The Failure of Putinomics
Last year, Russia experienced nearly $40 billion in capital flight. Money flowed out of Putin’s Russia at a rate of $3.2 billion per month. Russians voted with their wallets, and they voted that Putin could not be trusted and that a future ruled by him was bleak indeed.
So far this year, despite a crude oil prices above $100/barrel (and a stock market up one-fifth compared to last year), money is leaving Russia at a rate more than double that of last year. Already, in just the first four months of this year, Russia has hemorrhaged a stunning $26.3 billion — more than half the total it lost in all of 2010. The landslide vote against Putin in 2010 has turned into an absolute rout in 2011.
In just the past eight months, Russia has seen a genuinely appalling $55.6 billion in capital flight — showing unquestionably that Russia’s financial problems, already at horrific levels, are getting even worse as the price of oil rises. Foreign investors are simply not fooled by the Kremlin’s propaganda, and in fact they clearly understand that a rising price of oil only encourages the Kremlin not to reform, meaning that the Russian economy is getting more and more dangerous by the hour.
Other bad economic news is still raining down on Russia. WTO and Chinese energy negotiations have stalled spectacularly. An open trade war is threatened with Belarus. Khodorkovsky was sent back to Siberian prison, apparently for good, reminding every businessman both inside and outside Russia that his time could come at any moment.
And the reason for all this is clear: Vladimir Putin is a man with absolutely no economics or business credentials, and no ability to deal with the vagaries of a market economy. His whole life, Putin has been schooled in deception and brute force, two skills which are utterly useless any any type of capitalist system. Putin’s efforts to govern Russia as if he were a mafioso don are destroying the country just as surely as the equally inept actions of the fools who ruled the USSR, and whose descendent Putin is.
If the people of Russia do not wake up soon and strip this man of power, he will drive Russia to the same fate as was met by the USSR.