Tuesday, March 04, 2008

Russia's New (Old) Era

The farcial Russian elections have now been completed and the anti-democratic Putin retains his place at the heart of the Kremlin. On the same day, Gazprom stepped up the row with Ukraine over gas supplies- giving the lie to the empty words that the incoming President Medvedev had breathed claiming that Russia could be trusted as a reliable energy partner. As Medvedev is the outgoing chairman of Gazprom, it is clear that once again energy is being used as a political lever against those who oppose the Putinistas.

The sinister and authoritarian regime seems to grow ever more menacing.

Yet, despite the growing litany of threats- the military exercises in the Bay of Biscay, the bellicose posturing from the Putin jugend- the violent thugs of Nashi- and a constant blare of black propaganda, there is a growing sense that Russia has not recovered, and indeed that her weakness is now frightening many.

As always the heart of the matter is in the economy. Although Russia has seen a dramatic increase in the size of her economy, as the result of the huge increase in revenues from oil and gas, the fact is that the stronger Rouble has left much of the rest of the economy unable to compete. As a result, the country is sucking in a large number of imports, especially from the Euro-zone. However, although Dollar revenues are at an all time high, the depreciation of the Greenback has meant that in Euro terms, the economy is only just holding its own. The Russian terms of trade, having strengthened dramatically are now falling.

Meanwhile the country still faces major infrastructural problems, with inadequate transport links and a steady deterioration in the electricity generating capacity and grid. Although investment has gone into these areas, as it has to develop new oil and gas deposits, the replacement rate of investment is higher, and the new deposits have been exceptionally slow to come on stream.

Inflation, hitherto largely kept under control, is now growing very sharply, while debt too has begun to increase- raising the spectre of serious problems as the credit crunch makes itself felt across the world. Socially, the gap between rich and poor has exploded- with the Russian Gini coefficient, which measures income inequality now one of the largest in the world. Many of this new generation of Russian billionaires have been direct beneficiaries of the Putin era- raking in huge profits on the back of murky deals and corrupt business practice.

The rule of law, to which Medvedev has paid some lip service prior to his election, is an essentially meaningless concept in the lawless violence of the Russian state. The result has been extremely low levels of international investment in Russia, especially when compared to their neighbours who have now joined the European Union.

Poor, truculent and bullying, Russia is an uncomfortable neighbour, Meanwhile, if we are to judge the country by its international friendships, we see the comedy dictatorship of the odious hugo Chavez, the gerontocracies of Cuba and North Korea and the authoritarian Communist regime in Beijing. China aside, non of these are exactly successful states. Russia too, can not come to terms with the Stalinist legacy of brutality. the demographics are truly shocking- with the average life expectancy for a Russian male of only 54 years and alcohol and drug abuse causing a mass epidemic of Multi Drug Resistant TB and HIV. Though the birth rate has recovered a little, the population is still set to continue the largest fall in peacetime ever seen, outside of a plague.

So as the global economy enters turbulence, it is clear that Russia has few friends, a legal system that can not deliver international investment, a political system that is a sick parody of democracy, a series of critical social crises- and an economy that is getting weaker.

As we enter the new era, it is clear that Mr. Medvedev has a gigantic task ahead- we will know whether he will be successful when we hear genuinely liberal policies being put in place, other than that, Russia's future in the next decade could be grim indeed.

1 comment:

Karla said...

Nothing is impossible in Russia but reform.
-Oscar Wilde: Michael, in "Vera, or The Nihilists" (1880).