Note: This is an opinion article
I was sitting in Nero a few days ago, listening to a trader talk about the stock crashes caused by Covid-19 and the massive fall in the price of oil. Earlier in the day, I listened to a podcast episode where the hosts talked about Putin’s introduction of constitutional amendments that, if passed, would extend his ability to rule Russia as President until 2036.
This made me wonder if the fall in oil prices was intentionally planned, and caused, by Putin to push Russian dominance, hurt the US, and create an excuse to grab more power.
Let’s talk about pushing Russian dominance. The reason oil prices dropped is because OPEC, run primarily by Saudi Arabia, was unable to come to an agreement with Russia about decreasing output to keep oil prices up. Global oil demand has fallen because of Covid-19, and so production needs to be cut to maintain high oil prices. It was on Putin’s orders that Alexander Novak, the Russian Minister of Energy, walked out on talks with the Organization of The Petroleum Exporting Countries (OPEC). This caused a price war — oil prices have dropped from $61 a barrel earlier this year to just $31. Saudi Arabia, according to MarketWatch, needs oil to trade at $80 a barrel for a balanced budget, compared to just $45 a barrel. An argument can be made, then, that this hurts OPEC more than it hurts Russia, and this lets Russia show that whilst it will co-operate with OPEC when it is beneficial for them, they will go independently if needed as well. Russia and OPEC agreed to cut oil prices in 2014, at the expense of losing market share to the US. Russia does not want to lose market share any more, and the best way to do this is to flood the market with cheap oil, encouraging Saudi Arabia to work with it, and push the US, whose oil is more expensive, out.
As for the power grab, context is needed to understand how Putin has kept his hold on power for the last 20 years, and so to understand how he would do so in the future. Putin was first elected as President of Russia in 2000, ran the country for 12 years, and presided over a period of unprecedented economic growth. This let Putin maintain high approval across the country, and by the end of his second term he had endorsed his close ally, Dmitri Medvedev, for President of Russia. Putin did this because the Russian constitution forbids people from having more than 2 consecutive terms as President. Medvedev easily won, and appointed Putin as Prime Minister of Russia a day later. Whilst Medvedev formally held the most powerful role in Russia, realistically Putin managed to retain a lot of control. Once Medvedev finished his two terms, Putin ran for President again, winning a third and fourth term, although with allegations of election fraud.
Putin thrives in instability and uncertainty, which is exactly what tumbling oil prices have created, since Russia’s economy is so reliant on oil. Putin used this opportunity to increase the desire for a strongman leader, someone who can restore stability, stand up to Russia’s competitors, and deal with the Covid-19 outbreak. This created a perfect storm for Putin to introduce a constitutional amendment that would ‘reset’ the counter on his Presidential terms. Putin managed to push through the legislation at a moment when the public felt worried about the future, and would likely want more stability in their lives. This is something that Putin embodies — he has called himself the “the guarantor of the country’s security” and “domestic stability”. Perhaps Putin does not plan to rule until 2036. He may just want to keep the option open. There are still four more years until the next re-election, and by then Putin — or Russia — may have found a suitable successor.
