The Fate of the Russian Economy May Rest With One Man. Hint: it’s not Putin.

Recently, rumors surfaced of Alexei Kudrin’s potential return to the Russian government early in 2016. Kudrin served as finance minister from 2000 to 2011. Under his watch, the Russian economy grew at least 4% annually every year except 2009 – the year of the Great Financial Crisis.

Left axis is GDP right axis is oil price. Two-axis chart used for illustrative purposes.

Left axis is GDP right axis is oil price. Two-axis chart used for illustrative purposes.

During the first eight Kudrin years, GDP growth was not as closely connected to the price of oil –specifically, the growth of the price of oil – as it was before or after. The trend resumed after the economy rebounded from the 2009 Crisis, but then Kudrin left and the 90s began to return (and have now come back in full effect).

The question of course, is if Kudrin comes back, will he have the authority necessary to his job properly? If he is granted that authority, then expect military spending growth to get put on hold, some of the counter-productive self-imposed sanctions to be lifted or loosened, and there might even some real pro-business reforms. If not, well, he probably won’t stay around until the 2018 election. Then again, he probably won’t take the job unless he gets the authority he needs – although this is Russia and he might get an offer he can’t refuse.

Regardless of the outcome of the Kudrin situation, Putin is fast running out of time (read: money) to fix the economy. The Russian security state may be strong, but the loyalties of siloviki become increasingly fleeting once the paychecks start being inconsistent.

Oil price data from:


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