Another Big Win For Putin!!!
- Thread starter 88m3
- Start date
-
- Tags
- putin russia vladimir world news
88m3
Fast Money & Foreign Objects
Vladimir Putin has just created a personal army
REUTERS/Alexei Druzhinin/Sputnik/KremlinRussian President Vladimir Putin listens to a statement from his Belarusian counterpart Alexander Lukashenko after a session of the Supreme State Council of Russia-Belarus Union State in Minsk, Belarus, February 25, 2016.
The idea of creating a National Guard (NG) for Russia bringing together public security forces under a single command has been raised periodically and always abandoned for very good reasons, not least the lack of any apparent need to have a Praetorian Guard on steroids.
In 2012, for example, I didn’t think it likely: it would upend the balance of power within the security agencies, create a monster, and not really meet any true security need.
So what does it say that Putin today announced that such a natsgvardiya was going to be formed? After a meeting with security luminaries include MVD Interior Troops commander (and new NG head) Viktor Zolotov – a trusted ex-bodyguard – he announced [my translation]:
Decisions have been made: we are creating a new federal executive body on the basis of the Interior Troops – creating the National Guard, which will handle the fight against terrorism, the fight against organised crime, and in close cooperation with the Ministry of Internal Affairs, will continue to perform those functions which are [currently] performed by the OMON (riot police), SOBR (SWAT) and so on.
We will arrange, as we discussed with the Interior Minister [Vladimir Kolokoltsev], not only in the decree, but in a future federal law, so that there will be no discord in order to get everything working smoothly and clearly. I hope very much that the troops of the National Guard will effectively perform their tasks, as has been the case up now, and that they will strengthen the work on the areas that are considered priorities.
The NG will thus also take over the OMON and SOBR, making it a powerful paramilitary security force, with elements right across the country.
Meanwhile, the Federal Drugs Control Service (FSKN) and Federal Migration Service (FMS) will be brought under the MVD (Ministry of Internal Affairs), albeit remaining separate services. (Again, an idea which had been mooted before.) This may be a consolation prize for Kolokoltsev but appears, unsurprisingly, to have been a bitter pill for FSKN chief Viktor Ivanov, moving from independent director to ministerial subordinate.
The creation of a National Guard is a big deal. We await details, but here are a few first observations:
Thomson ReutersRussia President Putin makes statement in Moscow region
1. No discussion, no lead time. As with so many crucial decisions, this came essentially unheralded, underlining the extent to which policy comes from a small, tight circlearound Putin. It is not just that they have good operational security; they also clearly see no reason to prepare the public in advance. This is just the way politics goes these days.
2. Big worries in a little circle. There is no real reason for creating the NG out of the Interior Troops (VV) and other forces unless you have a serious worry about public unrest. Let’s be clear, whatever Putin says the militarised security forces of the VV and now NG have little real role fighting crime or terrorism; they are public security forces, riot and insurrection control and deterrence assets.
The OMON and SOBR do play a certain role, but detaching them from the investigations elements of the MVD actually reduces their value in fighting crime. (And the MVD will likely have to recreate some kind of SWAT forces of its own.)
3. Putin’s Own. The NG, as a federal agency, will be directly subordinated to the government, without a minister in the way. With Zolotov at its head, then it is even more clearly a personal, presidential Praetorian force, under a maximalist loyalist. This may not only be a force to keep the masses in check, but also the elite.
4. Upsetting the power ministry balance. In the past, there was a key desire to retain a degree of balance between the various security agencies. The MVD has now been weakened (and having the FMS and FSKN is by no means enough of a recompense), and the Federal Security Service (FSB) has a more direct rival in the domestic security stakes.
Read the original article on In Moscow's Shadows. Copyright 2016.
The idea of creating a National Guard (NG) for Russia bringing together public security forces under a single command has been raised periodically and always abandoned for very good reasons, not least the lack of any apparent need to have a Praetorian Guard on steroids.
In 2012, for example, I didn’t think it likely: it would upend the balance of power within the security agencies, create a monster, and not really meet any true security need.
