SHAFAQNA (International Shia News Association) The defining event of Vladimir V. Putin’s initial rise to power was the crushing of an Islamist insurgency in Chechnya, at the cost of human rights abuses and years of dictatorial rule there.
The defining event since his return to the presidency two years ago was his hard-line response to the Ukraine uprising in February, with the invasion and annexation of Crimea and the incursion into southeastern Ukraine — while sneering at critics in the West.
On Thursday, Mr. Putin was forced to contend with trouble on both fronts, as insurgents mounted a deadly attack in the Chechen capital of Grozny, and he was compelled in his yearly address to reassure Russians that his assertive foreign policy would not bring economic ruin.
An overnight attack in Grozny left at least 20 people dead and shattered years of relative calm. Yet just as the attack reminded Russians that the insurgency in the Caucasus Mountains never really ended, Mr. Putin’s speech did not convincingly explain how the Kremlin would contend with the economic damage from Western sanctions — and a simultaneous plunge in oil prices and the ruble.
Mr. Putin sought to portray himself as a leader with Russia’s glorious destiny firmly in hand, a viewpoint echoed by his supporters. His critics, however, called the speech way off the mark, if not delusional, with Mr. Putin acknowledging neither the scope of the problems nor his role in creating them.
“He thinks that overall the situation is under control — the problems with the foreign currency reserves, oil, the budget, the ruble, the economy, inflation and so on — but the situation is not under control,” said Vladimir A. Ryzhkov, an opposition politician. “The country needs surgery, and he proposed therapy.”
Standing in the Kremlin’s glittering white marble St. George Hall before more than 1,000 members of the country’s political elite, Mr. Putin acknowledged that Russia was facing hard times, but reaffirmed the combative foreign policy course he set earlier this year.
In the first part of the 70-minute speech, Mr. Putin adopted the angry, aggrieved tone toward the West that he has used since Russia annexed Crimea in March, blaming the United States for starting the trouble by fomenting a coup in Ukraine. He used a more professorial tone in the second, economic part of the speech, but it proved to be a laundry list of small adjustments, many of them recycled.
In one striking passage, Mr. Putin compared Crimea to the Temple Mount in Jerusalem, saying the peninsula held sacred importance for Russians because the Russian Orthodox Church was born there. Grand Prince Vladimir, considered the ruler who converted the tribes to Christianity, was said to have been baptized near today’s modern city of Sevastopol.
Mr. Putin said the West used the annexation as a pretext to continue its historical attempts to restrain Russia.
“The policy of containment was not invented yesterday,” he said. “It has been carried out against our country for many years, always, for decades, if not centuries. In short, whenever someone thinks that Russia has become too strong or independent, these tools are quickly put into use.”
Evoking World War II history, a favorite device, Mr. Putin suggested attempts to dismember Russia through sanctions and other means would fail just as Adolf Hitler had failed to conquer Russia.
Mr. Putin also stressed that Russia did not want to restore the Iron Curtain, that the country was open to the world and that it would never “pursue paranoia, suspicion and looking for enemies.”
That avowal will come as a surprise to some, especially government critics, employees of nongovernmental organizations and others who have been labeled “foreign agents” over the past year by the state-controlled media.
Before moving on to economic policy, Mr. Putin made a passing reference to the attack in Chechnya, but contended that local law enforcement officers could handle it. Still, even as he tried to brush off the most brazen attack there in many years, it was clear Mr. Putin’s determination to restore stability was being challenged on yet another front. With his budget already strained, Mr. Putin was again confronted with dedicating resources to Grozny even as he is committed to supplying a not-so-stealth campaign in eastern Ukraine.
While Mr. Putin’s resolve appeared strong, his treasury’s health was not.
The government conceded for the first time this week that Russia faces a recession next year. The economy is expected to contract by at least 0.8 percent instead of growing by the previously projected 1.2 percent. Independent economists say they believe the contraction could well be 2 or 3 percent. And that is assuming oil prices rebound somewhat from their current level of around $65 a barrel.
The problems have set off an extended fight in the Kremlin, which was already divided over Ukraine. “One school says that Putin will keep the mobilization among the people, the society and the elite despite the economic crisis,” Mr. Ryzhkov said. “If he prolongs the policy of greatness, of expansion, of confrontation with the West, he will be popular and supported by the people despite any economic crisis.”
But Mr. Ryzhkov and others calling for greater economic and political liberalization doubt that. Mr. Putin enjoyed ever-greater support from March to August, but in the months since, as sanctions began to bite with inflation, support began to erode — though his approval ratings remain in the 80s.
“I don’t believe the Russian people will support him if they lose their medicine, their health benefits, their education and their good standard of living,” Mr. Ryzhkov said.
Economists describe the enormous Russian corporate debt, with about $650 billion owed to Western banks, as the worst problem. The sanctions block access to any new Western capital, and it is not clear how the debts can be repaid.
Mr. Putin said Thursday that billions of dollars salted away in one of the government’s sovereign wealth funds should be used to prop up domestic banks. Some of Russia’s largest banks, including VTB and Gazprombank, have already asked for handouts from the roughly $81 billion sitting in the National Wealth Fund, out of total foreign currency reserves of $420 billion.
Mr. Putin did not say how Russia would close the huge gap between the corporate debts and the reserves. Analysts suggest that the government thinks the sanctions will be lifted in a year so they will not have to find a solution.
Mr. Putin said his country should use the confrontation with the West to try to overhaul its economy, and to depend more on itself for food, medicine and technology. He said there should be a four-year freeze in the business tax rate and proposed that honest small and medium businesses get a reprieve from constant government inspections, a font of corruption.
“There are people totally oriented toward the government — I think that he calmed them down, but they were already calm,” said Aleksei V. Makarkin, an analyst at Moscow’s Center for Political Technologies.
Everyone else will face a different reality, he said, “From the businessman thinking about how he can continue working under the new conditions to the simple man who goes to the store and sees that prices have risen — I think that this speech could not have answered all these questions.”