Kremlin Critic's Conviction Sparks Protests; Fall of Oil Prices; Predictions for 2015; US, European Markets Down
QUEST: One of Russia's most well-known opposition leaders is tonight being held by police after breaking house arrest and joining crowds gathered that are protesting against his conviction. Now, despite the freezing temperatures, demonstrators gathered near Moscow's Red Square after Alexei Navalny, an openly outspoken Kremlin critic, was found guilty of fraud. Look at the pictures of what was happening, a real melee in Moscow. Navalny denies that he and his brother embezzled over half a million dollars from a cosmetics company. Alexei Navalny has a history of challenging Putin and the political establishment in Russia, which he's called the Party of Crooks and Thieves. Now, in 2010, Navalny exposed what he said was a $4 billion embezzlement scheme at the state-run oil monopoly Transneft. The head of that company and Vladimir Putin both have denied that claim. Last year, Navalny was imprisoned for another offense -- imprisoned -- a day after entering the race to be the mayor of Moscow. You're starting to see the absolute battle. An ally of Putin went on to win that election. Now, Navalny and his brother, Oleg, have been convicted, with Oleg heading to prison. Alexei Navalny claims it's politically motivated.</s>ALEXEI NAVALNY, RUSSIAN OPPOSITION LEADER (through translator): I am ashamed of what you are doing. What are you putting him in jail for? What a disgusting act. All of this is being done in order to punish me even more.</s>QUEST: Our Matthew Chance is in Moscow tonight. Does -- we think of Khodorkovsky, the protests, the arguments, all this. But he stayed in prison for many years. Does this just peter out and Navalny gets let go, but Oleg stays in prison?</s>MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, I think the authorities were very careful not to stage a repeat of the Khodorkovsky affair by keeping Alexei Navalny out of prison. They're very mindful of the fact, Richard, that this is the most prominent opposition figure in the country. Very mindful of the fact that he has a significant degree of support, particularly in the urban centers, like Moscow, where as you say, he scored very highly in a recent mayoral election. And they don't want to make him a martyr. And so, they've kept him out of prison, they've sentenced him to this suspended sentence. They've put his brother in prison, which opposition activists say is the Kremlin's idea of maintaining some kind of leverage and control over Alexei Navalny and perhaps preventing him from realizing his political ambitions. And so, a very clever sort of sentence, I supposes, if you look at it from that point of view, on Alexei Navalny.</s>QUEST: And there's no question in anyone's mind, except maybe those who pretend otherwise, in your view, there's no question that the -- whether Putin personally or the actual administration, the government, is behind it all.</s>CHANCE: Well, that's the charge, of course, of the opposition, that it is the administration that's behind it, that the judiciary in this country is not independent and it does the bidding of its political masters. That's really at the heart of this controversy and why Alexei Navalny and so many others who've been convicted in the Moscow courts say that they've received unfair trials and they're victims of political persecution. But yes. Certainly it's the position of the government that this is nothing to do with them, this is purely a criminal matter to be dealt with by the courts and has been dealt with by the courts. It's interesting, because the prosecution asked for 10 years in prison for Alexei Navalny, but he only got 3.5 years suspended sentence. And so, in that sense, he got off pretty lightly.</s>QUEST: Matthew, the oil price and the economic woes as Russia now goes well and truly into the depths of winter, I saw some polls last week still suggesting an overwhelming popularity for Vladimir Putin.</s>CHANCE: Yes. It's one of those, perhaps strange to the outsiders' view, contradictions within Russia. The country is on its knees economically, virtually, or is on its way to getting down on its knees. Its ruble, its currency is in free fall. The oil price, its main export revenue earner, has plunged in value. GDP has basically halved. It's been an absolutely phenomenal precipitous decline for Russia's economy, yet its people are still standing foursquare behind its leader, Vladimir Putin. Latest opinion polls, 85 percent approval ratings. But let's see how long that lasts as this bleak economic winter continues.</s>QUEST: Matthew, I notice from the clock on our screen that it is after midnight, so my first duty is to thank you for staying up late onto New Year's Eve and to wish you happy New Year in the cold economic conditions, physical and otherwise, of Moscow, Matthew. Thank you.</s>CHANCE: Same to you.</s>QUEST: Matthew Chance. Now, while Matthew deals with the Moscow side, the floor continues to slide from under the oil price. Join me at the super screen, and you're going to see what I mean. You'll be aware since the beginning of the year, we were up in the $130 and $140. The big slide starts somewhere in July, and it falls right the way down. That really is quite dramatic. It's now down to -- fell less than $4 a barrel, its lowest level now in more than 5 years at $54 a barrel. And the chart tells the story of what's been a long and painful year for oil, down nearly 50 percent, and that's despite concerns that Libya ports have been shut down by warring factions. That could make the whole situation worse. We need to talk about some of these predictions on this second-to-last day of the year. Ken Rogoff is with us from Harvard. Good to see you, sir.