Putin blames West for woes
Analysts: Russia’s recession likely to have occurred without sanctions
MOSCOW When it comes to inflicting economic pain on Russia, the Kremlin might be doing a better job than western sanctions.
Just don’t tell that to the Russian people, who overwhelmingly blame the West for a deepening recession that has parts of central Moscow starting to look like a ghost town.
Prices are soaring. The ruble is dropping. And Russian living standards are falling even as citizens on Wednesday celebrated the first anniversary of the annexation of Ukraine’s Crimean Peninsula.
Many economists say the problems would have erupted even if there were no sanctions. But the wave of western penalties against the Russian economy has inadvertently given the Kremlin political cover with its own people, analysts say.
A year after the annexation, the West has been able to do little to alter President Vladimir Putin’s battlefield calculus. Russia is still fuelling a conflict in Ukraine that has cost more than 6,000 lives, U.S. officials say. Putin denies involvement in Ukraine, and he shows little sign of backing down. His popularity at home is sky high even as his nation’s economy is in turmoil.
Although sanctions have hurt, much of Russia’s current economic weakness has to do with the 45 per cent drop in the price of oil since June, analysts say. But most Russians are pointing their fingers toward the White House. Sanctions, the West’s primary tool to try to sway Kremlin policies, have become a punching bag.
The effectiveness of the sanctions is becoming a burning question as Obama comes under growing bipartisan pressure to arm Ukraine if a shaky ceasefire falls apart. He could also ramp up sanctions. Some in Congress have floated cutting off Russia from the international bank-transfer system, a possibility that Russian officials said would be tantamount to an act of war.
The options have split Russia’s weakened ranks of Kremlin critics, who were also deprived of a charismatic ringleader, Boris Nemtsov, after his murder earlier this month. Some opposition leaders say mounting economic woes will eventually turn Russians against Putin.
“The full financial force of the West is concentrated on attacking us,” said Nikolai Starikov, a pro-Kremlin pundit. “What they are doing is smashing the foundations of a great geopolitical construction that will become their competitor.”
Western leaders have long said the main target of their sanctions is the Kremlin, not ordinary Russians, and they have tried to dole out economic pain with pinpoint precision. Most Russians shrugged off the first several rounds of sanctions, which targeted people and institutions close to Putin. But after the July shoot-down of a civilian jetliner over eastern Ukraine, the West struck harder, and Russia retaliated with import bans on most western food products. The Russian countersanctions have hurt European farmers, but
they may have affected Russians most of all: Food prices soared afterward. The Russian economy is now expected to contract up to 6 per cent this year, fuelled by the dropping price of oil. The ruble has lost nearly half its value since the beginning of 2014. By some estimates, almost a third of Moscow restaurants will close by the end of this month, leaving storefronts empty across the city.
Ordinary Russians are also feeling the pain. Julia Lebedeva, 46, said her pay as a customs broker was cut by a third even as prices have spiked.
“I eat fewer tomatoes, fewer cucumbers, less lettuce. We just don’t have them,” she said. Cauliflower, once a standby, is now a rare treat.
The worst thing is the fear of the future, she said: “Today I can say things aren’t great. They aren’t bad. But tomorrow they might turn really awful.”
The vast majority of Russians — 91 per cent — say their biggest concerns are now economic, according to a January poll from the independent Moscow-based Levada Center.
“The main explanation is that the West and America is to blame for everything,” said Natalya Zorkaya, a pollster and analyst at the Levada Center. The economic anxiety is doing little to inspire Russians to push their leaders for policy changes, she said.
The effects of the sanctions on Kremlin policy-making are difficult to assess, analysts say, since there is no way to know whether the economic pressure helped avert an even bloodier fight in Ukraine. Kremlin critic Alexei Navalny said in an interview that sectoral sanctions had held Putin back from rolling far deeper into Ukraine, but he said only wider sanctions against Russia’s elite would force further policy changes.
Violence has quieted in eastern Ukraine since a ceasefire reached in mid-February. But U.S. officials say Russian tanks continue to flow over the border.
U.S. Secretary of State John Kerry this month said that sanctions were responsible for much of Russia’s current economic pain and that the administration stood ready to modify them based on Putin’s actions.
“We’re not doing this to hurt the people of Russia,” Kerry said. “We’re doing this to try to affect the choices that their leaders are making in order to uphold the norms of international law.”
Today I can say things aren’t great. They aren’t bad. But tomorrow they might turn really awful.