Sunday, March 29, 2020

Russia Faces ‘Most Serious Challenge’ Since 1991, Inozemtsev Says

Paul Goble

            Staunton, March 25 – The combination of the spread of the coronavirus pandemic, a deepening recession and Vladimir Putin’s moves to transform the political system means that “unlike the rest of the world, Russia may be facing the most serious challenge since the collapse of the Soviet Union,” Vladislav Inozemtsev says.

            “The Russian healthcare system is unprepared to fight the epidemic,” the Russian economist says. It is intended to produce numbers the regime likes rather than cure people. Consequently, “if the virus in Russia reaches that which it has in France or Italy, our country will descend into chaos that will last for months” (

            At the same time, Chinese experience suggests that Russia is “on the brink of a very serious economic crisis.” China’s industrial production fell by 14 percent in the first two months of this year. Russia’s will decline by at least that, and many sectors such as air travel, transportation, car production and sales, construction and retail sales will fall 30 to 50 percent.”

            And if “in a best case scenario,” the economies of Europe and the US will recover by mid-summer, Russia at that time “will be overwhelmed by a second wave of the crisis” because the price of oil, which has so far collapsed only for futures, will be what Moscow will receive for its exports.

            “The government will fulfil all budget obligations without difficulty. But who is going to cover the gargantuan losses caused by the epidemic? …  Russia’s problem is that the government (as was the case in 2014-2016) focuses on using up reserves whereas in the West the emphasis is on central bank lending to the economy.”

            On top of these two challenges is a third: Putin is seeking not just to ensure that he can remain in power for life but rather testing out “a new political model” for the country, one that is based on the replacement of legitimate elections with various kinds of plebiscites. Reformatting the system does not necessarily mean backsliding into totalitarianism, and I do not expect that.

“But it is almost certain that we are witnessing Russia’s conversion from an electoral albeit imperfect democracy to an enlightened monarchy in which the most important positions in the state will be occupied by individuals who have been appointed rather than elected,” Inozemtsev says.

 According to the economist, the system has been “prepped for such a conversion,” with the ending of mayoral elections, the inclusion of municipal government in the power vertical and the destruction of federalism with Moscow gaining the power to redraw the map at will by creating “federal territories” in place of krays, oblasts and republics.

Putin chose his time to make this advance with care or because of luck, Inozemtsev argues, because given the other two challenges, Russians will be “ready to accept the authorities’ instructions restricting all freedoms … Such restrictions will not appear politically motivated; people will accept that they are for their own good.”

2020 is going to be a hard one for people around the world: for Russians, it is going to be a turning point in their national history.

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