"Putin has indeed had a strong year. But 2015 promises to be a lot rougher." - Putin's Luck Runs Out | U.S. President Barack Obama says he does not think Russian President Vladimir Putin will change his course until the politics in Russia catch up to the damage being done by sanctions to the Russian economy
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Wednesday, December 03, 2014
Russia
Obama Says Russia Isolated, Putin 'Scaring' Neighbors
December 03, 2014
U.S. President Barack Obama says he does not think Russian President Vladimir Putin will change his course until the politics in Russia catch up to the damage being done by sanctions to the Russian economy.
Obama, speaking at a December 3 meeting in Washington with more than 100 top business executives, said that Putin's actions were "scaring" his neighbors and that Russia was completely isolated internationally.
But he said the really challenging part was that Putin's actions, such as annexing Ukraine's Crimean Peninsula, are politically popular within Russia.
Obama told the CEOs that he had a "very productive" relationship with Prime Minister Dmitry Medvedev when Medvedev served as president from 2008 to 2012 even though Putin was "the power behind the throne."
Obama also said he was confident the U.S.-led coalition can push back Islamic State militants in Iraq but said Syria is more complex.
Based on reporting by Reuters and AP
The Power Vertical
Putin's Luck Runs Out
December 03, 2014
Vladimir Putin has been on quite a roll for about a year now. But December 1, 2014, just might turn out to be the day the tide finally turned against him.
Ever since Russia's annexation of Crimea in March sparked the worst East-West showdown since the Cold War, Moscow has enjoyed a clear asymmetrical advantage: it was prepared to use force to achieve its ends in Ukraine -- and perhaps elsewhere -- while the West was not.
But this week marked something of an inflection point where whatever short-term asymmetrical advantages Moscow enjoyed are now being eclipsed by its long-term structural weaknesses.
And the signs they were aplenty.
First, there was the ruble. The Russian currency -- reeling from the combined effect of sanctions and falling energy prices -- experienced its sharpest one-day drop since the August 1998 financial crisis on December 1, falling below the psychologically important level of 50 to the dollar for the first time.
And then there was oil. The price of this backbone of the Russian economy has fallen 25 percent since the summer. On December 1, following OPEC's decision not to cut production, the price of Brent Crude, the world benchmark, dipped below $70 a barrel, a five-year low. And the slide is expected to continue.
"What do the ruble, oil, and Vladimir Putin have in common?" goes a joke making the rounds in Moscow. "They will all hit 63 this year."
The twin phenomena also prompted Twitter-user Robert Dambergs to quip, "I hear the ruble will soon be sold by the barrel!"
And, of course, there was South Stream. After talks with Turkish President Recep Tayyip Erdogan in Ankara on December 1, Putin announced that Russia will drop the South Stream natural-gas pipeline -- a project the Kremlin once hoped would cement Moscow's dominance over Europe's energy market. The move followed Brussels insistence that Gazprom abide by the EU's antimonopoly laws -- which it had been flouting for years.
The New York Times' Andrew Roth called the scrapping of South Stream "a rare diplomatic defeat" for Putin and "a rare victory for the European Union and the Obama administration, which have appeared largely impotent this year as Mr. Putin annexed Crimea and stirred rebellion in eastern Ukraine."
All true. But such a turnaround was also pretty predictable. And we should expect to see more setbacks for the Kremlin in the coming months.
Because a key source of Russia's strength has long been its ability to reap the benefits of being integrated into the global economy and be treated as a respected member of the international community -- while at the same time flouting their rules.
Prior to the Ukraine crisis, Putin's Russia had indeed found something of a sweet spot.
It was a respectable G8 member that was able to spread its influence by corrupting Western elites,stealthily buy up European energy infrastructure through shady shell companies, and flagrantly violate the EU's antimonopoly legislation.
It could even behave like a rogue occasionally, as in the August 2008 invasion of Georgia, and get off with barely a slap on the wrist.
But in Ukraine, Putin basically jumped the shark. By annexing Crimea he initiated the first forceful change of borders in Europe since World War II. And by manufacturing a pro-Moscow insurgency in Donbas, he effectively invaded Ukraine.
Once this happened -- and particularly after pro-Moscow separatists downed Malaysia Airlines Flight 17 -- it was no longer possible for Western leaders to continue to pretend that Russia is a respectable member of the international community. It became untenable to carry on with the charade that Moscow was a partner with which they could work. Instead, Russia became a problem they needed to confront.
Russia became a rogue state. And once it did, a crucial source of its strength began to melt away.
Western sanctions and the steady isolation of Russia from the world economy might not have been enough to contain Moscow in the short term. But, with an assist from falling energy prices, they are more than enough to cripple it in the long run.
And the long run begins now.
The Russian government on December 2 acknowledged what has long been obvious, that the economy would slide into recession in 2015.
Official projections say it will contract by 0.8 percent while other estimates say it could shrink as much a 2 percent. Disposable incomes are expected to drop by 2.8 percent. Inflation this year is at 9 percent, and is projected to continue rising. And capital flight is forecast to reach $128 billion.
And on top of all that, Russian firms owe $700 billion to foreign banks and, due to sanctions, are largely blocked from any additional Western financing.
The looming economic crunch "is a completely new reality" for Putin, economist Sergei Guriyev, who fled Russia last year, told "The New York Times."
"He has always been lucky, and this time, he is not lucky," Guriyev added.
As 2013 drew to a close, Putin appeared to be running circles around his Western counterparts.
He managed to thwart U.S. air strikes against his ally, Syrian President Bashar al-Assad. He strong-armed Armenia -- and temporarily, Ukraine -- into abandoning plans for a free-trade pact with the European Union in favor of the Moscow-led Eurasian Union.
Putin has indeed had a strong year. But 2015 promises to be a lot rougher.
-- Brian Whitmore
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