For markets that have grown accustomed to political stability almost being “enshrined” on Putin’s watch, this has created some unease and confusion, especially in the wake of unexpected political changes rolling through the Middle East. Could Russia be next?
Indeed, perceptions (real or otherwise) of divisions within Russia’s ruling elite are given as one of the prime reasons why Russia has seen an upsurge in capital flight in recent months — perhaps reaching as much as $30 billion in the first few months of 2011. The argument is that uncertainty over the leadership at the top of the country, and prospects of competition between elites around the two respective leaders, has acted to un-nerve local business leaders, who prefer to stash the oil/commodity windfall overseas. Are these concerns justified?
Evidence of divisions at the top are building.