It is now official – the Russian economy is in recession. Have Vladimir Putin and Dmitry Medvedev mishandled the crisis? Have they responded inadequately to the challenges facing the country? What could the Russian government have done differently? What impact will the deteriorating economic situation have on Russian politics? How will the crisis affect Russia’s foreign policy and its relations with major powers and neighbors? Will the West be able and willing to help Russia, or will Russia seek help from OPEC and China?
It now appears that the Russian leadership has been slow to understand the true impact of the international financial crisis on the Russian economy. All the way through November it had tried to portray the crisis as a U.S.-manufactured phenomenon that had nothing to do with Russia, and that the country would remain “an island of stability.” The government is now at a crossroads – having privatized the political dividends from the rising oil prices in 2000-2008, it is now forced to admit that the rising living standards of the past eight years have more to do with high oil prices than with the able management of Russia’s economy, which remained commodities-driven.
Vlad Ivanenko comments that Russia is likely to use the crisis to expand its sphere of influence in the near abroad. [...] Using the ruble as the price unit in state-sponsored trade credit lines will increase its role as regional reserve currency. Moreover, the crisis can push previously reluctant neighbors to form a regional trade union with Russia at the helm.
Secondly, a better delineation of state and private sector responsibilities will emerge. [...] I treat this development as a correction of excesses associated with the wild privatization of the 1990s. Using public funds, the state reaffirms its role in defining strategic national objectives, but leaves the day-to-day operations in the hands of private managers.
Finally, potential development of a brand-new economic system – prompted by the crisis – in this country cannot be excluded.
Ethan S. Burger adds that economic crime should be dealt with in the same way violent crime is. [...] Credible efforts to combat corruption and effective regulatory and law enforcement are needed to restore the businesses' and the citizens' faith in government. The criminal justice system and judiciary must inspire confidence in the population.
It now appears that the Russian leadership has been slow to understand the true impact of the international financial crisis on the Russian economy. All the way through November it had tried to portray the crisis as a U.S.-manufactured phenomenon that had nothing to do with Russia, and that the country would remain “an island of stability.” The government is now at a crossroads – having privatized the political dividends from the rising oil prices in 2000-2008, it is now forced to admit that the rising living standards of the past eight years have more to do with high oil prices than with the able management of Russia’s economy, which remained commodities-driven.
Vlad Ivanenko comments that Russia is likely to use the crisis to expand its sphere of influence in the near abroad. [...] Using the ruble as the price unit in state-sponsored trade credit lines will increase its role as regional reserve currency. Moreover, the crisis can push previously reluctant neighbors to form a regional trade union with Russia at the helm.
Secondly, a better delineation of state and private sector responsibilities will emerge. [...] I treat this development as a correction of excesses associated with the wild privatization of the 1990s. Using public funds, the state reaffirms its role in defining strategic national objectives, but leaves the day-to-day operations in the hands of private managers.
Finally, potential development of a brand-new economic system – prompted by the crisis – in this country cannot be excluded.
Ethan S. Burger adds that economic crime should be dealt with in the same way violent crime is. [...] Credible efforts to combat corruption and effective regulatory and law enforcement are needed to restore the businesses' and the citizens' faith in government. The criminal justice system and judiciary must inspire confidence in the population.
Andrei P. Tsygankov questions the economic model developed under Vladimir Putin. This model assumed stability of high oil prices, which allowed the state and private energy corporations to be more assertive abroad, including by borrowing from foreign banks. Rather than becoming an opportunity to diversify the economy, expansion of energy production and contracts slowed down such diversification. Although at the time it made sense to exploit energy as a comparative advantage, the sharp decline of oil prices requires a principally different course. Given the continued uncertainty in the global markets, the Russian government faces difficult choices ahead.
It is important to keep things in perspective. Russia’s fundamentals are not ideal, but they are not bad either, and can still serve as a basis for economic recovery. If the oil prices do not fall below $30 a barrel and the United States begins to recover within the next year, Russia is likely to feel the difference and will get back on its feet within a few years following the United States. Russia’s recession is very serious, but in relative terms, it is still possible not to make it much worse than that experienced by Western economies.
Professor Stephen Blank ends the discussion with a political note. To a large degree, this crisis validates many of the Western (and domestic) criticisms of Putin's economic and political policies that were built on a castle of oil, which is no more substantial than sand. Reforms and a much lower profile in world politics while Russia recovered and developed meaningful economic capabilities, not unlike China, was and remains the way to go. But that means decisively breaking with the neo-Muscovite and patrimonial model and moving toward a genuine market economy and pluralism, if not democracy in politics. The response to date has been the wrong one, pointing toward more state control and monitoring from above, as Frolov points out. Not only does this bring the country closer to fascism, without losing its neo-Tsarist and neo-Soviet attributes, but it also ensures that the country will pursue a great power status that is unattainable, and will crash at some future date in a major international crisis that will be of its making to a considerable degree.
Geen opmerkingen:
Een reactie posten