Monday, December 28, 2015

When It Comes to the Economy, Putin Increasingly Behaving Like a Shaman, ‘Profile’ Says

Paul Goble

            Staunton, December 28 – As the Russian economy continues to deteriorate, Vladimir Putin and his entourage are increasingly behaving like shamans, acting as if their incantations alone will be sufficient to turn things around and thus increasingly revealing their powerlessness before events, according to Aleksey Mikhailov of “Profile.”

            “Just as shamans do not understand what the weather will be, so too the Russian powers that be do not understand what is occurring in the economy. Both the one and the other use certain rituals in order to encourage the public to think that all will be well,” he writes (

            “And if things turn out badly, that doesn’t matter, it could have been worse so that is also good and then it will be better because the worst is already somewhere behind,” both the shamans and the Russian officials from Putin on down increasingly say in order to avoid confronting the reality Russians see around themselves.

            Mikhailov starts his presentation of evidence on this point by noting that only three days after Putin signed the 2016 budget, he announced that “we will be forced to correct something here” because the price of oil was falling faster than the authorities had anticipated and did not show any sign of reversing its decline.

            This was no anomaly, the analyst continues. Instead, it was a replay of what occurred a year ago, evidence that “the government makes its predictions by looking backward rather than forward.” As a result, one budget after another is adopted and then changed, leading to a situation in which Russia in fact lives on a quarterly rather than annual budget.

            But there are other ways Putin and Russian officials are acting like shamans. They appear to believe that if they do not call the situation a crisis, it isn’t one, and that if they say it will get better – even though they have only taken steps that have made the situation worse – it nonetheless will because of their words alone.

            In every case, however, reality has contradicted their words and thus called attention to the fact that the government is not in charge of the economy but rather is reacting to the impact of changes in the price of oil, evidence again that Russia has become less independent and not more of the international situation under Putin.

            It is not as if the government did not know how to struggle successfully with an economic crisis: if demand falls, the government must stimulate it by sharply increasing the budget deficit, reducing interest rates to encourage borrowing and investment, and devaluing on its own the national currency. Other countries including the US have done this, and such steps work.

            But Russia’s rulers today “do not want to do any of these things” unless they are compelled to.  They have been slow to increase the budget deficit, they have kept interest rates far too high, and they haven’t wanted to manage the devaluation of the currency. (Its fall has been the result of factors other than conscious government policy.)

            And the road ahead is bleak. Russian government policy has killed demand and investment, oil prices are going to remain low or go lower for a long time to come, and until Moscow faces up to all this and changes course, its leaders will likely continue to act like shamans rather than statesmen, fooling some but ever fewer as a result.

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