This very long article in the Telegraph is behind a paywall, but that link should work for everyone. It is headlined: “Putin fears another coup as Russia finally begins to buckle.” Subhed: “Panic in the Kremlin as it runs out of cards to play just as Trump turns the screws.” The article is too long to excerpt effectively, but I will try:
Suddenly, Putin has many reasons to be worried.
Russia’s economy is beginning to buckle. Businesses have been crippled by high interest rates, government borrowing costs have soared and economy minister Maxim Reshetnikov warned in June that the country was “on the brink of a recession”. Warnings are mounting over a potential avalanche of bad debt that could trigger a financial crisis.
There is much more explanation of the economic crisis, which you can read at the link. Among other things, the Russian government has been financing the Ukraine war off the books, with Putin pressuring Russian banks to lend money to defense companies. Those are bad loans that are now coming due.
Now Donald Trump is turning the screws. After frustration over a lack of progress to end the war in Ukraine, the US president announced new sanctions on two of Russia’s biggest oil companies on Wednesday.
India and China, the main buyers of Russian oil since the war began, responded by curbing purchases. It threatens to cut off crucial oil revenues to Putin’s war machine – and the Russian state.
“For the first time in three and a half years, Russia’s really getting hurt,” says Timothy Ash, an associate fellow at Chatham House’s Russia and Eurasia programme. “I think there’s some panic.”
The crisis is hitting Russian consumers:
The war is hitting home for ordinary citizens. Thick plumes of smoke have been rising from Russian oil refineries across the country this year following an unprecedented barrage of Ukrainian drone attacks.
Since January, Ukraine has hit 21 of Russia’s 38 largest refineries where crude oil is refined into products like petrol. It has struck as far as 683 miles into Russia from the Ukrainian border.
So much supply has been knocked out that petrol prices have surged by 40pc since the start of the year. Officials have introduced rationing in occupied Crimea while small petrol stations in Siberia have closed down. Social media is filled with video footage of enormous queues of cars waiting to fill up.
To try to make ends meet, Putin’s government has vastly expanded borrowing, although, to be sure, Russia’s national debt is nothing like ours.
It has also massively ramped up borrowing. Between January and August, Russia’s issuance of bonds surged by 104pc year-on-year, according to the KSE Institute. Total issuance this year could hit a record high.
This borrowing binge is eye-wateringly expensive. Yields on 10-year Russian government bonds hit a four-month high of 15.2pc earlier in October.
Fifteen percent on government bonds is a disaster in the making.
Trump has therefore chosen a particularly painful moment to begin turning the screws on Putin.
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Russia’s economic weakness may encourage Trump to go further. “A major argument for him pushing Ukraine to compromise was that Russia would inevitably win this war. As he put it tactlessly in the White House, ‘You have no cards,’” says a former US diplomat, referring to Trump’s explosive White House press conference in February. “He does like winners.”Now, it may be Putin who has no cards.
Intense pressure will be essential if Trump truly wants to stop the war, says [Mikhail] Khodorkovsky. “All the concessions that could have been offered to Putin have already been offered. It’s time for Trump to play the ‘bad cop’.”
He appears to be doing just that, pushing Russia’s economy to the brink. Trump told reporters in the Oval Office: “All of a sudden this economy is going to collapse.”
It looks like that prediction may well come true, sooner rather than later. As we say, much more at the link.
