Are the Russian people so dedicated to President Vladimir Putin that they will actually “eat less” throughout these times of crisis? That’s what one top Russian official proclaimed in Davos, Switzerland during the World Economic Forum on Friday.
Russian Deputy Prime Minister Igor Shuvalov, who is considered to be one of the richest men in the Kremlin, warned against Western leaders from attempting to topple the Putin regime and argued that the Russian people will sacrifice their own wealth for the good of the country and their president.
The nation has been sliding into a recession this past year as a mixture of economic sanctions, falling oil prices and a crumbling ruble have contributed to the gradual collapse of the Russian economy. In order for Moscow to balance its books again a barrel of oil needs to reach at least $100.
Shuvalov averred that the West does not treat Moscow like an equal, which is part of the reason why the Ukraine conflict will be “a bleeding wound for decades.” He added that the West is desperately trying to “put Russia in its place” as “the West says to Russia; ‘Go to your corner. We will teach you through our sanctions.'”
Ultimately, Shuvalov believes this type of action perpetrated by the West and its leaders trying to oust Putin will only unite the country.
“When a Russian feels any foreign pressure, he will never give up his leader,” Shuvalov argued, the Associated Press reported. “Never. We will survive any hardship in the country — eat less food, use less electricity.”
Although Shuvalov defended Russia’s foreign policy, he did say that the country is heading into a prolonged crisis, something that will be much worse than the financial collapse in 2008, which hurt Moscow for two consecutive years. He suggested that Russia should implement a series of reforms and support measures in the banking system, especially considering that the country’s foreign currency reserves declined two percent last week to $379 billion as the Bank of Russia sold foreign currency to try to revive the ruble.
“It is going to get worse and the anti-crisis plan should be aimed at adapting to the hard landing,” stated Shuvalov.
Capital exiting Moscow
Former Finance Minister Alexei Kudrin said Friday that between $90 and $110 billion worth of capital will make an exodus from Russia, according to a report from the Moscow Times. He conceded that Russia can’t downplay the economic sanctions because it’s causing a massive blow every single year that passes.
These sanctions have all but eviscerated Russian companies from gaining access to global capital markets, which has made it rather difficult for debtors to roll over loans. Kudrin added that $120 billion supplied by foreign creditors will be due sometime this year, something that could generate a serious crisis.
Last year, capital outflows skyrocketed to more than $150 billion over sanctions applied against Russia for its conflict in Ukraine as well as the tumbling oil prices. The price of oil has immensely declined in the past several months as it is now trading between $40 and $45 per barrel.
