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.
