“Putin Watches Russian Economy Collapse Along with His Stature,” blared a headline in Time in late 2014. Yet three years have passed since the price of oil crashed in 2014, halving the value of the commodity that once funded half of Russia’s government budget. That same year, the West imposed harsh economic sanctions on Russia’s banks, energy firms, and defense sector, cutting off Russia’s largest firms from international capital markets and high-tech oil drilling gear. Many analysts—in Russia as well as abroad—thought that economic crisis might threaten Vladimir Putin’s hold on power. It doesn’t look that way now.
Today, Russia’s economy has stabilized, inflation is at historic lows, the budget is nearly balanced, and Putin is coasting toward reelection on March 18, positioning him for a fourth term as president. Putin has recently overtaken Soviet leader Leonid Brezhnev as the longest-serving Russian leader since Joseph Stalin. Economic stability has underwritten an approval rating that hovers around 80 percent. Putinomics made it possible for Russia’s president to survive repeated financial and political shocks. How did he do it?
Russia survived the twin challenges of the oil price crash and Western sanctions thanks to a three-pronged economic strategy. First, it focused on macroeconomic stability—keeping debt levels and inflation low—above all else. Second, it prevented popular discontent by guaranteeing low unemployment and steady pensions, even at the expense of higher wages or economic growth. Third, it let the private sector improve efficiency, but only where it did not conflict with political goals. This strategy will not make Russia rich, but it has kept the country stable and kept the ruling elite in power.
That said, does Putin really have an economic strategy? A common explanation of Putin’s longevity is that he survives because Russia’s oil revenues keeps the country afloat; Russia’s economy is known more for corruption than for capable economic management. But the Kremlin could have adopted different economic policies—and some of
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