Friday, July 15, 2016

‘Guns or Butter’ Now an Existential Dilemma for Russia, Gontmakher Says

Paul Goble

            Staunton, July 15 – Moscow economist Yevgeny Gontmakher says that Dmitry Medvedev’s offhand remark in Crimea that “there is no money but hold on anyway” captures better than anything else the existential dilemma of “guns or butter” which now stands before Russia.

            In a “Moskovsky komsomolets” commentary yesterday, Gontmakher says that it is now clear that unless fundamental structural reforms of the economy begin soon, Russia faces “no less than 10 and perhaps 15 years” of stagnation in which the population is going to suffer ever more cutbacks in services  (

            “One could of course not spend as much money on defense,” he writes, “but this would mean a rejection of present-day Russia’s positioning itself in the world as a country which has chosen as its chief argument in international relations the unleashing of military force.” And that in turn, according to the bosses, would cast doubt on “domestic political stability.”

            What this means, Gontmakher argues, is that “the dilemma of ‘guns or butter’ has in Russia not a financial but a system-forming character” and that there is no hope that anyone in the Kremlin is about to shift two percent of GDP from defense spending to supporting public health and education.

            And that means beyond question that “the majority of Russians already have begun to live less well” than they did. The Putin regime thinks that the decline has not been all that dramatic, although for those in the population who are actually experiencing it, the declines have been anything but easy to take.

            However – and for the Kremlin, this is the key thing – “there are no social protests” and “public trust in Putin personally is very high.”  More than that, the Moscow economist says, the Russian people under the influence of Moscow television “swallows” the official version that the government isn’t cutting anything, despite evidence to the contrary.

            Gontmakher argues that the government has been testing what it can get away with in terms of cuts not only by making the population responsible for repairs to housing but also by de-linking pensions to inflation. Those actions have taken money away from the population and given it to the government to spend as the state wants.

            There hasn’t even been the level of protests that the decision ten years ago about the monetarization of benefits to pensioners had, protests that forced the regime to make all kinds of concessions. Instead, Russians have remained quiescent and the regime sees no reason to defer to any of their obvious needs.

            What is happening recalls the way in which the state extracted resources from the population at the time of serfdom. The government decides how much it needs to do what it wants, takes the money in one form or another from the people, and the people put up with it, even if they are angry that they are being forced to pay.

            The people in such systems are the object of politics not its subjects, Gontmakher says. And so what has happened after a brief experiment of making human beings the center of Russian politics, the government has returned to the older even “medieval” approach of treating them simply as object.

            The communist system loudly proclaimed that it was doing “everything for the good of man, everything in the name of man” when it fact it was doing exactly the reverse. Now, in today’s cynical times, that slogan has been supplanted by “there is no money but you hold on anyway.”

            “This is a sentence on the country and on its future as a great power that will be taken seriously by the world,” Gontmakher says.

            At the end of the Soviet period, many were offended when it was suggested that the USSR was Upper Volta with missiles. That comparison was “unjust.” But “our current social prospects unfortunately really are humiliating if you compare them with the progress that is observed in many formerly backward countries.”

            Gontmakher says that it is possible that this sentence on the country is being passed too soon. After all, “Russian cannot be understood by the mind” and some miracle could occur again just as it did with Mikhail Gorbachev and his perestroika.  One can only hope, he concludes, that we will “life until that happens.”

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