March 17, 2015

“Russian Spring-2015” or “boomerang effect”

A year ago, Russia resorted to covert armed aggression against Ukraine within the framework of the scenario of the so-called “Russian Spring”, which provided for organization of mass unrest among the population of eastern and southern regions of our State on the basis of spreading the ideas of the pro-Russian and anti-Ukrainian separatism. The Russian Federation had set a goal to split Ukraine, to prevent its European and Euro-Atlantic integration, to eliminate its statehood and/or return it to its sphere of influence within the framework of building the so-called “Russian world”, but in fact — to revive the Russian Empire as a major geopolitical goal of V. Putin's regime and the essence of his personal ambitions.

At this, the use of military force against Ukraine in the form and methods of a “hybrid” war shows that Russia cannot “draw” the Ukrainian state with the help of others, political and economic activities into the Russian integration projects (Custom, and later — the Eurasian Unions). Actually, these initiatives were not accepted by Ukraine, preferring Western (democratic) values ​​and the European way of development.

In response to this step of our state, Russia decided on military intervention. This can be called Putin's regime's “last argument”. However, despite all efforts, Moscow did not manage to implement its plans. Thus, Russia invaded and annexed the Crimea, provoked an armed conflict in the southeast of Ukraine, having captured a part of Donetsk and Luhansk regions. But despite all the negative consequences of this for our country, in the main it managed to stop Russia, to maintain the integrity of the vast majority of Ukraine's territories and to continue the chosen course of reforms and rapprochement with the EU and NATO.

Besides, instead of implementing the ideas of “Russian world”, Russia's armed aggression against Ukraine has caused the “boomerang effect” — has provoked a crushing blow to the Russian Federation itself in the form of the USA and EU's political and economic sanctions. In fact, since the beginning of 2015 the “Russian Spring”, prepared by Moscow for Ukraine, has got filled with new content (now for Russia), resembling the “Arab Spring” of 2011 (for the Middle East and North Africa). This is evidenced by the growing problems in the Russian economy, becoming critical and gradually creating the threat of a social explosion in the Russian Federation

In this context, the most negative consequences for Russia had the Russian Federation's limited access to Western loans and investments, which resulted in the Russian banking system's significant losses and has greatly complicated the operation and development of the Russian economy. For example, since the beginning of introduction of the international political and economic sanctions against Russia in the spring of 2014, a direct outflow of foreign capital from Russia has reached the amount of 150 billion US dollars and continues.

It is noted that the decrease in consumer activity in Russia, blocking the work of Russian business in the USA and Europe, Moscow's introduction of counter-sanctions for Western goods, as well as a number of other factors have caused a strong tendency of termination of work of many Russian banks and companies, receiving “domino” effect. In particular, to date, completely or partially are not working most of the plants for the production of road, railroad and aviation equipment. At the same time, according to the Russian statistical authorities, since the beginning of 2015, unemployment in Russia on average increases by 20 thousand people weekly and by the end of the year could reach more than 2.5 million. At least 3 million people will have part-time jobs.

Critical situation is also observed in the agricultural industry of the Russian Federation, which has always been subsidized. Thus, according to Russian experts, due to high interest rates, farmers cannot get bank loans, so there is a real danger of breaking the spring planting season this year. In turn, this will inevitably cause a food crisis in Russia, especially because Russia has closed its market to European and Ukrainian food.

Is coming to the boil the situation in Russia's most important industry — energy, ensuring the formation of the main part of the state budget of the Russian Federation and playing a major role in the foreign exchange earnings. This is due to the fall in world energy prices, reduced demand for Russian gas and oil in the EU (mainly due to the diversification of supplies), as well as a significant reduction in Russian gas supplies to Ukraine (the largest consumer of Russian “blue fuel”).

Thus, according to the Russian government's forecasts, due to the fall in world oil prices, the Russian budget losses may exceed 1 trillion rubles in 2015. At the same time, by the results of 2014, the Russian “Gazprom” has reduced gas production by more than 16 %, while its revenues have decreased by approximately 30 %.

In the future, this trend will intensify. The reason — the depletion of oil and gas fields in Western Siberia, Russia, as well as the Russian side's failure in the development of new deposits (now in the remote areas in the North and East of the country, as well as on the Arctic shelf) as a result of the USA and EU's embargo on supplying the Russian Federation with modern technologies. Today, this has led to the closure of a number of promising projects for oil and gas production in the Russian Federation together with the US and European companies. Besides, there is a cessation of functioning of refineries due to their unprofitability.

