Pedestrians walk under a board listing foreign currency rates against the Russian ruble outside an exchange office in central Moscow, on December 17, 2014. Photo: Getty Images
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Rouble trouble: oil's plunge has given Putin a serious headache

The fall in oil's price is being felt keenly in Moscow, where the Putin government is struggling to cope with the knock-on effects.

In June a barrel of Brent crude oil cost $115. On Wednesday it cost less than $59. The plunge is a result of higher global production  mainly due to shale drilling in the US  as well as weaker demand from large economies such as China and Germany.

For most of us lower petroleum prices are a good thing. It is cheaper to fill up our cars and the falling cost of producing goods can spur economic growth. But for some oil-producing countries crude’s tumble is a major headache. Ask Vladimir Putin.

Since the start of his campaign of irredentism in Ukraine in February, Russia’s president has shrugged off the strong criticism of his policies by European and North American leaders. When sanctions were imposed he retaliated by restricting food imports from the West. Thanks partly to the state-controlled media, but also to the rise in living standards and the financial stability under his rule, Putin’s domestic approval ratings remain high.

But the fall in the price of oil, which together with natural gas accounts for more than two-thirds of Russia’s total exports, now threatens Putin’s standing at home. It has already put huge pressure on the Russian rouble, which traded at less than 40 to the US dollar as recently as October. This week the rouble slid to 80 to the dollar – and that was after the central bank raised interest rates by 6.5 percentage points, to 17 per cent, on Monday night. The rouble has since recovered to around 63 to the dollar, but only after aggressive central bank intervention.

The bank’s deputy governor, Sergey Shvetsov, said on Tuesday that the rouble situation was “critical”, the stuff of his “worst nightmares”. Some Russians agreed, rushing to purchase foreign currency and goods before prices increased further. Apple stopped selling iPhones and computers online in Russia because the currency’s volatility made it too difficult to set prices.

Despite the signs of panic, a major financial crisis in Russia may be averted, unlike in 1998 when the currency last collapsed. In recent years the country’s fiscal policy has been relatively prudent, and high commodity prices have enabled the government to amass $400bn in foreign exchange reserves. Sovereign borrowings are modest.

Even so, the mild recession that seemed inevitable even before this week now seems likely to be severe; the central bank has forecast a 4.5 per cent contraction in GDP in Russia in 2015 if oil prices stay at around $60 a barrel. 

And that will make like harder for Putin. Writing in the Financial Times on Wednesday, Sergei Guriev, a former head of the New Economic School in Moscow, said that the Russian authorities had shown little understanding of how to deal with the financial predicament. International markets were witnessing "a gathering storm but no captain", Guriev added, leaving only two certainties: “First, unless sanctions are lifted and the oil price rebounds, the Russian economy will grow much worse in 2015. Second, we can predict that Moscow’s response — in both economic and foreign policy — will be unpredictable.”

Xan Rice is Features Editor at the New Statesman.

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Scarred lands: visiting the villages Boko Haram left behind reveals the toxic legacy of terrorism

The progress and challenges of Nigerian communities rebuilding after Boko Haram’s insurgency begins to wane.

“Sometimes it’s when I go to bed that what happened comes back to me.” Two years ago, Boko Haram militants stormed into 23-year-old John Amida’s home late at night in a village in Gwoza, Borno State, northeast Nigeria. Shielding his eyes with his hands from the torchlight saved his life. He shows me the mark in the centre of his forearm where the bullet aimed for his head went instead.

“All my friends were either killed or abducted,” he says. “I don’t try to forget what happened because it’s not possible; it’s with you even when it is not in your mind. The best thing is just to keep on living every day.”

After a broadly effective 18-month military campaign, Boko Haram remains a deadly yet waning force. Many communities once occupied by Boko Haram are now liberated. In Adamawa, just south of Borno, over 630,000 people previously displaced by Boko Haram have returned home.

With them, over 170,000 internally displaced people (IDPs) now live in camps, or – like John and his family – in host communities. He and his family live in a home vacated and lent to them by a local. All over Adamawa, IDPs live in homes shared with residents or given to them temporarily in exchange for help, crops or token sums of rent.

Adamawa is a serene, largely rural, mountainous state. Even deep into the dry season, driving through the roads that cut between its vast countryside, its land is incredibly scenic. But within local communities, in more rural, isolated villages north of the state’s capital, Yola, the picture is more complicated.

Gombi, a small town a few hours’ drive from Yola, was recaptured from Boko Haram in late 2014. Much of what was destroyed in the insurgency – shops and small businesses – have been rebuilt or replaced. The local government buildings have been largely restored. The impact is still visible but, according to locals, decreasingly so.

But in less urban areas, like in Garaha, a village in Adamawa, rebuilt homes sit next to broken, abandoned houses, churches, mosques and buildings blackened by the fires that damaged them. Local government officials say the damage across Adamawa by the insurgency has set the state’s development back by a decade. Funding for rebuilding the state, which local governments complain is insufficient, is concentrated on urban areas.

According to Chief Suleimanu, a traditional ruler in Garaha, mental health issues are widespread but few are financially able to access support. While some people have been able to move on, others are still dealing with the consequences.

“Many couples and families have separated,” he tells me, detailing how in some couples one partner feels attached to their home while the other can’t face returning, or feel there is little to return to.

“The same with the children, some of the young people have gone to bigger cities like Kano or Abuja because of a lack of opportunities.”

Many returnees, who left camps in Cameroon to come back to Adamawa, are from families who have lived in their villages for generations. Their ancestral roots anchor them to their homes because their farmland is their main source of income. Non-agriculture-based industries provide few jobs. For many people, fleeing their homes meant abandoning their livelihoods.

As of 2015, 52 per cent of people in Nigeria lived in rural areas. Their relative isolation is a blessing and a curse. Larger rural spaces provide them with adequate land to cultivate their crops – but it also leaves them exposed.

During Boko Haram attacks on Garaha through to early 2015, there was minimal protection from security forces who often take hours to arrive.

For many people living in rural Adamawa, life is getting harder and easier at the same time. Armed herdsmen, mainly from the Fulani ethnicity have become a greater threat across Nigeria, partly due to tensions between land ownership and cattle grazing.

According to locals, killings by herdsmen have increased this year. But villages are addressing their vulnerability. Armed vigilantes, some of which formed due to the lack of military protection against Boko Haram, are increasing. The police services are often too far away or too under-resourced to protect them. But some vigilantes now have more weapons and vehicles due to help from state services and locals. It is not an ideal solution but it has made places like Garaha safer.

With this new-found relative safety, villagers have begun farming again. With cash grants and donated tools from charities like Tearfund, it has been easier for thousands of people to begin cultivating land. In many villages there are small, lively recreation centres where young people play snooker and watch sport. Many of their places of worship have been rebuilt.

But the situation is grimmer in communities where such charities are not present.  Without resources, state or non-government help, rebuilding is a real challenge.

Adamawa is a state maxing on its credit of hospitality, relative safety and appreciation of agriculture. A recession in Nigeria and a severe food crisis in the northeast have added pressures on returnees and IDPs. Liberated communities will need more help and attention before they truly feel free.

Emmanuel Akinwotu is a journalist based between Lagos and London who writes about Africa, migration, and specialises in Nigeria.