The Moscow Times offers readers a two-part review of the onset of serious academic criticism of the Putin economy. How long this will be allowed to continue, and indeed how long these courageous academics have to live, is an open question.
First comes an op-ed from Sergei Guriev, rector of the New Economic School in Moscow, and Aleh Tsyvinski, professor of economics at Yale University:
Russia’s economy is collapsing, but the situation could be even worse. The global economic crisis has finally forced the government to adopt sensible policies, thereby staving off disaster — at least for now. Official forecasts for Russian gross domestic product growth in 2009 remain positive, but most analysts, including government officials, are bracing for a severe recession, which appears to have started in the fourth quarter of 2008. The stock market’s collapse — its 72 percent fall is the worst of all major emerging markets — is only the most visible sign of this.
Even Russia’s oligarchs are pawning their yachts and selling their private jets. Signs of political instability are mounting. The approval ratings for the country’s president and prime minister are heading south. Mass street protests have started, and they are led not by opposition political parties but by workers and middle-class families facing job losses and declining wages. More important, protesters are demanding that the government resign, which was unthinkable just a year ago.
With oil prices plummeting 70 percent from their peak, it is no surprise that the country is facing severe economic challenges. Growth is endangered, the ruble is weak, and the government budget is in deficit. Nevertheless, up to now, the government and private sector have weathered the storm reasonably well.
Critics of Prime Minister Vladimir Putin’s regime argue that the political system is too centralized and risks collapse in today’s economic storm. The regime’s ideology, after all, places the state and loyalty to the rulers ahead of private property and merit. When the crisis hits with full force, they argue that the government will nationalize major banks and companies, with the resulting inefficiency then burying the economy, just as it doomed the Soviet Union.
The government has, in fact, made serious mistakes in dealing with the crisis. Taxpayers’ money was spent to purchase corporate stocks in a failed attempt to support collapsing stock prices. The government is unlikely to recover its investment anytime soon.