So what does it say that Putin today announced that such a natsgvardiya was going to be formed? After a meeting with security luminaries include MVD Interior Troops commander (and new NG head) Viktor Zolotov – a trusted ex-bodyguard – he announced [my translation]:
Decisions have been made: we are creating a new federal executive body on the basis of the Interior Troops – creating the National Guard, which will handle the fight against terrorism, the fight against organised crime, and in close cooperation with the Ministry of Internal Affairs, will continue to perform those functions which are [currently] performed by the OMON (riot police), SOBR (SWAT) and so on.
We will arrange, as we discussed with the Interior Minister [Vladimir Kolokoltsev], not only in the decree, but in a future federal law, so that there will be no discord in order to get everything working smoothly and clearly. I hope very much that the troops of the National Guard will effectively perform their tasks, as has been the case up now, and that they will strengthen the work on the areas that are considered priorities.
The NG will thus also take over the OMON and SOBR, making it a powerful paramilitary security force, with elements right across the country.
Meanwhile, the Federal Drugs Control Service (FSKN) and Federal Migration Service (FMS) will be brought under the MVD (Ministry of Internal Affairs), albeit remaining separate services. (Again, an idea which had been mooted before.) This may be a consolation prize for Kolokoltsev but appears, unsurprisingly, to have been a bitter pill for FSKN chief Viktor Ivanov, moving from independent director to ministerial subordinate.
The creation of a National Guard is a big deal. We await details, but here are a few first observations:
1. No discussion, no lead time. As with so many crucial decisions, this came essentially unheralded, underlining the extent to which policy comes from a small, tight circlearound Putin. It is not just that they have good operational security; they also clearly see no reason to prepare the public in advance. This is just the way politics goes these days.
2. Big worries in a little circle. There is no real reason for creating the NG out of the Interior Troops (VV) and other forces unless you have a serious worry about public unrest. Let’s be clear, whatever Putin says the militarised security forces of the VV and now NG have little real role fighting crime or terrorism; they are public security forces, riot and insurrection control and deterrence assets.
The OMON and SOBR do play a certain role, but detaching them from the investigations elements of the MVD actually reduces their value in fighting crime. (And the MVD will likely have to recreate some kind of SWAT forces of its own.)
3. Putin’s Own. The NG, as a federal agency, will be directly subordinated to the government, without a minister in the way. With Zolotov at its head, then it is even more clearly a personal, presidential Praetorian force, under a maximalist loyalist. This may not only be a force to keep the masses in check, but also the elite.
4. Upsetting the power ministry balance. In the past, there was a key desire to retain a degree of balance between the various security agencies. The MVD has now been weakened (and having the FMS and FSKN is by no means enough of a recompense), and the Federal Security Service (FSB) has a more direct rival in the domestic security stakes.
Read the original article on In Moscow's Shadows. Copyright 2016.
Sad to say give it three years he will get bodied.
88m3
Fast Money & Foreign Objects
that's nuts @ThreeLetterAgency
88m3
Fast Money & Foreign Objects
a second Russian revolution brehs.If those russian Marxists are about the life......
I think Marxists every where need to heed the call
88m3
Fast Money & Foreign Objects
Russia’s Long History of Corruption
The Panama Papers merely confirm what we’ve long suspected about Putin.
By Fred Kaplan
Vladimir Putin, Leonid Brezhnev, and Boris Yeltsin.
Photo illustration by Sofya Levina. Images by Alexander Zemlianichenko/Getty Images, Staff/Getty Images and Vitaly Armand/Getty Images.
Revelations from the Panama Papers, one of the great financial scandals of our time, have focused mainly on the law firm that carved the offshore shell firms, the major banks that turned an eye, and of course the politicians—143 of them, including 12 former or current leaders—who dodged taxes by exploiting the arrangement.
FRED KAPLAN
Fred Kaplan is the author of Dark Territory: The Secret History of Cyber War.
But one question remains as yet unanswered: Where did some of these politicians get such vast sums of money to begin with? In particular, how did Russian President Vladimir Putin—whoisn’t explicitly named in the papers but whose cronies tellingly are—come up with $2 billion?
The papers—leaked to a vast consortium of journalists—provide tangible evidence of longstanding rumors that Putin has been running a kleptocracy, skimming bundles of cash from state-run enterprises and stashing it away in foreign banks. But Putin has only pushed—to new and daring heights—a practice that Russian rulers have been indulging in for many decades.
