Vladimir Putin is facing mounting pressure on all fronts, and this time, it’s coming from within Russia. Businesses across the country are growing restless as sanctions begin to take their toll, squeezing an already struggling economy. And the UK’s Ministry of Defence isn’t holding back, stating:
“Criticism of high interest rates is growing amongst Russian business.”
But that’s just the tip of the iceberg. Inflation is on the rise, fueled partly by the ruble’s recent slide in value, creating a perfect storm of economic woes.
The Numbers Tell the Story
On December 20, the Russian Central Bank (CBR) opted to keep interest rates steady at a staggering 21%, the highest since the war in Ukraine began in 2022. This decision marked a shift from October 2024, when the CBR raised rates from 19% to 21% to curb inflation.
The ruble hasn’t fared any better. November 2024 saw it plummet to its weakest value against the US dollar since the invasion began, trading at 114 per dollar. This sharp decline came on the heels of fresh sanctions targeting Gazprombank and grim economic statistics that painted a picture of an overheated economy.
In response, the Central Bank made a surprising move: halting all foreign currency purchases until 2025.
A Fragile Economy on the Brink
Despite predictions of another rate hike, the CBR chose to hold steady. Experts warn this decision might backfire, potentially destabilizing an economy already burdened by a weak ruble, inflationary pressures, and hefty government spending. Add to that a labor shortage exacerbated by war efforts, and Russia’s economic landscape looks increasingly precarious.
The Human Cost of Conflict
On New Year’s Day 2025, the grim toll of the ongoing war came to light. Ukrainian reports claim nearly 1,400 Russian soldiers were either killed or injured in a single day. The heartbreaking figure—1,370 casualties—reflects the devastating cost of a conflict that shows no signs of slowing down.
Accompanying these sobering numbers, a poignant quote from Arthur C. Clarke circulated online:
“The limits of the possible can only be defined by going beyond them into the impossible.”
A Warning for the Future
Putin’s challenges are piling up, with economic instability and military losses painting a bleak picture for Russia. As the ruble continues to waver and inflation bites harder, questions linger: how long can the Russian economy withstand this pressure? And will Putin’s leadership weather the storm, or will the cracks deepen into irreparable fractures?
For now, one thing is clear: the world is watching, and the stakes couldn’t be higher.