Raisi’s Souvenir on the Fragile Wall of China and Russia
Raisi’s Souvenir on the Fragile Wall of China and Russia According to Iran Gate, many analysts believe that Vladimir Putin’s government experienced a historic downfall in various aspects simultaneously with the crash of Prigozhin’s private jet. Numerous Western economic sanctions against Moscow have also led to serious uncertainties regarding Russia’s economic future.
The policy of looking to the East in Raisi’s government has been prioritized more than ever, while Russia’s economic and political situation is in its most unstable state. The ruble’s value has hit its lowest compared to the dollar, and it seems that the situation is slipping out of Putin’s government’s control.
In such circumstances, the Kremlin has decided to increase the country’s defense budget, and many believe this policy could be a severe blow to Russia’s economy. Meanwhile, sanctions against Moscow have intensified, and Vladimir Putin is deprived of the usual travels of world political leaders.
The Ruble in a Downward Spiral
Russia entered the war phase and attacked Ukrainian soil while enjoying relative economic stability. The ruble’s value was at its highest in the past 10 years, and the situation was balanced, such that Russian citizens were buying each US dollar for 60 Russian rubles. Inflation, unlike what was seen in Western countries, had not significantly increased due to the COVID-19 crisis.
However, with the start of the Ukraine war and the Russian invasion of this country, the process of the continuous decline in the value of Russia’s national currency began. This process advanced to the point where by August 2023, each US dollar was exchanged for 100 Russian rubles. This fact, indicating a more than 75% decrease in the ruble’s value in less than a year and a half, highlighted the dismal state of Russia’s economy.
In the early days of the Ukraine war, the ruble-dollar exchange rate even exceeded 135 units, but the exceptionally appropriate and consistent performance of Russia’s central bank halted this trend. However, given the severe sanctions imposed on Moscow, we again witnessed the continuous decline in the ruble’s value against foreign currencies.
On the other hand, in 2022, the consumer price index recorded a 14% growth, while Russia’s gross domestic product faced a 2% decrease, setting the stage for an inflation rate spike in 2023.
Western Front Pressure on the Kremlin’s Shoulders
In this context, the heavy costs of the Ukraine war on the Kremlin’s shoulders should not be overlooked. This situation arises while no sign of the war’s end is visible, and the situation at the front is more complicated than ever. The mysterious crash of Prigozhin’s plane and the death of the Wagner leader on Russian soil have created the ambiguity that Vladimir Putin’s political position has become more precarious than before.
Nevertheless, Putin has decided to increase Russia’s military budget in 2024, in such a way that it is said the military sector’s share of Russia’s budget has risen from 39% this year to 46%. The Economist also noted this point, reporting the likelihood of Russian inflation surging in 2024 due to a budget deficit.
Moscow Fades in the Oil Market
In recent years, Russia, alongside Saudi Arabia, has always been recognized as the largest player in the global energy market. However, following the United States’ powerful entry into this market in the past five years, the tide has turned for Moscow. The US managed to take over a substantial portion of the market, reducing Riyadh and Moscow’s share.
But it didn’t stop there, and Russia’s share of this lucrative market severely decreased following Russia’s invasion of Ukraine in February 2022. The Economist reported Russia’s daily income of about $425 million from oil exports, while, for instance, Saudi Arabia had daily earnings exceeding $1 billion, managing to swallow Moscow’s share in this market to the extent that many analysts believe the biggest winners of the Ukraine war are the Gulf oil countries, which see an exceptional opportunity before them with Russia’s removal from global markets.
It should be noted that given the increasing Western sanctions on Russia’s oil and condensate exports, Russia faces a more dire situation ahead, such that Moscow’s oil revenue is expected to decrease by more than 23% in 2024 compared to the previous year.
Putin Stuck Between a Rock and a Hard Place
All indicators in this country’s economic landscape suggest that Russia’s economic situation will become more challenging in the coming years, preventing Russians from competing with their rival countries globally and even regionally. All these factors should be considered alongside the severe disagreements between BRICS’s main members and Russia, which even led to Putin’s absence from the 2023 summit. The Russian Federation’s president’s absence occurred while the South African government announced it would be forced to arrest him upon his visit due to international laws.
On the other hand, many experts and specialists on Russian affairs believe that since Vladimir Putin took office in 2000, they have never seen his position as shaky as it is today. This statement should be analyzed alongside the recent events in this country, especially the Wagner uprising against the Kremlin, events that have caused severe public dissatisfaction with Putin, rendering him unable to undertake even the simplest of his travels.
The Kremlin Wall Weaker than Beijing
Given the depicted situation, it can be said that Russia, like China, is not a suitable option for partnership in the short, medium, and especially long term. A country that has not only failed to meet its citizens’ needs but also lost its international standing as the world’s second military superpower. The Russian army’s performance on the Ukrainian front showed that Putin’s military machine, contrary to expectations, is very inefficient and worn out.
Meanwhile, Ibrahim Raisi’s government, prioritizing the policy of looking to the East, claims it can benefit from Russian military industries. Economically, Russia has never been able to be a suitable partner for Iran. However, claims of establishing a banking channel between Iran and Russia are heard from Raisi’s government platforms, which experts consider unfeasible.
Even if such a channel is established, given the history of Kremlin-Tehran relations, it can be predicted that this cooperation and interaction will be one-sided, and Russia, with the multiple levers it holds, will take full advantage of the Islamic Republic to meet its financial and even military needs in the current difficult conditions.
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