Russia's Financial Reckoning

Stratfor Senior Eurasia Analyst Lauren Goodrich discusses Russia's financial crisis and the hard choices Moscow faces in funding its priorities.

What factors are making the current financial crisis so dire?

LAUREN GOODRICH: Russia is currently experiencing the perfect storm of economic and financial stresses. Russia has entered its second recession in six years mainly due to the global low oil prices.

However, there are many other problems within the Russian economy even before oil prices tanked. The Russian economy had started to slow, particularly in the industrial sector. And then, add in the Western sanctions on Russia and the sour foreign investment sentiment toward Russia. All of this combined has created a situation that Russia simply cannot get itself out of.

What areas in Russia's economy will suffer the most from the financial crisis?

The Russian government has already had to slash its budget this year by 10 percent, just like it had to last year. The Russian government will likely again to slash the budget another 5 percent in the coming weeks alone...The only thing the Russian government isn't touching yet is pensions knowing that would likely spark a social backlash on the ground.