With the rouble in crisis, President Vladimir V. Putin of Russia held his annual end-of-year news conference, which allowed for questions from both Russian and foreign journalists alike. Though many questions were asked about other Russian issues, inevitably, the current financial situation was the most discussed subject at the event.
The rouble had begun to spiral into chaos as oil prices started to fall steadily over the course of six months. While having an economy based so heavily on oil and gas has always been a strong international bargaining position for Russia, the national currency can suffer when the prices of those export goods fall. Adding to this financial stress are the sanctions imposed on Russian corporations by the U.S and Europe, in response to the conflict between Russia and Ukraine. These sanctions effectively restrict overseas trading activities of Russian businesses, further hampering the country's economy.
The Economist reports that, when the rouble dropped another 10 percent in value on December 15, the government responded by buying roubles with $2 billion, and then increased interest rates overnight by 6.5 percent, leaving total interest rates at 17 percent. These critical measures arrived against a backdrop of further sanctions. On Wednesday, as reported by the New York Times, the Prime Minister of Russia, Dimitry A. Medvedev, met with the directorship of those corporations that comprise the largest exporters in Russia.
"You know that there are enough currency resources in the country to achieve all the economic and production goals that you have set."
Concern continued to rise, however, leading President Putin to deliver a calm, measured response at his annual press conference. BBC News reports that while he conceded his country had failed to diversify its economy beyond oil and gas exports, he stated that Russia is capable of regaining financial stability, despite difficulties caused by "outside factors".
"I don't believe you can call it a crisis. You can call it what you like. Our economy will get out of this crisis. How long? Maybe two years, but after that, growth is inevitable."
He also stated that western sanctions were responsible for approximately 25 to 30 percent of the economic problems. These sanctions are due to increase on Saturday, with the implementation of restrictions on investment in Crimea, and fuel exploration in the Black Sea. The sanctions were explained by E.U spokesperson Maja Kocijancic.
"We are doing this because the E.U has said the annexation [of Crimea] is illegal and what we're doing is part of implementation of non-recognition of this policy by Russia."
During his press conference, when asked by John Simpson of BBC News whether he intended to de-escalate what many interpret as a desire for a new Cold War, Putin responded in the vaguest of terms.
"We will work together if our partners want to co-operate with us… You say Russia created this tension. Of course we contributed to this tension, but only in a sense; we're protecting our interests in a tougher way… What about what the Americans are doing – what about their tactical nuclear weapons, for example? The Pentagon's budget is ten times higher than our equivalent."
Perhaps his most fascinating response, as reported by the Independent, was to the question of whether the rouble crisis was the direct result of his move to annex Crimea.
"Sometimes I think, maybe they'll let the bear eat berries and honey in the forest – maybe they'll leave it in peace.
"They will not. Because they will always try to put him on a chain, and as soon as they succeed in doing so, they tear out his fangs and claws. Once they've taken his claws and fangs, then the bear is no longer necessary. He'll become a stuffed animal.
"The issue is not Crimea, the issue is that we are protecting our sovereignty and our right to exist. Do we want our bear to just become a stuffed animal?"
The conflict between Russia and Ukraine is set to be discussed by European leaders again at their final summit of 2014 late on Thursday.
[Image via Google]