Edition Geopolitical Futures predicted that 2017 will be “a crucial period in long-term destabilization of Russia.” With the beginning of the year it’s only been six weeks, but have already seen clear signs that this prediction is correct. You can read more about predictions about Geopolitical Futures of Russia in This Week in Geopolitics.
Russia has four areas of instability: wage arrears, the pressure on the banking system, a small social and economic concerns and government cleaning.
On the map of Russia there are regions where wages are regularly delayed. In December 2016 (this is the last month for which data is available the Federal service for state statistics) the total amount of wage arrears amounted to 2.7 billion rubles ($46.4 million).
In two regions of Russia, this problem is particularly acute. The first is the port regions. In Primorsky Krai, whose capital, the city of Vladivostok, is the largest Pacific port of Russia, wages are delayed most often. Its share accounted for 21.2% of the total amount of debt on the country. The second region is Siberia.
The value of these debts is not their size in absolute terms. Most importantly, where Russian workers do not get paid for their work. This indicates a much more serious problem.
The Russian economy remains highly regionalized. More than one fifth of the material assets of Russia are in Moscow and its surrounding areas. The Central government maintains the unity of the Russian Federation, redistributing material of value to regions.
Regions which are more exposed to economic problems, are the port and inland. Port regions are suffering because trade to port cities is the oxygen necessary for life. (And the price of oil, which is the main export of Russia, for a long time at a low level.) Inland areas suffer because the Central government allocates too little money.
All this puts Moscow faced with a difficult choice: austerity or spending cuts on defense.
Map of wage arrears suggests that the model is sufficiently accurate Geopolitical Futures. If the model is accurate, the probability that the forecast will be correct is high.
The banking system of Russia
The fall in world oil prices had a negative impact on the Russian banking system. The number of applications of depositors for payment of insurance on their deposits has grown substantially. In some regions, started a real banking crisis.
For example, in Tatarstan the largest Bank in the Republic suspended the work in December. This has robbed the investors and commercial companies access to financing. As a result, the employees did not receive salary, and the number of bankruptcies increased. The situation was so serious that the Central government had to intervene.
[…] lost the license more than 100 banks. In itself, this may not clarify the picture. Russian banks may be under pressure. But the fact that the dimensions of the main Fund used by the Russian Agency on insurance of contributions, decreased by 75% over the last two years, lends this argument additional weight.
It is possible that Russia is now readying its banking system. This means that she now needs to get rid of the banks involved in illegal activities. However, in light of other negative factors, the former is more likely.
Protests in the province
Economic difficulties can lead to social unrest. In the Russian province there has been little protests. Similar small protests also took place in major cities such as Moscow and Saint Petersburg. The map shows all the places where there were protests.
Here we must note two things. First, none of these protests showed signs of broader national organizations. Second, they were all small in scale (often about 100-200 participants). They, of course, important, but their importance should not be overestimated. Russian province is not going to raise a riot.
Meanwhile, in Russia there are visible signs of discontent. This indicates a concern with the reduction of wages, delays in payment of wages and reduction of social benefits. These minor events are alarming bells, foreshadowing the problems that may arise from the Russian government in the future.
The map also reflects the data on the purges in political circles and security services, authorized by the regime of President Vladimir Putin. Russian media called these measures “a large-scale political rearrangement”.
The purpose of the cleansing is to get rid of potential rivals and replacing them with faithful people. 6-7 February, the governors of Perm Krai and Buryatia, was forced to resign. Business newspaper “Vedomosti” said that in the near future in the regions marked on the map, there will be another reshuffle and resignation.
Unlike unpaid wages, the cleaning is not limited to specific regions. Some of them are in Siberia, some in the Caucasus, some in close proximity to Moscow. The fact that Putin is so insecure in the strength of his position that he holds this kind of cleaning, says a lot.
In a short time in Russia’s presidential elections. Most likely, they will be held in 2018. Like the President of China XI Jinping, which uses the fight against corruption as a pretext to get rid of his rivals on the eve of his re-election, Putin is also consolidating its position under the guise of the need to fight corruption.
Cleaning is not limited to governors. Putin got rid of several generals in the Ministry of internal Affairs and the Ministry for civil defence, emergencies and elimination of consequences of natural disasters. These ministries are responsible for the forces that used to maintain public order and the suppression of the protests.
You need to ensure the loyalty of these ministries, before serious problems will arise. According to the news Agency “RIA Novosti”, just lost their jobs, 16 generals, two of whom withdrew from military service.
Forecasts Geopolitical Futures does not mean that Russia is threatening imminent collapse. None of these factors by itself does not indicate the accuracy of the forecast Geopolitical Futures. They just point out the weaknesses of Russia. And they also explain why Putin, who just a few months ago proudly played on the world stage, now time stopped.