Russian Politics Today Stability and Fragility

Over the past two decades, the quest for economic stability and security has become a leading principle of contemporary Russian macroeconomic policies. To understand the genesis of these fundamental building blocks of Russia’s macroeconomic policies, the chapter provides a chronology of key policy choices and macroeconomic developments from the financial crisis of August 1998 to the aftermath of the global financial crisis ten years later. The painful fallout of recurring economic crises, most notably in the 1990s and after the global financial crisis of 2008, has shaped Russia’s recent policy choices in fiscal, monetary, and trade policies. During President Vladimir Putin’s first two terms in office in 2000–08, the Russian government reformed public finances, restructured sovereign debt, and wisely created a Stabilization Fund for a rainy day. These fiscal buffers cushioned the economy against some direct effects of the 2008 and 2014 crisis. Since 2012, it has become clear that conservative fiscal and monetary policies alone are not enough to support economic growth or increase household welfare. The sanctions and trade restrictions that are the result of geopolitical tensions with the West added further weight and urgency to Russia’s search for economic security at the expense of other economic priorities, such as social policy or improving the investment climate.