The Kremlin is searching for ways to hold the country together in the face of a struggling economy.
By Antonia Colibasanu
The Russian government announced yesterday that, considering the difficult fiscal environment, it plans to increase the use of interregional budget transfers to help poorer regions. Russian regions have seen their debt increasing during the last few years and have reached out to commercial banks for loans and bond issues to get cash and service some of their debt, even though Moscow has offered them cheap loans.
Russia’s vast geography has always been a challenge for its leaders. The country’s immense landmass is disproportionally populated because of its climate. Much of the Russian population lives north of the 50th parallel, which is even further north than Canada’s main population centers. This makes agricultural production scarce. Population density and urbanization rates are higher in the western regions, which have seen greater commercial development, considering their access to river routes. These factors have resulted in dramatic differences between rural and urban Russia and between western and eastern regions. These differences are highly problematic during times of economic crisis.........Russia is facing troubling times – all pointing to our forecast that Russia will face a major crisis by 2020. With a declining economy and limited options to address rising social problems, vulnerabilities for Putin will increase. The fundamentals of Russian geopolitics indicate that he must keep Russia united. He sees controlling security structures as key for keeping the country unified and under his rule. At the same time, as his power and the economy weaken, unpredictability will rise for Russia, especially in key strategic borderland regions like Ukraine, the Caucasus and the Black Sea........To Read More.....