Economic Darkness Descends on Putin’s Russia

The friend giving me a ride swapped just a couple of grim words with his wife on his cell phone, then turned to me. “They fired her,” he said sadly. “There go our plans.” The wife, who had enjoyed a cushy bank job, then joined the tens of thousands of Russia’s new middle class who have found themselves newly unemployed.

By Yuri Zarakhovich   
Time Magazine

Consumers shop in a Moscow grocery store
Consumers shop in a Moscow grocery store
Ivan Grankin / APF / Getty

Later, I found another friend pacing his office atop one of the newly built skyscrapers of “Moscow City,” the real estate symbol of Prime Minister Vladimir Putin’s ambitions of turning the Russian capital into a new world financial center. Several major companies had already moved out of these costly quarters to way beyond the city’s municipal boundaries, where they still can afford the rent. My friend’s company will soon follow. The Vneshtorgbank (VTB), a major state-run bank, has just canceled its long-planned relocation to the Federation Tower, the tallest of the Moscow City towers. Soon they will stand empty, symbols of failure.

In a nearly empty restaurant — which until quite recently would have been tightly packed at lunch by officials, business executives, entertainers and journalists — a key Moscow banker tells me quietly, “They admit privately at the top that the crisis has moved into economics. Their most likely answer is tightening the screws, as they’re running out of other means.” In the near future, he envisages Russia’s becoming a country whose dwindling population is mired in deepening poverty, an increasingly authoritarian state, run by a handful of immensely rich people, their despotism mediated only by their wish to be accepted in the West.

The hydrocarbon windfall that fueled the Russian state’s recent revival appears unable….

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