Can Putin Withstand Falling Oil Prices?

That’s the question, isn’t it? And the answer is… it’s complicated:

“It is not clear,” writes Martin Feldstein, the eminent Harvard economist, whether Putin’s regime (or similar ones in Iran and Venezuela) “could survive a substantial and sustained future decline in oil prices.”

It depends on who has the more accurate view of authoritarian power dynamics: Yegor Gaidar or Emmanuel Goldstein.

Gaidar, who died five years ago, is best known as an economist, a senior official in Boris Yeltsin’s post-Soviet Russian government and a promoter of the thesis that the Soviet Union collapsed largely because of a sharp drop in oil prices, brought about by Saudi Arabia’s decision in September 1985 to increase production.

The Saudi move, which Gaidar portrayed as a deliberate attempt to loosen Moscow’s grip on what was then a Cold War battlefield in Afghanistan, cost the Soviets approximately $20 billion a year, “money without which the country simply could not survive,” as he put it in a 2007 essay.


The Soviet Union was arguably in a stronger position, even in the mid-’80s, than Russia is in today. Certainly the USSR enjoyed much greater strategic depth, surrendered when the polyglot empire dissolved into its constituent SSRs. The Soviets also had a governing philosophy, bankrupt as it was — Putin has only a cunning thuggishness backed up by petrodollars.

And the petrodollars are drying up.

That’s not to say Putin’s government will necessarily fall. Cunning thuggishness has been enough to keep plenty of cunning thugs in power for a very long time. But his imperial ambitions may very well have to wait.


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