Russia's ruble and its stock market have been sliding since June—down 30 and 70 percent, respectively. Still, the state-controlled media have stuck to the Kremlin line that the economy is doing just fine (the word "crisis" was even banned by producers at one television channel). But the official state of denial is cracking—Prime Minister Vladimir Putin admitted that the nation would be affected by a "global crisis," and Russia's deputy economic development minister recently said, "A recession has started."
Estimates vary, but economists predict that GDP growth will drop from an annual 7 percent rise over the last eight years to close to zero in 2009. Such a steep fall would dent the Kremlin's popularity, and could spark unrest in a population that suffered in the last crisis (the 1998 ruble devaluation) but has since become used to rising fortunes.
That prospect has clearly unnerved authorities, who are arming themselves with ever more repressive means to subdue dissent. On Dec. 15, the Duma proposed a set of constitutional amendments to extend the definition of treason to any criticism of the state. A day earlier, more than 20,000 police prevented a few hundred protesters from staging an annual march in Moscow. More worrying for the Kremlin: tens of thousands of angry Vladivostok citizens recently protested a proposed tax hike on imported cars. Notably, their grievance was economic, not political. Opposition marches remain small. But if material hardship brings more protests, Putin's claim as the guarantor of prosperity could be seriously undermined.