will be further stagnation and inflation—not welcome news for an economy showing a tepid 1.3% growth last year. 

For now, Putin may enjoy the heady days of territorial expansion, high approval numbers and a fully compliant parliament. But how will he react as his economy sickens and the government deficit dances to the tune of falling revenues and increased spending in the form of the Crimean subsidies needed to convince a skeptical world that life as a newly adopted planet in Russia’s gravitational field is a good thing? Well, how have other autocrats-under-fire reacted over history to deflect criticism and calls for regime change during periods of economic chaos? Often by diverting attention—and blame—to real or imagined cross-border crises. 

In Putin's case, one wonders what new groups of oppressed Russians—whom he calls the world’s most divided ethnic group—might he need to ‘rescue’ in his latest territorial grab? Or, what if Putin’s desire to create a new Eurasion Union should excite an appetite to reclaim Russia’s former sphere of influence in, say, Georgia? An appealing proposition if, in the process, Russia should acquire greater control of the profits of Caspian hydrocarbon riches or export pipelines. Would not jeers turn to cheers when economy-enhancing revenues started rolling in? 

Today’s investor flight may be only a first step in a chain of worsening conditions driving Putin to entertain desperate options. For foreign policy wonks, tasked by their masters to analyze growing security threats, it may be a reason to arrive early and stay late.