Kuwaiti newspaper newspaper | Back to the past in Russia?

The hostilities in Ukraine appear to have reached the stage of trench warfare. Russian and Ukrainian defense officials have spoken of a threatening attack that could change the fragile balance on the front lines, but evidence that the confrontation could last for several months abundant, and at the same time the West begins to strengthen its support for Ukraine. Therefore, it is difficult for anyone to expect that the sanctions imposed on Russia will be eased or lifted completely. In Russia there is no serious and clear opposition to this military bet not. , and the collapse of the regime does not seem likely, even as the conflict between the internal elite continues, and as the playing field remains narrow, there is a need to discuss the expectations associated with the situation of the Russian economy in the short term, for example, by mid-2023, and methodological and quantitative aspects will be essential in this field.

The methodological aspect reflects the general landscape and situation of Russia in 2023, and people tend to compare the future with the past After it became clear to everyone today that the economy and society in Russia will be very different from what it was during the last decade and a half (especially in the period of relative prosperity between 2003 and 2013), no It is inevitable that the Soviet Union and Russia will become the most prominent reference points in the 1990s, but Russia in 2023 will most likely not be similar do not be after either of these two models.The Soviet Union has become very far from the present era, with foreign trade today accounting for more than 44% of GDP, while in the mid-1980s it was limited to less than 5% in the Soviet Union wash. , also, about 90% of companies were hugely dependent on imports, certain sectors became completely import-based, many technological competencies dwindled, and the Planning Committee could not control At the same time, consumption levels today are much higher than they were in the Soviet Union. period, and the basic elements on which the economy is built cannot be recovered. Soviet system.

The Russian model in the 1990s also went a long way, and that era witnessed a collapse in the financial system and hyperinflation, and the dominance of oligarchs over civil servants, as well as manifestations of local autonomy, and the country’s openness to the world increased and became almost submissive to the West, but none of these factors will remain during the a year or two, the last decades of Soviet stability (between the mid-sixties and early eighties) were accompanied by rapid industrial development and a remarkable, though slow, increase in the level of prosperity. The post-Soviet era, despite poverty and economic turmoil, was full of hope, change, freedom and promising opportunities. For millions of people, neither prosperity nor freedom in Russia will increase in the coming years For this reason, the current situation does not require comparisons with the past, but rather an objective analysis of the possibilities that emerged during the third phase of post-Soviet Russian history. offered.

On the other hand, the quantitative indicators are unlikely to be effective, as the current crisis is of an exceptional nature due to its excessive depth, and it is impossible to develop a number of sectors in the light of the continuation of current sanctions. , especially the aerospace and automotive industries, heavy engineering, chemicals, or even building materials and food processing. In various sectors, from oil refining and metallurgy to construction and transportation, supply is expected to reach an enormous level. What it was in 2007, provided the current system collapses, and in any case recovery takes a long time and may not happen at all if the system lasts.

Public and private services are expected to deteriorate faster than other economic areas in the public and private sectors, and the education and health care sectors are likely to be most affected, and in terms of education, this sector may be based on a year or two. information indoctrination and disinformation campaigns to an unprecedented extent Since the Soviet era, as far as the health sector is concerned, in recent years it has begun to rely entirely on imported equipment, consumer products and medicines (suffice it to say that the country today does not use disposable syringes or even manufactured medical gloves). This crisis in the health sector will affect the quality and cost of services by the end of this year. On the other hand, the maintenance teams in the field of information technology will have catastrophic consequences due to the absence of parts and necessary equipment, and IT experts may experience problems such as absence of servers, and the sharp decline in demand from foreign contractors, a mass emigration of professionals, and owners of airlines (those who receive state aid) and hotels (who receive no assistance), can remain safe because the absence of a thriving tourism movement could increase domestic demand, which means that general trends remain her condition.

The decisions of the Russian authorities are also expected to have major consequences for the economy, as promises to ease pressure on companies and improve the handling of businessmen remain a myth for simple reasons. The government can not afford to cut taxes, the modern business sector has never benefited from gray market legislation, and officials already do not have the power to make rational economic decisions. Everyone should realize that Russia’s prosperity in the 2000s was not only the result of high oil prices, but also a sharp decline in investment (between 36 and 38% of Soviet era GDP, and between 19 and 22% of GDP) under Putin).

Investment is expected to decline further, but this time it could lead to the deterioration of infrastructure in the near future without providing any benefits at the level of social welfare, and efforts to revive any planned economy will also fail because Russia its ability to control the growth of sectors over the past thirty years, and this is evident from the failure of all previous attempts to replace imports, knowing that this campaign was merely aimed at reducing the share of value-added value produced by the country increases, but without a full level of self-sufficiency at all stages of the production cycle.

The Russian authorities may not be able to stimulate economic growth, but they are able to curb the increase in unemployment for at least one year by putting pressure on big companies and preventing them from firing workers, subsidizing state-owned enterprises, and maintaining the current number of employees in the public sector, as well, A large number of workers are expected to emigrate due to instability, difficulties in reconciling the financial situation with other countries, fluctuations in the exchange rate of the ruble, and the high cost of the living in Russia Unemployment has never posed an aggravating problem in the country, which means that people are accustomed to receiving benefits by finding additional sources of income, and then, in spite of everything, there will be no major problems in this area. not. Finally, the labor surplus can reach the growing gray market without the government stopping this wave, and the unemployment rate would officially increase from 4.1% today to 5.5 or 6%, but without causing major problems.

On the other hand, the financial sector will not see any major changes either. The most difficult problem facing Russians is the repayment of loans due to high interest rates and declining income, but the government is expected to make major concessions in this regard. area, including the postponement of payments for several years and the cancellation of some debts The ruble exchange rate will remain relatively stable, despite all the sanctions, and it is unlikely that it will fall to 100 rubles against the dollar because currency flows are subject to strict regulations and currency speculation remain difficult in these circumstances, and meanwhile prices will rise by at least 25% compared to their current levels. For the next twelve months, therefore, neither the dollar nor the euro will guarantee the security of savings, and Russia will become a “de-dollar” country isolated from world markets where the movement of citizens remains restricted. The real estate sector may be the only noticeable exception on the trend of general prices, and its cost is expected to fall from next autumn, both in rubles and in foreign currency, due to the decline in mortgage lending, the tendency of people to get rid of their real estate investments, and the large-scale sale of real estate by Russians who decided to leave the country.

In other words, the new phase in the history of the Russian economy will not be as catastrophic as, for example, the period between 1990 and 1993, and at the same time the downturn will not be as short-lived as the financial crisis of 2008, instead of returning to return to the era of the Soviet Union. The authorities in it have sufficient means to reverse this path. Six years ago, I predicted that the first decade of the twenty-first century would be a decade of growth, while the second is a decade of stagnation that precedes the decade of decline and decline.

* Vladislav Innozymetif

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