At a panel discussion at the World Economic Forum in Davos, Switzerland on Friday, Russian Deputy Prime Minister Igor Shuvalov said that international pressure on Vladimir Putin over the Russian invasion of Ukraine and its ongoing support of rebels there would not turn Russians away from their president. On the contrary, he said, “When a Russian feels any foreign pressure, he will never give up his leader. Never. We will survive any hardship in the country — eat less food, use less electricity.”
The promise was especially rich coming from Shuvalov who, it’s frequently noted, is the highest-paid member of Putin’s government. Along with his wife, Shuvalov has a personal fortune in the hundreds of millions of dollars. They own multiple homes in Russia, as well as residences in London and Austria.
Related: Obama’s Slap at Putin Provokes Angry Response
Shuvalov’s comments came in the context of a pessimistic assessment of the future of the Russian economy. He described the current downturn as worse than the financial crisis the country faced in 2008 and 2009.
WHY THIS MATTERS
If Shuvalov is correct—that the Russian people will stand by their man regardless of the sacrifices they have to make—additional sanctions may not be the wisest strategy to convince Putin to pull troops out of Ukraine and stop the aggressive land grab in the west.
Also on Friday, in an interview with CNBC, Herman Gref, the CEO of Russia’s largest bank, Sberbank, said that the country is likely facing a deluge of loan defaults in 2015, which could trigger a banking crisis. The combination of high inflation, high interest rates, and a ruble that has lost half its value in the past few months will leave many borrowers unable to service existing loans, in turn causing major balance sheet problems for banks.
Russian regulators are already allowing banks to price their assets as though the ruble were worth what it was worth at the end of the third quarter of 2014 rather than at its currently debased value. Otherwise, an untold number of Russia banks would likely be flirting with insolvency.
Related: Putin Suffers a One-Two Punch on Sanctions and Bonds
Shuvalov’s comment about Russians being willing to forego food in support of their president may be overblown, but Vladimir Putin’s popularity among Russians remains high. He has cast the Russian invasion of Ukraine’s Crimean peninsula as a matter of national identity and Russian pride, so far with considerable success.
His comments come as fighting in the eastern part of Ukraine has escalated, as have charges that Russia is supplying troops and advanced weaponry to the rebels – a charge the Kremlin has strenuously denied. Russia originally denied having troops in Crimea, then admitted it once the takeover was complete.
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