<p style="text-align: right;"><span style="color: #808080;"><em>FORBES by <a class="link ng-binding" style="color: #808080;" href="http://www.forbes.com/sites/harrybroadman/" target="_blank">Harry G. Broadman</a> </em></span></p>

<h3>Boris Yeltsin was no dummy.  He had a secret plan all along to bring lasting economic democracy to Russia: put Vladimir Vladimirovich Putin, a former Lieutenant Colonel of the KGB (now FSB), in control of the Kremlin.</h3>
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Yeltsin must have known that Putin, a political neophyte, would work unsparingly to centralize control and amass tremendous power—arguably the skills he had honed best over his career. And then, as a result of his comrade’s inability to adhere effectively to Machiavelli’s playbook, Yeltsin surely foresaw that Putin would begin to self-destruct on the world stage, getting Russia booted out of the G8; put the lid on a nascent democracy at home; and instill even greater brittleness to an already hobbling economy.

Over the years, this confluence has given rise to an increasingly effective incubator for a growing share of the Motherland’s citizenry to become seriously fed up and truly question what has happened to their once great country, especially as Russians see firsthand other emerging markets making great strides in development, most notably China.
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If history is any guide, it is the bringing of the Russian economy to its knees that is really sowing the seeds for a rupture in the governance of the country—one that ultimately might engender a fundamental economic restructuring that could permit realization of the type of growth that has eluded Russia for decades.

This may well be overly optimistic: having spent a substantial number of years, beginning in the 1990s, as a senior economic advisor to (literally) numerous, successive governments in Moscow—almost all in the pre-Putin era—during my tenure at the World Bank, I no doubt have developed a soft spot for Russia.

The conventional wisdom today about Russia’s economic troubles—the IMF projects the Russian economy will shrink by 3.4 percent this year, on top of minute growth of 0.6 percent in 2014, and it will register only 0.2 percent growth in 2016—tends to focus on the impacts of international sanctions put in place as a result of Putin’s annexation of Crimea and invasion into eastern Ukraine in February 2014 and, of course, the present-day regime of significantly low world oil prices, a decline that began in earnest in June 2014.

To be sure, the sanctions, which were applied in March 2014, are causing real economic pain to some of the most powerful elites in Russia. More importantly, however, they are serving to socialize (pun intended) the costs of Putin’s westward land grab across the entire Russian economy. Indeed, this is a case where international sanctions are doing largely what they are intended to do.

And, yes, the low price of oil is the real kicker for Moscow. After all, when only one or two commodities, especially ones that are highly tradeable and subject to significant global volatility—in this case, oil and gas—have been accounting for more than 51 percent of a country’s budget, it is the rarest of emerging market economies, if any, that can truly develop.

So while the sanctions and low oil prices are certainly major pressure points for Russia <em>today</em>, they are typically viewed as emanating from forces <em>external</em> to Russia.  And in any event, they are seen as <em>transitory</em>—phenomena whose time shall pass.

On the first point, to suggest that these developments are actually not direct consequences of Putin’s own doing is hard to swallow.  The imposition of sanctions by the international community is, of course, very clear in this regard.

And, surely, the sudden—and sustained–decline in world oil prices <em>ultimately</em> is a result of an imbalance in global supply and demand—stemming perhaps most notably from the decline inChinese demand for oil, coupled with the bringing on stream of new supplies from the US, Africa and Latin America. But more important is the anomalous behavior of OPEC, especially Saudi Arabia, that gives rise to notions of a deliberately strategy to discipline the Russians, in particular Putin.