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Suddenly, Russia's Confidence Stumbles


The Russian economy is in trouble. The price of the ruble is sinking. It's now worth 50 percent less against the dollar than it was a year ago, as the price of oil falls and Western economic sanctions tighten. Russia's president, Vladimir Putin, held his annual press conference this week and it lasted three hours. He tried to reassure the nation, but even as he spoke the ruble fell a few points more. We're joined now by Michael McFaul, a professor of political science at Stanford and former U.S. ambassador to Russia. Thanks very much for being with us again.

MICHAEL MCFAUL: Sure, thanks for having me.

SIMON: It wasn't so long ago that rich Russians were strutting a little. What's happened?

MCFAUL: Well, just what you described. There's been fall in the oil prices, which has had a big effect on the ruble; exacerbated by the sanctions, in my view, and suddenly a confident Putin and a confident Russia is no more. I think growth is next to zero by the end of the year and many people are predicting negative four - maybe even negative 5 - percent economic contraction next year.

SIMON: Does anyone in Russia say - are they bold enough to now say in public that invading Crimea doesn't look like such a smart move?

MCFAUL: Bold enough in public - that's an interesting phrase. I would say no to that, but that said, lots of people are now beginning to raise that quietly. And the trade-off, economically, for what happened in Ukraine is becoming a serious issue that people are discussing. One person who's not discussing it that way, however, is President Putin and that's the person that matters in terms of changing the policy of Ukraine.

SIMON: I gather polls show an 80 percent approval rating, which any Western Democratic leader would certainly envy. Is he that popular?

MCFAUL: Well, yes and no. I mean, he's popular in that he's the only leader on the national stage, right? So there's no alternative. There's no independent media, per se. There's not a - you know, I remember just watching the president's statement about Cuba. Immediately, on all other television stations were critics of his. That doesn't happen in Russia. The parliament just rubberstamps what he does, so I don't think that 80 percent number is as robust as it would be in a democratic society, but yes, he's still popular. He's still the leader and most people don't see an alternative to Putin inside Russia.

SIMON: A lot of voices say the Russian economy needs to diversify, not depend so much on oil. Is it possible to diversify and how quickly?

MCFAUL: Yes, lots of people have been saying that for years, including senior government officials, including the former president - President Medvedev. It was striking to me that Putin himself said that in his press conference. And that hinted at the possibility of some serious structural reforms - admitting that this is not just about oil prices and sanctions, but about economic policy inside Russia. But he did not outline what that was, right? He held his cards, but I'm looking to that in the coming, you know, after the New Year to see if they will take that on seriously.

SIMON: Let me read something else with you. There's a former esteemed U.S. ambassador to the Soviet Union, George Kennan, who used to say that Russia gets dangerous when it feels cornered. Is there a danger that the combination of falling oil prices and Western sanctions will make Russia feel cornered and that it'll lash out?

MCFAUL: I did not detect that in Putin's three-hour press conference. I did not see him saying we need to open up a second front in our confrontation with the West. I actually saw hints of him looking for a deal, hints of him wanting to be more conciliatory vis-a-vis the West. And so I didn't detect that, you know, we're in the corner and we're going to lash out. It was more conciliatory for Putin. I want to emphasize that.

SIMON: Yeah. At some level, is this what American policy wanted?

MCFAUL: At the beginning of the Obama administration - when I joined the government - this is exactly what we didn't want. We wanted a cooperative relation with the Russians that would be good for the United States, good for Russia.

SIMON: So do Russians of means put all their money into London townhouses now?

MCFAUL: Oh, I'm sure Russians who can do that have already done that. What it will be important to watch for the new year is do people in the middle class buy television sets and cars? And that's a confidence game, but I don't think we're out of the potential for panic moment yet.

SIMON: Former U.S. ambassador to Russia Michael McFaul is now at Stanford. Thanks so much for being with us.

MCFAUL: Sure, thanks for having me. Transcript provided by NPR, Copyright NPR.

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