by Patrick Fearon-Hernandez, CFA

Although Russia hasn’t been in the Western news very much recently, there’s been plenty of action “under the radar” related to the country’s regional and municipal elections this fall. On September 8, governors will be elected in 16 of the country’s 85 regions, including the important city of St. Petersburg.  Legislative assemblies will also be elected in 14 regions, the capitol Moscow, and many other municipalities.  In this week’s report, we’ll review the Russian government’s security goals and show how domestic political security is one of its most important priorities.  We’ll also discuss the domestic political challenges faced by the government and how it is attempting to control the regional and local elections to ensure President Putin and his United Russia Party retain power.  As always, we’ll conclude with market ramifications.

Russia’s Traditional Security Goals
In recent years, we’ve explored Russia’s security concerns in detail (see our Weekly Geopolitical Report from February 8, 2016).  We’ve emphasized that Russian security concerns stem largely from the fact that the country has few natural defenses and is essentially landlocked.  Russia’s European territory is open to invasion through the northern European plain, as illustrated by the invasions of Napoleonic France and Nazi Germany.  Meanwhile, Russia’s primary outlets to the sea can be blocked with relative ease.  Such landlocked isolation, restrained foreign trade, and limited arable land have left Russia relatively insular and poor, with an economy focused on natural resources.

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