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Vladimir Putin's state of union speech caps a bad year for Russia

12/03/2014 04:26 EST | Updated 02/02/2015 05:59 EST
As Russian President Vladimir Putin gives his state of the union address Thursday, he'll be capping off a tumultuous year for his country in which it commanded the world's spotlight during the pageantry of the Sochi Olympics, only to plunge to rogue status in the months since.

Consider that last year, Putin scored several wins on the global stage. He talked down the U.S. into a deal that got international inspectors into Syria to disarm its chemical weapons stockpiles. Then Russia partook in the successful P5+1 pact on Iran's nuclear program.  

Putin also opposed, and effectively blocked, airstrikes against Syrian President Bashar Assad's regime. His motives may well have been otherwise, but he gave lip service to a logic that has now, in some ways, proved prescient.

"Al-Qaeda fighters and extremists of all stripes" are arrayed against Assad, Putin warned in a New York Times op-ed, and would be among those benefiting from aerial bombardment. Well before the Islamic State group, aka ISIS, became a mainstay in headlines and a byword for brutalism, Putin was expressing wariness of it.

"He was a major player," said City University of New York political scientist Rajan Menon, a member of the Council on Foreign Relations and an expert on Russian foreign relations.

Then there were the Olympics in Sochi. Despite the backdrop of Russia's vicious anti-gay propaganda, the Games earnedsympathy, even praise, in the Western press as organizers pulled off the massively costly event while facing down threats of militant attacks and concerns about preparedness.

"But he's gone from that to being a pariah," Menon said.

Crimea a turning point: prof

Forbes named Putin the world's most powerful person in its annual ranking in November, but things have soured for the Russian leader over the past nine months as a result of his country's incursions into Ukraine, its marginalization at world summits, the plummeting price of oil, and even a corruption inquiry by soccer's global governing body.

Whether Putin acknowledges problems in his speech Thursday or not, he and his country are now facing many.

A key turning point after Russia's Olympics success was Crimea. Less than a month after the Sochi Games closed, Russia effectively annexed the region from Ukraine.

"That completely changed the dynamic, because it brought the European Union — which had been much more reluctant than the U.S. — to slap sanctions on Russia," Menon said.

But Moscow didn't stop there — it stoked ethnic Russian rebels in eastern Ukraine's Donbass area, and then denied sending troops or materiel. Russia has also been accused of supplying a surface-to-air missile that may have been involved in the shooting-down of Malaysian Airlines flight MH17, killing the 298 people aboard, although investigators are still determining the cause of the disaster. Moscow suggests another aircraft shot down the airliner.

More rounds of sanctions followed the events in the Ukraine.   

By themselves, the sanctions might have been a mere annoyance that could be worked around with creative use of Russia's large cash reserves from its oil sales, said Menon, but that strategy has now snagged. The price of oil is down 35 per cent from its recent highs in June, hovering around $70 a barrel.

Russia needs oil to sell for $100 a barrel to balance its budget, according to its own projections and those of the International Monetary Fund.

"The Russian economy is about 50 per cent dependent on petroleum. That's a fairly strong dependence," said Aurélie Campana, a professor of politics at Laval University in Quebec City who studies and teaches Russian nationalism.

Snubbed at world events

The need for strong petroleum revenue, plus the sanctions on Russian state companies, have driven the country to partner with China on a gas deal and Turkey on an oil pipeline, instead of routing hydrocarbons to Europe as it has in the past.

Meanwhile, Moscow has become increasingly sidelined at major world summits. It was supposed host a G8 conference in Sochi in June. Instead, the other countries kicked it out, met as the G7 and moved the sessions to Belgium.

Then at the G20 meeting in Australia last month, Putin dined alone and left a day early, having been snubbed by some world leaders and talked to sternly by others, including Canadian Prime Minister Stephen Harper.

"On the international scene, Russia has affirmed its power but also isolated itself, in particular from its European and American partners," Campana said.

Domestically, the combined effect of the sanctions (especially Russia's retaliatory ones) and the tanking oil price have dragged the ruble to record lows against the U.S. dollar, jacking up inflation. It has forced the government to cancel a planned sale of treasury bonds and poses the risk of throwing the country into a recession.  

For the average Russian, food prices, particularly due to the import bans on European and North American agricultural goods, are climbing steeply — 17 per cent year-over-year for meat and poultry as of September, for instance. The government is weighing the option of bringing in price controls.

Campana said the price hikes probably won't pose a problem for Putin in the short term, but in the mid-term, "social discontent is possible."

Adding salt to the wounds, even world soccer's governing body has its eye on Russia. FIFA asked Swiss officials last month for a criminal probe of the bid process by which Russia was awarded hosting duties for the 2018 World Cup.

Overall, Menon said, no matter what Putin announces in his address to the nation, the situation is sobering for Russia and its leader. "They're in deep trouble."

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