A comment piece by Robert Manning on Atlantic Council takes a look at Russia’s economic difficulties, concluding that it is misleading to list the market about the BRIC economies.
We are still having summits, and Russia is still in decline, a country with the dubious distinction of the first industrialized nation with a declining mortality rate and a population that has declined by seven million since 1992. Despite its cocky posture as one of the BRICs, the Russian economy had minus 10% growth in the first half of 2009, and is projected to grow at minus 2% for the year. Russia’s banking system is deeply in debt, in the $450 billion range, and even mighty Gazprom is scrounging around for cash, with key gas pipeline projects at risk. And then there is the episodic nastiness in the Caucuses.
With a highly educated populace, a sizable community of scientists,engineers and technicians, many speculated in the early 1990s that thefirst post-Soviet generation, now come of age, would be agents ofchange. Wild West capitalism would be tamed by a modern, globalized newInternet generation and a post-communist system settling down tosomething like contemporary norms. Russia would become more like therest of Europe, less like the Sopranos. Yet nearly two decades later,Moscow has failed to substantially diversify its economy and build onits considerable human capital to position itself for the new knowledgeeconomy on the horizon of electrification of transport, biotech,nanotech, new materials, and emerging clean energy technologies. Or forthat matter, even diversify its economy much beyond hydrocarbons. Manythought that the post-Soviet generation now in their 30s and 40s wouldbe the architects of a new modern Russia, part of the Europeanlandscape. Perhaps eventually. But it doesn’t quite seem so yet.
There are here and there a few glimmers of such a future. But ithasn’t really jelled. The old Soviet-era only-half-joking line was thatthe USSR was “Nigeria with rockets.” But it does not appear to havemoved far beyond being a petro-state. Of course, with its nuclearwarheads, permanent seat on the UN Security Council, and enormous oilproduction and the world’s largest gas reserves, it has a considerableimpact and demands attention.