What now for Russia? Three possible scenarios to resolve the current crisis. None of them is attractive, some are dangerous.

Commenting on the sharp rise in interest rates in Russia, Anastasia Nesvetailova, Professor of International Political Economy at City University London, says:

“In the middle of last night, the Russian Central Bank made a desperate attempt to shore up support for the rouble, a move that is unlikely to save the currency or the economy beyond the very short term.

When a crisis of this nature erupts, countries tend to seek external help. Putin’s Russia has very few friends.

Against this bleak background, there are three possible scenarios to resolve the current crisis. None of them is attractive, some are dangerous.

Scenario One: Russia is saved by China and becomes a satellite of China. This merger starts a global realignment of powers and geopolitics.

Scenario Two: Putin is ejected from power by domestic clan wars or popular uprising; Russia returns to the Western fold.

Scenario Three: The Kremlin attempts to resolve the economic crisis by entering into another war conflict.
The views of critical voices in Russia suggest that scenario two is already under way. Many believe that Putin is isolated and effectively only an arbiter, caught between powerful interest groups. Lately, many of his loyal friends and allies were either removed from power or in some cases, put under house arrest.

Some analysts believe there is a power struggle between a powerful siloviki clan (KGB/Defence Ministry) and the first generation of Putin’s own state oligarchs who now are affected by the sanctions. The financial sanctions on Putin have had the untended effect of strengthening the position of the Russian Defence Ministry and the neo-conservative clan.”


  • Alexei

    Roger, #1 is unrealistic due to China’s dependence on the US. China is as dependent on the US market, as Russia depends on the oil prices. #2 can be partially true, albeit none of the existing elite is likely to turn towards the West. Liberals are marginalised in Putin’s circles and if he is ousted, it would be by the hardliners. #3 might be an option, however, they couldn’t pull through the Ukraine offensive and are unlikely to find a better target.

    At this point, the most likely scenario, in my opinion, is that they will stabilize the situation by sacking Medvedev’s government and selling lots of currency. After all, the demand for it is not that huge. See the WSJ article.

  • Roger Darlington

    A report from CNBC suggests another option:

    There is a sense of panic in Russia after a massive rate hike by the country’s central bank failed to stop the ruble from crumbling, a former United States ambassador to Russia told CNBC on Tuesday.

    However, he doesn’t think President Vladimir Putin will necessarily resort to war to distract from Russia’s deteriorating economic situation.

    “I actually get a sense of panic among economic elites right now, and that makes Putin more cautious,” Michael McFaul, a professor at Stanford University, said in an interview with “Power Lunch.”

    “Another war in Kazakhstan is not going to stop the falling ruble, it’s not going to stop the crash in the stock market and I think he understands that.”

    Instead, he sees a different type of surprise coming from the Russian president.

    “I actually think he may think about changing his government. I think that may be the surprise move you might see in the coming days or weeks.”


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