A sudden and sustained drop in oil prices creates a crisis in Russia’s economic foundations that threatens the country’s social stability. Paralysed by the threat of popular resistance to cutbacks in entitlements and social spending, the government is compelled to strengthen its hold on the economy, using state companies as vectors of social spending. While compromising its fiscal position, Russia preserves at least the illusion of economic stability for most of its population.
(The Scenarios for the Russian Federation have been developed by the World Economic Forum in close cooperation with a host of Russian and foreign experts, and with support from Sberbank.)
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