February 22, 2014
PUTIN’S ACHILLES’ HEEL:
Give Putin some credit: He has put together an impressive spectacle in Sochi. But while the world’s attention is focused on Kiev and the billion-dollar show in the Caucasus, Russia’s economy as a whole is slowly falling apart. Capital flight is accelerating, and the ruble has fallen by 8.1 percent this year and 1.7 percent in the past week alone. Only the Argentinian peso is doing worse.
Russia was also forced to cancel three debt auctions in four weeks due to weak demand and high yields. The markets have cast a skeptical eye on Putin’s policies, particularly his decision to pledge $15 billion in aid to Ukraine so soon after dropping nearly three times that amount on Sochi.
If the Euros want to rein him in, they should start fracking to undercut his natural-gas leverage, and income.