Russia Flashcards
1
Q
Explain how Putin’s bet on Ukraine has gone bad.
A
- The combination of falling oil price and ruble has wreak havoc on Russia finance
- Falling ruble is directly tied to sanctions against Russia. Sanctions make it so that Russian company can’t borrow money to refinance their debts, meaning companies are forced to buy dollars to pay back these debts, which weaken ruble.
- These sanctions have made companies more reliant on Putin, however. There’s nobody else to give them cash.
- It may seem like falling rubles will benefit Russian companies making consumer goods since imports become expensive, however, there’s little internal spare capacity to make consumer goods, which will be disastrous to people.
