Russia: Putin re-election likely in March 2018

28 February 2018

President Vladimir Putin is likely to be re-elected in March 2018, given a weak opposition and his continuing domestic popularity. Enhanced policing at football events will moderate the risk of violent clashes between rival supporters, although foreigners may be attacked by Russian fans. Sanctions will continue to deter foreign investors from entering the Russian market, whilst the pace of economic reform will be slow in the coming years.

Security Environment

President Vladimir Putin is likely to be re-elected for a fourth term in March 2018, with opposition candidates posing a limited challenge to the incumbent. Putin enjoys high approval ratings of over 70%, whilst the government has successfully weakened opposition effectiveness. Alexei Navalny, Putin’s most vocal opponent, has been banned from running for president. However, the opposition may organise anti-government rallies in the aftermath of the election.

These are likely to be centred in major cities, such as Moscow and St. Petersburg and may attract thousands of people. The government is expected to respond by detaining opposition leaders and demonstrators, and will enforce a ban on unapproved demonstrations. However, the use of tear gas and water cannons is only likely in response to the largest rallies.

Individuals attending the 2018 FIFA World Cup in Russia will face an elevated risk of violence between Russian fans and rival supporters. Russian football fans routinely clash with rivals and police. For example, in September 2017, Zenit FC fans fought with riot police outside their St Petersburg stadium, after trying to break through security barriers.

Following violence by Russian fans at UEFA Euro 2016, tighter security measures have been introduced at football games in Russia, with 191 Russian fans banned from games. During the 2017 Confederation Cup, which was held in Russia, no violent brawls were reported. The police will likely respond to any skirmishes close to World Cup venues quickly with batons and tear gas. However, foreign fans, particularly non-white individuals, may be targeted in attacks at hotels and restaurants, elevating the risk of death and injury.

Trading Environment

Putin’s re-election is unlikely to lead to any significant shift in economic policy-making, ensuring limited progress on structural reforms to diversify away from hydrocarbons and reduce state influence in the economy. Whilst the economy has emerged from recession and is projected to grow by 1.7% in 2018, it is unlikely to post higher growth over the coming years. Near-term growth will be driven by household spending and fixed investment.

However, in the longer term outlook, continued overreliance on oil and gas exports will limit growth levels, as sector revenues remain below historical averages. The low oil price environment and limited growth opportunities in domestic hydrocarbons will be contributing factors. However, the sector will continue to attract most investment into Russia, stymying growth elsewhere in the economy.

Despite limited reform momentum, Russia’s sovereign credentials will be reinforced by a current account surplus. The surplus reached USD 26.6 billion in January-September 2017, up from USD
15.3 billion in the previous year. Russia will also maintain large foreign exchange reserves, enabling it to meet its debt obligations. Reserves are forecasted to reach USD 367 billion in 2018, up from USD 317 billion in 2016.

Investment Environment

The Russian government has tried to increase private investment in infrastructure projects by offering state guarantees for projects. However, a challenging operating environment will continue to deter foreign interest. US and European Union sanctions on Russia will limit investor interest, particularly as the Trump administration appears willing to threaten further sanctions. In January 2018, the US
Treasury listed Russian political, business and government figures that may be added to existing sanctions and restrictions by Congress in future.

Any further sanctions would substantially elevate the risk of retaliatory contract alterations for Western companies. Firms would also be likely to face arbitrary fines and tax claims, and could be pressured to exit the Russian market through measures amounting to creeping expropriation.

Pricing Outlook

† The location of the asset is particularly important in pricing. Those closest to the Ukrainian border will be more highly priced
†† Underwriters remarked that they rarely see this type of risk

In this month's Risk Outlook, we also provide a detailed forward looking assessment of developments within the security, trading and investment environments for Turkey, Russia, Argentina and Iraq all of which have been the subject of recent enquiries from JLT's client base.

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The monthly Risk Outlook is supported by JLT’s proprietary country risk rating tool, World Risk Review (WRR) which provides risk ratings across nine insurable perils for 197 countries. The country risk ratings are generated by a proprietary, algorithm-based modelling system incorporating over 200 international sources of data.

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For further information, please contact Eleanor Smith, Political Risk Analyst on +44 (0)121 626 7837 or email


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