‘Innocent’ Putin Blames Others for Russia’s Financial Crisis

posted by Dr. Jael Ever @ 7:00 AM
December 22, 2014

sanctions-Russia        As usual, Russian President Vladimir Putin blames everyone––i.e. other leaders and nations––for his nation’s financial collapse other than himself. He says American and E.U. sanctions cripple Russia, and that Saudi Arabia and OPEC joined them by collapsing the price to oil just to ruin him and his country.

Within secrets of international intrigue, this could be true. But Putin annexed Crimea and still attacks Ukraine. He will get no help from Europe, and he won’t ask for it either. His bombastic pride, constant warmongering and foolish gamble that oil prices would remain high has done nothing but diminish his nation’s size.

In ‘Russia’s Economy Has Shrunk So Much It’s Now Only As Small As Spain,’ Reuters says: “The decline in the price of oil, Western economic sanctions against the nation following its invasion of Ukraine, and the collapse of the Russian ruble that resulted, has decimated Russia’s economy.

“Russia has lost its ranking as the world’s eighth biggest economy, shrinking in just nine months from a $2.1 trillion petro-giant to a mid-size player comparable with Korea or Spain.” That’s quite a fall for an egotistical man and his nation.

As Ambrose Evans-Pritchard writes in ‘Capital Controls Feared as Russian Rouble Collapses’: “The currency has been in free fall since Saudi Arabia and the Gulf states vetoed calls by weaker Opec members for a cut in crude oil output, a move viewed by the Kremlin as a strategic attack on Russia.”

But why didn’t Putin and cohorts in his government see this coming?  As Evan-Prichard explains, Russia has a history of declines involving oil, its major export: “Protracted slumps in crude prices crippled the Soviet Union in the late 1980s, and caused Russia to go bankrupt in the late-1990s.”

However, responsibility lies deeply within Russia’s borders.  Kingsmill Bond from Sberbank says that failing Russian companies expect the government to help them: “Most Russian companies have been shut out of global capital markets since Western sanctions, following the downing of Malaysia Airlines Flight 17. They are forced to pay back debt as it comes due, seek support from the Russian state or default. The oil giant Rosneft has requested $49 billion in state aid.”

Other commentators point out that Putin spent years silencing oligarchies who would resist his rule by giving them vast amounts of wealth. Now that too has come home to bite him. In ‘Putin’s Bubble Bursts,’ Paul Krugman explains that even with all its problems, Russia should still have money. So where is the money?

“Well, [by] walking around Mayfair in London, or . . . Manhattan’s Upper East Side, especially in the evening, and Venaja-Rueplaobserve the long rows of luxury residences with no lights on—residences owned. . . by Chinese princelings, Middle Easheikhs, and Russian oligarchs. Basically, Russia’s elite has been accumulating assets outside the country—luxury real estate is only the most visible example— and the flip side of that accumulation has been rising debt at home.”

Neil MacFarquhar details in ‘Putin, Acknowledging Financial Turmoil, Assures the Nation It’s Temporary,’ the staunch leader still defiant, in his end-of-year speech, warns of dangers for those who would attack a wounded bear.  “. . . he was determined to thwart plots by the West in general and the United States in particular against Russia.”  So it’s still everyone’s fault but his own.

But even bears know to run away from fights they can’t win. As historical books of the Old Testament foretell:  “Pride goeth before destruction, and an haughty spirit before a fall (Proverbs 16: 18)” again and again and again!

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