The collapse of the Chinese Wall and Russia’s inheritance
According to Iran Gate, many analysts believe that Vladimir Putin’s government experienced a historic collapse in various aspects simultaneously with the crash of the personal Prigogine jet. The numerous economic sanctions imposed by the West against Moscow have also led to serious uncertainties in Russia’s economic future.
The policy of looking eastward in the Raisi government has been prioritized more than ever, as Russia’s economic and political situation is in its most unstable state. The value of the ruble has reached its lowest level compared to the dollar, and it appears that the management of the situation is beyond Putin’s government’s control.
In such circumstances, the Kremlin has decided to increase the country’s defense budget, and many believe that this policy could have a devastating impact on Russia’s economic body, while sanctions against Moscow have intensified and Vladimir Putin is deprived of conducting regular visits with world leaders.
The ruble is in free fall.
Russia entered into a military phase and attacked Ukraine when it was enjoying a relatively stable economy. The value of the ruble was at its highest level in the past 10 years, and the situation was balanced in a way that Russian citizens could buy one US dollar for 60 rubles. Unlike Western countries, inflation had not significantly affected Russia due to the COVID-19 crisis.
However, with the start of the war in Ukraine and the Russian invasion of its territory, the process of continuous devaluation of the Russian national currency began. This process advanced to the point where in August 2023, one US dollar was equivalent to 100 Russian rubles. This indicates a decrease of over 75% in the value of the ruble in less than a year and a half, reflecting the unstable economic conditions in Russia.
Initially, during the early days of the Ukrainian war, the exchange rate between the ruble and the dollar reached over 135 units. However, the effective and proportional performance of the Central Bank of Russia halted this trend. But due to the severe sanctions imposed on Moscow, we witnessed another continuous decrease in the value of the ruble against foreign currencies.
On the one hand, in 2022, the consumer price index recorded a 14% growth, while Russia’s gross domestic product faced a 2% decline, setting the stage for an inflation rate surge in 2023.
The pressure from the Western front on the Kremlin
In the meantime, the heavy costs of the Ukraine war should not be overlooked on the Kremlin’s shoulders. This situation arises at a time when there is no sign of the war ending yet, and the situation on the front is more complicated than ever. The mysterious crash of the Prigozhin plane and the deaths of Wagner leaders on Russian soil have created ambiguity that Vladimir Putin’s political position may have already become shaky.
Nevertheless, Putin has decided to increase Russia’s military budget in 2024, reportedly raising the military’s share of the country’s budget from the current 39% to 6%. The Economist magazine has also reported on the possibility of Russia experiencing inflation in 2024 due to budget deficits.
Moscow becomes more scarce in the oil market
Putin stayed here and was driven from there.
All signs in the country’s economy indicate that Russia’s economic conditions will become more difficult in the coming years, to the extent that it hinders Russians from competing with rival countries in the world and even the region. All of these factors must be considered alongside the severe disagreements between the main members of BRICS and Russia, to the point that even in the 2023 summit, Putin was absent. The absence of the President of the Russian Federation in these circumstances was significant, especially since the South African government had announced that according to international laws, they were obliged to arrest Putin if he traveled to this country.
On the other hand, many experts and specialists in Russian affairs believe that since Vladimir Putin came to power in 2000, they have never seen his position so shaken. This proposition must be analyzed alongside recent events in the country, especially the protests against the Kremlin, events that have led to severe public dissatisfaction against Putin, to the point that he is even unable to carry out the simplest of his trips.
The Kremlin wall is weaker than Beijing’s.
Given the depicted situation, it can be said that Russia, like China, is not a suitable option for short-term, medium-term, and especially long-term partnership. It is a country that has not only failed to meet the needs of its own citizens but has also lost its international standing as the world’s second-largest military superpower. The performance of the Russian army in the Ukrainian front has shown that Putin’s military machine is inefficient and outdated, contrary to expectations.
This is while the Ibrahim Raisi government has claimed to pursue an Eastward-looking policy, which can benefit from Russian military industries. Economically, Russia has never been a suitable partner for Iran. However, there are claims of creating a banking channel between Iran and Russia from Raisi’s government tribunes, which experts believe is not at all operational.
In the event that such a channel is established, considering the history of the Kremlin-Tehran relationship, it can be predicted that this cooperation will be one-sided, and Russia, despite having multiple levers at its disposal, will take maximum advantage of the Islamic Republic to meet its own financial and even military needs in the current difficult circumstances.
English
View this article in English
