More Problems for Russia

First of all, morale is bad, due to a failing economy. Russia's economic problems are mainly due to the fall in oil and gas prices -- Russia's main source of income. Weapons sales are also hurting, thanks to a new competitor to the south.

Only about a third of the Soviet era defense manufacturers are still in business, and now about half of them are faced with bankruptcy because of a shortage of orders and increased competition from China. This is complicated by the fact that the Chinese competition is mainly in the form of cheaper copies of Russian weapons and equipment. Russia thought it had signed a deal to halt this plagiarism and technology theft, but the Chinese continue to sell copies of Russian stuff on the international market. The Chinese know that Russia will not go to war over this, and otherwise can do nothing. So the Chinese either ignore Russian complaints, or issue empty apologies, and continue stealing Russian secrets and reselling them.

In an effort to aid the defense industry, Russia is negotiating a new arms reduction treaty with the United States. This will mainly reduce nuclear weapons, which are very expensive to maintain and guard. Russia would rather spend its defense dollars on new tanks and radios to replace Cold War era stuff. The Russian military is still the same old post-Cold War mess. Reforms have had a hard time taking hold. Meanwhile, training levels and readiness are low. Ships rarely go to sea, pilots get a few dozen hours a year in the air, armored units rarely go out and train as they would fight. Troops rarely fire their weapons. Except in a few parachute or commando units, morale is pretty bad. Things were looking up for the past five years, as high oil prices pumped up the economy. But that's gone now, and so is the glow. _StratPage

Russia is trying to save the rouble, which has been under siege for months now. There is no guarantee of success. A lot of Russian wealth has fled the country due to fears that the entire system will collapse.

One of Moscow's sharpest financial pains came in the form of a slumping Russian ruble, which has dropped by about one-third against the dollar since August 2008. Thus far, the Kremlin has spent $200 billion defending its currency, a startling number given that the currency still dropped by 35%. The Russian government has allowed dozens of mini-devaluations since August; the ruble's fall has pushed the currency past its lowest point in the 1998 ruble crash. _MoneyWeek

Russia's oil production is expected to continue falling due to failure to invest in new infrastructure. To top it all off, Russian vodka distillers are beginning to suffer from bootleg vodka. It seems that higher taxes on vodka sales are driving Russian drinkers to moonshine. Bootleggers have never had it so good.

And then there is the huge demographic decline, with the loss of several hundred thousand Russians every year due to lack of replacement via childbirth. Fertile women are either fleeing the country or refusing to have children.

Very strange that a Russian academic has been predicting the split-up of the USA into several pieces, and the re-acquisition of Alaska by Russia. In reality, it is Russia that faces a certain breakup within a few decades at most.