by Dish Staff
Dish alum Katie Zavadski graciously watched Putin’s annual three-hour press conference (yes, the above video is a trailer for a press conference) so the rest of us don’t have to:
Putin denied accusations that he is inciting a major international conflict in Ukraine, accusing the West — particularly the U.S. — of being in a pot-calling-the-kettle-black situation. “Our budget is $50 billion — the Pentagon budget is 10 times higher. Does anyone listen to us at all? Does anyone have a dialogue with us? No,” he said. “All we hear is ‘mind your own business.’ In the Ukrainian crisis I believe we are right and our Western partners are wrong.” …
But weighing most heavily on the minds of everyone in attendance was the ruble’s recent downward spiral. At the Wednesday low, one U.S. dollar was buying 79 rubles, though the free-fall appears to have stabilized. For some, Tuesday’s value drop called to mind a similar incident 20 years ago, now known as Black Tuesday. He attributed a significant portion of these ongoing economic woes to Western sanctions, introduced in part because of his annexation of Crimea. But the president also told Russians not to worry, assuring them that the economy would rebound. (Indeed, the ruble was up to 61 to a dollar during his address.) “Our economy will overcome the current situation. How much time will be needed for that? Under the most unfavorable circumstances I think it will take about two years,” he said.
Cassidy sizes up that forecast:
Insofar as Russia’s fate depends on what happens to the oil price, Putin’s guess that things will pick up by the end of 2016 is as legitimate as anybody else’s. While he was speaking, the Saudi oil minister, Ali al-Naimi, was also saying, in Riyadh, that the current collapse would prove to be temporary. But Putin’s claim that, by the end of 2016, Russia will have successfully diversified its economy beyond energy is hopeful, to say the least. Indeed, a bit later in his press conference, when a reporter from Pravda asked about the country’s “oil addiction,” he acknowledged as much. “We are trying to create more favorable conditions for the development of production, but it is moving forward with difficulty,” Putin said.
Nemtsova sees right through Putin’s show of optimism:
A prominent political observer and professor of National Research University Higher School of Economics, Vladimir Ryzhkov, summarized Putin’s statements for The Daily Beast: no plans for new reforms, no radical changes of staff or re-appointments. Not a word mentioned about the crazy growth of prices and public poverty. Why did Putin not give Russians any comforting promises? “Because he is waiting for oil to become expensive again, and everything to go back to normal soon. He does not have a clear understanding of how deep the crisis is—that’s why he is afraid to make any abrupt moves,” Ryzhkov said. Meanwhile, Russia is sinking ever deeper into its economic morass.
Morrissey is also skeptical:
If OPEC continues to support the oil glut — and they’re probably going to keep up pressure on Iran, now that the West has backed away from sanctions — the ruble won’t recover for years, and in the meantime Russians will have to live with stagflation at best. Putin gets job-approval ratings in the 80s now because he’s seen as responding to Western aggression, and because the conditions haven’t dragged out for very long yet. Eventually, Russians will start asking themselves whether Crimea and eastern Ukraine are worth the dissipation of their life savings, and the answer will increasingly become no.
Putin wants two years for Russians to wait for a light at the end of the tunnel. That’s a very long time, even for an oligarchical autocrat, to keep the hoi polloi in line, let alone the oligarchs themselves.
Matt O’Brien, meanwhile, sees more signs that the Russian economy is in a bit of a death spiral:
The latest news is that Russia’s banks are about to get bailed out to the tune of $16.5 billion. That became inevitable once the interest rate they charge each other on short-term loans—which shows how much they believe in each other’s solvency—shot up to 28.3 percent on Thursday, higher than it was even during the 2008 crisis. And, to give you an idea how big the black hole in Russian bank balance sheets must be, this is all happening despite the fact that the central bank just said that banks could pretend that they don’t have losses. Okay, it didn’t exactly say that, but close enough. Specifically, Russian banks can stop marking their losses to market, and use the old exchange rate to calculate the “value” of the assets on their books. Potemkin balance sheets, though, aren’t enough to fool the bankers themselves. They know how broke their banks are, so they don’t trust any others. The Russian government hopes that injecting this $16.5 billion into the banks will be enough to end this credit crunch. We’ll see. That’s money that Russia is going to start running out of.
“The most interesting message in Putin’s hours-long bravado, however, may have been on Ukraine,” Marc Champion observes:
Beyond his usual accusations that Russia’s neighbor got into trouble because it invaded itself, he called for a quick political settlement that would restore Ukraine as “a single political space.” Later in the speech, Putin — prefacing his comments with “I’ll say an important thing. Look, I’d like everyone to hear this” — said that the rebels were part of the problem. He said that at the last peace deal in Minsk, they refused to sign crucial protocols the defining cease-fire lines. He also said he believed Ukrainian President Petro Poroshenko genuinely wants a deal. So Russia’s leader, not for the first time, is offering himself as peacemaker. (In his words, an intermediary.) The question for Ukraine, the U.S. and Europe is whether he means it.