The combination of economic sanctions and oil prices have led to the currency crisis in Russia mutating into the greatest crisis for Putin to face. The question which observers should be pondering is whether or not Putin will survive this storm. This is why I felt it necessary to write on the new crisis in Russia:
Putin’s brand of national capitalism, not to be confused with a neoliberal market economy, faces the greatest challenges in its short history. Economic nationalism meant the combination of a flat tax regime, land privatisation, state management of resources and protectionist measures to maintain industry. Oil revenue allowed Russia to secure growth and pay off its Soviet-era debt. But the nationalist push against international capital inevitably comes up against the limits of its own barriers.
Russia has a strategic interest in keeping Ukraine out of the EU-NATO orbit, but this doesn’t mean it produces results for its economy. On the contrary, the invasion of Ukraine and annexation of Crimea led to diplomatic and economic pressures being brought against Russian institutions. The sanctions converged with the collapse of oil prices, as OPEC maintains output, confident that it will break even sooner rather than later. The rouble is unstable, sanctions are beginning to cripple international trade, and the economy is logically contracting.
The full article can be read at Souciant.