At least since the reign of Leonid Brezhnev in the 1970s, when the state had turned sclerotic and its ideology had gone bankrupt, the main—perhaps the only—reason for joining the Russian government was to get a piece of the country’s resources. Back then, this meant a nice apartment in the center of Moscow, a lakeside dacha on the outskirts, and an entrance pass to the exclusive stores selling Western goods and decent food.
In the 1990s, when Boris Yeltsin dismantled the Soviet Union and privatized industries, many lowly government managers became suddenly wealthy private owners—and their chums in the state bureaucracies demanded a share.
When I was the Boston Globe’s Moscow bureau chief around this time, Russian businessmen told me that, in order to obtain a license for exporting oil or metals, they had to pay the Ministry of Foreign Economic Relations a bribe worth 5 percent of the contract’s value. These bribes didn’t finance the upkeep of the ministry; they lined the pockets of the minister and his top deputies.
In 1993, Yeltsin fired the minister as part of a much-ballyhooed anti-corruption campaign. But the often-drunk president waxed and waned in his enthusiasm, as he did with so many other laudable efforts, and the bribery soon resumed. The deposed minister, Sergei Glazyev, later became a leader of Rodina(meaning Fatherland), a right-wing nationalist political party, and he now serves as one of Putin’s economic advisers. (At one point in his wending political career, Glazyev adopted an anti-corruption platform himself, claiming that his ministry had been overtaken bycriminal gangs.)
But again, it isn’t just Putin’s crowd that raids the treasury. Prime Minister Dmitri Medvedev, during his brief spell as Russian president, was a champion of good relations with the West and active partner in President Obama’s “reset” policy (which led to a substantial nuclear arms reduction treaty). Nonetheless, he too grabbed a nice piece of the pie. When he was still president, for instance, he proudly posed for pictures crouching next to his $200,000 stereo system. Several years ago, an audio manufacturer I know told me that he’d sold a pair of his top speakers—retailing for $100,000—to the Russian minister of defense. It’s unlikely that these officials bought this stuff with the savings from their government salaries.
It is no coincidence that most of the political leaders cited in the Panama Papers occupy positions of power in states with authoritarian rule and enormous cash flows—for instance, Ukraine, Saudi Arabia, China, Pakistan, and Qatar. The rulers don’t want to spread the wealth widely, lest it foster the rise of counter-elites and the decline of their own power. So they sprinkle it discreetly, in exchange for loyalty and, in some cases, a share of the subsequent proceeds. (The one Western democracy on the list, Iceland, is a puzzling anomaly, and its prime minister, Sigmundur David Gunnlaugsson, will likely be the only leader on the list to resign over the scandal.)
Top Comment
Fatherland? Who doesn't know that Russia is called the Motherland, or Mother Russia, or Mother Motherland? If Rodina means Fatherland I've been woefully misinformed for almost 50 years. FRWT, can you confirmÉ 72 CommentsJoin In
Occasionally in these countries, the leaders lose control of their beneficiaries. In the early days of the Yeltsin era, this is what happened with one of the new Russian oligarchs, a provincial theater director and black marketeer-turned-banker named Vladimir Gusinsky. Gusinsky had previously struck up a friendship with a politician named Yuri Luzhkov, and when Luzhkov became Moscow’s mayor, he funneled all the city’s accounts—and those of enterprises that did business with the city—to Gusinsky’s bank. But Gusinsky (whom I interviewed several times as a Moscow reporter) tried to do good with his new wealth, modeling himself after early 20th-century American philanthropists, such as Rockefeller, Guggenheim, and Carnegie. He created the first independent newspaper (Segodnya, meaning Today), the first independent TV station (NTV, one of whose shows, Kukli, meaning Puppets, was more savagely satirical than any American TV show at the time), and several magazines. When fascists within the Russian parliament went after Yeltsin in 1993, Gusinsky’s media sided with the president. But the following year, when his reporters started criticizing Yeltsin for his savage war in Chechnya, the security services physically threatened Gusinsky, who soon fled the country. His bank and most of his media outlets were taken over by Gazprom, the state-owned gas company, which either absorbed them into state media or sold them.
Gusinsky’s fate was meant, in part, as a lesson. It seems to have been taken to heart by those on the receiving end of the Kremlin’s largesse, and the money, it’s now clear, continues to flow.
