Russia enters economic chaos as ruble plummets

Russia’s currency, the ruble (rouble), has lost some 20% of its value in the last two days, on Monday and Tuesday. Following a 6.5% interest rate hike, to 17%, in a desperate move by the Central Bank late Monday evening to halt the ruble’s fall after it lost some 10% of its value earlier in the day, the currency continued its slide on Tuesday in a wild day of trading.

The collapse of the ruble appears to be primarily the result of two factors: (1)the precipitous drop in the price of oil to less than $60/barrel, and (2)the economic sanctions imposed by the U.S., the EU, and other countries following Zrussia’s invasion and “annexation” of the Crimea in February and March, and its “stealth war” and then transparent military intervention in Donetsk and Luhansk provinces in the eastern Ukraine, beginnging in April if not before.

The Russian invasion accelerated with an invasion of Russian troops and armor in August, and continues up to the present, with Russian forces having effectively taken down the border between rebel-controlled areas in the Donbas region and the Russian Federation.

In any event, the ruble and the economy of Russia are now in very serious trouble.


Ambrose Evans-Pritchard (International Business Editor) “Russia risks Soviet-style collapse as rouble defence fails; ‘What is happening is a nightmare that we could not even have imagined a year ago,’ says Russia’s central bank,” The Telegraph, December 16, 2014 (8:59PM GMT).

Alexander Winning and Vladimir Abramov, “Russian ruble suffers steepest drop in 16 years,” Reuters, December 16, 2014 (5:26pm EST).

Evans-Pritchard summarizes the impact as follows:

The rouble has now fallen 56pc against the dollar over the past year. Russian GDP has shrunk to $1.1 trillion, smaller than the economy of Texas, and half the size of Italy’s. The effect has been to double Russia’s external debt to at least 70pc of GDP, a high-risk level for rating agencies.

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James Rowles
"The Trenchant Observer" is edited and published by James Rowles (aka "The Observer"), an author and international lawyer who has taught International Law, Human Rights, and Comparative Law at major U.S. universities, including Harvard, Brandeis, the University of Pittsburgh, and the University of Kansas. Dr. Rowles is a former staff attorney at the Inter-American Commission on Human Rights (IACHR) of the Organization of American States OAS), in Wasington, D.C., , where he was in charge of Brazil, Haiti, Mexico and the United States, and also worked on complaints from and reports on other countries including Argentina, Chile, Uruguay, El Salvador, Nicaragua, and Guatemala. As an international development expert, he has worked on Rule of Law, Human Rights, and Judicial Reform in a number of countries in Latin America, the Caribbean, Africa, the Middle East, South Asia, and the Russian Federation. In the private sector, Dr. Rowles has worked as an international attorney for a leading national law firm and major global companies, on joint ventures and other matters in a number of countries in Europe (including Russia and the Ukraine), throughout Latin America and the Caribbean, and in Australia, Indonesia, Vietnam, China and Japan. The Trenchant Observer blog provides an unfiltered international perspective for news and opinion on current events, in their historical context, drawing on a daily review of leading German, French, Spanish and English newspapers as well as the New York Times, the Wall Street Journal, the Washington Post, and other American newspapers, and on sources in other countries relevant to issues being analyzed. Dr. Rowles speaks fluent English, French, German, Portuguese and Spanish, and also knows other languages. He holds an S.J.D. or Doctor of Juridical Science in International Law from Harvard University, and a Doctor of Law (J.D.) and a Master of the Science of Law (J.S.M.=LL.M.), from Stanford University. As an undergraduate, he received a Bachelor of Arts degree, also from Stanford, where he graduated “With Great Distinction” (summa cum laude) and received the James Birdsall Weter Prize for the best Senior Honors Thesis in History. In addition to having taught as a Lecturer on Law at Harvard Law School, Dr. Rowles has been a Visiting Scholar at Harvard University's Center for International Affairs (CFIA). His fellowships include a Stanford Postdoctoral Fellowship in Law and Development, the Rómulo Gallegos Fellowship in International Human Rights awarded by the Inter-American Commission on Human Rights, and a Harvard MacArthur Fellowship in International Peace and Security. Beyond his articles in The Trenchant Observer, he is the author of two books and numerous scholarly articles on subjects of international and comparative law. Currently he is working on a manuscript drawing on some the best articles that have appeared in the blog.