Monday, March 8, 2021

Last Two Decades Show Why Economics and Demography are Now ‘Gravediggers of Putin Regime,’ Gontmakher Says

Paul Goble

            Staunton, March 6 – If one considers what has happened in Russia over the last two decades, Yevgeny Gontmakher says, “one can discern what will happen in the next two” and see that economics and demography are becoming “the gravediggers of the political regime” that now is in power.

            The Moscow economist says that the economic boom of the first decade of the 2000s, an boom driven exclusively by rising oil prices, convinced many people that their lives would always continue to improve, something that the second decade showed was not only not the case but not likely to be without significant changes (

            During the first decade, people experienced a dramatic increase in their standard of living and the benefits of stability, both of which represented a sharp change from the 1990s and allowed the government to build a cushion in two ways – it was able to fill up its reserves to protect against threats and to win support among older Russians who remembered the past.

            And during that first decade, birthrates rose, a reflection of the confidence Russians then had about the future. As is almost universally the case, when people’s incomes are rising and they feel the future will be better than even recent improvements have made possible, they have more children.

            But the second decade of the 21st century has brough economic stagnation and even decline, as oil prices have tanked and Russia has failed to develop alternative sources of income, and that has sent birthrates down as well because people are no longer confident about the future, a lack of confidence still largely confined to those too young to have lived in Soviet times.

            Despite that, the cushions the regime has built for itself allow for the conclusion that “the present powers that be are stable and will sit without change not just for one more year but perhaps even until 2036,” Gontmakher says. “For some, this conclusion is a source of optimism,” but for the more thoughtful, it should be a source of serious concern.

            That is because beneath this apparent stability are appearing the gravediggers of the system. “In the Russian case, these are economics and demography. Stagnation is unlikely to end given that oil prices are unlikely to recover, and birthrates are unlikely to increase given declining confidence in the future among those in prime child-bearing cohorts.

            Indeed, the economist continues, “even if one assumes that covid will end, sanctions will be lifted, and prices for oil will again grow to 100 US dollars a barrel, all the same, there will not occur any economic breakthrough like the one of the beginning of the 21st century.” In fact, far more dire trajectories are likely if not soon then eventually.

            To avoid them, Russia needs a new “perestroika of state power and all its branches; but the current leadership of Russia and above all its president aren’t even thinking about that, because they consider that ‘the security cushion’ will maintain the situation even without any reforms.”

            That means that the current economic stagnation and degradation of government institutions will continue; and to the extent that happens, the past two decades suggest, these things will have demographic and thus political consequences, the Moscow economist and commentator continues.

            Stagnation will hit young adults harder than their elders who may still hope the regime will turn things around. But people in their 20s and early 30s, who weren’t shaped by the Soviet period but by the positive experiences of the first decade of this century are increasingly going to view the future as bleak, not have children, leave the country, or protest current arrangements.

            These things become ever more likely given “the complete absence in the powers that be of a desire to begin any systemic changes,” a lack that resembles the situation in Brezhnev’s time when most of the nomenklatura assumed it could just wait things out because the system had enough “cushions” to protect them.

            The powers that be both then and now have responded to such concerns and even protests in the same way, suppressing protests and demonizing dissent. And at one level and for a short time, they have succeeded. Indeed, Gontmakher says, there are unlikely to be the kind of mass protests anytime soon that will sweep the regime away.

            “But already in the middle term perspective – five to ten years – the continuation of stagnation of the economy and of all social institutions will become equal to degradation,” and the young will either sink into the lethargy of conformism, choose to leave the country, or engage in protests to demand real change to avoid Russia falling ever further behind.

            “Such a pessimistic vision of our prospects arises from objective trends which all recent years have contributed to.” That doesn’t mean things are about to collapse, but it does mean that Russia is at risk of some “black swan” event that will trigger either disaster or radical change, both of which are increasingly possible, although neither may happen soon.

            But given these risks, the Russian people need to engage in the kind of horizontal self-organization that has been behind the economic growth of other countries; and the powers that be need to promote rather than try to stop them from doing so. Otherwise, Gontmakher suggests, the more negative outcomes will become ever more likely.

            That is the clear lesson of the last 20 years for the next 20. 

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