More broadly, the Russian government is facing a serious economic crisis on several fronts. Just six months ago, its huge pile of almost $600 billion in foreign reserves seemed a symbol of the country’s new-found strength. But they have got through roughly a quarter of that in just three months – mainly through supporting the rouble. At this rate, it will all be gone well before the end of 2009. That is not an entirely implausible scenario, because the fiscal pressures on the Russian government are only likely to grow over the next year. Official projections are still that the economy will grow by about 3%; but private-sector economists in Moscow are talking about a deep recession. With oil down at just over $40 a barrel, the cash-spigot has been turned off.
There is a danger that, as the government comes under increasing fiscal pressure, it will be tempted to raid the foreign reserves for ordinary budget spending – espescially if the alternative involves cutting social spending and risking further popular unrest.