By Paul Goble
For four reasons, the Russian economy is on the brink of panic, something that threatens stock prices, ruble exchange rates and indeed all economic activity because it introduces elements of uncertainty that no one involved can afford to ignore, according to Rosbalt commentator Sergey Shelin.
In recent weeks, he says, “the nervousness of participants in economic activity in Russia” has been increasing given the unpredictability of the small circle of Kremlin officials who make their decisions in secret and four signs that their policies even if they are not continued are already creating problems for Russia (rosbalt.ru/blogs/2021/11/23/1932351.html).
Four of these signs are especially noteworthy, Shelin suggests. First of all, the authorities showed that they are apparently “indifferent” to the collapse of Rosnano, a state company that the Kremlin could easily save and would have if it were following past practice. By not moving to do so, the Kremlin is sparking questions about whether it has changed course.
Second, the conflict between Moscow and the West has for the first time ever raised questions about the continuing ability of oil and gas exports to pay for the Russian government’s activities and to keep the economy functioning. Major powers, including China, are now dipping into their reserves, and Saudi Arabia can’t function as Russia’s ally in the event of a major war.
As a result, many in Russia now fear that the source of funds oil and gas sales have provided will disappear and with it the chief support of the Russian economy at the present time. Even if that does not happen, fears that it might both raise more questions about the competence of the regime and the resilience of the Russian economy.
Third, the migrant crisis on the northern and western borders of Belarus which Alyaksandr Lukashenka provoked but that Putin has backed may in the opinion of many come back to bite Russia because most of the oil and gas from Russia to the West goes through Belarus and sanctions imposed on Minsk would block much of that, hurting Russia first of all.
And fourth, ever more Russians believe that Putin will expand his invasion of Ukraine and that the West will respond harshly in ways that will hurt the Russian economy more than anything that has happened so far. In the case of such a war, “no business as usual will be possible.”
It is, of course, possible that none of these things will play out as many fear, Shelin says; but business and investment is based on predictability – and the growing sense that Moscow is headed in the direction of maximum unpredictability will have negative consequences even if Russia has the good fortune to avoid the worst