Tuesday, March 13, 2018

Putin’s Resources for Boosting Economy and Fighting Opposition Running Out, Mironov Says

Paul Goble

            Staunton, March 13 – Vladimir Putin’s fundamental problem is the same as the one that confronted the leaders of the Soviet Union at its end: he relies on extensive rather than intensive forms of development which require the constant influx of new resources from outside and he can no longer count on such an influx in either the economy or the polity, Maksim Mironov says.

            The Madrid-based Russian economist says that for the moment “Putin of course is still strong and may win some tactical victories as the Indians sometimes were able to seize the forts of the English. But strategically, he has lost since in no country have those armed with bows and arrows defeated those carrying guns” (echo.msk.ru/blog/mmironov/2163998-echo/).

                There are many reasons analysts have pointed to for the collapse of the Soviet economy and the ensuing demise of the USSR, Mironov says, but it is clear that the fundamental cause was that Moscow no longer had any prospects for the kind of extensive rather than intensive development on which it had relied.

            “There was no mass of peasants who could be shifted from the village to the city. There were no inspired students and mechanizers who were ready to overturn the virgin soil. There were no newly discovered sites of oil, gas, gold, copper and other useful minerals” that would bring in money.

            And because the Soviet leaders had no understanding of or plans to introduce intensive development, they found themselves without any development at all, the economist argues.

            “In this sense, the Putin economy is very similar to that of the USSR. Of course, the fact that it is based on market principles significantly increases the level of its stability, but the principles of its functioning are very similar. All its growth has been based on obtaining enormous resources from the outside.”

            The rise in the price of oil between 1999 when it stood at 20 US dollars a barrel to 2008 when it had risen to 130 US dollars a barrel meant that there was money for everything and that it could be lavished on projects like the Sochi Olympiad. It made no difference how much it cost because “an extensive economy is not about effectiveness.”

            Unfortunately for Putin, “suddenly the inflow of cash began to run  out,” the price of oil fell, and there were no new sources of money, just as had been the case with the Soviet Union in the 1980s.  Putin and his advisors didn’t and don’t know what to do, and the economy is decaying rather than growing, Mironov says.

            According to the economist, “Putin is struggling with the opposition with exactly the same extensive measures.” He monopolized the old media but failed to recognize how others could make use of new media.  These grew and a new leader, Aleksey Navalny, was found; but if it had not been him, it would have been someone else.

            What was Putin’s response? To use his massive advantages in what had constituted power up to then without understanding that the nature of power was changing. And “Navalny’s methods of struggle turned out to be more effective,” even as Putin spent more and more on old methods that are declining in importance.

            In his struggle against Navalny and those like him, Putin has behaved just like the leaders of the Soviet Union and just like he is in the economy: he is throwing ever more resources. But that only works for so long because ultimately new systems like guns win out over old systems like bows and arrows.

            For his reappointment, Putin has made use of “the unbelievable resources of the Central Election Commission, the FSB, the MVD, the courts, the schools, the universities, the state enterprises and private companies.” But the question is “How many archers does Putin have in reserve?”

            Today, Putin’s media dominates the ideas of 62 percent of the population, but the new media, the Internet, reaches 38 percent, and it has become the channel for the opposition.  Six years from now, this relationship will be 54 percent to 46 percent in favor of the opposition because in 2024, the Internet will be the main source for information for everyone under 50.”

            Continuing the metaphor, Mironov suggests, “by the next elections, these people with guns in their hands will be transformed into automatic weapons and Putin will all the same be seeking to drive them away with a bunch of archers.”  That may work on occasion and for some time, but it won’t save him or his system just as it didn’t save the Soviet Union.

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