Russia on the verge of criсis?!

US-EU sanctions and negative trends in the Russian economy affect the republics of Central Asia, the economy and society which are more or less oriented towards Russia. Emotional comment Edil Baisalov regard to the situation in Kyrgyzstan may be of interest to exchange opinions.

Within a few hours last night the Russian ruble to US dollar exchange rate has fallen by more than 6 rubles, or 10%, amounting to almost (65 rubles per dollar). In order to stop the catastrophic decline of the ruble “Black Monday”, the Russian Central Bank had to announce in the morning to raise the key rate to 17%.
Just last week, kyrgiz som exchange rate caught up with the ruble, trading in some places up to 85 soms per dollar. Having lost in the past year more than 49% of its value, the Russian ruble was yesterday officially announced the weakest currency in the world. Yes, the ruble got weaker than the Ukraine Hryvnia! Russian government bonds traded with a risk rate higher than those of Rwanda. The price of oil has fallen to its lowest level in the past five years and is likely to continue its fall: OPEC said only that the refusal to reduce the level of production, even at the price of $ 40 per barrel. The morning news on Russian television today broadcast on other issues ignoring their unprecedented in scale crisis of the Russian economy, because it is no longer possible to hide by any propaganda.
Many in Kyrgyzstan are concerned with economical situation in Russia, which is our “strategic partner”, because literally 100% of all foreign and domestic policies of our government in recent years are integrated with Russia. Well-being of hundreds of thousands of Kyrgyz families, as well as the state of our economy, is directly dependent on Russia.
However, it is surprising to see how easily the “revived superpower empire”-makeup is getting washed away from Russia’s face…. We have forgotten that the power of Russia is actually rely on natural resources. Our closest ally makes living almost exclusively by pumping and selling oil and gas, which sums up to 348 billion US dollars in 2013, or about 70% of total exports.After fifteen years of its energy boom Russia has failed to get off the dependence on raw materials, and now has less diversified industry than in 1999. Furthermore it is burdened with huge spending by the state and prohibitively high level of government corruption.
For comparison, the percentage of oil export UAE in recent years is about 25%. While Abu Dhabi and Dubai from scratch created powerful industrial parks and shopping hubs, and now annually exporting technological products, machinery and equipment by $ 36 billion, Russia, and it’s hard to believe, ranks 31th (!! !) in the world in terms of exports. Needless to say, for the the new power plans that Russia is currently constructing, they are going to import Chinese turbine !!!
It turns out that in the 21st century, Russia got almost nothing to trade. In the world ranking, it would be firmly stuck next to Venezuela and Nigeria, if it did not possess nuclear weapons. Nuclear weapons are just used for propaganda by big mouths on TV: “Russia is the only country that can turn the US into radioactive ash”! “It is Russia that saved the world from fascism in World War II!” It is only the legacy that got Kremlin a seat in the UN Security Council.
In any other aspect Russia lags behind many other countries, I am not even talking about industrial leaders such as US, China, Japan, Germany, South Korea – just think about it! – The volume of Russian high-tech exports (even with the military-industrial complex !!!) is less than that of Romania and Vietnam. As noted by the German Chancellor Angela Merkel, it is a complete lack of any political and economic achievements, pushing frustrated Russia on adventures and blackmail the international community to force at all costs to be reckoned with.
Western sanctions, cutting off access to cheap long-term loans for the leading state-owned banks and state corporations in Russia, apparently only slightly accelerated the process of bankruptcy. Central Bank of Russia almost openly announced the launch of the printing press: from our recent common history, we all know what will happen next.


Last night at convenience stores such as Moscow “Ikea”, got swept by Russians hurrying to invest their rapidly depreciating rubles. Just a couple of months, millions of families have lost half of the savings in ruble deposits. Even without taking into account the effects of inflation, according to the most optimistic forecasts, the Russian economy is going to face up to 4.5%  decline  next year.
Most likely, the real stagnation will be much higher. Raising key rates almost blocking access to resources for the development of Russian small and medium-sized businesses, which together with a huge drop in domestic purchasing power and the failure of the West to extend credit and supply technologies, freezes the economy, at least for 2-3 years.

More in details


About Ahmed Islamov

I was born and raised in Uzbekistan and lived in that country for about two thirds of my life. I left the country about 14 years ago but sustained tight bonds with my family and friends living there. I know and communicate personally with hundreds of people including blue-, white- or pink-collar workers. I am naturally very attached to and concerned with everything that is going on there.
This entry was posted in Economics, Geopolitics, opinion and tagged , , . Bookmark the permalink.

One Response to Russia on the verge of criсis?!

  1. Pingback: Обвал российского рубля вдохновляет национал-патриотов в Центральной Азии | Хроники Узбекистана

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