Economic collapse forces Putin to provoke external crises

On 17 April, a pompous tele-press conference by the Russian President Vladimir Putin took place at a time when negotiations in the format of four USA, EU, Russia, and Ukraine to resolve the crisis in Ukraine were held in Geneva.

The time of Putin"s communicating with the people, and the time of the Geneva meeting, probably can not be considered accidental, just like the dominance of the theme of Ukraine in his speech. From Putin"s answers it was clear that he was ready to make concessions on the issue of Ukraine, and change rigid agenda on the federalization of the country to respecting the rights of minorities within a holistic Ukraine. This line of a new behavior was noted in the statement of Minister of Foreign Affairs, Sergey Lavrov, after negotiations of the four countries, what indicates the correction of the policy towards Ukraine in the Kremlin.

However, it would be naive to think that Moscow will immediately withdraw its conspiratorial troops from Ukraine, and will promote the peace process. The chances are 50/50. This is confirmed also by careful estimation of peaceful rhetoric of the hawks of the Kremlin policy on the part of the leaders of the major Western countries.

The nationalist and revisionist tone of the President Putin at the press conference, whose rating exceeds the limit in opinion polls, yet could not hide the deep economic and social problems, which have faced the Russian society. Putin too softly admitted that such problems exist in many regions of the country, but he did not admit that there will be even more problems.

The Russian Prime Minister, Dmitry Medvedev, admitted earlier the failure of Putin's "Strategy 2020" - Concepts of long-term socio-economic development of Russia until 2020. This is improved version of the first program, developed in 2006-2007, which was aimed at ensuring the long-term (2008-2020 years) sustainable welfare of Russian citizens, national security, dynamic economic development, strengthening of Russia's position in the world community. But because of the crisis in 2008-2009, it had been reformatted again in 2011.

The strategy provided for the restoration by the year 2012 the level of development of the country similar to the level of 2007 year. But until now, the government failed to:

Increase the life expectancy by 2.5 years;

GDP growth by 37-38 %;

Productivity growth by 40-41 %;

Reducing energy intensity of GDP by 17-19 %;

Growth in real disposable income - by 53-54 %;

Growth of investment in fixed assets by 80-85 %, etc.

Moreover, according to the latest revised data obtained on the eve of the press conference, the situation is worsening in spite of optimistic expectations of the Kremlin. The drop in production, income of people, inflation, and unemployment grow rapidly. Investment theme, which is called the Achilles heel of Russia, indicates a serious crisis, which the country has not seen over the past 15 years. Over the first quarter investment outflows reached $ 100 billion at the forecast $ 70 billion for the entire 2014. According to Russian experts, annualized capital outflows may exceed $ 200 billion. Budget deficit over three months totaled more than $ 30 billion, and the prices for many foodstuffs have increased by 20-30%, said an independent expert Dmitry Adamidov.

Ministry of Economic Development had to revise the GDP growth forecasts for the coming years, and to cut it by two times from 2.5% to 1.1%, said Deputy Minister Klepach. However, Finance Minister Anton Siluanov had to confirm last year's forecast of independent economists on GDP decline to zero and below. By the end of 2014, Russia's GDP will grow by 0.5 per cent, and probably will be "near zero," said Finance Minister, Anton Siluanov, at the expanded meeting of the Board offices.

According to him, the conditions in which they will have to work in 2014 are the most difficult since the crisis of 2008-2009. Besides, the minister warned of a possible decline in oil prices and capital outflows. These trends are due to unstable geopolitical situation, Interfax reported.

Staff reductions by 7.5 thousand people in 2014 in "AvtoVAZ", planned last year, proved to be founded. Net loss of the flagship of the Russian motor industry in the first quarter grew by 9.6 times, which evidences decline in the solvency of the population, especially with middle and lower-middle income, which inevitably leads to increased social tensions.

Development of the situation and extent of the crisis once again reinforce previous conclusions by Turan agency on the causes of Ukrainian overtures by the Kremlin. The deepening crisis demonstrates once again, and it was clear from the press conference, that Putin's team had to play the Ukrainian card to distract the population from domestic problems, increase trust in the government, and to unite society before the so-called external threats.

Putin was no other way out of the situation, and the veiled large-scale economic crisis needed the same vulnerable opponent, such as Ukraine. Aggression against any other country in the CIS would not give the desired effect. Seventy percent support by the Russian society for the actions of Putin shows that the effect has been achieved. However, this does not mean that the conflict around Ukraine has exhausted, and other countries are not in danger. Putin will continue to play the Ukrainian card, and will have to look for other reasons for creating external crises for disorientation and disorganization the protest mood in Russian society. Only support for the Russian economy by the developed countries can mitigate the situation. The world has already seen such support in the form of rising energy prices, a huge investment and the opening of the global arms market for Russian weapons after the crisis in 1998-1999 and 2008-2009. It's a dilemma that should be solved by all whose security and interests may threaten Russia: inadequate Bear with nuclear weapons in the den, woken during hibernation, is too dangerous, even for those who are not involved in his awakening.

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