History is Watching you, Mr. Obama
The Russian stock market took another brutal pounding last week. The MICEX ruble-based index, where most of the action is, spent all day Wednesday shut down in fear of disaster after taking a massive hit on Tuesday. When it reopened on Thursday morning, the bloodletting continued, and it was down nearly 10% by noon, and closed crashing through the critical 600-point psychological barrier to finish at 598. The RTS dollar-based index suffered a similar bashing and was also repeatedly shut down to prevent even more humiliation for the Kremlin. By midweek the RTS had shed over 20% of its value.
We published an editorial dealing with a wave of bad economic news earlier in the week, and no sooner had we done so than we had to supplement it with an extra covering even more ghastly developments in the stock market on Wednesday. On Thursday, they continued apace, and the RTS exchange was shut down before noon after only a small amount of trading had occurred and the market seemed to remain in freefall. By the end of the trading day, the RTS was flirting with crashing through 600-point psychological barrier and into 500-point territory, which would reflect an 80% loss of value from its high last spring.
Russia’s budget for 2009 was drafted based on the price of crude oil averaging $95/barrel. On Thursday, the price hit $55/barrel. If that situation persists, it means Russia will have to impose a massive drain on its reserves just to pay the government’s current accounts, to say nothing of the need to shell out even more in order to buoy the stock market and the ruble. And Russia’s own Finance Ministry believes that the situation will persist.
Make no mistake: Though of course the Kremlin would like Russians to believe otherwise, this calamity was visited upon the nation by the gross policy errors of Vladimir Putin, the country’s dictator who weilds absolute power and is totally unqualified to run a complex market-based economy.
And don’t have any illusions about what this means. The Kremlin has a vested interest in imposing a draconian crackdown on civil society in Russia in order to keep the word about its mideeds from reaching the general public, and in order to crush any protest action that might result if it does. Moreover, the Kremlin has a vested interest in destabilizing the oil supplies of the Middle East and jack the price of oil up as high as possible. In this climate, it’s hardly surprising that the Kremlin is already moving forward rapidly with a plan to extend the presidential term, which likely means the speedy return of Vladimir Putin as an absolute dictator. And finally, the Kremlin has a vested interest in provoking the West with outrageous actions like threatening to install offensive nuclear missiles in Kaliningrad, so that it can distract the attention of the Russian people from its own blunders by pointing to foreign enemies. It’s extremely dangerous to simply ignore such threats, since that will only encourage the Kremlin to escalate until it is stopped. For a long time Georgia ignored Russia’s provocations in Ossetia, but the provocations did not stop. Russia simply concluded it could take what it wanted without consequences, and did so.
It’s time for those in Russia who care about freedom and democracy to put up or shut up. The last hairline fissure in the door of liberty is rapidy slamming shut. They must act now or the will be permanently squeezed out of Russian civil society for a generation or more, just as happened with Stalin came to power.
And it’s time for the democracies of Europe and the United States to take sides as well. President-elect Obama, if he really believes the principles of social justice he claims to espouse, must speak out against what is happening in Russia, loudly and often, and must reach out to support the remaining forces of liberalism that exist in Russia, starting with Oleg Kozlovsky’s Oborona youth organization.
Obama has been shamefully, outrageously silent on the Kaliningrad missile threat Russia has recently made. He’s said he wants to see proof that the proposed system will work, but that proof is already in the public domain. Air Force Lt. Gen. Henry Obering, who heads the U.S. Missile Defense Agency, states that “he had confidence in the system based on the success of 36 of 45 test missile intercepts since 2001.” If Obama doesn’t want to use the missile defense plan as a main bulwark against Russian aggression, then what alternative does he propose? His silence can only encourage those in Russia who believe him to be weak and easily manipulated. It must stop now.
History is watching you, Mr. Obama. And so is La Russophobe.