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It is almost certain that Vladimir Putin will continue to be in office as elections in Russia are about to be held. Things have changed for Russia after the collapse of the USSR. Still, there are a lot of things which seems to be the same as they were. An article by Anders Åslund (Anders, A (2001). Russia. Foreign Policy, No. 125 (Jul. – Aug., 2001), pp. 20-25) needs our attention. He tried to portray the situations of then Russia; which like any other growing economy needed an overhaul. Russia was no longer following the communist traditions with wounds and ghosts (or legacy) of the past but then, it is not perceived as a democratic nation even today. Yes of course, one could debate on what is good or bad for Russia, but Åslund provided an interesting analysis. To be frank, I am not sure if personally I would agree with everything presented in the article, it is still worth reading, discussing and keeping in mind. While reading it, let’s not forget that it was published back in 2001.

The article presents various examples and arguments to portray the economic situation of the then USSR, which is now a growing economy. In doing so, it analyses some of the conceptions about Russia as an Economic Superpower, brings in facts from the soviet era and questions (as well as contradicts) the western belief about Russia as a declining economy.

As opposed to the western understanding, the author argues that the Russian economy has not collapsed, instead it is showing a slow progress. During the communist period in order to achieve the goals there were exaggeration of data; and information was manipulated. The quality of products was also not good. However, post-communism trends are showing different patterns.

There is a slow economic growth, and Russia is picking up with the global economic shifts with its GDP being 5.4 percent in 1999 to 8.3 percent in 2000. The author writes further that all the problems of modern day Russian economy, be it excessive state intervention, corruption, high tax rates, lingering inflation, or limited rule of law are due to the fact that there were no sufficient measures taken to change the system. Countries like Poland and Estonia took more stringent actions and have achieved better results. Russia needed to take even stricter and radical actions in order to perform better.

Furthermore, the article presents GDP data to show that privatization has not created corruption in Russia, on the contrary it has helped the economy grow. Since 1997, Russia’s private sector has created around 70 percent of the country’s GDP. Corruption in Russia is not due to the privatization, as it (privatization) permanently deprives public servants of public property. The main reasons for corruption in Russia are related to the law enforcement, tax collection, and state intervention. The author continues by giving cases of Poland and Ukraine to show how both the countries adapted privatization with slower pace than Russia and achieved different results because of the reform policies they implemented simultaneously.

There is another misconception about Russia that it cannot collect taxes. The author says that this information is incorrect. Russia is a different type and size of economy than United States, former Soviet Union or Western Europe. The tax rates were different in Russia and now have been changed to 13 percent flat. By presenting the discussions on International Monetary Fund and the World Bank, the article continues further by saying that the current tax rates are a good step for the Russian economy because it is encouraging people to pay taxes than investing in tax saving schemes. The author does not exclude the problem of lawlessness among the tax collectors.

Saying that Russia’s infrastructure is falling apart is another misinformed statement. Russia’s telecom industry, ports and aviation industries are growing. Privatization has only increased its speed. There are challenges of maintenance remain, that are mostly caused by the state monopoly. Russia like any other country doesn’t need more foreign direct investment (FDI) but more exports and more domestic investments according to the author. Poland, Hungary and Czech Republic used different mechanisms to attract FDI, and have shown different results. Russia has problems of excessive bureaucracy and corrupt law enforcement which needs to be changed to achieve a better economic growth.

Talking about the health sector in Russia, the author reiterates that although the statistics do not favour Russia the situation is not pessimistic. Russia’s population growth has declined, so has of the Western Europe. The trends of life expectancy are similar to that of East Slavic and Baltic countries. The investment in the health sector has increased and accessibility to healthcare has also increased. Some of the challenges such as low salaries, low efficiency, bribery are carried forward by the systems of the past and need reform. AIDS, TB are new epidemics which need attention by the health service decision makers.

Contradicting the popular Western belief that Russia has been a black hole for Western aid, the author says that Russia has been given lesser aid than it was announced. Most of this aid was spent on western consultants, who helped formulating new economic reforms possible for Russia. The west particularly the United States should be thankful to Yeltsin and Gorbachev. The articles adds further by saying that if more had been given early on, much more could have been attained.

The author argues that many Russians and foreigners think that Russia needs a strong leadership. However, it is not required for Russia as democracy and market reform are positively correlated. As per Anders, the disregard for democracy and repression of the press are(were) main challenges Russia faces today.

As human beings, some nation states learn from mistakes of others and some only from their own. Russia has experienced both. From the time of publication of the article there has been many changes in the Russian economy in almost each dimension presented by the author. Undoubtedly, as it said in Timor Leste future is the son of the past. There is a lot to learn and to do. Let us hope for a better future for Russia and its people.

Ashish Kumar Singh is a Doctoral Candidate of Political Science at Higher School of Economics- The National Research University, Moscow, Russia. He can be contacted at: ashish.tiss@gmail.com

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2 Comments

  1. An argument using Estonia as a good economic example Is not to be trusted. Estonia suffered a significant population loss after its ‘independence’ from the Soviet Union due to an increased death rate and a high emigration rate. Most of those emigrés would be highly skilled younger people – and the population is now an aging one.

    As for using GDP for economic comparisons, it is one of the most highly manipulated figures especially within the neoliberal realm that Estonia has adopted.

    As for Russia it is one of the healthiest economies in the world. It has minimal international debt, the economy is growing in several areas, in part due to sanctions: military sales, agriculture; and in part to an ongoing healthy resource sector. They continue to buy gold to bolster their reserves and to assist in the event of more western sanctions. Their partnership economically and militarily with China has also provided a good basis for economic steadiness.

    US “aid” to Russia was calibrated to enrich western economies. By accepting the US shock doctrine Russia was robbed of billions of dollars of wealth by both Russian and US oligarchs. It was the US that advised Russia on how to set up a new government – one with a strong presidential role. Perhaps they though it would be easier to control Russia with a single strong figurehead.

  2. K SHESHU BABU says:

    There are many positive indicators in Russian economy. But, still, it has wide gap between rich and poor. After Stalin ,not much progress had been on human development index and it’s imperialist foreign policy remains a cause of concern as well as stifling dissent. It should review it’s progress in accordance with the policies of lenin