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Russian President Vladimir Putin speaks during his annual end-of-year news conference in Moscow on Wednesday.

Maxim Zmeyev/Reuters

Russia has been a country on the brink for a long time, held together by the force of Vladimir Putin's personality. But even an 80-per-cent domestic approval rating cannot help Mr. Putin when so many economic forces are lining up against him. A deep dive in oil prices in recent weeks is simply the final nudge pushing Russia to the edge of the cliff.

The ruble's value against the U.S. dollar has been cut in half this year; after the country's central bank this week attempted to stem the tide by hiking interest rates to 17 per cent from 10.5 per cent, the markets responded by shaving 20 per cent off the value of the currency in a matter of hours. The ruble's fall is linked to a 50-per-cent decline in oil prices since last summer. But oil prices alone have not caused Russia's decline.

If Mr. Putin were the introspective type, he would have to accept blame for much of this situation. Russia has been shovelling money into its incursions in Ukraine and in retaliation is beset by an array of global trading sanctions. Foreign companies have become increasingly leery of the corrupt regime he oversees and have withdrawn in droves. Domestic investors are even wiser.

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But Mr. Putin is defiant and defensive, and the worry now is what he may do next to try to distract from his problems. The worst case scenario is that he plays the nationalist card to provoke more military conflicts in neighbouring countries, a strategy he has employed in Ukraine with great domestic success.

There are those who think that sanctions should be eased, to help protect Russia from a full-out economic collapse. But unless Mr. Putin agrees to withdraw from Ukraine, any reversal on sanctions will be read as acceptance of his actions. That would reward aggression, and further empower him against what little domestic opposition still exists. It would give him a huge win.

No one wants Russia to sink further into economic turmoil. But Mr. Putin is the main author of his country's misfortunes. His policies have damaged Russia's global relationships and left few tools in place for western countries or corporations to help clean up its growing mess.

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