Can Russia be Saved?

The global economic crisis has finally forced Russia's government to adopt reasonable policies, thereby staving off disaster – at least for now. But the ossified, corrupt, inefficient economy built in the fat years of the oil boom may still prove impossible to save.

MOSCOW – Russia’s economy is collapsing, but the situation could be even worse. The global economic crisis has finally forced the government to adopt sensible policies, thereby staving off disaster – at least for now.

Official forecasts for Russian GDP growth in 2009 remain positive, but most analysts, including government officials, are bracing for a severe recession – which, indeed, appears to have started in the fourth quarter of 2008. The stock market’s collapse – its 72% fall is the largest of all major emerging markets – is only the most visible sign of this.

Even Russia’s oligarchs are pawning their yachts and selling their private jets. Signs of political instability are mounting. The approval ratings for Russia’s president and prime minister are heading south. Mass street protests have started – not led by opposition political parties but by workers and middle-class families facing job losses and declining wages. More importantly, protesters are demanding that the government resign –unthinkable just a year ago.

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