With oil prices now hovering below $30 dollars per barrel, the potentially profound political ramifications are becoming apparent to Russia’s political elite, with finger-pointing between rival factions starting to test the durability of the Putin-Medvedev “tandemocracy”. New legislation curbing the right to dissent is being pushed through in anticipation of increased political and social unrest prompted by the financial crisis and the Kremlin’s economic mismanagement.
RFE/RL’s excellent Power Vertical quotes Moscow-based political analyst Dmitry Oreshkin on the challenge to the power structure:
The vertical is not as strong as it seemed. It is based on buying the loyalty of officials with the help of oil funds. The bureaucratic class gives its loyalty to the center and the center closes its eyes to their corruption…When oil and gas prices were high and when the economy was growing, it worked well. Bureaucrats were afraid to show disloyalty to their bosses because if they were fired they would be outsiders. But when gas and oil prices are low and the economy falters, it is not possible to buy everybody’s loyalty.
Analysts predict that, with the collapse in energy prices, Russia is unable to prop up the ruble and will be obliged to devalue, with devastating economic consequences. The political fall-out is more difficult to predict.
We might glean some consolation from the news that U.S.-Russia relations will at least be informed by a degree of expertise – and sympathy with Russia’s beleaguered democrats. Reports suggest that our friend Michael McFaul looks set to assume up the Russia portfolio on the new administration’s National Security Council.
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