Security Policy Perspectives

Russia: Follow the Economic Polls
Roger W. Robinson Jr., PSSIW Executive Director

October 18, 2008

A silver lining to the global financial crisis is the disproportionate economic dislocation that will likely befall actual and potential adversaries of the United States, including Russia, Iran, China, Venezuela and Syria. Russia in particular has been hard hit since its August military incursion into Georgia, with its market down some 73% since May of this year. Hard currency reserves have fallen significantly and as much as $200 billion – or considerably more as Russia is not known for its transparency – has been pumped into its cascading banking and economic crisis which is not as near the bottom as many suspect

Of all the statistics, however, swirling around Russia’s financial travails arguably one of the most important is the fact that some 42% of Russians, according to a recent poll conducted by the Levada Center, believe that the current financial difficulties are “likely to be temporary”. Only 31% said the country confronts “serious financial shocks”. ¹

It is speculated that the state-run media, especially television, has offered unduly optimistic coverage of the crisis. Indeed, Russia broadcast stations were not permitted to even use the word “crisis”. Herein lies the debilitating penalty for a controlled, Putin-style media establishment. As that 42% figure steadily declines in the days and weeks ahead, the gears of the Russian economy will, in slow motion at first, begin to seize. Analysts will then take a second look at the roughly $180 billion in debt that comes due by year-end 2009. Rather than an imperial political-military swing through certain of the Soviet-era neighboring states and regions (including the Crimea), Mr. Putin, and his protégé Mr. Medvedev, will probably face a domestic political crisis the likes of which they never imagined when their tanks were rolling into Georgia.

For additional information on this topic, please see the Barron’s article of October 13, 2008 entitled “Recession Dividend”.

¹ Gregory L. White, "Oil’s Drag on Russian Growth Poses Test for Putin," The Wall Street Journal, 18-19 October 2008, A6.