Russia Was a Kleptocracy Long Before Putin
The Panama Papers merely confirm what we’ve long suspected about Putin.
By Fred Kaplan
Vladimir Putin, Leonid Brezhnev, and Boris Yeltsin.
Photo illustration by Sofya Levina. Images by Alexander Zemlianichenko/Getty Images, Staff/Getty Images and Vitaly Armand/Getty Images.
Revelations from the Panama Papers, one of the great financial scandals of our time, have focused mainly on the law firm that carved the offshore shell firms, the major banks that turned an eye, and of course the politicians—143 of them, including 12 former or current leaders—who dodged taxes by exploiting the arrangement.
FRED KAPLANFred Kaplan is the author of Dark Territory: The Secret History of Cyber War.
But one question remains as yet unanswered: Where did some of these politicians get such vast sums of money to begin with? In particular, how did Russian President Vladimir Putin—whoisn’t explicitly named in the papers but whose cronies tellingly are—come up with $2 billion?
The papers—leaked to a vast consortium of journalists—provide tangible evidence of longstanding rumors that Putin has been running a kleptocracy, skimming bundles of cash from state-run enterprises and stashing it away in foreign banks. But Putin has only pushed—to new and daring heights—a practice that Russian rulers have been indulging in for many decades.
At least since the reign of Leonid Brezhnev in the 1970s, when the state had turned sclerotic and its ideology had gone bankrupt, the main—perhaps the only—reason for joining the Russian government was to get a piece of the country’s resources. Back then, this meant a nice apartment in the center of Moscow, a lakeside dacha on the outskirts, and an entrance pass to the exclusive stores selling Western goods and decent food.
In the 1990s, when Boris Yeltsin dismantled the Soviet Union and privatized industries, many lowly government managers became suddenly wealthy private owners—and their chums in the state bureaucracies demanded a share.
When I was the Boston Globe’s Moscow bureau chief around this time, Russian businessmen told me that, in order to obtain a license for exporting oil or metals, they had to pay the Ministry of Foreign Economic Relations a bribe worth 5 percent of the contract’s value. These bribes didn’t finance the upkeep of the ministry; they lined the pockets of the minister and his top deputies.
In 1993, Yeltsin fired the minister as part of a much-ballyhooed anti-corruption campaign. But the often-drunk president waxed and waned in his enthusiasm, as he did with so many other laudable efforts, and the bribery soon resumed. The deposed minister, Sergei Glazyev, later became a leader of Rodina(meaning Fatherland), a right-wing nationalist political party, and he now serves as one of Putin’s economic advisers. (At one point in his wending political career, Glazyev adopted an anti-corruption platform himself, claiming that his ministry had been overtaken bycriminal gangs.)
But again, it isn’t just Putin’s crowd that raids the treasury. Prime Minister Dmitri Medvedev, during his brief spell as Russian president, was a champion of good relations with the West and active partner in President Obama’s “reset” policy (which led to a substantial nuclear arms reduction treaty). Nonetheless, he too grabbed a nice piece of the pie. When he was still president, for instance, he proudly posed for pictures crouching next to his $200,000 stereo system. Several years ago, an audio manufacturer I know told me that he’d sold a pair of his top speakers—retailing for $100,000—to the Russian minister of defense. It’s unlikely that these officials bought this stuff with the savings from their government salaries.
It is no coincidence that most of the political leaders cited in the Panama Papers occupy positions of power in states with authoritarian rule and enormous cash flows—for instance, Ukraine, Saudi Arabia, China, Pakistan, and Qatar. The rulers don’t want to spread the wealth widely, lest it foster the rise of counter-elites and the decline of their own power. So they sprinkle it discreetly, in exchange for loyalty and, in some cases, a share of the subsequent proceeds. (The one Western democracy on the list, Iceland, is a puzzling anomaly, and its prime minister, Sigmundur David Gunnlaugsson, will likely be the only leader on the list to resign over the scandal.)
