Russia 2013-16

 
A modern take on the Faberge egg
 
 

Something I haven’t been doing nearly enough of in this round of forecasts is spending time on the core elements of each national psyche, and their geomorphology and how these two factor are playing out within the context of the 21st century global economic and political environment.
These are factors which I will return to in other countries when I have more time, but in the case of Russia there are some factors which are worth reiterating before we look at 2013-16.
There are the key fundamental signatures, of strong figureheads at the top and revolutionary opposition as well as that feature of so many of the countries and currencies we look at – excessiveness and perhaps deception. More pertinent, though, are some of the on-going long term influences; the benefits of the commodity boom and the associated glitz, the crackdowns on freedoms and opposition, the era that started with the end of communism and the long period of evolution in Russia’s economic and socio-political makeup that has accompanied the Putin era.
I would also like to take a more detailed look at Russia’s currency and market and will return to this too in early 2014.
2013
One of the dominant themes for Russia in 2013 has been its position on Syria and this was evident from the beginning of the year.
 But it took a backseat in February and March as Cyprus’s financial situation within the Eurozone became the prominent issues.
Cyprus was home to many rich Russian’s and their money and the proposed  hair-cut of deposits to help bail out the Cyprus economy was resisted. Nevertheless in the end a resolution was reached.
While Syria and its consequences on US relations continued to bubble in the background, economically the statistics for the first quarter of 2013 were not encouraging. Russia, despite being a BRICS constituent and despite benefitting from  the on-going positive commodities cycle, just wasn’t growing as much as hoped or expected.
However it was in June and July that life got more interesting as the Syria situation escalated and Snowden ensconced himself in Moscow airport – much to the disgust of the US.
Economically there was talk of QE in Russia but the impact of the small measures was overstated. Statistics were still not good however.
It is surprising then how the situation changed over the next two months. First economically, when Russia did not follow countries such as India in terms of currency and market falls in August. The commodity situation might not be creating growth in Russia but it is protecting it from the worst external influences.
Then Syria, where by the end of September Russia had managed to negotiate a strategy for Syria’s chemical weapons with the US.
All in all a positive time. 
Although economically there may not be much good news for much of the last quarter, the government’s reputation has been solidified by the Syria outcome.  The last few months of the year are thus likely to be positive with increased faith in the country being perceived by the outside world.
There is a tricky point for the leader in December but it is more than offset by economic rewards for the people as a whole.
 2014
One of the themes of 2013-15 is the gradual change in Russia’s underlying structures, these are being softened and although the pace is slow the long term outcome should be more positive.
The first quarter of 2014 sees everything in a relatively positive state. There is economic good news, and even more power and credibility for the leadership right through until April.  There are one or two areas of difficulty but on balance then the winter Olympics looks to be ok politically.
The period May to September sees some unexpected news and events, but in the main these are positive. Again the outside view of the country is predominantly good, although there may be the odd hiccup with too much force.
July is a great month economically, although how much of this is real and how much is misinformation or just hope is questionable.
September, however,  does see the political situation become more challenging and the leadership will need to compromise more else create opposition.
This mood continues in October
But November and December see a return to the strong leadership position of the earlier part of the year
While the economic position is mixed and progress is slower than might be hoped, the support for the government makes it easier to handle.
There are also some unexpected opportunities and benefits at the end of the year.
2015 
January 2015 is a mixed month, but again the balance of strength seems to be with the leadership.
There are some dark issues to confront in February 2015, and there are some issues of rights and freedoms to be addressed but the situation does not insurmountable.
In April and May 2015 Russia gets caught up in some of the global events that are taking place. This is an unstable period, with shocks and upheavals and the leadership needs to take extra care not to come across as too arrogant and domineering.
April and May are likely to prove to be the start of a key long term shift which will become more apparent in June and July.
These are pretty good months politically and economically for the country though. There are even leadership surprises.
By the end of July the statistics are very positive economically.
The focus on leadership continues from august to October. It is a key turning point in the longer term Russian   evolution. For whatever reason, something about the  government and leadership of Russia will change at this time.  There are no elections planned so it is not clear what this will be- the surrounding conditions do not suggest unhappiness with the government. The situation looks broadly positive.  Perhaps it represents Russia taking a more prominent role on the global stage.
A slightly less pushy 2-3 year phase for the country starts in November.
It is a more mixed 2 months as the country integrates some of the conditions of the new environment. There are still some dramatic events to liven things up, and there is some suggestion of difficulties in making progress externally in December, although this is offset by a sense of renewal and potential, albeit somewhat risky, opportunities for the future.
 2016
January and February 2016 is an absolutely key time. Again Russia is responding to the external global events which are requiring immediate attention. Russia is very much in the limelight as a result. Although arguably it may also be seen as having a fog hanging over it or being the focal point of very large financial movements.  A clearer picture of what exactly this period will entail might be obtained when we look at the Rouble etc.
However the conditions now are less positive for the Russian leadership. Perhaps there are just too many challenges to resolve and the pressure is outweighing the opportunities.  
The theme of radical change in Russia’s role continues into March and April.
Global relations are crucial now. There may be very severe diplomatic or economic ( especially debt) imbalances that have to be addressed. It is extremely tricky for the leader, and there is a danger of going overboard and being too pushy and as a result getting harsh pushback. It is a challenging time, when the wrong decision could lead to long term destruction of relations.  
Although the surrounding conditions are still in place in May and June, there is perhaps less drama. But there is still a danger of trying too hard to control the situation and meeting opposition in the process.
The limelight changes almost imperceptibly from the country as a whole to just the leader. There is also a danger of deception or inertia as the environment becomes too complex for simple leadership
 July is a slightly easier month. More can be achieved, or rather it will be possible to give the impression that something can be done.
There are still challenges though, and progress as July goes into August will be mixed at best. There may be short term efforts to ease the situation but these equally could create resentment from some quarters.
September 2016 is an interesting month where the situation of the Russian people is highlighted ( in contrast to much of the global stuff that has happened before). There is a sense of weakness, inertia and perhaps shortages – however this does not last long.
The last quarter of 2016 is characterised by a series of shifting events which take things forward slowly. There is still a sense of being at the focal point of things, but there is far less co-operation between government and people. There are still surprising events to content with at government levels and challenges that make the leader’s progress slow.  This might show itself as the need to co-operate or it might later show itself as simple opposition. There appear to be too many conflicting factions – some who are benefiting and some who are not, for any  clear picture to emerge clearly by the end of the year.

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