Ruble turning to rubble? No signs of panic in the Kremlin.

Most Russians still blame the West, not their own government, for their intensifying economic pain. President Putin's approval rating has remained around 90 percent.

Ivan Sekretarev/AP
People walk past an exchange office sign showing the currency exchange rates in Moscow on Friday. The Russian ruble currency is falling under the pressure of cheaper oil, reviving concerns over the country's economic outlook.

Nadezhda Manontova, a Moscow office worker, is starting to feel the pressure as prices for her modest daily food purchases creep up amid unrelenting inflation now running at around 20 percent. Like many Russians, she's been able to supplement her summer diet with vegetables grown in her own garden, so her main worry is how to feed her two dogs.

"You can't give them a piece of bread, you know?" she says. "I'm cutting my own budget just to get the cheapest things, like liver, for them. And when I look around and see what other things cost now ... I just wonder how on earth people can afford it?"

For Russians, now entering the second year of a rolling economic downturn largely brought on by systemic weaknesses, plunging oil prices, and the Kremlin's sanctions war with the West, the relative prosperity of the past decade is clearly ending. Many are reacting like recession-hit people everywhere by changing their buying habits, staying home instead of traveling, and eschewing new consumer debt. Most public opinion polling suggests they are digging in for worse. 

"Russians have never lived well, and many believe it's not a good idea to get used to a prosperous life," says Alexei Grazhdankin, deputy director of the Levada Center, Russia's only fully independent public opinion agency. "They've seen really catastrophic times, like the 1990s when the economy dropped by 50 percent, so they're inclined to think that maybe things are not so bad now."

They are also not pointing fingers at Russian President Vladimir Putin, who is sailing high above the fray with approval ratings approaching 90 percent. Experts say the Kremlin has been largely successful in convincing Russians that much of their economic pain is a result of Western "enemy action" rather than bad domestic policies. And this week's news of crashing global stock markets and plummeting commodity prices – of which most Russians seem only dimly aware – will only play deeper into the Kremlin narrative that integrating with the West is a bad idea anyway.

No rush to reform

Perhaps the most intensely disappointed group of people are leading Russian economists, who care little about politics but have been warning since Russia's anemic recovery from the global meltdown of 2008 that basic structural reforms are needed to foster growth.

"The government hasn't done a bad job of handling the immediate crisis. It's been painful, but the falling ruble has saved the country's currency reserves and actually propped up corporate profits measured in rubles," says Vladimir Osakovskiy, an economist with Bank of America-Merrill Lynch in Moscow. "But the crisis hasn't been bad enough, and there's no pressure from below, to make them address the underlying problems."        

Russia's economy grew quickly in the first decade of this century. Its growth was largely fueled by strong global prices for Russia's main exports, oil and gas, but also enabled by liberal reforms that eased the business climate and sought to attract foreign investment, Mr. Osakovskiy says. 

"They are perfectly capable of delivering reform if there is a political need," he says. "But so far, beyond a bit of budget-slashing and waiting for oil prices to rebound, they don't seem to feel any such need."

Little has been done to fight corruption, promote economic diversification to cushion Russia's oil dependency, raise weak labor productivity, promote better property rights, or enact judicial reforms.

But the public tendency to give the Kremlin a free pass may not last. Polling by the Levada Center shows that Russians' trust in government is not nearly so high, with only 4 percent of respondents in a July poll saying they trust top officials to always tell the truth about economic and social issues, and a further 13 percent thinking they usually do. 

Putin's fine line

The general mistrust of officialdom is a useful tool for Putin, who is seen as an infallible figure who is not to blame for everyday troubles. But he's also walking a fine line. In the 1990s, then-President Boris Yeltsin failed to maintain his above-the-fray image. His popularity fell to single digits and Russia came close to economic and social collapse.

"Putin is not perceived as being part of the bureaucracy, but a higher, independent leader who tries to make them work properly," says Mr. Grazhdankin. "The mass media does everything to maintain this image, by displaying him inspecting regions, giving instructions officials, prodding them. People see on their own level how things actually work out, but they don't blame Putin."

But history suggests that could change, and perhaps quickly. Economists say the Kremlin needs to develop a strategy to deal with a long period of low oil prices and deteriorating social conditions. But leaders may not be feeling enough pressure to act.

"We're in a place now where the leadership thinks it has enough political capital to avoid carrying out any serious reforms," says Alexei Devyatov, chief economist for UralSib, a leading Russian investment bank, "while the population isn't feeling enough economic pain to demand it." 

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