“Upper-Volta with Missiles” Part Two.
Posted by democratist on June 12, 2010
12th June 2010
Russia is in desperate need of political and economic reform, not least because of the truly monstrous levels of corruption from which it is currently suffering. This corruption has had both a clear impact on Russia’s inability to encourage innovation and growth in the high-tech sector, and also appears to have had a wider impact on domestic demand and investment, which remains sluggish despite some recovery of the economy from the financial crisis.
The Russian government (or at least some within President Medvedev’s “liberal” wing of the regime) have been hoping to resolve these problems by encouraging investment from abroad, but the government as a whole have so far made it clear that it is not really willing to introduce the kind of deep political and economic reforms that would be necessary to deal with the existing “hypercorruption” (in fact it may be incapable of doing so, precisely because the distribution of rents on the basis of loyalty has become a key component of how the Russian government has done business since 2000).
But without these reforms there is no additional reason for Western firms to invest in Russia – so the expectation that Russia’s problems will be solved by foreign companies is almost certain to fail. This suggests a continued stagnation of the Russian economy and atropying of the non raw-materials sector (and perhaps even the economy as a whole): Russia appears to be slowly collapsing under the weight of its own corruption – and (in the phrase used by The Economist to describe the collapsing USSR in the 1980’s) to be once again firmly on a path to becoming an “Upper-Volta with missles”.
As Dimitri Trenin, of the Carnegie Center Moscow observes “…Russia is sorely lacking what it takes to be a major global economic and political force in the 21st century: Relative energy abundance and nuclear arsenals are simply not enough.”
Without meanngful reform, Russia seems doomed to economic stagnation, increasing international irrelevance and continued social disintegration, as well as (over the longer term) the potential for an eventual reactionary backlash.
In the meantime, the long-suffering Russian people will have to endure many more years of massive hypercorruption under the current regime. This will entail a lack of any real economic diversification or investment in R&D, and the above-mentioned economic stagnation.