The Guardian view on Russia’s economic turmoil: a good time to talk to Vladimir Putin
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Version 0 of 1. Financial crises of the kind now hitting Russia are not new, but they are always spectacular. They usually involve a currency in freefall, stocks knocked sideways and panicky central bankers jacking up interest rates and spending millions to shore up their currency. So far, so familiar: Russians themselves went through something very similar just over 15 years ago. The rest of the ballet normally goes like this: businesses begin pulling back their operations (as Apple has shut down its Russian online store); the central bank keeps burning through its war chest (which in Moscow’s case is huge: it’s spent $90bn so far this year, and has over $400bn spare); then there is talk of a bank run, or of the government imposing capital controls. All of this is running to the script. But were this any other country, there would be one more act to come: market participants would be counting down the days until the IMF was called in. The twist here is that it is almost impossible to imagine Vladimir Putin begging Washington to come to his aid. One thing is for certain: the consequences of Russia’s economic rut will be felt beyond its borders. Even if Russia has long since ceased to be the Soviet superpower, it does retain both a nuclear arsenal that compares to that of the US and considerable international reach. Mr Putin has put great effort into reminding the world of this, and not only through inflammatory speeches. Military aggression against Ukraine and the annexation of Crimea this year brought Russia’s assertiveness to a spectacular climax. The Kremlin embarked on a policy that amounted to disrupting Europe’s post-cold-war order, complete with the scrambling of military jets over Nato skies. Whether a cornered Mr Putin will become more mellow or, on the contrary, resort to still more provocations is anyone’s guess. An upcoming press conference will be scrutinised for answers. Initial indications are that the regime is gearing up public opinion to withstand economic hardships, with much exaltation of the nation’s history of resisting the onslaught of external foes. But nevertheless, it is clear that Mr Putin’s domestic narrative for the last 15 years – the strongman stepping on democratic rights in return for higher living standards – is now at risk of being shattered. The cronyism and the lack of modernisation that have characterised his rule are coming back to haunt him, as both the oil price and the rouble crash. Some in the west will now calculate that the wounded bear should be wounded some more so that he relents. It is not hard to see the case. The September ceasefire in Ukraine exists only on paper, because there has been no Russian military withdrawal. Brash behaviour could backfire on Mr Putin. His reaction to sanctions – an embargo on European food – has only contributed to higher domestic inflation. Also, Russia can ill afford to threaten anyone with cutting off gas supplies, when it so desperately needs foreign currency revenues just now. On the Middle East, Russia would risk more than it could gain by going confrontational. After all, Mr Putin can only be satisfied with current US policies on Iraq and Syria, seeing as they don’t contradict his strategic aim of keeping Bashar al-Assad in power. Nor is there is any desire in Moscow to kill off the international talks over Iran’s nuclear programme, which are aimed at preventing proliferation. Yet instead of hastily concluding that it would cost nothing to treat a financially weak Russia as a complete pariah, the time may have come for a burst of diplomatic creativity. The crisis in Russia provides the west with the best possible circumstances for combining smart pressure with new openings for dialogue. Pressure is important if one wants to be taken seriously by a Russian regime that has made great use of western hesitation. So there should be no lifting of sanctions as long as the conflict in Ukraine festers on. But dialogue is equally crucial. Any talks must be open-eyed, and must not compromise on values that form the core of Europe’s architecture, as Russia tries to assert some regional influence. Reaching out to Mr Putin would deprive him of the possibility of claiming he has no other option but to pull Russia further into insular nationalism and military adventurism. It is precisely when the bear is down that more effort should be put into communicating with him. |