How vulnerable is Putin?

S P SETH

In his recent annual state of the union address, President Vladimir Putin of Russia was trying to put the best face on the problems arising out of the conflict with Ukraine that is backed by the US and European Union (EU). He defended the “reunification” of Crimea with Russia, which set the ground for a widening rift with the west. He reportedly likened Crimea as holy land for Russians, like the Temple Mount in Jerusalem for Muslims and Jews. According to Putin, “It was here in Crimea in ancient Khersones, or Korsun as the chroniclers called it, that Count Vladimir was baptized [in the 10^th century], to then baptize the rest of Rus [Russia].” And Crimea is also “strategically important”. Crimea might be invested with holy status but Russia’s strong stand in Ukraine is mostly strategic. The eastward expansion of NATO and EU to the Russian borders was considered a threat and Moscow wanted to give a strong message that it won’t be tolerated, whatever the cost. And the cost is becoming clear as Russia’s economy comes under increasing pressure from western sanctions and the falling oil prices. At his press conference, the other day, President Putin admitted that, “We are going through a trying period, difficult times at the moment…” but he was determined to tough it out.

The most obvious sign of “difficult times” is that the Russian rouble is in free fall, having lost (at the time of writing) 40 per cent of its value against the US dollar. The intervention of the Russian central bank to support it has not worked so far. The western sanctions are quite comprehensive, denying it access to financial markets, and restricting/barring investments in Russian energy projects and other economic activities. Even as western sanctions were hurting, the steep fall in oil prices, the bread and butter of the Russian economy, has worsened the situation with no sign, as of now, of a lift in oil price any time soon. While a good proportion of the fall in oil prices is dictated by a mismatch between supply and demand caused by a glut in the markets due to weak or zero economic growth in Europe, slow rate of growth in China, increased oil production in the US from shale oil and gas extraction; it is also caused by the convergence of strategic interests between the US, Saudi Arabia and other Gulf producers to punish Russia and Iran by adding to the glut. This was clearly revealed at the recent OPEC meeting in Vienna where Iran and Venezuela’s pleas to restrict production to bolster oil price was not heeded by Saudi Arabia. Both these oil producers (OPEC members) and Russia derive much of their revenues from oil exports.

How will Russia cope with its economic problems from western sanctions and falling oil prices? First, Russia is seeking to diversify its markets. A recent $400 billion dollars gas deal with China was an important breakthrough. Another instance is a proposed undersea pipeline to Turkey, which will receive concessional price for gas supplies from Russia. In this way, Russia will create a new channel for gas supplies to southern European countries. Which would suggest that Russia is working hard, with President Putin personally pushing alternative/supplementary deals, to diversify his country’s economic relations. Putin’s recent visit to India to clinch a raft of economic agreements, including in the energy sector, is another example of the same process of diversifying economic ties. These initiatives might not immediately relieve the economic pressures from western sanctions and falling oil prices, but they do signal a strong determination by Russia to stand its ground.

Another aspect of the crisis is that with their tough economic sanctions, the west is pushing Russia into China’s embrace. As Ivan Tsvetkov, an associate professor at Petersburg State University, has written, “Of course the confrontation between Russia and the West is a true godsend for China…. [with] Moscow’s ability to destroy the US-centric world order by starting to play the China card…” Normally, Russia has been very cautious about creating economic dependence on China but, according to Tsvetkov, “Putin has decided that the threat of China’s economic and demographic domination of Russia is less serious than the threat of US provoking a ‘colour revolution’ in Russia”, as happened earlier in Georgia and Ukraine. That would be aimed at toppling Putin and putting together a compliant regime.

However, despite economic difficulties, Putin’s popularity at home so far is very high at around 80 per cent in the wake of the Ukrainian crisis.  He has been a fairly effective leader ever since he became president. After the collapse of the Soviet Union, which Putin called the greatest geopolitical tragedy of the 20^th century, Russia was drifting and going nowhere and virtually faced bankruptcy in 1998, having defaulted on its debt. After Putin took over from Boris Yeltsin as the country’s acting president in December 1999, later returned after elections, he was able to turn the country around, establishing his reputation as a strong leader. He was able to suppress the insurgency in Chechnya, which was causing a lot of insecurity in the country from random attacks by the insurgents in the country’s heartland. However, the rebels recently made a bloody appearance in a shoot out in Chechnya’s capital, Grozni, with 20 fatalities even as Putin was reading his annual address. Despite this, the situation in Chechnya is nowhere near the mayhem of the nineties.

All in all, he introduced an element of stability to a chaotic country that seemed in free fall and likely to face further division from Islamic insurgency in Chechnya, Dagestan and the surrounding region. And with the income from oil and gas exports, he was able to restore a certain degree of economic respectability for Russia, further reinforced by putting up strong opposition to NATO/EU expansion to it borders, reminding them that Russia was a strong military power with a nuclear punch. Which, in a sense, created the Ukrainian crisis, and the resultant western economic sanctions.

As noted earlier, these sanctions are hurting Russia and the pain is likely to increase in the short to medium period.  And this would adversely affect Putin’s popularity at home. But the strong nationalist narrative in which the west is accused of creating the Ukrainian crisis in the first place with a view to weaken and threaten Russia might rally people around their leader, even if it meant some economic pain. This will be tested in the months to come.

In such charged atmosphere, the potential danger comes from turning the Ukrainian crisis into a contest of power that might lead to a military conflict. In this regard, George Soros, an influential US investment banker and public intellectual, has advocated strong and united action against Russia’s ‘aggression’ in Ukraine. Writing in in the New York Review of Books, he deprecates “…the current European attitude toward Ukraine that fails to recognize that the Russian attack on Ukraine is indirectly an attack on the European Union…” And urges that, “All available resources ought to be put to work in the war effort even if that involves running up budget deficits.” Without that, “Not only the survival of the new Ukraine but the future of NATO and the European Union itself is at risk.”

One only hopes this kind of war cry doesn’t catch up because such talk, if translated into warring action, might not only prove disastrous for the ‘combatants’ but rest of the world too.

Note: This article was first published in the Daily Times.

Contact: sushipseth@yahoo.com.au