Putin Faces Mounting pressure as Russia‘s Economy Strains, Raising Fears of Instability
Moscow – Growing economic hardship and internal dissent are fueling concerns within the Kremlin about potential challenges to President Vladimir Putin’s authority, according to reports. The russian government is responding with increased efforts to suppress opposition, while concurrently grappling with a deteriorating financial situation and the ongoing impact of international sanctions.
The Federal Security Service (FSB) has recently accused exiled former oligarch Mikhail Khodorkovsky and the Anti-War Committee of plotting a coup, a move widely interpreted by observers as a tactic to consolidate power and discredit potential rivals. This comes as Russia’s economy shows increasing signs of strain.
Interest rates have climbed to 16.5% as the central bank attempts to manage financial instability. Banks have significantly increased lending to defense companies, often with lax credit assessments, creating what analysts describe as a “dark pool” of debt that could trigger a banking crisis. Senior bankers acknowledge a rise in loan restructurings and a growing volume of bad debts, despite outward assurances of calm from the central bank.
Public discontent is also simmering. Recent Ukrainian drone strikes on Russian refineries have led to fuel shortages, with prices rising approximately 40% and long lines forming at gas stations. While the war industry remains a driver of economic activity, the civilian economy is contracting sharply, with business leaders reporting a severe lack of available cash.
International pressure is intensifying. The United States has imposed sanctions on energy giants Rosneft and lukoil, and threatens further restrictions on banks facilitating Russian oil payments. Simultaneously, key purchasers like China and India are moderating their oil imports, directly impacting Putin’s revenue streams. Despite a brief rebound, oil prices remain lower than last year, forcing Russia to sell at a discount.
This confluence of factors is pushing the Russian budget into a deficit, estimated at around 2.6% of GDP. National Wealth Fund (NWF) reserves are dwindling, prompting Moscow to increase taxes and issue record amounts of government bonds at interest rates exceeding 15%. The escalating interest burden further constrains the budget, while banks’ capacity to purchase government debt is limited by their extensive lending to the defense sector.
Strategically, Russia is falling further behind due to sanctions that exacerbate it’s technological gap and increase reliance on China. While Beijing continues to purchase Russian oil, it prioritizes its own industrial interests, putting Russian companies under pressure from Chinese pricing.
Khodorkovsky maintains that sustained pressure is the only way to halt the war in Ukraine, a sentiment echoed by the current economic realities. For the first time in years, Putin appears to be losing key advantages, as economic strangulation, financial stress, and international isolation take their toll.The Kremlin’s attempts to delegitimize opposition groups, such as by labeling the Anti-war Committee as “extremist,” suggest a growing anxiety about potential power shifts.
