The financial crisis and especially the recent decline in oil prices have hit the Russian economy hard, and have shaken previously strong popular support for Vladimir Putin's regime. In late January, there were widespread anti-government demonstrations organized by a variety of opposition groups. Russia's growth during the 8 years of Putin's rule has been overwhelmingly based on revenues from oil exports, which boomed as oil prices rose. Now, however, the game seems to be up. Although oil prices might go up again, they are unlikely to regain their pre-recession levels anytime soon.

Putin's popularity has suffered enough that even Russian President Dmitry Medvedev - whom Putin handpicked for the post - is beginning to distance himself from his longtime patron - criticizing Putin's economic policies and tabling a Putin-sponsored law that would have criminalized most political dissent as "treason."

Until now, both Russian and foreign opinion has mostly seen Medvedev as a lackey that Putin installed in the presidency last year so as to circumvent term limits. If this particular rat is considering jumping ship, that means the vessel in question might really be in danger of sinking.

Anders Aslund, a leading expert on the Russian economy, says that the nation has arrived at a crossroads:

Russia is at a crossroads. There are basically two choices. Either it becomes more authoritarian, with state capitalism and protectionism — [and] then it has no need for cooperation with the European Union. Or we see a political and economic liberalization, which is the opposite direction.

I suspect that Aslund is right. It's possible that the regime will now be forced to liberalize, and Medvedev has been making a few gestures in that direction. Liberal democratic opposition leaders, such as Garry Kasparov, might be able to turn the crisis to their advantage.

However, it's also possible that the economic crisis will ultimately play into the hands of Russia's communists and ultranationalists. The latter have also been out in force lately, blaming Russia's economic woes on the West (as Putin has also done) and on the Jews. Unfortunately, anti-Western and anti-Semitic sentiment has been bolstered in recent years by the Putin regime's nationalistic propaganda, which even went so far as to sponsor a TV "documentary" claiming that the US government itself organized the 9/11 attacks so as to manufacture an excuse to assert dominance over the world. The influence of Putin's propaganda might outlast Putin himself.

As bad as the authoritarian Putin regime is, there are nationalist and communist forces in Russia that are even worse. It remains to be seen whether they or their liberal rivals become the main political beneficiaries of Russia's economic crisis.