IT HAS been a remarkable year for Russia since Vladimir Putin swapped the presidency for the prime minister’s office and ushered his protege Dmitry Medvedev into the Kremlin. After a landslide election victory last March, Medvedev oversaw Russia’s victorious war with Georgia and then defied the west by recognising the independence of its separatist regions, South Ossetia and Abkhazia.
Medvedev took power at the end of an oil boom that buoyed up Putin’s two terms in the Kremlin and fuelled a rise in Russian living standards and restored national confidence. Now, things are very different. Oil is trading at $50 a barrel rather than $140, Russia’s rouble and stock market have been ravaged, and its business giants – known as the oligarchs – have lost hundreds of billions of dollars and need state aid to pay their debts.
After a decade of growth, Russia is entering recession. It is nowhere near economic collapse, but the vast currency reserves accumulated during the oil boom have been heavily depleted in just a few months through attempts to support the rouble and help the oligarchs stay afloat.
Putin’s government holds Russia’s purse strings, and his ministers are likely to be the first victims of public demand for scapegoats. Ministers will be sacked, and they could become dangerous enemies for him. He has already told the oligarchs that he will not save all their firms from bankruptcy and, even with their fortunes slashed to a few hundred million dollars each, vengeful tycoons could also be troublesome foes.
With pressure building on Putin and Medvedev, some observers claim to have glimpsed the first cracks in their “tandemocracy”. And experts agree that any major threat to one or both of them will come not from the street but from a rebellious clique of the political and financial elite.
Such shifts in Russia’s power dynamic are felt far beyond its shores. The new White House administration says it wants to “re-set” relations between Russia and the US, which suffered during the presidencies of Putin and George W Bush. Barack Obama needs Russia’s help to deal with Iran and North Korea, to forge a new nuclear arms control treaty, and to provide a safe supply route to US troops in Afghanistan. Moscow wants Washington to scrap plans for a missile defence system in eastern Europe and to scale back efforts to bring Ukraine and Georgia into Nato.
Success on any of these issues would greatly enhance Medvedev’s domestic and international stature. A new, open, constructive relationship with the US would also cast a bad light on the irritability and aggressiveness that often coloured Putin’s foreign policy.
The presidents of Russia and the US are due to meet for the first time at the G20 summit in London early next month, and Obama is expected to visit Moscow in the summer, when the economic crisis will be biting hard. A year on from election victory, Medvedev faces a period of extraordinary challenges, both at home and abroad. How he responds could define his presidency.