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Russia Reform Monitor - No. 2094

The wages of economic crisis;
Moscow, Ankara make nice

Edited by Amanda Azinheira and Evan Revak
September 27, 2016

September 8:

Western sanctions against Russia may finally be taking their toll. The Times of London reports that the country’s national reserves have shrunk by two-thirds since 2014, falling from £67 billion ($88 billion) to barely £23 billion ($30 billion) today. While the depleted funds have been used to bolster the hemorrhaging national budget, the larger economic crisis has plunged millions into poverty and all but eliminated the gains in living standards made in Russia in recent years.


A change, however, is not in the cards. With parliamentary elections fast approaching, calls for trimming the national budget have fallen on deaf ears. The growing unease among ordinary Russians, however, threatens Russian President Vladimir Putin’s approval ratings, and could affect his grip on authority in the longer term.

September 9:


2017 could turn out to be a financially disastrous year for Russia. According to, the Russian Reserve Fund (RRF) may become insolvent this year. Although the Finance Ministry is taking steps to avoid such an outcome by selling foreign currency to finance the budget, growing federal expenses are depleting Russia’s “rainy day” fund at an alarming rate. The RRF crisis comes as Russia finds itself saddled with more and more financial obligations, notably ongoing military expenses in Syria, growing pension obligations, and mounting state-owned corporation subsidies.


September 10:


The Russian-Turkish relationship continues to improve. Reuters reports that, after months of delays caused by diplomatic tensions, Moscow and Ankara are now poised to sign an agreement on “Turkish Stream,” the natural gas pipeline coveted by the Kremlin as an alternative to the moribund “South Stream” pipeline through Europe, in October. The news marks the latest evolution of the relationship, which has improved qualitatively since the debacle over Turkey’s down of a Russian military jet over its airspace in November 2015. Both countries, moreover, are keen on facilitating further partnership. For Turkish President Recep Tayyip Erdogan, “the building of the gas pipeline quickly was a priority” -- a testament to Turkey’s growing nervousness about the durability of its future cooperation with the West against the Islamic State terrorist group.


Average Russians are beginning to feel the pinch of the country’s economic crisis. According to Dozhd TV, some 74 percent of Russians now recognize that there is an economic problem within the country. An equal number believe price inflation represents the most significant problem they face, while half of respondents (49 percent) believe poverty to be the most pressing, and almost as many (43 percent) identified unemployment as the most acute issue.  


[EDITOR'S NOTE: Given the effect of Russia's increasingly authoritarian political climate on pollsters and respondents alike, the results of public opinion surveys in Russia should be viewed with some caution.]


September 11:

Moscow and Kyiv have found another area of conflict: the polling booth. According to the Kyiv Post, the Ukrainian government has denounced the Russian government’s decision to place polling stations in Crimea as part of its efforts to more firmly integrate the peninsula, which was annexed by Russia in 2014, into Russia proper. The move comes ahead of Duma elections, which are set to take place in mid-September.


Related Categories: Russia; Russia and Eurasia Program

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