OSW Studies

Crisis in Russia. The degradation of the model of economic governance

Crisis in Russia

The present economic crisis in Russia is conditioned above all by political factors. The crisis is proof of a serious dysfunction of the model of economic governance which is subordinated to the government elite’s individual interests. Because oil prices were at a high level until 2014, this model could work at a relatively low social cost.

However, now that the oil prices are remaining at a low level and given the lack of internal sources of long-term economic growth, the country is facing the risk of a long-lasting stagnation. It will lead to an inevitable degradation of the Russian economy and, above all, to a deterioration of the Russian public’s living standards. The government still does not intend to launch any structural reforms; its goal is to preserve the present system of control over the political and public sphere.

Is a political crisis possible in Russia, given these conditions? Should the government be wary of a ‘colour revolution’ or a revolt among the elite?