Staunton, April 11 – Many Russians are comparing the current decline in their standard of living with earlier crashes, Vitaly Grankin says. But that is a mistake because the mechanisms that allowed for recoveries in the past “no longer work.” And unless the current regime changes course or is replaced, there is little prospect for a recovery like those Russia experienced earlier.
In the 1970s, the Moscow expert says, the Soviet government opened the country up and began using earnings from the sale of gas and oil to improve the lives of the population as a whole or at least, when there was less money from that source, those parts of it which the regime needed to maintain itself (rosbalt.ru/russia/2022/04/11/1952911.html).
These export earnings could be used to purchase the foreign goods that allowed Russians to feel that they were doing better. But now, “the connection between world oil prices and export earnings has been lost” and “as a result of boycotts, Russian oil is being sold are below market prices and in a smaller amount.”
That in turn means, Grankin says, that the link between incomes from exports and purchases of foreign goods,” on which the Brezhnev stagnation depended, “has also been lost.” Russia continues to earn from the sale of oil and gas abroad, “but paying with it for foreign goods and importing them have become ever more difficult because of the boycotts.”
Despite all the foreign and domestic efforts “to isolate the Russian economy from the outside world,” he continues, the country’s economy “still remains comparatively open, but the standard of living of Russians in the coming months will decline as if the economy were already fully isolated.”
And in this situation, “there are no signs that the powers as was the case in the 1950s and 1960s will direct resources to the improvement of the lives of the population.” They will take care of those on whom they depend, but the rest will be compelled by their neglect to tighten their belts still further.
In many respects, this pattern resembles that of the late Stalinist period when the Kremlin sought to ensure some prosperity for the elite but insisted on belt tightening for everyone else, something it could do while being “fenced off from the world.” Indeed, such isolation made that policy possible; and that is why the Kremlin now is seeking a similar isolation again.