Similar for Putin.
He came in to power in 1999 at the low point of the Boris Yeltsin era- after a devaluation/default and debt restructuring after oil prices hit a low of $8 a barrel, and then it appeared the only way was up. We all know the rest, a decade of seemingly ever higher oil prices, market re-opening/access, cheap financing, rating upgrades – arguably a decent 2008 crisis, when Russian macro-policy responses were prudent and helped by the fact that his frugal former finance minister, Alexei Kudrin, had had the wherewithal during the good years to set up a rainy day oil fund in effect which was deployed to good effect through the global financial crisis.
Putin’s popularity was augmented by early efforts to rein in oligarchs, and then the regions, countering centrifugal forces which were accelerating in the Yeltsin era, and as reflected in the wars in Chechnya. Putin reversed those trends, and showed a willingness to counter what Russia saw as the West’s encroachment first in the Georgia was in 2008, and more recently in Ukraine.
But perhaps the evidence now is that Putin’s luck finally running out (as per Blair, and arguably Recep Tayyip Erdogan in Turkey), as reflected in the now long-running conflict in Ukraine, which shows no signs of abating, and risks pulling Russia in even further – as Moscow is forced to “double” up if it is to deliver on its strategic objectives therein, and then lower oil/commodity prices, and even China.
Note that a Russian reaction to the increasingly difficult relationship with the West, over Ukraine, has been to try and re-orient Eastwards, and to try and build trade, investment and financing ties with China This has seen big energy sector investment/supply deals signed, including the East and West Siberian gas pipeline deals. This re-orientation is now looking increasingly flawed, as China struggles with its problems at home, and is likely to have less financing available for investments in Russia.
In reality, the eastward re-orientation by Russia was less than wholehearted, and more of a short term ploy to send a message to the West that it had other options – “playing hard to get.”
In strategic terms, Moscow still views China as a rival and security threat to the vast and largely uninhabited East of the country. This re-orientation hence was more tactical, opportunistic and short term, than strategic or long term even. The Chinese also largely saw it the same way – understanding that Russia was facing short term difficulties in terms of its relationship with the West, and that this could create some great short term trading/investment opportunities, i.e. and ability to sign long term energy deals, on very favorable terms, to fund these deals through Chinese banks at lucrative rates, and to buy assets, particularly in the natural resource sector very cheaply. “Bring it on” from a Chinese perspective.
The question is with oil lower, and the outlook for the Chinese economy now appearing much more challenging will Russia re-consider this recent tilt Eastward. So far there is not much evidence of this, albeit China’s current difficulties in the economic sphere may be a significant surprise to the authorities in Moscow, as they are to many in the market at present.
What is clear though is that, unlike the first 15 years or so of Putin’s rule, he now faces a much more challenging outlook, of low oil prices, Western sanctions, war in Ukraine, plus also more restricted options in terms of the re-orientation East. One solution would be to refocus on reform at home – addressing long running and deep structural problems, mostly associated with the business environment (legal system, corruption, bureaucracy, red tape, property rights, level playing field, etc), but these all threaten the power vertical/sovereign democratic model of governance, and efforts to rein in Western companies operating in Russia, hardly suggest meaningful change is in the offing.
