Sunday, March 12, 2017

Putin to the Russian Far East: ‘Why Do You Need Cars? You Don’t have Roads.’

Paul Goble

            Staunton, March 12 – Many Russians believe that Dmitry Medvedev long ago retired the Marie Antoinette prize for the most insensitive statement by a Russian official concerning the standard of living of the Russian people, a prize he keeps reacquiring with claims that things are getting better when in fact they are getting worse.

            But it is quite possible that Vladimir Putin may edge out his prime minister with a statement that he made not long ago about Russians’ inability to afford cars given that prices for them have risen and the incomes of Russians have fallen. He asked Khabarovsk residents “Why do you need cars? You don’t have roads.”

            Commenting on the state of the Russian economy, Moscow commentator Aleksandr Nemets cites this remark in support of his contention that all official claims notwithstanding, the Russian economy isn’t coming out of the crisis. Instead, he says, it is mired in “a catastrophe” from which no exit is visible (

            Among the statistics he adduces to make that argument are those showing a dramatic fall off in the sales of cars and light trucks since 2012 and the collapse of the Russian GDP from 2.232 trillion US dollars in 2013 to 1.10 trillion US dollars this year, a decline of 50 percent, Nemets says.

            The former figure put Russia above India and Canada, although less than China and Brazil and sparked Moscow propagandists to talk about “overcoming Germany.”  But the latter one means that Russia has fallen to 14th in the world, ahead of many developing countries but far behind those it normally compares itself with.

            Russian officials, of course, contest these figures, claiming that the decline totaled only three percent over that period. But their claims show only that Rosstat and other figures in the Russian government simply lie, as any examination of the details of the country’s economy show, including those on automobile sales which have tanked.

             According to Rosstat, real per capita incomes in Russia fell all of 15 or 16 percent, but it achieves those numbers only by manipulating inflation rates and thus putting itself in a position to claim that the declines in income and thus consumption were not as great as they in fact have been.

            If one uses the inflation estimates of independent experts, per capita income fell over this period by 30 to 35 percent, more than twice what Moscow admits.  Retail trade fell by 30 percent, and investment over this period fell “at a minimum” by 20 percent.  State spending as a whole didn’t fall, but social spending collapsed.

            That reflects the fact that spending on internal security and defense rose from 2.2 trillion rubles in 2013 to 3.8 trillion in 2016.

            And all these catastrophic declines become even more obvious if one focuses on those things that individual Russians can feel in their daily life.  Among the ones Nemets cites are the following: Not only do Russians now view a car once again as in Soviet times as a luxury, but a third of them lack the money to buy cheese, sausage or fish.

            That isn’t a crisis: it is a catastrophe. Worse, it isn’t ending, Nemets concludes. 

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