MONDAY APRIL 20 CONTENTS
(5) Kasyanov Speaks
MONDAY APRIL 20 CONTENTS
(5) Kasyanov Speaks
Putin’s Economy is in Flames, but much Worse is Coming
Two stunning admissions were made last week by the Putin administration, admissions which reveal the true extent to which Putin’s mismanagement of the economy has led to fundamental national collapse.
First, the Kremlin admitted that it will cut the federal budget by a whopping $60 billion next year (that’s two trillion rubles less spending on basic social welfare measures for a population that is already so sick its male population doesn’t rank in the top 100 of the world for lifespan), owing to shortfalls in revenue this year of 30% compared to projections at the beginning of 2009.
Then, the Kremlin admitted that spending cuts, even that draconian, wont’ be enough: it will need to beg for foreign loans in order to keep the economy afloat next year, the first time it’s had to do this in more than a decade. Streetwise Professor states believes that the uncontrolled ballooning of the deficit brought on by the dramatically worsening economic contraction will seriously undermine the Kremlin’s ability to deliver a stimulus package as promised, creating a horrific snowball effect.
An 8 percent of GDP deficit (predicated on the current forecast) seems unachievable if the economy indeed contracts by more than 2.2 percent as Kudrin deems likely, so a 5 percent deficit would require deep spending cuts–cuts that would conflict with Putin’s plan for a fiscal stimulus totaling $90 billion(3 trillion rubles.) How Kudrin can square that circle is beyond me.
Combined, these two horrifying facts bespeak total failure within the Putin regime. As Natalya Orlova, chief economist for Russia’s Alfa Bank, writes in her Moscow Times column, 2010 is shaping up to be a true annus horribilis for Russia, since “the full effect of the crisis on Russia lags behind developed markets and will likely only be felt here in the second half of 2009, manifesting itself in the form of bad corporate debt.”
Barbaric Russian Cowards on the Rampage in Georgia
Human Rights Watch has released what looks to be the definitive report on the use of cluster munitions by Russian forces in their August 2008 invasion of Georgia. It concludes that Russia carpet-bombed the Georgian city of Variani twice and hit the city of Gori once, using cluster weapons all three times and in total killing 12 Georgian civilians while wounding 38. For its part, Georgia killed only four civilians and wounded just eight using cluster bombs — one third the Russian totals.
HRW’s investigation discovered remnants of Russian cluster munitions in or near nine different Georgian villages, meaning that the casualty tally could well be higher than HRW was able to conclusively document.
Let’s be clear: “Russia definitely violated international humanitarian law with its use of cluster munitions.” Those aren’t our words, they’re the words of HRW researcher Bonnie Docherty, author of the report. Russia still denies even using the weapons, much less killing any civilians. Georgia, at least, admits using them, though it claims only military targets were selected.
Paul Goble, writing in the Moscow Times:
Russia’s population will continue to decline over the coming decades, threatening first some regions and then the country as a whole with depopulation, a trend whose consequences are both more immediate and more widespread than many now assume, according to a leading Moscow demographer.
In an article titled “The Social Consequences of the Depopulation of Russia,” Olga Lebed of Moscow State University argues that “the demographic situation that has arisen in Russia over the course of recent decades has achieved such a critical point that it is impossible not to pay attention to it.”
The USSR was destroyed from within as the Communist regime devoted an ever-larger share of the national income to military spending. Now, Russia is going right back down that same path of total failure, for reasons that defy comprehension. Time magazine reports:
Russia’s leaders are getting used to cutting budgets this year. As the country sinks deeper into recession — unemployment, according to some estimates, is as high as 12% and the economy is predicted to shrink by about 4.5% in 2009 — the government is slashing spending at most of its ministries. The Energy Ministry’s budget is down by 33%, and that of the Transport Ministry by 30%. But there is one hugely expensive project on which President Dmitri Medvedev has vowed to actually increase spending: transforming Russia’s creaking Soviet-era defense industry into a modern technological power, and turning the 1.1-million-man Russian army into a leaner but more effective fighting force.
To get there Medvedev has increased government military spending this year by nearly 26% to about $37 billion, and given military producers of strategic weapons like missile systems and aircraft an extra $1.9 billion in 2009. In late March, just days before flying to the G-20 summit in London, the President donned a military pilot’s helmet and uniform at an air base near Moscow for a ride in the back of a Sukhoi-34 fighter bomber, one of Russia’s most sophisticated and deadly pieces of hardware. Afterwards he told reporters that it was time to modernize the country’s entire air-force fleet. “We have the momentum and people who want to serve their country,” he said. “Much is yet to be done.” (See pictures of Russia on Victory Day.)
Reuters reports that former Prime Minister Mikhail Kasyanov is warning that Russia stands on the brink of collapse:
Russia could face economic chaos and even revolution unless the government acts swiftly to reform and relax political restrictions, former Prime Minister Mikhail Kasyanov said on Thursday. Kasyanov, who now leads an opposition party, told a seminar in Brussels that by the end of this year inflation could reach 15 percent, toxic loans could rise to 30 percent of all loans and unemployment could reach 10 million. The government may also have to seek help from the International Monetary Fund “in the near future,” he said.