Monday, November 21, 2011

Putin's Coming Next 12 Years: Rumblings of Instability?

Challenged with the view that Russia and its exhausted political system were heading towards stagnation, he disarmingly said, “I have nothing to object to in what you are saying”, adding later that “our system is not perfect.” _Economist


Mr Putin seemed blithely confident that Russia’s economic growth would not be affected by the global crisis. Others are more doubtful, including his former finance minister, Alexei Kudrin, who predicts that the oil price could fall to $60 a barrel, presenting Russia with challenges as serious as those in Europe and America. Mr Kudrin’s resignation, after Mr Putin’s promise to make Mr Medvedev prime minister, also lowers the chances of the sort of authoritarian modernisation that some liberals had once hoped for.

In foreign policy Mr Putin remained unrepentantly blunt, notably on missile defence (see article). He promoted his pet idea of a Eurasian union to foster economic integration with Russia’s former Soviet neighbours. But the Kremlin has neither the money nor the popular support for this—and Ukraine, the biggest potential prize, remains unenthusiastic. _Economist
Russia is warning that the threat of nuclear war is rising once again, with Mr. Putin's return to the presidency. Putin wants to return Russia to superpower status, and one of his strategies is apparently to wave the nuclear threat.
"The possibility of local armed conflicts virtually along the entire perimeter of the border has grown dramatically," [General] Makarov said. “I cannot rule out that, in certain circumstances, local and regional armed conflicts could grow into a large-scale war, possibly even with nuclear weapons.”
But at its core, Russia is a sick, ageing, and shrinking nation. It is doubtful whether Russia can hold on to its land holdings in the far east for many more decades.
The fate of babies that are born in Russia is a bleak one. Russia ranks #6 in the world for fatality by suicide. It has the second-highest prevalence of AIDS in Eurasia. It is #7 in the world for cigarette consumption and #5 in the world for alcohol consumption. Its rate of fatality by fire is ten times that of the United States, and it is the most dangerous place in the world to drive a car or get on a plane.

...Russians are deeply, fundamentally, infamously suspicious of anyone who is not white, Slavic and Orthodox, and therefore the notion of creating a "melting pot" in Russia is nothing more than a pipe dream. If the inflow of such persons continues there will be a furious backlash led by Russia's fearless and shameless skinhead nationalists.
What's more, with every day that passes, more and more Russians flee their country, while they still have the chance. Entrepreneurs most particularly, are leaving in droves. As this process accelerates and the supply of wretched refuse so lowly that they see Russia as a step up diminishes, immigration will cease to be a factor in stabilizing Russia's population._AT
Here is how Russia can still throw its weight around:

...First, nuclear weapons. Simplest and most direct, Russia can threaten to blow up the world if it doesn't get what it wants.

Second, oil and gas. Especially in former Soviet space, Russia can threaten energy blackmail, turning off the lights and the heat in any country that doesn't do Moscow's bidding. The government of Ukraine has recently announced a massive shale exploration program to try to break its dependence on Russian crude.

Finally, cold war politics. Russia can funnel money, weapons and diplomatic support to the rogue regimes of the Middle East, just the way the USSR always did. It can threaten to roil their oil markets and create political instability throughout the region. _AT
Mr. Putin is not reluctant to play the international thug on the world stage, either. If he can not be the leader of a world superpower, at least he can make things more difficult for other leading economic powers. According to traditional thinking of the Russian peasant class, it is better to keep your rival from getting ahead, than to get ahead yourself.

But the erstwhile tsar will have his hands full just keeping his own country in one piece. Meddling in the far corners of the globe while his own human infrastructure crumbles, may be his downfall.


tomerickson said...

Putin has said that the demographic effect of just privatizing Russian real estate, and industry and following Western advice has lost maybe 30 million Russians from what the normal demographic growth would be to 2050. So the effect of neo-liberal financial policy has been more devastating to Russia than WW2.

They were told that the way to get rich was to become a raw materials exporter. So Russia simply dismantled its industry. The West said, oh, you’re not competitive and what the Russians didn’t realize is that all of this was very self-serving to the West. The West, especially the American planners- the Harvard boys that went over said, well, we really don’t want is for Russia ever to be a military threat. We’d like to conquer it, to break it up, let’s now just slam them at the end of the cold war.

So without an industrial, manufacturing base there can’t really be much of a military. So the first thing they did was say – get rid of your manufacturing, get rid of your engineering, begin charging for your schooling, close down the schools – you don’t need engineers all you really need to do is make a hole in the ground.

But none of this export revenue from the hole in the ground should really be turned over to the state – we want to make sure that you only tax labor and tax business, but don’t tax natural resources – let it all be privatized. And so Russia thought, gee this sounds like a funny way to get rich but that’s what they did. And so they followed the Harvard advice to give away the oil, the nickel companies, the mineral resources, and that’s how they got the money to begin sending it all to the West. There wasn’t any Russian money to buy these companies because the IMF and World Bank wiped out Russian savers with a hyper inflation by getting rid of all the capital controls and letting the rouble float. So it was just one bad advice after another and now the Russians realize they’ve been taken.

Putin et al are coming to realize that building a strong Russian middle class based on high middle class wages relative to middle class real estate prices is more important than controlling trade routes or importing wage slaves. The result will be an eventual turnaround in Russian demographic decline coupled with a rise of hard — and by that I mean manufacturing, mining, etc. — technological creation. They may even pick up where Cray Computer Corporation left off with GaAs fabrication due to the West’s increasing hostility toward its own engineers favoring masses of “engineers” from foreign academic paper mills.

What Russia has to do beyond building its middle class with policies precisely the opposite of those pursued by the West, is keep its resource base. The approach taken by the West of trying to control resources and to commoditize the creation of technology via lowered standard of living for its real creators, will ensure the rise of Russia as a world-class economic power while the West declines into a northern version Brazil.

al fin said...

The ongoing demographic collapse in Russia is accompanied by a rapid human and capital flight from the troubled nation.

Building a viable middle class in the middle of a transition back to bloody authoritarianism and government-connected elitism, seems almost impossible.

As for the attempted de-nuclearisation of the Russian military in the 90s under Clinton, it made sense after being under threat of destruction from Soviet nuclear missiles for almost 40 years.

Russia is a real place, not a mythical land of wonder. It is being destroyed by its own government far more rapidly than the west is destroying itself.