No prizes for guessing which country was most enthusiastic about Donald Trump's victory Wednesday.
The Russian stock market was the world's second-best performer of the day (right behind Switzerland's market). Stocks surged in the hopes that the new president-elect will lift the sanctions that President Barack Obama imposed on Russia in the wake of its annexation of Crimea and its armed interventions in eastern Ukraine.
The benchmark RTS index rose 1.8%, led by some of the state-run oil and gas names that have been suffered most from their closeness to the Kremlin. London-traded shares in gas giant Gazprom rose 4.6%, while those in oil company Rosneft rose 1.8%. Yields on the country's government debt fell across the board. The ruble ended flat on the day, after an initial, oil-related dip.
Kremlin-owned media appeared to be taken as much be surprise as anyone by the result. Margarita Simonyan, the editor-in-chief of the controversial international TV network Russia Today (RT), had tweeted "RIP Democracy" on Tuesday as polls showed Hillary Clinton, the Kremlin's bête noire due to her hawkishness on foreign policy, clearly ahead.
Meanwhile, the Sputnik web site, also a part of the RT group of official state-owned mouthpieces, had appeared to be preparing a narrative of electoral fraud, running stories about Russian diplomats' outrage at being stopped from observing at polling stations.
A day later, Simonyan had changed her tune completely, crowing "That's all, my friends! It's Trump!" and taunting the defeated Democrat with "What? Clinton really isn't even going to speak to her supporters? Not even a few words?" before rounding off with "I officially withdraw my tweet from yesterday saying 'Democracy RIP'. I'm changing it to 'Establishment RIP'. I hope I don't have to withdraw that."
Simonyan's ultimate boss was more circumspect. Vladimir Putin struck a conciliatory note (in Russian language video) eerily similar to the one from Trump in his victory speech, almost–but not quite–forgetting to add his usual barbs about U.S. arrogance and belligerence.
"We closely followed this campaign," Putin said, in what may be the understatement of the year, given the widespread allegations of Kremlin-sponsored hacking of Clinton's party and campaign beforehand. "We congratulate the American people on the completion of this electoral cycle, and Donald Trump on his victory."
"Russia is ready for and wants a restoration of full-format relations with the U.S., " Putin said. "I assume that it will not be simple, but I repeat that we are willing to do our part…as I have said many times already, it's not our fault that Russian-American relations are in such a state."
Relations had gone from bad to worse since the Crimean annexation. Putin openly challenged American primacy in the Middle East with his?support for Syria's President Bashar al-Assad, sending both the Russian Air Force and Navy to bomb anti-government rebels into surrender. When the Obama administration tried to have Russian bombing raids condemned in the United Nations Security Council, Putin responded by deploying strategic missile batteries to the Polish border. He also pulled Russia out of a long-standing agreement with the U.S. on the disposal of weapons-grade plutonium, an accord that had symbolized the normalization of relations after the end of the Cold War.
Trump's obvious desire to turn a blind eye to Russian actions in Syria has encouraged Putin. But letting Putin have his way in Syria (and Ukraine) is one thing; what Putin desperately needs from Trump is an end to the sanctions that have helped to cripple the economy since 2014.
Those sanctions, coupled with the collapse of prices for oil and gas, the country's biggest exports, have weighed heavily on the Russian economy in the last two years, extending and aggravating a slowdown that started with the collapse of the commodity bubble in 2008. Annual GDP growth has been negative since the December 2014, while incomes, adjusted for inflation, have fallen sharply due to inflation, reversing the steady gains in living standards that most Russians had enjoyed in the first decade of Putin's rule.
Putin has to face re-election himself in 2018, and faces a struggle to sustain his popularity as he prepares to slash the health and education budgets in order to afford the big increases in military spending he ordered back in 2012.