Tuesday, January 5, 2016

Only Three Groups of Russian Regions Likely to Do Relatively Well in 2016, Zubarevich Says

Paul Goble

            Staunton, January 5 – The absence of property rights, the excessive involvement of the state in the economy, ineffective investments and massive corruption would all have to be changed for the economies of Russia’s regions and Russia as a whole to expand, Natalya Zubarevich says.

            Moscow’s leading academic specialist on regional affairs adds that “the old model of growth ceased to work in 2013 when stagnation began.” And she suggests that Russians need to recognize that they stopped growth “with their own hands.”  That situation was then compounded by political mistakes (novayagazeta.ru/comments/71369.html).

            Despite that, three categories of regions are likely to see a growth in production. The first includes those federal subjects involved in agricultural industry, mostly in the southern part of the country.  Because of sanctions and counter-sanctions, their competitors have been removed allowing them to raise prices and earn more.

            But growth in this sector can only be slow unless there is more investment, and investment in this sector has fallen for the third year in a row.

            The second privileged group includes those with new oil and gas fields where production is going up, including Sakhalin, the Nenets AO, Sakha, and Irkutsk Oblast. Old fields where production is stable or even falling will not do so well. Indeed, they are likely to see their incomes continue to fall.

            And the third group includes those regions where military industry is concentrated. These are the places Moscow is spending and investing, and they include Bryansk, Tula, Vladimir, Yaroslavl, and Ulyanovsk oblasts, and Mari El. If military spending continues to rise, they will do well.

            “It is already time to understand that the crisis which has begun is not like the previous one: it is slow, deep and long. And it will not be cured by oil prices alone,” Zubarevich says.

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