Economic instability destabilizes the regime.

The Kremlin has grown confident that its risk-taking usually achieves favorable results, leading it to adopt a more confrontational stance with the West to achieve its strategic aims. That attitude of risk tolerance rests on a perception that Russia and the current regime do not face any imminent existential threats, despite fevered statements from top officials about the dangers posed by NATO enlargement and Ukraine’s cooperation with Euro-Atlantic partners. In reality, the most likely threats to regime survival are likely to come from within and not from the West. A genuine political crisis emerges that threatens the regime politically—for instance, the emergence of a nationwide protest movement calling for new leadership over poor economic conditions and endemic corruption, an excessively violent crackdown on public protests that ignites outrage, or the emergence of a grassroots anti-war movement as Russian soldiers are killed and wounded while enforcing Russia’s claims to a sphere of influence—could induce the Kremlin to move toward extreme risk acceptance as it hopes to deflect emerging discontent by mobilizing the country against external threats.

Economy

The timeline for the “baseline” economic trajectory of prolonged stagnation (outlined in the first scenario) is accelerated by the rate of decarbonization globally. State coffers shrink while the costs of climate change for Russia grow, due in part to penalties imposed by third-party countries on Russian imports. The government is forced to make further cuts to social services, increase taxes to offset lost oil and gas revenues, and freeze or reduce state workers’ wages in an effort to maintain equilibrium. However, declining commodity prices linked to lower demand for hydrocarbons cause the value of the ruble to drop substantially, increasing poverty rates and leading to large-scale street protests. Russia begins to tap into its Sovereign Wealth Fund with increasing frequency to prop up the ruble and to issue bailouts and subsidies in the hope of maintaining order.