Putin’s Belligerence, and Russia’s Desperation

… as he crisscrosses Russia… he finds a drunk, suspicious, bitter country where everyone has been broken in their own small way … __ The struggle to save a dying nation

It has become a race to the bottom on projections of just how stagnate the Russian economy is and on how much money it is losing. As the state of anarchy and blame game over Ukraine continues, Russia continues to hemorrhage capital and investments. Sanctions have had a dramatic impact on investment in the country along with its growth projections as businesses, and countries, continue to be unnerved by the continuing fighting and uncertainty of further sanctions.

Yet they have not been forceful enough to stop Putin, and the full story of just how badly the Russian economy is doing has yet to be fully told as projections and outflows continue to change weekly.

… And while Russia’s economy continues to muddle through in a mire of uncertainty, a far more damaging and long-lasting trend has emerged. It is not just capital and investment that is fleeing the country, but some of Russia’s best and brightest minds.

… these are not just political activists and opponents of the Putin regime that are emigrating. These are the small- and medium-business owners and entrepreneurs, economists and scientists who are afraid of the increasingly constrictive Russian society. These are the people who are the true engines of growth for the Russian economy, and the people needed to rejuvenate the dormant entrepreneurial spirit that would diversify the moribund economy from its reliance on commodities. _Russia’s Brain Drain Crisis

The number of Russians emigrating in the last two years was some five times higher than in the two before Putin began a new six-year term in May 2012, official figures show.

Russia’s statistics service Rosstat data shows 186,382 moved abroad in 2013 and 122,751 in 2012, compared to 36,774 in 2011 and 33,578 in 2010.

But experts say the real number is much higher.

“The official statistics on migration are very low,” said Mikhail Gorshkov, director of the Russian Academy of Sciences’ Institute of Sociology (ISRAS), a state-funded body.

“It’s a wake up call for our politicians when someone wants to leave their home country: What is missing for him?”

Echoing the post-Soviet brain drain, sociologists say Russia is bleeding exactly the kind of people it needs to plug a skilled labor shortage and diversify the economy away from reliance on energy exports.

“We are losing the most educated, most active, most entrepreneurial people,” Lev Gudkov, director of the independent Moscow-based Levada Centre pollster. “The Kremlin sees this in a cynical way – as a way to let off steam.”

He estimated that three million Russians have left over the last decade, as many as in the first few years after the Soviet Union collapsed when Russia was in political and economic chaos. __ An Exodus of High Value Russians

Besides Russia’s slow-motion retreat from Siberia, its worsening public health disaster, and its one-trick-pony export economy, Russia’s catastrophic brain drain is yet one more sign of national desperation which Russophiles choose to ignore. One more reason why “everything they think they know, just ain’t so.”

Russia has been slow to abandon its primitive and barbarian ways, and Putin’s belligerent war-mongering has not helped matters.

Russia may not think that it is bound by any alliances. But it turns out that institutions do matter — and Russia cannot easily retreat from the global economy. Indeed, virtually every retaliatory move proposed by Putin has backfired on Russia and left it in a far weaker financial position. __Reuters

“Do unto others before they can do it unto you,” appears to be the motto of modern Russians, just as it has been the motto of Russian peasants for centuries. Traditionally, the thing that makes a Russian peasant the happiest, is the misery and misfortune of others.

Realization is dawning among EU businesses that allowing Russia a free hand injects an uncertainty into investment and trade…. It has also become clear that Russia is now endangering Western European lives. Illegally ripping away bits of land from independent countries could have been overlooked, as it was in 2008 and as it might have been in 2014. But killing EU citizens, even unintentionally, has a more direct resonance with the populations Western leaders depend on to keep them in power. Doing nothing has become morally and politically unacceptable.

… Russia’s geography, population density, westward brain drain, and economic requirements at home suggest that it will eventually come running back to Europe.

Europe will welcome it with open arms once more. But if it wants to avoid repeating the disappointment of the past two decades, it should wait, however long it takes, for this president and this system to depart the scene. __ Moscow Times

As Russia’s capital and its best people continue to flee the nation, Russia’s future is shrinking. Resource-rich Siberia is increasingly at risk as ethnic Russians die off or move to cities in the western part of the country. Russia’s fertile young women seek opportunities and marriages overseas. Russia’s best university students and professionals seek better prospects abroad. These are losses that Russia cannot afford.

Meanwhile, Soviet era infrastructure is breaking down at a time that Russia is losing the people who are necessary to rebuild and diversify the nation. Russia is in desperate need of western investment and technical expertise, at a time that Putin is alienating the west and making it more risky and dangerous to invest in Russia.

These dark trends — and many others even more ominous — are being ignored by Russia’s monopolistic state media (Putin propagandists) and by Russophiles in the west.

Playing the “blame game” is becoming increasingly irrelevant. It is the facts on the ground which matter.


Inflation has risen; the labour force is shrinking, ageing and unhealthy; and Soviet-era infrastructure is decrepit.

The economy’s three greatest weaknesses are throwbacks to the USSR’s downfall. The market economy built so painfully in the 1990s has partly been reversed into state capitalism, dominated by lumbering giants in supposedly “strategic” sectors – notably Gazprom and Rosneft in petroleum – and grandiose, uncommercial Potemkin projects.

Corruption is pervasive – indeed, it has become the system – fostering cynicism and deterring innovation and foreign investment.

And Russia has reverted to a petrostate, dependent on exporting oil, gas and metals. Gazprom’s key European market is shrinking, prices falling and the global liquefied natural gas market is becoming more competitive.
_Robin Mills

We know that the Russian oil & gas industry is growing desperately dependent upon foreign expertise and investment for upgrades — just to maintain current levels of production. But the Russian armaments industry is just as dependent upon more modern production methods of overseas suppliers. The futures of both critical Russian industries are threatened by serious sanctions.

Defense plants have been buying advanced machine tools and other production equipment in significant quantities from leading European, Japanese and U.S. firms, and Rostec has been organizing joint enterprises in Russia with some of these companies to meet some of their requirements. __ Moscow Times

Although the Russian government is “smiling through the tears” of targeted sanctions, Russia is no longer in a position to “go it alone” as it seemed to be in Soviet times. (in reality the Soviets received mountains of critical aide from the west) Russia has lost too many of its best people, and is in too steep of a downward demographic spiral to pull out now without a new round of massive outside help. And who will help a belligerent dictator who is threatening to envelop the world in another age of war?







More: A smarter Russian leader might have waited before invading a nation that makes most of Russia’s military helicopter engines.

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