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We have been following Russian developments from afar to assess President Putin's administration of modern Russia. He took power in 2000. It strikes us that his primary effort has been directed at establishing state authority over every important sector of Russian society and to limit disent. Little of what he is doing seems directed at addressing Russia's major economic and social problems. It also strikes us that President Putin has moved to curtail the development of the core values of modern Western society. That is not to say that he seems to be building a Stalinist dictatorship, but we now know where Putin was headed. He has not constructed a Stalinist totalitarian state. His use of viloence is very realm but not the hideous terror of Soviet totalitarianism. President Putin's decession to move Russia away from the basic Western values has a wide range of economic and political consequences. Fortunately for President Putin, he seized power at a time of low oil prices and that intertnational oil prices rose to record levels, over $100 a barrel. Given that Russia's primary export commodity is oil nd gas, it led to record export income leading to unprecedented prosperity, much like an Arab oil shiekdom. This is a major factor on Putin's undeniable popularity in addition to his cultivation of Russian nationlist sentiment. This only began to change when American shale oil began to impact supply. The oil price cracked (2014). This and Western sanctions because of Russian military aggression in Crimea and the Ukraine have adversely impacted the economy. A Russian blogger has provided some addotional useful insights into how Russia has developed in the nearly two decades of Presudent Putin's rule.
President Putin's two decade rule of Russian ppears in many ways a great sucess. That certainly is how a substabtial majority of Russians view it at least through 2017. Aussian blogger writes, "On the grand scale of things, it looks good. Very good, actually. Never ever have my countrymen lived so good and comfortable life as right now. We have the best ruler ever who knows how to keep crazy Russians calm. We have shed off the stigma of eternally poor people. We are tearing up the stifling armor of imperial thinking and go about shaping ourselves into a nation-state. Our youth is urban, globalized, well-educated. Our elite knows how to speak in complete sentences. Infant mortality is at lowest point ever, life expectancy is creeping up. Life for the common people is more safe and peaceful than ever." Russia now has a few cleaning cities, especially Moscow in sharp contrast to the drab Stalinist cities.
Fortunately for President Putin, he seized power at a time of low oil prices and that intertnational oil prices rose to record levels, over $100 a barrel. Given that Russia's primary export commodity is oil and gas, it led to record export income leading to unprecedented prosperity, much like an Arab oil shiekdom. And Russia benefitted from its location close to Western Europe an industrilized region with few oil and gas fields except for the North Sea. This is a major factor on Putin's undeniable popularity in addition to his cultivation of Russian nationlist sentiment. This only began to change when American shale oil began to impact supply. The oil price cracked (2014). This and Western sanctions because of Russian military aggression in Crimea and the Ukraine have adversely impacted the economy.
Our Russian blogger writes, "Russia is shrinking. The war Communists waged against private farmers starting in late 1920s, with great help from Hitler (the Red Army in 1941 was largely a peasant army) has wiped out the bottomless fountain of the old Russia’s demographic might. We are not as many as we were. Worse, we’re running out of people." Modern Russia has only a fraction of that of the Soviet Union, but the vast majority of the people lost when the Soviet Union imploded were non-Russians, a impressive mix of nationalities that had been amassed by the Tsarist Empire and Soviet Union. The primary demographic problem in modern Russia is a decling birth rate.
Our Russian blogger writes,"Our provinces are getting empty. Everyone is moving to Moscow, or close. The Far East lost 25 percent f population since the fall of Communism. Murmansk, the largest city we have beyond the Polar circle, has lost a third. Cultivated land shrank by a 1/3 (while agricultural production doubled). In the Russian heartland, that’s what much of the countryside is looking like." The situation in provincial cities is an interesting one. We do not have nuch information at this time. Agriculture is another ingeresting topic an unlike the decline of provincial cities, there is some positive developments. Grain during the Tsarist era ws Russia's primary export. The Tsarist Empire (incluing Ukraine) was the breadbasket of Europe. Stalin severely damaged Soviet agiculture, in part by murdering many of the best farmers. As a result, the Soviets had to important grain and other agricultural products. We are not sure about modern Russian agriculture, but some sourcs report increasing poduction, in part bcause of the priatization of Stalin's collective farms.
Our Russian blogger writes, "Millions, many of them high-skilled, world-class professionals have left the country to never come back. Which means brain drain in epic proportions, with no end in sight. Hundreds of thousands of Jews have emigrated. (If we look at what happened to the greatness of Spain and the magnificence of Habsburg Austria when their Jews headed for exit, and take it as a predictor of things to come, it’s not very uplifting.)" We do not think that it is just Jews leaving Russia by any matter. Many etnic Russians have also left Rusia. One of the few real achievements of the Sobiet Umion besides smashing the German Wehrmacht was buildung a national education system with important standards. Andtht system produced an impressive number of competent technicins and scientists. We are less sure bout th modern Russian education system.
The soviet Union was a major industrial power. Soviet industry was not efficent and produced few quality products, but it was massive. And as Soviet consumer had no other options, they had to accept wht was offered. Our Russian blogger writes, "Putin has presided over the largest de-industrialization in the world in modern history. Manufacturing has shrunk, exports of extracted minerals and low-level processed goods have skyrocketed. As a result, even Russia’s defense industry massively depends on imported components, which is the main reason Russia is so angry at the Western sanctions." Soviet industry was highly inefficemt. It actyally destroyed wealth. The value of the inputs into Sivit industrial products were actully LESS than the value of the raw materials that went into the manufacturing proces. And this does not even figure in labor. Thus when the Soviet Union collapsed, Soviet industry could not compete with foreign products. Of course this was not President Putin's fault. But Putin did nothing to address the oroblem or like Chinese leaders, harness the power of capitalism with market reforms. Rther he simply rlied on the vast export imcome generated by oil and gas exports, bsically the same policy of an Arab oil shiek.
Our Rssian blogger writes, "Russian business doesn’t believe in Russia. Capital flight during the post-Soviet era has been in the magnitude of 1 trillion USD in total, while foreign investment fluctuated and was at about 50 billion USD per year, at best. (This is only what’s captured by official statistics). Russians who know the country best take their money out of Russia to spend or invest it in the West." Here a major factor is the lack of the rule of law.
Russians believed tht the collapse of Cimmunism wouls automatically result in Western democracy and capitalism. This of course did not occur. Our Russian b;ogger erites, "Russians are losing faith in entrepreneurship. The share of private business in the national GDP has fallen from 70 percent to 30 percent. The share of small and medium-sized enterprises in GDP does not exceed 18 percent (the all-red-tape EU has 40 percent). If you want a good career for your kids in Russia, tell them to seek jobs in the public sector. Police officers and tax inspectors in Russia never fail to make their parents proud."
Our Rusian blogger writes, "Russia increasingly lacks labor force. Absurdly many are employed in spheres with zero or very low value added, such as the public sector, private security, retail, and banking sector. There is an urgent shortage of engineers, researchers, workers with technical skills, and professional managers."
Our Russian blogger writes, "We suck in productivity. On an hourly basis, each of us contributes $26 to Russia’s GDP. One Greek, for comparison, does $37. And Greece doesn’t have oil and gas (productivity in oil is at least triple the average).
Our Russian reader writes, "We have no incentive to change. We love our ruler, we are proud of our country, and two thirds of us say we are happy or very happy. It’s all going to sort itself out, somehow. Hey, that’s what many of you are telling us, right? We see no reason to bother when things are going great, just great!"
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