Can Vladimir Putin survive the falling ruble?

In Russia, bad news isn't really news, it is just history repeating itself, again.

Once again, banks and exchange offices are under siege from battalions of citizens with glum, frozen faces, trying to flee a failing currency. They want to rid themselves of rubles, hoping to get dollars, to get something solid.

No wonder, the collapse of the ruble has been precipitous.

Since the beginning of 2014 it has lost more than half its value. Inflation is rising fast, along with the central bank interest rate, now fixed at 17.5 per cent.

The Kremlin's self-vaunted economic stability and prosperity is in tatters.

For the moment, though, the country's citizens seem unshaken. They've seen it before in their lifetimes, twice, in 1992 and then in 1998.

On Dec. 25, 1991, a world empire, the Soviet Union, fractured and collapsed, creating 15 new countries. The biggest was the Russian Federation under Boris Yeltsin. A week later, his government, run by the so-called "economic bright boys," freed prices, which had been rigidly controlled by the Soviet state.

The result was runaway inflation. The ruble became almost worthless. It became the wooden ruble, a part-mocking, part-despairing nickname.

For millions it was a swift descent into penury. Modest savings were wiped out. A common sight became that of miserable people in snow-filled streets selling anything — teacups, empty bottles, socks — to earn pennies.

Yet there was no mass revolt, the government survived and, somewhat amazingly, six years later the economy, based on the sale of oil and natural resources, was almost flourishing.

Then, in August 1998, a second crash. The almost-flourishing economy had been a mirage.

The price of oil collapsed and so did government revenue. Outside Moscow, people hadn't been paid in months. When I travelled through provincial Russia that fall I discovered not a wooden ruble economy but one without rubles at all.

Workers at a brick plant were paid in bricks, farmers in cows.

At a famous factory where they made samovars — a sort of giant Russian teakettle — they were paid in samovars, one a month. Their job then was to try to sell or barter these things to live.

'We're a very patient people'

Raissa Kusherova was the personnel manager at the factory. "Obviously this isn't very good," she told me. "But at least there's way to get by.

"You can't run away from your country. We're a very patient and tolerant people."

In his annual state of the union speech earlier this month, Vladimir Putin said one of the country's two "rainy day" funds would be used to support domestic banks, as part of broader efforts to help Moscow to overcome its economic woes. (Reuters)

Now, this third crash. The lineups to change rubles into dollars are long and the political elite is rattled. The public sniping has begun.

MP Oksana Dmitriyeva, a member of the Russian parliament's budget committee, was scathing about the central bank's huge rate rise — 6.5 percentage points overnight — to try to stop the hemorrhaging of the ruble.

"What the central bank is doing now is not just a mistake," she said. "It's not just financial illiteracy, it's not even just unprofessionalism. Its actions are close to schizophrenia, to madness, to complete incompetence."

It seems an age, but it was only nine months ago that the country was deliriously applauding the annexation of Crimea by Vladimir Putin, and revelling in political muscle-flexing.

Russia, said the vice-president of the Russian parliament Sergei Jelezniak, was once again a beacon for the world.

"I'm convinced that today millions of people in different countries link their security, their prosperity, and their hopes to the actions of the Russian Federation, to the work of our people and our government."

Not as bad as '98

Outside Russia, of course, millions more were horrified by the land grab.

Western governments imposed sanctions. Then came a huge drop in the oil price, which accounts for two-thirds of Russia's export income and most of its government revenue.

Boris Nemtsov, once one of Boris Yeltsin's economic bright boys, a vice-premier in the '90s, and now a leading opposition figure, says this crisis isn't yet as severe as 1998.

In 1998, the oil price dropped to $6 a barrel, not $60 as now. In 1998 the Russian state and Russian banks owed billions in loans. Inflation was close to 85 per cent.

Today the state has reserves of almost $450 billion, and inflation is running at around 10 per cent.

There is another major difference, Nemtsov says. The 1998 crisis was almost entirely economic. This one has a strong political dimension.

"The mad political aggression of Putin has resulted in isolation and sanctions for the country. And because of that everything is breaking down," he says, "even with a relatively good oil price of $60."

Iron grip?

In the wake of the far more serious crisis of 1998, the regime did not immediately crack.

It was not Yeltsin, the president, but his prime minister who was dumped along with key ministers.

Among the new men to take their place at the top table was a new spy chief, a relatively unknown little man named Vladimir Putin.

A year later he was prime minister, and six months after that he was Russia's president.

Yeltsin was shuffled off into retirement, and very quickly Yeltsin's men and women were swept from the corridors of power.

A new autocrat moved his people into place. And luck was with him; the price of oil went up and up, past $100 a barrel.

Sixteen years later Putin has an iron grip on the police, the military and the media. His aggressive moves in Ukraine, his aggressive rhetoric and the unrelenting propaganda on state television lauding his every move have ensured his enormous popularity.

He's in no immediate danger of being ousted.

"I think he has a store of support that can last 1-1/2 to two years," says Lev Gudkov, the head of the independent polling group Levada-Centre. "We will see the first signs of discontent in the spring."

He may well be right. Russians are patient but not eternally so.

The crisis of 1998 did not produce a quick regime shift, but within two years the political landscape was utterly changed.

Putin's principal political card has been stability and prosperity. He can't play that card now.

Instability, for him, is very bad news. For Russians it's just history repeating itself.