The fall in world oil prices has also become one of the main reasons for the collapse of the Russian ruble in relation to leading world currencies — the US dollar and the euro, which in turn has led to higher inflation in Russia. Thus, according to official data, since the beginning of this year inflation in Russia has made 16-17 % in annual terms. At the same time, the real price of the main groups of goods (primarily food) has risen by 60-80 %.

All this determines the acceleration of the stagnation of the Russian economy, including drop in the country's GDP, which is expected to reach 5.5 % in 2015. At the same time in separate regions of the Russia, the industrial production index today has fallen by 70-80 % as compared with 2014.

Decrease in revenues from energy carriers exports, as well as reduction of production significantly reduce revenues for the state budget of the Russian Federation that makes Russia's leadership tighten the policy of budget savings. The fact that this problem is very serious is confirmed by the Russian government's decision (February 2015) on sequestration of the 2015 budget by about 10 %.

Mostly it comes to socially oriented expenditures, including fulfilling the iconic for Putin decrees of 2012 to fulfill his election promises to improve living standards of Russian citizens. In particular, are being reduced outlays to support the poor, on health care, education and culture, are being reduced salaries of employees of the public sector and business structures (including the leading Russian companies “Gazprom”, “Rosneft” and the like), and the indexation of pensions is stopped. Similarly, has been reduced funding for science, including the most high-tech industries (rocket-space industry included).


Defense order of the Russian Federation in 2015. Defense Ministry intends to continue rearmament this year


Filling of a defense order of the Russian Federation in 2014. Military improvement of the Russian army with weapons and equipment increased by 7 % for the year, serviceability — by 5 % (to 85 %)



At the same time military spendings remain virtually unchanged (making 40 % of the expenditure of the state budget of the Russian Federation), which, on the one hand, confirms the aggressive nature of the regime of Vladimir Putin and his intention to continue the armed aggression against Ukraine, and on the other — it makes continue spending foreign exchange reserves of the Russian Federation to cover the state budget deficit. Since the beginning of this year Russian reserve funds have decreased by 20 % to a minimum (since 2007) level — about 360 billion US dollars as of March 1 (monthly average reduction is about 15 billion US dollars). Taking into consideration the need to pay the Russian Federation's external debts (including the loans taken by Russian companies under the state guarantees) in the amount of 125 billion US dollars in 2015, Russia may be in a situation of technical default in the autumn of this year.

Such problems are already felt by the majority of the population of Russia. According to the survey in March of this year, 70 to 85 % of Russian citizens have felt deterioration of their living standards due to the economic crisis in the country, and they expect further worsening of the situation in the Russian economy. At this, the Russians' biggest concern is losing jobs, which is becoming a reality for a large part of the working population of the Russian Federation.

In turn, this activates the mood against the government in Russian society, as evidenced by the protests in different cities of the country. Protests are increasing. Today they are seen in the form of both, mass meetings in Moscow (in particular, March 1 with the participation of about 50 thousand people), and individual picketing by doctors, teachers and workers of Russian enterprises, subject to reduction. With further aggravation of the economic situation in Russia, social unrest will necessarily increase, as it happened in the early 1990s.

The catalyst for these protests may be killing of one of the leaders of the Russian opposition Boris Nemtsov February 27, which provided the opposition forces of the Russian Federation with the “sacrificial symbol” of struggle against the Russian authorities. It was with such resonance events that mass protests of the “Arab Spring” in the Middle East and North Africa began and ended in the change of power in Egypt and Libya, and had led to a long-term civil war in Syria. By analogy, the same events are sure to cover Russia.

Another manifestation of the “Russian Spring’s” sample of 2015 has become the spread of negative attitudes towards Russia's integration projects and initiatives (primarily the Eurasian Economic Union and the Eurasian Union) among the leaderships, business circles and population of Russia's closest allies — Belarus, Kazakhstan and Armenia. First of all, this is due to the negative impact on these countries of international sanctions against Russia. This, against the backdrop of worsening of the socio-economic situation in Russia, effectively negates the idea of ​​renewing Russian control over the post-Soviet space as part of the construction of the Eurasian Union.

There is every reason to believe that the above-mentioned processes are characterized today by rapid activation, and in fact, they provide the “boomerang effect” for Russia. Soon they will become irreversible — in case of Russia's further provocative violations of Minsk agreements and cynical continuation of the covert armed aggression against Ukraine.