Thursday, November 14, 2013

Window on Eurasia: Will Russians React to Kremlin’s Unprecedented Prediction of Stagnation Ahead?

Paul Goble

            Staunton, November 14 – In an editorial today, Moscow’s “Nezavisimaya gazeta” asks what may be the key question about Russian social and political life in the next few years or more: will Russians react to the Kremlin’s unprecedented prediction that the country potentially faces decades of stagnation as a result of the government’s own policies?

                So far, the editors say, “society has not reacted to [this] recognition by the authorities of their own hopelessness” against broader economic forces that will mean slow growth for at least the next two decades at least and a decline in Russia’s economic role in the world relative to other countries (

            “Neither the tsars, nor the Bolsheviks, nor the statists ever once told the population that their country did not have greater prospects,” the paper says. Instead, they encouraged the Russian people to think that things will get better if not immediately than over the longer term. But now Russian officials say that Moscow’s current approach will have the opposite effect.

            According to their projections, the world’s economy will grow on average 3.4 percent a year between now and 2030 but Russia’s will grow much less quickly, only 2.5 percent annually.  As a result, Economic Development Minister Aleksey Ulyukayev says, Russia’s share of the world economy will decline from the four percent it represented in 2012 to 3.4 percent in 2030.

                More than that, Ulyukayev did not say this was a possibility but rather “the most probable” outcome. No other official have sought to dispute him.  Consequently, they are “in fact admitting that they are not in a position to secure the development of the country either in the immediate future or over the longer term.”

                So far, the implications of this have not been absorbed by the population. Instead, “the so-called informed part of society has literally fallen into a stupor.” The ruling United Russia Party and both the systemic and non-systemic opposition “have remained quiet,” despite what one would expect they would do in the face of such a declaration.

“The authorities,” “Nezavisimaya gazeta” argues, “have thrown a challenge to society. The government hasn’t done anything for 15 years and doesn’t plan to “change the model of development,” even though that model is not working in the ways that the Kremlin has repeatedly claimed.

Indeed, it continues, this “new government projection is in essence a diagnosis of the current political and economic system” and a damning one at that because it suggests that the country will stagnate for at least two decades and quite possibly more.  It will continue to rely on oil and gas exports, it won’t build infrastructure, and the standard of living will fall relative to other OECD countries.

The calmness with which this projection has been made and the apparent “indifference” with which it has been met are a matter of “extreme concern,” the paper says.  The projection means that income differentiation will continue to grow, the middle class to decline, and there will be less money to tax and less to spend. And that will be made still worse for many Russians because in the absence of domestic production of the goods they want, they will have to spend even more money on imports.

In most countries, such a projection would produce a demand for a change in government or at least a change in government policy. That may well happen in Russia, “Nezavisimaya gazeta” implies, but that this hasn’t happened already may be the most worrisome aspect of this entire situation.

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