Russia is putting out a lot of optimistic press releases but most of it is spin. Throughout Russia the popular perception is that the nation is losing ground or stalemated. It’s not just the economy, which all Russians can experience daily, but with the foreign situations Russia is involved in.
Russia is still hurting from low oil prices. These were headed up in 2018, peaking at $74 a barrel in early October then falling over 40 percent (to $43) by December 25th. Since then prices have recovered to $53 but the prospects much more price growth in 2019 are not good. The major customer for oil, China, continues to reduce use because Chinese economic growth continues to decline and it is feared China might even suffer a major recession because of the continued economic problems. Meanwhile North American oil and gas production continues to soar and the U.S. beginning to take business from Russian gas producers, supplying LNG (Liquefied Natural Gas) at lower cost than Russia provides via pipeline. European customers don’t trust Russia, partly because of the war against Ukraine but also because of the increasing belligerence against NATO (for an imaginary scheme to weaken Russia, some Russia seems quite capable to doing all by itself).
Although the government has been able to bring the inflation rate down (from 12 percent in 2015 to about 4 percent in 2018-19) the cumulative effect is a continued reminder to Russians that the economy is still weakened by the sanctions and low oil prices. Worse, Russians now tend to blame their own government for this not “the West.”
The government has less economic activity to tax and as a result government spending has to be cut. The cuts in retirement benefits was particularly unpopular as were the cuts in infrastructure (roads and utilities) maintenance and improvements. At the same time the defense budget suffers fewer cuts, mainly because Russia is still racing the clock to replace elderly Cold War weapons and equipment. There is still a lot of that pre-1990 stuff around. The navy is something of a lost cause, mainly because the major ships are so expensive and were never as much of an export items as armored vehicles and warplanes. The shipbuilding industry is uncompetitive. Aviation and armored vehicle exports are thriving and because of that the military received a hundred new aircraft in 2018 and will get about the same in 2019. Most of these are improved models of late Cold War designs (especially the Su-27/30) and some late-Cold War helicopter designs that were completed in the 1990s. The air force inventory of modern aircraft is still shrinking but deliveries are keeping the shrinkage rate low. This comes at a cost. New aircraft designs, like the Su-57, are not going into production. Same with new tank designs (namely the T-14). These are too expensive and too untried. The generals prefer to get improved models of what they know works rather than untested new designs.
All this malaise has also expressed itself in accelerated population decline. Not just birthrates but also migration. In the last year the number of people moving to Russia declined over 40 percent and the number who left went up 22 percent. More people are leaving than arriving. Add that to more people dying than being born and the shrinking population becomes more visible. Even expatriate Russians who send money to kin still in Russia are less active. Before the 2014 sanctions expats sent nearly $20 billion a year back to Russia. Those amounts have since declined by a third and continue to shrink.
In the south (Crimea) Russia is still holding three Ukrainian ships (a tug and two patrol boats) and the 24 Ukrainians on board that were seized while travelling from the port of Odessa (west of Crimea) to the port of Mariupol in Donbas and 800 kilometers southeast of Kiev. As the three Ukrainian ships approached the Kerch Strait they were fired on by Russian aircraft. This was apparently to stop the Ukrainian ships from going under the Kerch Strait Bridge and into the Sea of Azov. The air attack was quickly followed by another Russian attack using armed ships and boarding parties of commandos which resulted in 24 Ukrainian sailors being taken prisoner. After that Russia stationed warships under the Kerch Strait Bridge to block any unwanted traffic. The Kerch Bridge is too low (35 meters above the water) for 30 percent of the ships that usually use Mariupol, which is the largest Ukrainian port east of Crimea. Worse, the Russian backed rebel front lines are less than 14 kilometers from Mariupol which had a population of 450,000 before the Russians invaded five years ago. Because of construction activity on the Kerch Bridge shipping activity at Mariupol was only 28 percent of capacity. Ukraine sees this blockade of the Sea of Azov as an illegal effort to make it more difficult to supply Eastern Ukraine and make Mariupol more vulnerable to attack.
Over the last few months Russia has been moving warships from the Northern Fleet (Barents Sea) and the Pacific fleet to the Black Sea to reinforce ships already there in case there is a confrontation with NATO over Russian threats to restrict access to the Sea of Azov. Those restrictions were imposed on November 25th. In January Russia has been patrolling the Sea of Azov and adjacent Black Sea areas more frequently, often harassing foreign ships, not just Ukrainian ones.
This dispute went critical back in April 2018 when Russia declared the Sea Of Azov, reached from the Black Sea via the 4.5 kilometer wide Kerch Strait, was now under Russian control. The Crimean Peninsula, when it was part of Ukraine, was separated from Russia by the Kerch Strait. Maximum depth of the strait is 18 meters (59 feet) and there had long been talk of building a bridge between Crimea and the Kerch Peninsula (now and always part of Russia). Once Russia seized Crimea in 2014 proposals that a bridge be built actually turned into construction activity. The Kerch Bridge opened in March 2018 (at least the highway part, the sturdier railroad section is not finished). With that Russia declared the Sea of Azov under Russian control and no foreign ship could enter with Russian permission.
So far the Russians have seized over a hundred ships trying to reach the Ukrainian ports of Berdiansk and Mariupol that are on the shore of the Sea of Azov. Russia is putting these two ports out of business. The EU and U.S. protested the Russian blockade but have not done anything to get that changed, like sending American warships to conduct a FONOP (freedom of navigation operation) in the Sea of Azov. So far no NATO warships have sought to enter the Sea of Azov.
On land a new ceasefire was agreed to on December 29th but Russian backed rebels in Donbas began 2019 with several days of heavy attacks on Ukrainian troops. The attackers, many of them Russian, suffered casualties, including several dead and over a dozen wounded. The Ukrainians held their positions.
Since 2014 over 10,000 people (many of them civilians) have died in Donbas as a result of the combat operations.