AUDIE CORNISH, HOST:
Russia's swift move to annex Crimea is seen as a sign of strength by many Russian people. It boosted President Vladimir Putin's popularity at home. But when it comes to Russia's economy and the quality of life for its people, many analysts think Russia's prospects look weaker, not stronger. Here's NPR's Chris Arnold.
CHRIS ARNOLD, BYLINE: In recent days, we've seen Russians rallying in the streets celebrating Putin's move to reclaim Crimea as part of Russia. But to most, the annexation is also a victory over the West, a sign of a strong Russia with a strong leader. CNN showed Russians waving flags and cheering. Before Crimea, Putin was active on the world stage with the Olympics and the crisis in Syria. Forbes recently named him the most powerful man in the world. And then there are the macho outdoor sportsman photo ops.
UNIDENTIFIED MAN: Vladimir Putin can ride a horse without his shirt on, can drive a boat, volleyball, skiing, blacksmithing...
ARNOLD: That was ABC having some fun with Putin's physical exploits. Professor Angela Stent studies Russia at Georgetown University. She says Putin has done a lot to bring order out of the chaos that's followed the collapse of the Soviet Union.
ANGELA STENT: I think what you see with Putin is a reassertion of this traditional great power, flexing military muscles, literally flexing his own muscles as we've seen him riding horses and motorbikes and things like that, certainly it's the image of a resurgent Russia. But behind that image, lies a very different reality.
ARNOLD: Stent says when you look at the economic reality that Russia's facing, things don't look so good these days. The biggest part of Russia's economy is energy, oil and gas, that makes up more than 70 percent of Russia's exports. That's huge. And for a while, that was helping Putin and ordinary Russians.
STENT: Between 2000 and 2008, Putin was very lucky. Oil prices were rising so they got windfall profits from their energy sales. They put these into various stabilization and national welfare funds.
ARNOLD: Per capital income in Russia rose from $1,700 a year to $10,000. Sure, corruption and wealth taken by oligarchs soaked up a lot of that, though life for many average Russians got better, too. And that made Putin popular. But many economists say this is where Putin could have been a much stronger leader. They say during this boom, he squandered an opportunity.
STENT: What Putin never did was to undertake modernizing reforms so this is an oil and gas exporting economy, but it's basically not a modern economy in as much as it doesn't manufacture things that other countries want to buy.
JIM O'NEILL: That's very disturbing. They got lazy because of oil.
ARNOLD: That's Jim O'Neill speaking over Skype. He's a prominent economist who, 13 years ago, coined the term BRIC, that's B-R-I-C, to describe the then fast-growing emerging markets of Brazil, Russia, India and China. Since then, though, in the past couple of years, Russia's economy is stagnating and growth is anemic, inflation is high and O'Neill says Russia is ever more reliant on selling oil and gas.
O'NEILL: A lot more dependence on a higher oil price and that is never a good place to be, not least because oil prices might go down.
ARNOLD: Before the Olympics and Crimea, Putin's popularity had faltered along with the economy. Now he's riding high again. But what sort of economic price will Russia pay for Crimea? O'Neill says for one thing...
O'NEILL: The need for them to do more in international trade is huge and then what we're doing here is just obviously not helpful.
ARNOLD: That is, instead of making itself a target for trade sanctions, Russia needs to help its businesses become competitive, sell more products around the world, attract foreign investors, not scare them off. That said, so far, the sanctions haven't actually been too painful. And if you use the stock market as a rough indicator of anticipated damage...
O'NEILL: If you look at how the Russian markets have traded after that first day, it's not been that bad so far.
ARNOLD: Now that Putin's very popular again at home, O'Neill says there is now another opportunity to push through economic reforms, limit corruption, try to overcome Soviet-era inefficiencies. That might be the best test of strong leadership. But Vladimir Putin hasn't ridden his horse into that battle.
Chris Arnold, NPR News.