A seemingly perfect storm of plummeting oil prices and western sanctions was supposed to tame the Russian bear. Less than 3 years later, Russia's economy is back on track.
Watching the ruble make a (modest) comeback against the dollar and euro over the last week, we were suddenly reminded of the fact that Russia is expected to return to growth in 2017. This means it took Russia less than three years to recover from plummeting oil prices and western-imposed economic sanctions.
It was March, 2014 when the sanctions were announced, and things went from bad to worse after that. The ruble tanked after oil plummeted to historic lows. Major budget cuts were announced (the Russian government depends heavily upon oil revenues to balance its checkbook). Russia's Central Bank began to burn through its foreign currency reserves, in hopes of protecting the ruble from speculators. It looked grim.
By now, Russia was supposed to have been crushed. Completely destroyed. Look at how wrong all the pundits and politicians were.
Three years later, and Russia's economy is growing. Russia also became the world's biggest wheat exporter in the process.
We wrote last weekend about why we think sanctions and counter sanctions should remain (please, keep them).
And while discussing the advantages and disadvantages of the current sanction regime is of course important and necessary, it almost misses the larger story here: You can't tame the bear.
For better or for worse, Russia has always looked longingly at the west, in hopes that it could finally be accepted as an equal member in the European community.
Over the last three years, Russia has learned something that could very well save the entire Russian nation: Russia can only depend on itself. While growing friendships with China and Eurasia are of coruse encouraging, the truth is that Russia's vast natural resources and military prowess makes it a country with few true friends, and many jealous enemies.
This of course could all change if Europe decided to remove itself from Washington's yoke. Large books have been written about how Anglo-American geopolitical strategy is aimed at sabatoging economic and political cooperation between Russia and Germany. If those two ever got together, the whole world would be bending the knee in ten years.
At any rate: There's still plenty of work to be done to get Russia back on its feet. Back can we all take a moment and appreciate that Russia beat the odds, in less than 3 years, and became the world's biggest wheat exporter in the process? Not too shabby.
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