Mar 1, 2018 | 20:37 GMT

3 mins read

Russia: Putin Promises Guns and Butter

Forecast Update

The 2018 Annual Forecast covered a number of the challenges that Russia could face, placing particular emphasis on the financial struggles ahead for the government and people. Additionally, the forecast highlighted the strain on bilateral arms treaties between the United States and Russia. In a speech delivered just weeks before national elections, President Vladimir Putin has brought both issues to the forefront.

With elections just weeks away, eyes from around the world were looking to catch a glimpse of Russia's future. President Vladimir Putin gave his annual state-of-the-nation address on March 1 — a speech that was expected to present the road map for his fourth term in office. One of three annual speeches, the address was pushed back until just three weeks before Russian elections to act as one of Putin's electoral stump speeches. Usually held within the Kremlin, the address was moved to a large exhibition space, the Moscow Manege. The building was outfitted with large screens so Putin could punctuate his presentation with infographics and animated videos — something he rarely (if ever) does. Throughout, Putin used the speech to lay out the two key focal points of his goals for the next six years: combating poverty and preparing for a new global arms race.

The strain on the economy and accelerating poverty are the top concerns of the electorate. Poverty is growing at its fastest pace in two decades, and 5 million Russians have fallen under the poverty benchmark in recent years. Additionally, more than half of Russians have lost their salaries, had them cut or seen them interrupted. To tackle this issue, Putin announced a plan to raise the country's minimum wage in February. And in his speech to the Russian people, he announced his ambitious goal to reduce the number of Russians living in poverty by half over the next six years.

In another expensive announcement, Putin presented a new group of weapons that includes hypersonic glide vehicles, hypersonic missiles and a nuclear-powered cruise missile, which he says has a practically unlimited range. Putin spent a quarter of his two-hour speech showing videos of Russia's weapons capabilities in what is rapidly becoming a new global arms race. The United States and Russia have recently traded threats to create upgraded weapons and pull out of current arms agreements, such as the Intermediate-Range Nuclear Forces Treaty. And with negotiations over such treaties likely to stall this year, Russia is showcasing its capabilities ahead of an expected renewal in military competition.

Both of Putin's points enabled him to send a strong message to his people that Russia's leader will ensure their security by upholding obligations to their quality of life and by competing with the great powers abroad. However, both plans come with hefty price tags and require the Kremlin to carry the financial burden directly. With Russia's economy already foundering in stagnation, the financial strain of maintaining both positions will prove the greatest challenge for Putin as he enters his next stage of leadership.

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