While Americans argue about the extent of Russia’s intervention in the U.S. presidential election, Putin is battling a recession at home. To that end, he has recently focused on the ruble’s exchange rate: A weaker currency could boost the competitiveness of Russian exports, and also help balance a budget that depends heavily for revenues on the ruble value of hard-currency oil and gas exports. Some forecasters expect the Russian central bank to do its part by lowering interest rates later this week.
Such tinkering at the margin, though, serves only to obscure an economic weakness more fundamental than the exchange rate, the price of oil or Western sanctions: Putin’s oppressive governance. His regime’s grasp on power depends too much on subverting the rule of law to enrich allies and punish opponents -- an approach that has undermined a long list of businesses, from Mikhail Khodorkovsky’s Yukos oil company to, earlier this year, the RBC media group, which had the temerity to investigate Putin’s friends and family.
This attitude toward private property sets the tone for all of officialdom. Any entrepreneur can become the target of authorities, from fire inspectors to criminal investigators, who demand payment on the threat of fines or even imprisonment -- or simply shut businesses down on behalf of better-connected competitors. The disincentive to business is extreme: Why invest in the future if whatever you build can be taken away?
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