The Russian Economy, Enslaved
“If the oil price is around $68-70, then the increase (in GDP) could surpass 3 percent, it could be 3.2-3.5 percent.”
–Russian Deputy Economy Minister Andrei Klepach, to Reuters on Friday, November 13th
Klepach was only saying out loud what everybody else (except the people of Russia) already clearly understands: Russia has no real economy. Even before the August 2008 financial crisis laid Russia low, the Putin regime had done nothing to diversify and broaden Russia’s economy, leaving it totally dependent on world crude oil prices for subsistence. And even now, growth of just 3% on Russia’s pathetically small economic base is simply not sufficient to create any real improvement in living standards. Since the U.S. economy is ten times larger than Russia’s while the U.S. population is only twice as big, each point of economic growth has five times more value in the U.S. than it does in Russia.
And let’s be clear: This isn’t just a matter of incompetence or inattention. This horrific enslavement of the Russian economy is official Kremlin policy.
Putin doesn’t want the economy to diversify. That would mean a multiplicity of centers of power, pluralism, and Putin can’t abide it. It’s so much easier to control a nation whose economy is utterly dependent on a single asset which the state has monopolized. Sure, growth and jobs and standard of living are limited, but people who are poor are weak, and therefore easier to control than wealthy, well-fed people who are have time to think about issues like democracy.
Now, the only hope Russia has to stave off national collapse is if the economies of the West continue to recover from the global downturn and demand for Russian oil picks up. Yet, it has been the clear policy of the Putin regime from day 1 to attack the economies of the West, seeking to destabilize the Middle East and drive up oil prices to the level where they seriously inhibit economic growth. In other words, it ‘s the classic story of the idiot farmer who kills the golden goose.
A sensible Russian leader would have been doing all he could to nurture the economies of the West, upon which Russia depends so utterly, or would have been aggressively seeking to diversify the Russian economy so that their downfall would not harm Russia. Putin has done neither. Instead, he has relentlessly attacked the West, even going to far as to repeatedly buzz our territories with nuclear attack aircraft, and meanwhile he has kept his own economy in a chokehold, barely able to breathe.
That is national suicide, there is no other word for it. Blinded by his lifelong indoctrination in KGB hatred of the West, Putin is simply unable to concede Russia’s dependence upon the West, just as the USSR was unable to concede the West’s massive economic superiority.
How then can Russia expect to avoid the USSR’s fate?