An excellent and prophetic analysis of Russia's economic choices and future development by one of her most well-known and articulate economists
This post first appeared on Russia Insider
The author is a leading Russian economist, publicist, and TV and radio host. (Wikipedia - Russian only)
Sometimes referred to as the "Russian Paul Krugman", he writes prolifically, and has a very large audience in Russia. His articles typically receive hundreds of thousands of views. He is known for explaining complex economic ideas in clear terms non-specialists can understand.
He is a former senior economist in the presidential administration and a frequent speaker at international conferences.
"Putin's persona has significantly divided our society.
There are people who love him dearly. There are those who passionately hate him. But even those who do not like him recognize the fact that today Putin is a statesman.
Maybe in the beginning of his career he was not a statesman,he was more of a manager, however, today he definitely is.
In fact, if he weren’t a statesman, he wouldn’t go for a third term.
Now, any statesman has some state idea. If we look at Putin, then, in my subjective opinion, his state idea can be formulated as "convergence". Convergence is an idea which became popular in our country during Andropov’s time in office.
I will remind you that Putin’s worldview was formed in the KGB of the USSR, during the heyday of Andropov’s rule. In this sense, it’s quite natural, that he was infused with this idea.
It is the idea of the unification of the Soviet and the Western elites.
Though each has its own sphere of influence, there is a common elite group. As we know, Andropov didn’t succeed, but Putin has continued this line.
Today we see that this idea has reached a dead end.
This is a fundamental problem that Putin is now facing as a person and as a statesman. All actions by the Western elite in the recent months have clearly shown that they do not perceive Putin personally or the Russian elite as something independent.
It is being explained to each representative of the Russian elite that if he wants something, he must go to the West, start from the bottom like everybody else, and stop at a medium level. He cannot rise up.
Thus Putin has become persona non grata not because he did something outrageous, but because he has encroached on something that the Western elites have already considered theirs. In other words, from the Western point of view Russia is their territory.
They write the rules. So the idea that there is some kind of elite, which has certain rights, in principle, is not being approved.
I shall note that because of this, most likely, Putin had problems with some people. In the 2000s, for example, with Kasparov or Khodorkovsky.
The reason was that they received a status in the Western elite, which was higher than the status of Putin in the Western elite. When they were demanding something, and Putin was sincerely surprised, their argument was that they already had a certain status there and he hadn’t. They laughed at the idea of convergence.
Today we see that the idea has not gone through.
It doesn’t matter why. There are reasons, in my opinion, why it couldn’t get through in the 70s either.
But this is not the essential point. Today we see the result: it has not gotten through.
What does it mean?
It means that a struggle against the sanctions and the pressure of the West within the framework of Western rules, will not be successful for Russia.
We are well aware of how the highest Russian officials were forced to submit by the West. We see Siluanov, Kudrin, and other government officials, who today are purposefully turning society against Putin.
The Finance Minister Siluanov explains to the people that the funded part of the pension fund has been thrown into Crimea and won't come back. Kudrin explains that because of the sanctions, or specifically because of Putin, they will lose 20% of their salaries.
The government says it has to raise taxes, and Putin is to be blamed personally.
While at the same time the revenue from the government's budget is deposited in the West to the benefit of the very people who declare the sanctions.
The latter is complete nonsense.
Once again, a war has been declared on Putin and the concept of independent Russian elites. Today the only chance for Russia is to produce new rules and a new agenda together with the Eurasian economic community, the BRICS or something else.
We must abandon the Washington consensus.
We must abandon the dollar. We must abandon the IMF. This does not mean that we have to do it tomorrow. But we must announce a clear plan and slowly but surely begin to realize it.
There is no need to fear that the U.S. will shut us off from the dollar. They will suffer more than us. Furthermore, once we have announced this plan, they will most likely come to accept it.
They recognize nothing but power.
We don’t have economic power; we don’t have military power, well, compared to them.
But we have conceptual power.
So today we need to present a conceptual idea. This can be done.
Today we can safely say that if Putin doesn’t do it, he, as a statesman, will not survive. We understand that considering the West’s attitude, if he ceases to be a statesman he will either die or end up in prison.
Does Putin have any allies, except Glaziev? Putin actually has many allies.
The trouble with the US is that today they are unable to realize the same rules that they themselves had installed. They don't have the resources to do it. They have begun to break their own rules.
Therefore, everybody is waiting for someone to announce new rules.
The one who does it first, even in the absence of resources, will inevitably become a leader. This will provide additional resources for development.
We can do that today.
Once we do that, we will have economic resources. Take the program of import substitution, for instance. It cannot exist today because programs that would free us from dependence on the IMF cannot exist within the framework of the Washington consensus and the IMF rules.
This is impossible.
We can see it very well: Siluanov, Kudrin, Nabiullina and the government sabotage the President’s orders. Why? Because they know that the rules are written in Washington and therefore, regardless of what Putin wants, their welfare is decided in Washington.
But, once the rules are changed, they have only two options: either to follow the new rules, or go to Washington.
Who are they going to be there? Small clerks?
Today’s world crisis is our crisis in the 80s. It’s just slightly different, on a larger scale, but the economic mechanism is the same - the crisis of the decline of capital efficiency.
The way out is in reducing the level of the division of labor and dividing the world into zones.
The project of Eurasian economic unity only works because there are objective economic trends that are pushing the world towards the division into zones. Therefore, there will be boundaries between zones.
The question is: will we be able to form our own zone, or become the periphery of someone else’s zone."
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