Top Comment
Fatherland? Who doesn't know that Russia is called the Motherland, or Mother Russia, or Mother Motherland? If Rodina means Fatherland I've been woefully misinformed for almost 50 years. FRWT, can you confirmÉ 72 CommentsJoin In
Occasionally in these countries, the leaders lose control of their beneficiaries. In the early days of the Yeltsin era, this is what happened with one of the new Russian oligarchs, a provincial theater director and black marketeer-turned-banker named Vladimir Gusinsky. Gusinsky had previously struck up a friendship with a politician named Yuri Luzhkov, and when Luzhkov became Moscow’s mayor, he funneled all the city’s accounts—and those of enterprises that did business with the city—to Gusinsky’s bank. But Gusinsky (whom I interviewed several times as a Moscow reporter) tried to do good with his new wealth, modeling himself after early 20th-century American philanthropists, such as Rockefeller, Guggenheim, and Carnegie. He created the first independent newspaper (Segodnya, meaning Today), the first independent TV station (NTV, one of whose shows, Kukli, meaning Puppets, was more savagely satirical than any American TV show at the time), and several magazines. When fascists within the Russian parliament went after Yeltsin in 1993, Gusinsky’s media sided with the president. But the following year, when his reporters started criticizing Yeltsin for his savage war in Chechnya, the security services physically threatened Gusinsky, who soon fled the country. His bank and most of his media outlets were taken over by Gazprom, the state-owned gas company, which either absorbed them into state media or sold them.
Gusinsky’s fate was meant, in part, as a lesson. It seems to have been taken to heart by those on the receiving end of the Kremlin’s largesse, and the money, it’s now clear, continues to flow.
Russia Was a Kleptocracy Long Before Putin
@ADevilYouKhow @Ill @88m3
Putin' outchea'
A man has been arrested 'for trying to assassinate the chief MH17 expert witness'
Suspect arrested over attempted assassination of chief forensic expert in MH17 probe
Police have arrested a man on suspicion of trying to assassinate the chief expert witness in the investigation into the downing of the Malaysia Airlines jet MH17.
Ukraine’s most senior forensic scientist, Oleksandr Ruvin, was shot in the leg late last year in an attack that the authorities suspect was linked to his role in the crash probe.
In a short statement, the Ukrainian prosecutor’s office said the country’s chief military prosecutor, Anatoliy Matios, would hold a briefing later on Monday “regarding the arrest of the killer who attempted to murder the chief expert on the case of the downed Malaysia Airlines Boeing 777”.
A report into the downing of MH17 published in October 2015 confirmed the plane was shot down by a Russina-built Buk surface-to-air missile launched from eastern Ukraine.
In pictures: MH17 final report
The incident, in which 298 passengers and crew on board a routine flight from Amsterdam to Kuala Lumpur were killed, and sparked a rapid review into the policy of allowing air traffic routes to pass over what is still a conflict zone.
While the Dutch Safety Board’s report addressed ways in which the tragedy could have been avoided, it said it was for a criminal investigation to determine who was responsible for firing the missile which downed the plane.
That probe continues, with recent Dutch media reports suggesting evidence about the type of missile and where it was fired from will be presented “before the second half of the year”.
Putin' outchea'
A man has been arrested 'for trying to assassinate the chief MH17 expert witness'
Suspect arrested over attempted assassination of chief forensic expert in MH17 probe
Police have arrested a man on suspicion of trying to assassinate the chief expert witness in the investigation into the downing of the Malaysia Airlines jet MH17.
Ukraine’s most senior forensic scientist, Oleksandr Ruvin, was shot in the leg late last year in an attack that the authorities suspect was linked to his role in the crash probe.
In a short statement, the Ukrainian prosecutor’s office said the country’s chief military prosecutor, Anatoliy Matios, would hold a briefing later on Monday “regarding the arrest of the killer who attempted to murder the chief expert on the case of the downed Malaysia Airlines Boeing 777”.
A report into the downing of MH17 published in October 2015 confirmed the plane was shot down by a Russina-built Buk surface-to-air missile launched from eastern Ukraine.
In pictures: MH17 final report
The incident, in which 298 passengers and crew on board a routine flight from Amsterdam to Kuala Lumpur were killed, and sparked a rapid review into the policy of allowing air traffic routes to pass over what is still a conflict zone.
While the Dutch Safety Board’s report addressed ways in which the tragedy could have been avoided, it said it was for a criminal investigation to determine who was responsible for firing the missile which downed the plane.
That probe continues, with recent Dutch media reports suggesting evidence about the type of missile and where it was fired from will be presented “before the second half of the year”.
- More about:
- MH17
88m3
Fast Money & Foreign Objects
Yep...ISIS is blooming in the Caucasus.
