Russia’s desperate economic situation looks increasingly likely to limit its influence in the Middle East in the short to medium term — partly due to practical economic constraints, but also in the intangible world of perception. Nevertheless, Moscow’s most significant tool in the region does not depend on its economy and will remain largely undiminished in its effectiveness.
Moscow’s fundamental economic problem is bad policy. After years of exhortation, neither President Vladimir Putin nor Prime Minister Dmitry Medvedev has succeeded in diversifying Russia’s economy to reduce its vulnerability to volatile energy prices, or in combating the corruption that drains away much of the wealth Russia earns from energy exports and stifles small and medium businesses, or in promoting innovation to drive the advanced economy that Russia could have built. Their best move so far has been to amass considerable financial reserves that have saved Russia twice — in 2008-2009 and today. But even the roughly $400 billion that Russia still has won’t last forever.
