As stunned Russians confront a sharply degraded economic landscape, a new law that would sharply increase US sanctions pain on Russia is awaiting President Barack Obama's signature.
The long-term political impact of Russia's crashing ruble and economic woes may be too early to gauge, but a range of experts in Moscow Wednesday said the Kremlin has convinced most Russians that they are under attack from the West, and that it is time to rally 'round the flag.
"Russians increasingly seem to perceive these sanctions as enemy action," says Alexei Grazhdankin, deputy director of the Levada Center, Russia's only independent polling organization. "There really is a disconnect between the way Russians view events, like the annexation of Crimea and the war in Ukraine, and the way it's seen in the West. In poll after poll, Russians express support for the actions of their leadership. They also feel bewildered that the West doesn't seem to hear their arguments, and instead takes hostile measures against them."
The White House says Mr. Obama will sign the Ukraine Freedom Support Act of 2014 by week's end, which will give the president the authority to ratchet up sanctions against oil and arms, Russia's most lucrative export industries.
Russia's booming weapons exports – which grew by 20 percent last year even as the global arms trade diminished – are a major target of the new sanctions. Experts say it's not clear that arms industries, which were hit by earlier waves of sanctions, are vulnerable to any new measures since they tend to be owned and funded by the Russian state, and their main customers are countries that can easily defy US pressure like China and India.
But the psychological impact of new sanctions could be telling, particularly among already panicky bankers, businesspeople, and investors, says Alexei Devyatov, chief economist for UralSib Capital, a leading Moscow investment firm.
"We calculated that the ruble should have devalued around 15 percent when oil prices dropped by 50 percent. Instead, the ruble is down by half, and we think most of that plunge is explained by the effects of sanctions," he says. "What we've seen is that even though sanctions are targeted on a narrow circle of Russian companies, their indirect effects have proven to be much wider and more devastating. This lesson will not be forgotten, even though the government and Central Bank may now succeed in stabilizing the ruble."
Much may now depend on how well the Kremlin continues to craft its message that Russians have no choice but to hunker down and absorb the pain, or else face the humiliation of surrendering to the West. Vladimir Putin is set to give his annual electronic town hall conference tomorrow, and he will almost certainly set the tone.
"The idea that Russians can grasp is that this is like [World War II], and we are being tested," says Mr. Grazhdankin. "Seen in this light, sanctions and more sanctions are an assault on Russia that we can neither accept, nor yield to."
A September poll by the Levada Center found that 73 percent of Russians had a "very bad" or "generally bad" attitude toward the US, up significantly from previous years.
Some experts suggest that Mr. Putin can harness that image to make Russians work harder and accept coming economic sacrifices as necessary.
"Sanctions have awakened people to the need to do more for ourselves, to produce our own food and other necessary things, and not rely on the oil revenues so much," says Sergei Mikheyev, director of the independent Center for Political Assessments in Moscow.
It's a crisis, and a bad one, he says. "But historically, Russians only tend to get their act together when things are really dire. This is something Putin can work with."