Russia remains enmeshed in the supply chain of Western ideas and technologies, and remains dependent on foreign investors
Save time by listening to our audio articles as you multitaskThe ructions in Russia’s markets have taken many by surprise. For years President Vladimir Putin had, apparently successfully, built up Russia’s economic defences, such that it would easily be able to resist whatever Western governments threw at it—what Timothy Ash of BlueBay Asset Management dubbed the “Fortress Russia” strategy. It turns out that the strategy has been a failure.
As Fiona Hill and Clifford Gaddy show in “Mr Putin: Operative in the Kremlin”, a book published in 2015, the Russian president has long wished that his country could be self-reliant. Since 2014, however, that ideology has gone into overdrive, with Mr Putin desperate to ensure that the West could never again exert economic control over his country.
There have been some successes. Take the economy first. Russia is somewhat less dependent on hydrocarbons. In 2019 oil profits accounted for about 9% of, down from around 15% when Mr Putin took office. Oligarchs remain exceptionally powerful, controlling a huge share of overall Russian wealth, but their influence appears to have stopped growing.
The chaos in Russia’s financial markets has been an even bigger surprise. After all, by 2022 Russia had $630bn-worth of international reserves , the most ever, and had diversified away from American dollars. It had also greatly reduced its foreign-denominated debt owed to foreigners since 2014.
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