Russians get cheery picture as economy takes a plunge

MOSCOW – Oil prices have dived from a high earlier this year of $147 a barrel to the $70s this week, dangerously close to the minimum needed to sustain Russia’s national budget. Russian stock markets have lost more than 60 percent of their value since May.

The rough times have forced the recent sales of five banks, at least three of them for symbolic prices of less than $200.

At the Grand Havana Room, a private club in Moscow for the wealthy and well-connected, “everybody is shell-shocked,” said Bob Van Ronkel, the director of business development.

The oil boom of the past several years had convinced many Russian business leaders that their country wouldn’t face a downturn, even if Western economies began to slide.

“Everybody told me it couldn’t happen because of the demand in Russia, because of the oil prices, because of the money coming in,” said Ronkel, whose club reportedly has at least six members who are on the Forbes list of wealthiest Russians. “What everybody was saying was wrong.”

For TV news viewers in Moscow, though, there’s been little indication that things are awry.

During the past two weeks, newscasts showed Prime Minister Vladimir Putin saying that because the global financial crisis began in the United States, its position as a leader of the free world “has been damaged, I believe, forever.”

As for news about the plunging Russian economy on the main TV stations, all controlled or heavily influenced by the Kremlin? Almost nothing, during 20 newscasts watched recently, except when the markets went up.

The disconnect between problems with the financial system here and the message the Kremlin is pushing makes clear a key facet of Russian leadership these days: a Soviet-style approach of a strong central power that criticizes the West while telling its citizenry little of importance.

It’s made reading the financial tea leaves difficult for experts and almost impossible for ordinary Russians.

Even among Russian economists and political figures, there’s disagreement about what the government is up to as it implements a planned bailout package of some $200 billion.

Russian officials have said repeatedly that they’re looking to stabilize the stock market, protect the ruble and rescue banks in financial distress.

However, Alexander Murychev, the vice president of the influential Russian Union of Industrialists and Entrepreneurs, argues that the government has paid more attention to larger banks while letting many smaller ones languish. Four banks that were sold recently to government-affiliated banks or companies were among the 50 largest in the country.