The Russian military’s move into parts of the Ukraine, including Crimea, has international news media and diplomatic channels buzzing. But no one who has been paying attention is at all surprised. Russia is playing the part of a former superpower that is jealously guarding its neighborhood, while attempting to protect its dominant position as the main supplier of natural gas to both Eastern and Western Europe. Without those gas revenues, the Russian government begins to collapse. More here.
Though she sees herself as a great power, Russia is still a developing nation with all of the maladies and curses under which developing nations suffer. Russia is also struggling with a steady depopulation of ethnic Russians from Siberia, with a somewhat slower de-Russification of Russia west of the Urals — along with a steady replacement of ethnic Russians by Muslim immigrants in all regions.
And one of the biggest reasons why Russia is still a lagging, underdeveloped nation, is The Oil Curse.
The Oil Curse is a potentially deadly cluster of problems that underdeveloped nations suffer whenever they depend too heavily upon oil & gas income to finance government spending and their general economic well-being.
- Extreme dependency on price volatility
- Lack of diversification in the economy
- Over-centralisation of power with persecution of people and ideas that are not connected with or protected by the inner circle
- Massive corruption within the inner circle and its cronies
When oil & gas prices remain high for even a short period of time, oil curse nations tend to overspend and overproject future earnings and future spending.
When a nation has only one profitable industry, the entire government and economy can glom onto that industry to the neglect of a potentially healthy and diverse economy.
This describes a quasi-totalitarian society, which is what Russia is evolving back toward.
A perfect description of modern Russia under Putin.
If one does not understand Russia’s modern oil & gas curse, the actions of Russia’s corrupt oligarchy are likely to seem incomprehensible.
Rather than acting in the best interests of Russia or her people, Putin is only acting in the best interests of his corrupt inner circle of oligarchs.
When there is no demand for talented and innovative Russians in their own country, it is inevitable that they will seek better and more productive lives in other countries. As a result, Russia is turning into a blank space on the world map. _Moscow Times
Not only is Russia suffering a “brain drain,” it is also suffering a “womb drain” — a steady out-migration of its fertile young women. __ Brain Drain vs Womb Drain
Russia’s people need a more diverse economy with less violent organised and unorganised crime, and more economic opportunity. But that is the least of Putin’s concerns.
“The one remedy that can help everywhere is greater transparency in how governments collect, manage, and spend their oil revenues,” Ross writes. __ From a review of Ross’ The Oil Curse
Greater transparency in how the Russian government collects, manages, and spends its oil & gas revenues would be a dire threat to Putin and his cronies. So it will not happen.
As Russia’s population of ethnic Russians continues to shrink, Putin and the inner circle continue to pursue the hopeless quest of surrounding Russia with vast buffer zones of “safe” land. All of this while simultaneously re-expanding Russian zones of control.
At the least, Russian leaders want to expand the zone of nations dependent upon Russia for vital supplies. And they cannot do that if Russia’s former satellites choose to go off on their own, and develop their own resources independently of Russia.
After all of the old former Soviet officials die off, a new generation of Russians may arise with more genuine concern for their country and countrymen. But given hundreds of years’ history of authoritarian rule in Russia, we are unlikely to see a turn to the rule of law or general meritocracy any time soon.
A final note: Putin has earned a significant popular following in western nations, much as Stalin, Hitler, Castro, and Hugo Chavez earned popular followings in the west, in their own time. Human beings are always looking for heroes and champions, and often fantasize such characters in the unlikeliest places.
But once one looks beyond the fog of his own fantasy needs to the deeper realities of human nature and the particulars of the strong-men themselves, it becomes easy to detach them from one’s more personal concerns.
HFTB-PFTW. It is never too late to have a dangerous childhood.
What happens to oil-cursed nations when oil & gas prices fall? (a 1982 Daniel Pipes look at oil-cursed Arab states in an oil downturn)