Paul
Goble
Staunton, February 22 – A report by
the Washington Center for International Policy’s Global Financial Integrity
program suggests that illegal capital flight from the Russian Federation over
the last 17 years has been “stupifyingly” large, but in fact, a Russian
economic analyst says, the report’s figures understate the size and
implications of the problem.
In a lengthy essay on Politcom.ru
yesterday, Vladislav Zhukovsky says that the GFI report is correct at a general
level because it documents the ways in which the Russian economy is suffering
from “a black hole” which is “incompatible with the normal existence of the
state and even more with the modernization of the economy” (politcom.ru/15359.html).
According to GFI, Zhukovsky says,
the illegal import and export of capital by the private sector in Russia totaled
782.5 billion US dollars between 1994 and 2011 for an average of about 43.5
billion US dollars a year. Illegal capital flight within this figure totaled 211.5
billion US dollars for the period or about 11.8 billion US dollars annually.
The GFI report adds that money
laundering of criminally obtained funds by sending it abroad amounted to about
135 billion US dollars over this period, an amount equivalent to 40 percent of the
annual state budget of the Russian Federation and one that far exceeds
government spending on education, health, environmental protection, sports, and
other programs.
Further, it continues, Russian firms
through the manipulation of prices and the illegal import of goods produced by
them abroad were able to pull out of the Russian Federation “no less than 397.1
billion US dollars over this 17 year period, an amount equal to 23.3 billion US
dollars annually and one that cost the government and ordinary Russian citizens
enormous sums.
Independent economists, Zhukovsky says,
including those at the National Anti-Corruption Center, suggest that fictional
operations in foreign trade amount to “no less than 1.5-2 trillion rubles” (50
to 70 billion US dollars) every year, again an amount that far exceeds federal
spending on most projects.
Put in simplest terms, the commentator
continues, “colossal financial resources which over the course of ‘market
transformations’ and the theft of state property … have been carried away by
major oligarchic capitalists, criminal structures, corrupt bureaucrats and
ordinary entrepreneurs iin offshore accounts and then returned back to the
economy under the guise of foreign investment.”
“Even
the GFI experts were forced to admit,” Zhuravlyev says, “that given its current
size, the offshorization of the [Russian] economy represents a serious threat
to the macro-economic stability” and could easily drain dry the financial
system of the country, triggering an economic crisis.
Offshore
arrangements, he continues, “are a constituent part of the Russian
de-iindustrialized ‘pipeline economy,’ which help the ruling class to extract
the maximum profit from the sale of minerals and the misuse of their monopoly
position” as well as pulling into the country oil dollars and foreign credits.
A
“no less interesting” part of the GFI report concerns the size and role of Russia’s
shadow economy. Its estimates in this area, however, are
much too low. Rosstat says that the
shadow economy makes up 16 percent of GDP; the IMF suggests it is approximately
35 percent, but the reality is that “at a minimum 47-50 percent of Russia’s GDP
is in the shadows.
Indeed,
Zhuravlyev continues, “it is very likely” that the real figure approaches 70 to
80 percent if one includes tax avoidance schemes and other illegal
activities. He acknowledges that the
situation now is better than it was in the mid-1990s, but he points out that it
is worse now than it was in 2009, a trend that must be changed.
GFI’s estimates in this area “on the whole”
correspond with Russian ones, but the American economists underestimate “the
creative potential of Russia’s corrupt bureaucrats and thus the size of the
shadow sector of the economy.” If one
compensates for that, then the illegal outflow of capital over the last 17
years was “a minimum of 2.5 times” larger than GFI reports.
Zhuravlyev
then provides a close analysis of Russian figures and concludes that “over the
last 17 to 18 years, “the real losses just from the illegal export of capital
to offshore havens and fashionable countries may exceed the annual GDP of
Russia [today] and reach 2.5 to three trillion US dollars.
As
long as this continues, he says, “Russia will remain ‘a cash cow’ and a raw
materials colony of trans-national capital.”
Even the Russian leadership is “beginning to understand that such a
de-industrialized Russian ‘oil and gas Titanic’ is step by step heading toward
the bottom.” The question is, does the current regime have the will and
resources to change course.
Zhuravlyev’s economic analysis
may well be beyond the patience of many ordinary Russians, but today, an
article in “Rossiiskaya gazeta” put the issue in terms everyone can
understand. The paper said that if
Russia ended capital flight, the country would have enough to build 25,000
miles of roads every year (.rg.ru/2013/02/22/pobeg-site.html).
That
would be enough, the paper suggested, to “support the entire transportation network
of Russia for 15 years.” And it noted that money now flowing into the offshore
accounts of wealthy Russians “could at least theoretically be working for the
good of Russia” if the government could stop this outward flow.
No comments:
Post a Comment