Four reasons why the Russian economy is on the verge of panic
For four reasons, the Russian economy is on the verge of panic, which threatens stock prices, ruble exchange rates and indeed all economic activity, because it introduces elements of uncertainty that no one can understand. allow to ignore, according to Rosbalt commentator Sergey Shelin.
In recent weeks, he says, “the nervousness of participants in economic activity in Russia” has increased given the unpredictability of the small circle of Kremlin officials who make their decisions in secret and four signs that their policies , even if not prosecuted, are already creating problems for Russia (rosbalt.ru/blogs/2021/11/23/1932351.html).
Four of these signs are particularly noteworthy, suggests Shelin. First, authorities have shown they are apparently “indifferent” to the collapse of Rosnano, a state-owned company that the Kremlin could easily save and would have if it followed past practices. By not moving to do so, the Kremlin is raising questions about whether it has changed course.
Second, the conflict between Moscow and the West has for the first time raised questions about the continued ability of oil and gas exports to pay for Russian government activities and keep the economy functioning. The major powers, including China, are now drawing on their reserves and Saudi Arabia cannot function as Russia’s ally in the event of a major war.
As a result, many in Russia now fear that the source of funding for oil and gas sales will disappear and with it the mainstay of the Russian economy at present. Even if that doesn’t happen, fears it could raise both more questions about the regime’s competence and the resilience of the Russian economy.
Third, the migrant crisis on Belarus’ northern and western borders, sparked by Alyaksandr Lukashenka but which Putin backed, could, many believe, come back to bite Russia because most of Russia’s oil and gas to the West passes through Belarus and the sanctions imposed on Minsk would block much of this, hurting Russia first.
And fourth, more and more Russians believe that Putin will expand his invasion of Ukraine and that the West will react harshly in a way that will hurt the Russian economy more than anything that has happened so far. . In the event of such a war, “no status quo will be possible”.
It’s, of course, possible that none of these things happen as much fear, Shelin says; but business and investment are based on predictability – and the growing sense that Moscow is heading for maximum unpredictability will have negative consequences even if Russia is lucky enough to avoid the worst