</s>KEN ROGOFF, ECONOMICS PROFESSOR, HARVARD UNIVERSITY: Good to see you, Richard.</s>QUEST: Now, I have my map -- my globe. The prediction for oil and how you see this coming forward, $54 a barrel at the moment, likely to go less. Whether it goes up and down a bit is irrelevant in some sense. At these sort of prices, next year, your prediction on oil. Is it a key factor in the global economy?</s>ROGOFF: It is huge. I mean, for the countries of Europe, in Japan, even the United States, it's a fantastic boost. But you were just talking about Russia, Venezuela, the exporters, especially the ones that don't really -- that really depend on it daily, it really hurts. But on net --</s>QUEST: But net -- net?</s>ROGOFF: Net, it's very good. I mean, the consumers, high-spending consumers are benefiting, ordinary people are benefiting, gas prices in the US are down a dollar, for example. And in Europe and Japan, the effect's bigger. It's huge.</s>QUEST: Right. Now, if I turned our globe to Europe here and the eurozone. Now, the eurozone and Europe is in the most appalling state at the moment. Greece promises to upend it all again with its election on January the 25th. Are you worried about Europe?</s>ROGOFF: Long term, yes. It's just not clear what they're going to do. It's not clear whether there's enough integration coming, if Italy and France will reform. Greece clearly is in an unsustainable situation.</s>QUEST: How can it still be unsustainable, Ken, after 28 -- ? I mean, it's had hundreds of billions. It's had almost -- for a size of the country that it is.</s>ROGOFF: Simply put, they were taking in a lot of money every year. Forget about the paper value of the debt. They were borrowing every year. And now, they're able to borrow much, much less. That's where the austerity is coming from. No one -- the private sector doesn't want to give them money, Germany doesn't want to give it money from its pockets, and it's very painful. Any direction they go, they need transfers, really, to relieve what are these austerity programs.</s>QUEST: Well, before we go to our main entry, I want to just turn the globe across the United States. Five percent annualized growth in the US. Now, we've got such a difference on both sides of the Atlantic. On the western side, you've got growth, good growth, good job creation. Does that continue next year?</s>ROGOFF: Yes. I think, actually, the growth's pretty broad-based in the United States, and we're likely to see wages finally start rising more significantly, unemployment continue to improve. The US is on a pretty solid ground. Of course, there's uncertainties in the rest of the world, which are a weakness. But I think net net, it is a big year for the United States again.</s>QUEST: So, let's go right across to Russia. Look at it. Vast --</s>ROGOFF: Very big.</s>QUEST: -- country. Vast country, huge oil exports. Matthew Chance says Putin remains popular. You see recession in Russia next year, deep.</s>ROGOFF: Oh, absolutely. I think they're on the cusp of a really systemic financial crisis, even, in Russia. I don't know if it'll be 1998 again, they have deeper pockets, somewhat less vulnerabilities, but this is not ending quickly. It's a very, very difficult time for the Russian people. I agree the polls I've seen also show Putin still very popular. So, we'll see.</s>QUEST: I'm going to spin the globe. Never mind where it ends, but when we talk about growth next year, when we talk about your biggest concern, when you think about what you're most worried about, where should I stop?</s>ROGOFF: Well, Russia's no fun.</s>QUEST: Right.</s>ROGOFF: But it's not that big in the global economy. It's China, really --</s>QUEST: China?</s>ROGOFF: -- that's the big concern. Absolutely it'd be China. They are slowing in a way that's controlled. They're trying to change. They're trying to depend less on exports, less on investment, more on consumers. That just doesn't happen overnight. And some of what we're seeing in oil prices, commodity prices, even slower growth in Germany, is China has been slowing. We don't know how much, probably more than they say.</s>QUEST: China, Russia, the US. I think we've just about done the world.</s>ROGOFF: Well, this is really fun. I want to do this again.</s>QUEST: Good to see you, sir.</s>ROGOFF: Pleasure.</s>QUEST: Now, sea of red --</s>QUEST: -- for the Dow Jones Industrials. Back under 18,000. It was concerns over oil prices. The S&P 500 down half a percent. The US markets opened for a full day of trading on Wednesday. I think they do sing "Wait 'Til the Sun Shines Nellie." I'm determined to get a version of that out before we're finished. European markets have a shortened session on Wednesday. They ended the last full day with a whimper. A slide in energy stocks. The major markets were down. Political uncertainty in Greece, we were just talking about. Actually, that's more of a slide than I thought, the CAC 40 down more than 1.5 percent when all was over. As we continue, how important is your fingerprint? Well, it's certainly very important for things like Apple Pay and the like. But what if your fingerprints could be stolen? 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