Part of the Syria Transition Challenges Project
May 3 rd, Russia’s COVID-19 infection rate resembled that of the United Kingdom. This situation has the potential to significantly impact the country’s financial situation, influencing the country’s foreign policy toward the Middle East. By the beginning of the lock-down period, the most optimistic forecasts for 2020 predicted a fall in the Russian economy by 4-6% of GDP.1 However, after four weeks of confinement, a decline of 6-8% was considered to be the most positive scenario, provided that it is possible to avoid a second wave for the epidemic in the autumn as predicted by the Higher School of Economics forecast.
The Russian situation is complicated by the fact that the outbreak of COVID-19 coincided with the dramatic decline in oil and gas prices. The federal budget’s breakeven price for 2020 was set at $42.4 per barrel.3 However, prices by the end of March and the beginning of April went significantly lower. This means that Russia may not be able to match the predicted government spending for 2020. Moreover, its leadership may not be able to spend money as generously to advance projects serving the country’s foreign policy.
Moscow, short on revenue, will unlikely take foreign policy and domestic political adventures. Foreign policy projects, primarily those that require significant budgetary expenditures in the Middle East and specifically in Syria, will be frozen. A passive Russian international engagement is expected to dominate until the end of 2020. The exception to this policy will be when a response is unavoidable. Domestic policy is likely to be just as reactive. The baseline will likely be to maintain the current state of affairs and absorb any shocks to stability given the scarcity of financial resources.
The ideas expressed are of the author’s not the publisher.
Published in June 2020
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