88m3
Fast Money & Foreign Objects
RUSSIA
Massive Blaze Tears Through Russia's Ministry of Defense in Moscow
By VICE News
April 3, 2016 | 12:10 pm
Russia's Ministry of Defense went up in flames on Sunday, sending clouds of smoke billowing over Moscow. The cause of fire is still under investigation, but initial reports in Russian media have suggested it was accidental.
Major-General Igor Konashenkov told Russia's Interfax news agency that parts of the building in the Russian capital were still smoldering hours after the fire was extinguished. The building was evacuated of about 50 people, and no injuries were reported.
Russia's Ministry of Emergency Situations reported that the fire covered an area of at least 50 square meters. Video and photos taken at the scene earlier in the day showed firefighters climbing ladders up the building's exterior to reach the upper floors. Russia's Sputnik news agency said the building's roof had caved in.
Interfax, quoting a source, reported that the fire might have started due to an electrical malfunction, likely a short circuit involving old wiring.
The Defense Ministry told Interfax the fire would not hamper its operations.
The Ministry building was constructed in the 1940's and later renovated in the 1980s. The National Defense Management Center oversees operations in the building, which is the highest command center for Russian armed forces. The current Minister of Defense is Sergey Shoygu.
Related: A Putin-Loving Alien Cult Wants to Build Its 'Extraterrestrial Embassy' in Russia
Massive Blaze Tears Through Russia's Ministry of Defense in Moscow | VICE News
Putin working on damage control
What
*tinfoilhttp://www.nytimes.com/interactive/...column-region®ion=top-news&WT.nav=top-news
Why the Russian Economy Is Tumbling
By JASMINE C. LEE APRIL 12, 2016
Low oil prices and international sanctions have crippled Russia’s economy. The country has been operating at a deficit since 2012, and its Reserve Fund is slated to run out by 2017. Last week, the World Bank warned that the poverty rate in Russia is rising sharply.
Budget balance
+1
Surplus
0
In trillions of rubles
-1
A global recession weakened Russia’s economy.
Experts suggest this crisis is more alarming.
Deficit
-2
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Source: Russian Ministry of Finance
Depending on Oil Revenue
One reason for Russia’s current economic situation is the sharp decline in global oil prices since June 2014. “Russia’s economy never diversified away from oil and raw materials export dependence,” Kimberly Marten, a political science professor at Barnard College and Columbia University, said in a recent email. In 2015, oil and gas accounted for 43 percent of the government’s revenue.
Federal revenue by source
Oil and gas
All other sources
100
%
80
60
40
20
0
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Source: Russian Ministry of Finance
Sanctions and a Falling Ruble
After Russia annexed Crimea in 2014, the European Union and the United States used economic sanctions to target Russia’s financial, energy and defense sectors. Western sanctions have multiplied the effect of the low oil prices, said Robert Kahn, an international economics senior fellow at the Council on Foreign Relations. Russia has very little debt, but sanctions have made it difficult for the country to borrow on international capital markets.Additionally, the ruble has fallen nearly 50 percent against the dollar since August 2014. This has depressed the standard of living across Russia, because a weaker ruble makes imports more expensive. Russia countered Western sanctions with import bans on various food products, leading to a smaller supply of those goods and further rising prices.The World Bank predicts the poverty rate will reach 14.2 percent in 2016.
0
rubles per dollar
20
40
Value of the ruble
60
APRIL 7
68.5
rubles per
dollar
80
2004
2006
2008
2010
2012
2014
2016
Source: Central Bank of Russia
Expanding the Military
On March 14, President Vladimir V. Putin announced that he would immediately begin pulling troops from Syria, reducing a military intervention that has cost Russia $482 million so far.Increased defense spending — at the expense of education, health care and infrastructure — has been a part of Russia’s return to the world stage. In 2008, Dmitri A. Medvedev, the president at the time, announced a program to modernize the country’s military by 2020. That overhaul, which has been expensive, included building new bases, conducting vast military exercises and updating equipment. Now, the expansion has ceased. Russia recently announced plans to decrease its defense budget by 5 percent this year.
