On Russian government's non-response to economic problems
In a recent editorial, Gazeta.ru castigated the Russian government for not doing anything about the country's slowly but surely growing economic problems. While the problems started before the Ukrainian Crisis, the Western sanctions - and Russia's own retaliatory sanctions - have the economic situation worse.
How much worse? Unfortunately, the economic collapse that followed the demise of the Soviet Union set the bar pretty low for Russians old enough to remember it (so... a majority of them). But the editorial points to some alarming tends that, if left unchecked, will spell trouble on the long run.
For the first time since 2009, the number of citizens living below the poverty line has been creating - from 19 million to 22 million. In other words, approximately every fifth adult Russian lives in poverty. The middle class is thinning out - if, in 2013, 18% of Russians could say that they could afford to buy a car and a condo, vacation at resorts, send their kids to private schools and colleges, that number turned out to be 13% in 2015. Emigration out of the country is growing, and for economic reasons, too.
People don't know what future awaits them, where will they be able to earn a salary, what their growing kids will do, and what institutions would even remain.
The editorial also points to the fact that, since Crimea joined Russian Federation, the country has been spending billions of rubles on the peninsula, often at the expense of capital improvements elsewhere in the country, without clear economic benefit. Granted, that was bound to take time, and Crimea may yet return to its Soviet-era glory, but anybody who thought joining Russian Federation would magically fix all the peninsula's problems were, at best, naive.
But what galls Gazeta.ru isn't so much that economic problems exist - it's that, they argue, the Russian government isn't taking them seriously.
Here is a quick list of Russian economic initiatives over the past we days. Burn food [banned by Russian counter-sanctions] at the border - that's what the Minister of Agriculture is advising the President to - instead of taking steps to develop our own domestic farming. Banning import of flowers from Netherlands, because it initiated an international tribunal to investigate the downing of [Malaysia Airlines Flight 17]. Create a national ratings agency, as if foreign investors would immediately believe those ratings and will race to invest their money [in Russia]. Pass the law regarding seizure of foreign property in Russia in response to seizure of our government property in response to lawsuits from YUKOS shareholders.
[...]
There is no strategy for escaping this crisis except for the one Putin announced at the end of last year during the end-of-year press conference "We need to be patient and, in two years, the oil prices will rise.
Which, needless to say is a foolish thing to hope for, since oil prices isn't something Russia can do much to influence. If nothing else, there needs to be some kind of a back-up plan.
Wikimedia Commons/Gazeta.ru
As Gazeta.ru sees it, Russia needs a foreign investment from somewhere. It can't be West, for obvious reasons. And while much has been made about strengthening relations with China and other Asian powers, Gazeta.ru is skeptical.
Asian investors are increasingly concerned about the fund market in China. As for China itself, in the past few years, it has actively developed connections with Western countries. And Азиатские инвесторы все больше обеспокоены ситуацией на фондовом рынке Китая. And PRC government is currently putting its resources into resolving its own, internal problems, so there might not be enough money for Russia.
If the current trends continue, there is a very real possibility that Russia will force itself into a situation where neither East nor West would help.
The situation is further complicated by the fact that, as the editorial notes, the United Russia propaganda has been pushing the narrative that Russia has weathered sanctions just fine, and that domestic industries have filled the gaps left by sanctions and counter-sanctions. Admitting something was wrong would require admitting that - gasp! - sanctions are working.
Before the Ukrainian Crisis, I would've argued that United Russia would try to improve the economy. But we live in the time when the ruling party continues to be paranoid about anything that might undermine its power. They might be willing to let more and more people slide toward poverty.
And because, as I said in the beginning, the bar for awful economic situation has been set so bloody low, they might be able to get away with it for years.
28.07.2015, 19:28
Черная неблагодарность
Спустя год после введения серьезных финансовых санкций против России и ответного продовольственного эмбарго...
http://www.gazeta.ru/comments/2015/07/28_e_7660501.shtml
How much worse? Unfortunately, the economic collapse that followed the demise of the Soviet Union set the bar pretty low for Russians old enough to remember it (so... a majority of them). But the editorial points to some alarming tends that, if left unchecked, will spell trouble on the long run.
For the first time since 2009, the number of citizens living below the poverty line has been creating - from 19 million to 22 million. In other words, approximately every fifth adult Russian lives in poverty. The middle class is thinning out - if, in 2013, 18% of Russians could say that they could afford to buy a car and a condo, vacation at resorts, send their kids to private schools and colleges, that number turned out to be 13% in 2015. Emigration out of the country is growing, and for economic reasons, too.
People don't know what future awaits them, where will they be able to earn a salary, what their growing kids will do, and what institutions would even remain.
The editorial also points to the fact that, since Crimea joined Russian Federation, the country has been spending billions of rubles on the peninsula, often at the expense of capital improvements elsewhere in the country, without clear economic benefit. Granted, that was bound to take time, and Crimea may yet return to its Soviet-era glory, but anybody who thought joining Russian Federation would magically fix all the peninsula's problems were, at best, naive.
But what galls Gazeta.ru isn't so much that economic problems exist - it's that, they argue, the Russian government isn't taking them seriously.
Here is a quick list of Russian economic initiatives over the past we days. Burn food [banned by Russian counter-sanctions] at the border - that's what the Minister of Agriculture is advising the President to - instead of taking steps to develop our own domestic farming. Banning import of flowers from Netherlands, because it initiated an international tribunal to investigate the downing of [Malaysia Airlines Flight 17]. Create a national ratings agency, as if foreign investors would immediately believe those ratings and will race to invest their money [in Russia]. Pass the law regarding seizure of foreign property in Russia in response to seizure of our government property in response to lawsuits from YUKOS shareholders.
[...]
There is no strategy for escaping this crisis except for the one Putin announced at the end of last year during the end-of-year press conference "We need to be patient and, in two years, the oil prices will rise.
Which, needless to say is a foolish thing to hope for, since oil prices isn't something Russia can do much to influence. If nothing else, there needs to be some kind of a back-up plan.
Wikimedia Commons/Gazeta.ru
As Gazeta.ru sees it, Russia needs a foreign investment from somewhere. It can't be West, for obvious reasons. And while much has been made about strengthening relations with China and other Asian powers, Gazeta.ru is skeptical.
Asian investors are increasingly concerned about the fund market in China. As for China itself, in the past few years, it has actively developed connections with Western countries. And Азиатские инвесторы все больше обеспокоены ситуацией на фондовом рынке Китая. And PRC government is currently putting its resources into resolving its own, internal problems, so there might not be enough money for Russia.
If the current trends continue, there is a very real possibility that Russia will force itself into a situation where neither East nor West would help.
The situation is further complicated by the fact that, as the editorial notes, the United Russia propaganda has been pushing the narrative that Russia has weathered sanctions just fine, and that domestic industries have filled the gaps left by sanctions and counter-sanctions. Admitting something was wrong would require admitting that - gasp! - sanctions are working.
Before the Ukrainian Crisis, I would've argued that United Russia would try to improve the economy. But we live in the time when the ruling party continues to be paranoid about anything that might undermine its power. They might be willing to let more and more people slide toward poverty.
And because, as I said in the beginning, the bar for awful economic situation has been set so bloody low, they might be able to get away with it for years.
28.07.2015, 19:28
Черная неблагодарность
Спустя год после введения серьезных финансовых санкций против России и ответного продовольственного эмбарго...
http://www.gazeta.ru/comments/2015/07/28_e_7660501.shtml