“Russia seems ready to try anything to escape the chokehold that free-falling oil prices are putting on its economy,” said Pierre Briançon on Breakingviews – even to the point of considering joining Opec. But it’s hard to see how it would benefit from this. Cartel membership would oblige it to cut output – but with the black stuff down to under $40/barrel, production cuts would hit revenue just when it needs it most. “Russia may be tempted by closer cooperation with Opec. But it’s still a long way from joining it.”
In any case, oil is far from Russia’s only problem, said Neil Shearing of Capital Economics. A lending boom also played a huge part in the country’s growth and the credit crunch threatens this. Meanwhile, “the recession in Western Europe looks set to hit manufacturing hard” and the recent plunge in the rouble will not help exporters much, because the problem is one of deficient demand, not a strong currency. “The question is not so much how far growth could slow… but whether the economy could grow at all.”
The state of the country “looks worse with every passing day”, agreed The Economist. And this could have some unexpected consequences. Economic growth and political stability were “the two proudest achievements” of Vladimir Putin and his ex-KGB coterie. “Now the economy is looking wobbly… the big question is whether the regime’s politicial control will crack too.”