Staunton, January 3 – Vladimir Putin’s constitutional changes last year already are having a negative impact on the economy, not the specific provisions as much as the fact that what Putin did shows businesses that they have no reason to count on the rule of law because laws and even the constitution will be changed at the whim of the rulers, Andrey Zaostrovtsev says.
“The changes introduced in the preamble in fact blocked the section about human rights,” the European University economist says;” “and this is a signal for business and the economy: if the basic law can be changed to easily, then everything else can be changed as well. Thus, there is no stability in the legal situation, not to speak about the supremacy of law.”
That makes it impossible for businesses or anyone else to make long-term plans, plans needed if the economy is going to escape from its fundamental dependence on the export of raw materials and develop in ways that will allow for a serious recovery after the damage that has been done by the pandemic (severreal.org/a/31014650.html).
Much of the Russian economy was not devastated by the coronavirus and so should be able to recover, and inflation is likely to remain below five percent. But the increasing role of the government and uncertainty about what that role will remain are going to limit the recovery, especially as “freedom is becoming ever more a deficit good.”
What lies ahead for the Russian economy, the economist suggests, is stagnation; but this is not something that threatens the rulers because they have the tools necessary to punish any challenger and all potential challengers know that if they act, they risk losing their property or even their freedom.
This reflects the fact that Russia, like China, is based on a civilization where state power is primary and property secondary rather than the other way around as is the case in the West. At the same time, Russia and China cannot simply develop on their own but must seek to undermine the West lest its development undermine the legitimacy of those in power.
“If you can’t catch up,” Zaostrovtsev says, “then one must make things worse for those who are ahead of you” – and given the resources Russia and China have, using covert means, including cyber attacks are the most effective way to do that. But for the foreseeable future, the West will remain ahead, and Russia and China behind even with these attacks.
Moreover, Russia is not about to change and become free, the economist says. One of his colleagues has argued that “Russia will be free,” to which the economist says he has responded: “if it is free, then it won’t be Russia, and if it is Russia, then it won’t be free.” As long as the empire is so extensive, “it cannot be a free democratic country.”
Zaostrovstsev addresses two more immediate foreign policy issues. He argues that Belarus is already “a semi-subject of the Russian Federation and Lukashenka a kind of Western Kadyrov.” As a result, the Belarusian leader is irritating but cannot be removed lest the West move in and fill the vacuum.
That Moscow is worried about that happening next door and not in Cuba shows just how much Moscow’s real influence abroad has declined.
At the same time, however, the St. Petersburg economist argues that Moscow has come out the winner in the recent war in the South Caucasus. Armenia’s economy was already “completely Russian,” and its political leadership will come back in line with that after Nikol Pashinyan leaves office.
Therefore, Zaostrovtsev says, Moscow “has won Armenia, which now will be still more dependent on Russia.” And at the same time, Moscow has “gotten a military base in Azerbaijan” and because it is guarding not just Qarabagh and the Lachin corridor but the corridor from Azerbaijan to Nakhichevan, Russia can exert real influence more broadly.