Wednesday, March 22, 2017

Making Russia Grate Again

The paranoid Russians who stoke fear of nonexistent NATO aggression face a future of a poor economy as sanctions scare off investors and talented Russians; and as American fracking depresses oil prices that remain the key factor in Russian income. If Russia connects those dots into a fantasy picture it could get ugly.

Russia's foreign policy of beating their chests and flinging poo has reminded the world that Russia is a factor to be weighed in international relations. While this grates on our nerves in its pointless posturing, Russians can't actually eat that foreign annoyance (for those far from Russia) or fear (if you border Russia):

The corruption, police state atmosphere and trade sanctions mean that while the rest of the world continues to see an average of three percent GDP growth a year Russia will be stuck at two percent a year, or worse. Since sanctions and much reduced oil income hit in 2014 the government insisted that everything was under control. That was only partly true. The reality is that the real average income of Russians has been declining every month since late 2014 and the decline continues. With so many people seeing their income decline it is not surprise that corruption is getting worse, despite vigorous (or at least well publicized) efforts to curb it. The number of best educated and capable Russians who have left the country since 2014 is over 1.5 million. The poor are getting poorer and more Russians are slipping into poverty. The Ministry of Defense is telling its veteran officers and NCOs that a new benefit for ex-military personnel is preferential treatment when it comes to getting unemployment benefits. There is still the implied promise of a government job for retired officers but, well, you know hard times and all that. And then there are the foreign cash reserves, essential for buying imports. Those reserves will be exhausted later in 2017 or in 2018. So no, the economic news is not good so it is not discussed much in the state controlled mass media.

The Russians claim NATO is out to get them; justified attacks on Ukraine and threats to other Western neighbors based on that claim; and now that NATO and others are prudently reacting to Russia's threats and aggression, see those reactions as proving their claim of a threat from NATO. And this makes sense to the Russians.

I imagine that sanctions are a small component of Russia's economic problems compared to corruption that lowers growth by driving away foreign investment, erodes the impact of domestic investment, and already pushed 1.5 million Russians to leave the country.

And fracking would have been done if Russia had no oil. Yet if Russia was less corrupt the oil industry wouldn't be so important.

But Western sanctions over Ukraine fit nicely with the Russian paranoid world view as the source of blame that allows Russia's government to evade responsibility.

One thing I worry about in the area of sanctions is that they are generally ineffective and just a signal of your moral position. In time, there are ways at least partly around sanctions.

Yet if sanctions do work by targeting a truly key element of national survival--or if the targeted nation believes that the sanctions are the key problem--then sanctions have the effect of being seen by the sanctioned nation as war by other means rather than as an alternative to war as the states imposing sanctions believe.

Will the thrill of being a power to be reckoned with wear off in the Russian population as Russia falls farther behind the rest of the world in economic growth?

Will the Russian leadership decide that the only way to break the sanctions that they see as decisive and avoid further fragmentation or weakening of their rump empire (and it isn't just me worrying about that) is to break NATO by taking territory from a weaker NATO state far from the center of NATO power and daring NATO to mobilize and take back what is grabbed in the face of Russian nuclear missiles?

We don't think that is rational. But what the Russians already clearly believe isn't rational. Yes, things can always be worse.

So what if Russia decides war is the answer to their problems?


UPDATE: Russian government corruption:

A major new investigative report has detailed how at least $20 billion was moved out of Russia between 2010 and 2014 in what it describes as a massive money-laundering scheme.

According to The Global Laundromat, an investigative report coordinated by the Organized Crime and Corruption Reporting Project (OCCRP) together with local partners in Russia, Moldova, and elsewhere and published on March 20, many of the Russians allegedly involved have ties to the Russian government and the Russian security services.

If the West was truly conspiring against Russia, the West would have engineered the current government and system to bring down Russia from within.

UPDATE: Russians can't even have nice shoes. Although to be fair my personal annual rate of shoe purchases is less than the Russian rate based on my needs!