Dec 4

Dec 4 Reflections on Russia 100 Years After the Russian Revolution: Part II By Nathan Richmond

We can best understand Russia today by considering a few of the most important issues in each of four categories: politics, economics, society, and foreign affairs. Understanding the key elements in each of these categories together give us the big picture, an overarching view of present-day Russia, as I articulated in the first part of this piece.

Russia's Politics

Politically, Russia is a kleptocracy, a system defined as rule by thieves. Corruption in Russia is rampant. Russia is not the first nor is it the only kleptocracy; countries rich in natural resources, especially oil, are particularly vulnerable to this problem. Russia is ranked 131/176 on the 2016 Corruption Perception Index (the higher the number, the more corrupt a country is perceived to be). Ironically, Russians joke among themselves that theirs must be the wealthiest country in the world because everyone has been stealing from the state for a hundred years and there is still quite a bit left to take.

Further politically, President Vladimir Putin has no effective political opposition. Many of the leaders of the political opposition have been jailed, exiled, murdered, or are otherwise sufficiently intimidated and are no longer politically active. His most outspoken critic, Alexei Navalny, a crusading anti-corruption politician has been jailed briefly on several occasions in the last few years usually for organizing unapproved demonstrations. His “criminal record” thus makes him ineligible to run against Putin in the 2018 presidential election. He has also lost his vision in one eye, the result of having acid thrown in his face recently by assailants.

Thus far, Putin’s only declared presidential election opponent is Ksenia Sobchak, the daughter of a former St. Petersburg mayor, the late Anatoly Sobchak, who was Putin’s political patron. Ms. Sobchak is a television and movie actress, famous for hosting a tv reality show. She is widely seen as Kremlin-backed candidate who will provide the illusion of an opposition candidate to give legitimacy to the Putin’s 2018 re-election. Part of her election platform is to “never criticize Putin”.

With his political opposition neutralized and no serious challengers on the ballot, President Putin will be routinely reelected in 2018 for another six years. He is not without concerns, however; he recently created a 350,000-400,000 strong national guard under his personal command.

The Russian Economy

Economically, Russia suffers from what was once called the “Dutch Disease.” The Russian variant of the “Dutch Disease” refers to the practice of using the income from energy exports to purchase imported products rather than producing those other products themselves. When the market for energy collapsed, Russia no longer had the resources to import, nor did they have domestic manufacturing either, which is the case today.

The oil and gas industry is the mainstay of the Russian economy and accounts for about 70% of Russia’s exports. Russia also exports other raw materials including precious metals and timber products. It also has a fairly well developed armaments industry and is a leading weapons exporter.

But Russia suffers from a lack of economic diversification and while they are making efforts to expand their economic bases by trying to develop their own high tech industries, their own pharmaceutical industry, etc., they are hampered by a lack of investment funds. Much, if not most of Russia's privately held capital is held in off-shore accounts. Government funds that could be used to invest in economic diversity are instead dedicated to military modernization. And a lack of foreign direct investment is due to a combination of Western economic sanctions, high levels of corruption, and weak property rights.

Russian Society

On the societal level Russia experienced a population decline on the order of approximately 500,000 to 750,000 annually for more than a decade following the 1991 collapse of the USSR. Current (2017) estimates of Russia’s population vary with the Russian Government indicating their population at 144.5 million (not including the Crimea) and the CIA estimating the number at about 142 million. Russia had a population of about 149 million at collapse of the USSR in 1991.

The severe population decline was attributed to a very low birth rate combined with a soaring death following the breakup of the USSR. The high death rate in turn was the result of a failing health care system, a high murder rate, and rampant alcoholism all rooted in the bankruptcy of the Russian economy following the collapse of the Soviet Union.

Indicative of Russia’s demographic problem was the falling life expectancy rate for Russian males. The life expectancy rate in 1986 was 65 years; by 1994, it had fallen to just under 58. It has since climbed to 67.5 as of 2017 with steady progress in the decade since 2006.

Russia’s demographic decline, and subsequent anemic growth however, will make it difficult to expand Russia’s already weak economy (currently ranked 11th in the world by GDP in 2017), and will also put pressure on manpower demands for staffing its military. Both of these trends will make it increasingly difficult for Russia to maintain its great power status in the long run, thus undermining the government’s legitimacy.

Russia's Foreign Policies

In terms of foreign policy, Russia under Putin has played an extremely weak hand masterfully. In the near term, Russia likely will continue to try to undermine the European Union (EU) and the North Atlantic Treaty Organization (NATO) in Europe. They are working actively to intensify political divisions within the US so that we are preoccupied and inward looking, and to sow discord among our allies. Russia was happy to see the UK vote to leave the EU and will work to bolster European populist parties in France, in the Netherlands, in Austria, and in other countries seeking to hold referenda on their respective countries’ continued participation in the EU.

In the Baltics, in Moldova, and in Ukraine, Russia will continue to try to exert influence in these areas of special interest on their western border. Ukraine’s affairs continue to be unsettled (as are Georgia's) and we should probably expect Russia to attempt to play a decisive role in the upcoming Ukrainian presidential election in 2019.

In the Middle East, Russia has played a decisive role in the Syrian Civil War and they have warming relations with Iran and Turkey. They are also seeking to regain influence in Central Asia. And in East Asia, Russia continues to maintain good relations with China based on common interests. While the Russian government has condemned North Korea's nuclear ambitions, they have significantly boosted trade with Pyongyang.

Russia’s Future

Based on Russia's past patterns of behavior (discussed in Part I on this web site on November 20, 2017), the most unexpected leader, probably someone we haven’t even heard of yet, will succeed Putin sometime in the next decade. That new leader will both repudiate Putin’s kleptocracy, and seek to enhance Russia’s global influence, probably by reversing Putin's confrontational relationship with the West.

Finally, when thinking about Russia's future, we need to expect the unexpected. No one expected the Russian Revolution(s) of 1917. No one predicted Khrushchev’s condemnation of Stalin in a "Secret Speech" to the Soviet leadership followed by the policy of de-Stalinization. Nor was the subsequent overthrow of Khrushchev an expected result. No one predicted an attempted coup against Gorbachev or the subsequent collapse of the USSR. No one expected Russia to default on its loans in 1998, or Yeltsin’s sudden resignation the following year. Thus, while some aspects of Russia's policies may be predictable, other aspects concerning Russia will no doubt come as a surprise.