Russia’s Ruble Faces Meltdown And Threatens To Bring The Rest Of Us With It

Russia’s ruble is crashing, and the people of Russia are once again facing the grim possibility of food shortages. But as much as the rest of the world would like to believe otherwise, it is not strictly a Russian problem.

The Russian ruble fell 11 percent against the dollar on Monday, bringing an equally devastating blow to Russian President Vladimir Putin’s approval rating, and the first reaction of many in the West might very well be one of rejoicing and satisfaction at a job well done. After all, so rarely has the world seen such a successful textbook case of economic sanctions at work than in the case of those imposed against Russia for the annexing of Ukraine, and their suspected involvement of the ensuing civil war. Russia hasn’t faced anything this threatening to their economic system since 1998, when it was forced to default on its domestic debt.

The collapse of the Russian ruble all seems like an internal matter until foreign debt and investments, including those of the West, are taken into account, Time cautions readers. More immediate concerns are placed upon the possibility of the Russian ruble’s collapse making their payment of concessions to Ukraine more unlikely. It is far more likely that the Russian propaganda machine will place all of the blame on Western interference and according to recent opinion polls, many of Russia’s people already believe this to be true. In addition to the probable crash of Russia’s ruble, the economic situation in Ukraine may also collapse at any moment, which will undoubtedly add to the effect the ruble’s collapse will have on the global economy.

In an effort to control the situation for its own sake, the Russian central bank has been driving interest rates higher and has now spent close to $90 billion in efforts to protect the ruble and to prevent prices from skyrocketing. The fall of Russia’s ruble is already making it more difficult for businesses and banks within Russia’s borders to pay their outstanding foreign debts.

If Russia’s ruble fails to make a sharp comeback, inflation will be driven even higher than the 10 percent increase the Central Bank of Russia has forecast, reports CNN. The Russian government won’t burden the weight of the collapse of the ruble alone, if at all. Even now, the people of Russia seem to be suffering more than the government, seeing the price of food products, which totals over 30 percent of Russia’s disposable income, rising in anticipation of the coming economic crunch. Meanwhile, the Russian government is investing trillions of rubles into the modernization of its military, seemingly prioritizing defense and national security.

Of the options open to President Putin, history has proven that he will most likely use the repression of his people and a concentration on enforcing foreign policy as a way of distracting attention away from the problems at home. Already, Putin has cast an eye toward Kazakhstan, which lacks the N.A.T.O. protections afforded to the Baltic States.

It seems that a sudden shift in oil prices would be the only way to spare the Russian ruble, but, as was reported in an earlier Inquisitr article, that seems as unlikely as the collapse of Russia’s ruble remains an internal problem.