The Russian ruble has been on a rollercoaster ride, posting the second biggest drop in global currencies in 2014, then rebounding this year with the biggest gain against the dollar, euro, pound and yen.

The ruble’s dizzying return, however, is neither due to an economic boom nor to sustained intervention by the Russian Central Bank. And it came at a high price.

Maintaining the ruble at around 50 to the dollar has depleted the country’s hard currency reserve by $ 150 billion, or more than a quarter of the reserves available at the end of 2013. These cash injections have failed. much to encourage Russian consumers or businesses: inflation remains at over 16% and the European Bank for Reconstruction and Development predicts the overall economy will contract 4.5% this year.

And the stabilization of the ruble was only achieved after President Vladimir Putin rocked the Russian oligarchs for what he saw as their fair share in stopping the currency’s fall, a tactic inaccessible to the guardians of a democracy. free market.

“There is no strategy or vision. Everything is “live for today”, “said economist Sergei Guriev, former rector of the new Moscow economic school living in voluntary exile in Paris.

The dying Russian middle class and working poor are paying the price for the Kremlin’s economic fiddle, Guriev said. It points to an average 10% drop in real income last year, an increase in mortgage defaults and rising prices for food and utilities.

A decade-long $ 500 billion military modernization program bodes even darker years to come.

Car sales in Russia fell 42% in April compared to the same month last year, Assn. of European companies said last month. The share of Russians who can only afford the absolute necessities has climbed to 20%, the highest since polls on the subject began ten years ago, research firm Nielsen reported last month.

Even during the 2009 recession, the report notes, only 7% of those polled said they couldn’t afford anything more than food and shelter.

“But people know we shouldn’t blame Putin. They know it is the fault of Obama and the Ukrainian fascists that they have to suffer economically to confront these evil people, ”said Guriev, mocking the prevailing public attitude shaped by a generously funded propaganda campaign at the state television.

“In Russia, they say there is television and there is the refrigerator,” said the economist who, until last year, was part of the Kremlin’s financial entourage. “People believe what they see on TV, but when they don’t see anything in the refrigerator, they stop believing. If the government does not have the money it needs and sees that its propaganda is no longer convincing, it can embark on a new military adventure to make believe again.

In recent years, the economy has been running at a healthy growth rate until Russian troops seized Ukraine’s Crimea region in 2014. The United States and the European Union imposed sanctions on Moscow for its violation of international law and the sovereignty of its neighbor.

The moves, which halted international lending and blacklisted dozens of Kremlin pillars, coincided with global oil prices falling to half their value a year ago. And despite Putin’s repeated promises to diversify the economy since taking office in 2000, Russia remained dependent on oil and gas sales for more than half of its revenue when the last financial crisis hit.

The government revised its 2016 budget in April to take into account the drop in expected energy revenues, initially calculated at $ 100 per barrel of oil. The deficit spending now envisioned for next year will consume an additional $ 200 billion in hard currency reserves, and more if the military modernization project continues to be exempt from budget cuts imposed on nearly every other economic sector.

Putin micromanaged the financial crisis in the same way he guided the country’s geopolitical strategy. He summoned his country’s captains of industry to the Kremlin for an emergency meeting on December 16, as the ruble traded at 80 to the dollar. According to the RBK business newspaper, he told them that the ruble collapse threatened their well-being as well as that of the country and that they had an obligation to repatriate the money they had hidden in foreign banks.

No official edict has been issued and the newspaper observed that the Kremlin has limited means to control the way oligarchs or ordinary citizens manage their finances.

Putin declared a “capital amnesty” after the December meeting, and the State Duma, the lower house of parliament, has since worked to draft legislation to ensure offshore depositors that repatriation of their capital does not. will not lead to inquiries as to whether they went through it legally. A history of nationalizations, corruption and asset foreclosures has undermined confidence in the security of Russia-based wealth, explaining the flight of more than $ 150 billion in capital last year alone.

But none of the oligarchs lost the unspoken threat of retaliation if they didn’t do their part to stop the ruble’s free fall. Memories were still fresh of the September house arrest of oil magnate Vladimir Yevtushenkov and the seizure of his assets, not to mention the 10 years former billionaire Mikhail Khodorkovsky spent in prison for challenging the political domination of Putin.

By the end of February, the billionaire owners of Lukoil, Severstal, Norilsk Nickel and three dozen other large companies had converted enough of their holdings into hard currency to push the value of the ruble to around 60 per dollar. Igor Sechin, head of the oil monopoly Rosneft, told the Tass news agency that he sold $ 93 billion for rubles in 2014.

The winter run on the ruble was sparked by the converging effects of sanctions and the low point in oil prices that flirted with $ 45 a barrel in December. Oil recently traded at around $ 60 a barrel.

Putin called the sanctions little more than an irritant and banned European food imports in retaliation. He ordered major importers to buy Russian-made products to replace components they got from Western manufacturers, although domestic production could not increase to meet new demand when the limited credit available from banks. Russian comes with double-digit interest. rates.

As national coffers emptied at the end of last year, Putin ordered general cuts of 10% in government-funded services for regions and municipalities, only pensions and the ambitious defense overhaul have spared the budget.

Government economists have revealed little about the brainstorming taking place behind closed Kremlin doors or their own outspoken views on Putin’s handling of the crisis. But academics and independent economists willing to comment from their senior level see little to suggest that the current problems will be short-lived.

“There is nothing good” in the medium to long term forecast, concluded Alexander Savelyev, senior researcher at the Institute of World Economy and International Relations of the Russian Academy of Sciences. “And the majority of experts expect a further decline.”

Twitter: @cjwilliamslat