Putin’s problems mount as coronavirus hits Russian economy

It was meant to be the day Russians voted to change the constitution to allow President Vladimir Putin to extend his rule until 2036.

Instead, Putin spent Wednesday troubleshooting one of the biggest crises of his rule – fallout from the coronavirus outbreak.

Because of the pandemic, the constitutional vote – described by opponents as a power grab – has been postponed until an unspecified future date.

So too has a military parade marking the 75th anniversary of victory over Nazi Germany in World War Two, an historic event the former KGB officer has long used to support his narrative of a Russia that, thanks to him, is resurgent.

Putin has survived many crises before, and there is no sign that he is about to be toppled. But problems are piling up for the man who has dominated Russia since 2000.

According to Reuters, the price of oil, the Russian economy’s lifeblood, is at its lowest level in nearly two decades, and the rouble is now one of the world’s worst performing currencies. Gross domestic product could fall by 15% if oil prices drop below $10 per barrel, Russia’s biggest bank says.

“There won’t be a macroeconomic meltdown but I’m worried about the population losing their livelihoods,” said Sergei Guriev, a senior economist who left Russia in 2013.

Former finance minister Alexei Kudrin says the number of jobless Russians could more than triple to 8 million this year.

And oil and gas revenues could drop by $165 billion, said Nordea Russia chief economist Tatiana Evdokimova, which would force the government to dig deep into its international reserves to fund the state budget, already facing a big shortfall.

A nearly 26-trillion-rouble ($338-billion) programme, meant to contribute to Putin’s legacy, looks less likely than ever to lift living standards and improve infrastructure as much as hoped.

“All these things combined amount to the single biggest challenge for Putin in his 20 years in power,” said Professor Sergei Medvedev, from Moscow’s Higher School of Economics.

“The landscape has changed dramatically. Stability has been ruined, Putin has much less legitimacy, and dissent among the (political and business) elite may be brewing. The regime will be in survival mode for the next year, groping for reserves.”

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