Russia. Vladimir Putin has done well to keep Russia in the headlines as befitting the historical stature of the old USSR rather than the current weight of its GDP in the world economy. Using PPP exchange rates, Russia is the 5th largest economy on a par with Germany and behind the US, China, India and Japan. Using market exchange rates it is only 10th behind France, Italy, the UK and Brazil. In population terms, it is 9th behind a number of populous emerging economies such as Indonesia, Pakistan, Nigeria and Bangladesh. And its relative position will continue to decline as its population falls and its economy underperforms. Yet one would not think this from the headlines. Indeed, the Kremlin seems to have been a major player in determining the outcome of the US presidential election. It has outmanoeuvred the US in Syria. Its intelligence network seems to be everywhere and many of the old Soviet republics struggle to escape its clutches. But and this is a big but, its weaknesses are all too apparent. First, its population is declining and it will soon be overtaken by Mexico. Secondly, the Russian economy is too dependent on oil. This is not just in terms of selling barrels of oil but also the dependence of the financial sector on oil. Thirdly, capital continues to flow out of the country at a remarkable rate. It is this failure to diversify away from oil over the last 25 years that is Russia’s greatest weakness. This is in part reflects its comparative advantage in oil (Saudi Arabia has a similar problem) but it also reflects a strong authoritarian streak within the body politic. One sector like oil is easier to control than a multitude of several diverse sectors. That a small number of extremely wealthy oligarchs emerged after the privatisation process also did not help. Battles emerged between the Kremlin and any oligarch that showed an independent streak which the Kremlin normally won. This increased the incentive to export capital rather than reinvesting in the domestic economy. Whilst this dependence on oil may suit the Kremlin from a political point of view, it is not a successful long term strategy for the economy. This was made blatantly obvious by the fall in the oil price a year ago. Suddenly the easy money wasn’t there, budgets dried up and wages frequently couldn’t be paid. Domestic discontent is rising as are bank failures. Foreign military excursions are not as affordable as they once were. Russia still has the ability to cause trouble. Putin is a skilled operator but there are limits. A love-in with Trump may be entertaining, but inevitably the wiser heads in Washington still see Russia as a strategic threat. If Putin wants sanctions removed, he will have to pay a price. The stalemate in the eastern Ukraine shows trouble making can only be taken so far. If Europe pays a bit more for its defence, then suddenly the concerns over the US’s commitment to NATO are no longer there. The addition of Syria as a client state is not that great an achievement. So ultimately the message is not to be deceived by the headlines. Russia has played a weak hand well but now the cards are on the table, it is obvious to all that it is a weak hand.