$50
billion
Military budget
40
30
20
10
0
2006
2008
2010
2012
2014
Source: IHS Jane’s
Dipping Into the Reserves
Russia maintains a Reserve Fund, which has been supported by excess oil revenue, to protect the federal budget from economic shocks. But the fund has fallen 45 percent since September 2014 as the government ran larger and larger deficits. The finance minister, Anton Siluanov, has said that the Reserve Fund could run out by 2017. Mr. Siluanov said in a recent interview that Russia may need to dip into its other money supply, the National Wealth Fund, which is used primarily to fund pensions. It now holds $73.18 billion and has been used recently for infrastructure projects and bank bailouts.
$
80
billion
60
Russia’s Reserve Fund
$50.6
billion
40
20
0
2014
July
2015
July
2016
Source: Russian Ministry of Finance
Note: Crude oil prices were around $30 a barrel in February, and have risen since then.
Ivan Nechepurenko contributed reporting.
Why the Russian Economy Is Tumbling
By JASMINE C. LEE APRIL 12, 2016
Low oil prices and international sanctions have crippled Russia’s economy. The country has been operating at a deficit since 2012, and its Reserve Fund is slated to run out by 2017. Last week, the World Bank warned that the poverty rate in Russia is rising sharply.
Budget balance
+1
Surplus
0
In trillions of rubles
-1
A global recession weakened Russia’s economy.
Experts suggest this crisis is more alarming.
Deficit
-2
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Source: Russian Ministry of Finance
Depending on Oil Revenue
One reason for Russia’s current economic situation is the sharp decline in global oil prices since June 2014. “Russia’s economy never diversified away from oil and raw materials export dependence,” Kimberly Marten, a political science professor at Barnard College and Columbia University, said in a recent email. In 2015, oil and gas accounted for 43 percent of the government’s revenue.
Federal revenue by source
Oil and gas
All other sources
100
%
80
60
40
20
0
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Source: Russian Ministry of Finance
Sanctions and a Falling Ruble
After Russia annexed Crimea in 2014, the European Union and the United States used economic sanctions to target Russia’s financial, energy and defense sectors. Western sanctions have multiplied the effect of the low oil prices, said Robert Kahn, an international economics senior fellow at the Council on Foreign Relations. Russia has very little debt, but sanctions have made it difficult for the country to borrow on international capital markets.Additionally, the ruble has fallen nearly 50 percent against the dollar since August 2014. This has depressed the standard of living across Russia, because a weaker ruble makes imports more expensive. Russia countered Western sanctions with import bans on various food products, leading to a smaller supply of those goods and further rising prices.The World Bank predicts the poverty rate will reach 14.2 percent in 2016.
0
rubles per dollar
20
40
Value of the ruble
60
APRIL 7
68.5
rubles per
dollar
80
2004
2006
2008
2010
2012
2014
2016
Source: Central Bank of Russia
Expanding the Military
On March 14, President Vladimir V. Putin announced that he would immediately begin pulling troops from Syria, reducing a military intervention that has cost Russia $482 million so far.Increased defense spending — at the expense of education, health care and infrastructure — has been a part of Russia’s return to the world stage. In 2008, Dmitri A. Medvedev, the president at the time, announced a program to modernize the country’s military by 2020. That overhaul, which has been expensive, included building new bases, conducting vast military exercises and updating equipment. Now, the expansion has ceased. Russia recently announced plans to decrease its defense budget by 5 percent this year.
$50
billion
Military budget
40
30
20
10
0
2006
2008
2010
2012
2014
Source: IHS Jane’s
Dipping Into the Reserves
Russia maintains a Reserve Fund, which has been supported by excess oil revenue, to protect the federal budget from economic shocks. But the fund has fallen 45 percent since September 2014 as the government ran larger and larger deficits. The finance minister, Anton Siluanov, has said that the Reserve Fund could run out by 2017. Mr. Siluanov said in a recent interview that Russia may need to dip into its other money supply, the National Wealth Fund, which is used primarily to fund pensions. It now holds $73.18 billion and has been used recently for infrastructure projects and bank bailouts.
$
80
billion
60
Russia’s Reserve Fund
$50.6
billion
40
20
0
2014
July
2015
July
2016
Source: Russian Ministry of Finance
Note: Crude oil prices were around $30 a barrel in February, and have risen since then.
Ivan Nechepurenko contributed reporting.
Russia has been through a recession for what seems to be decades.