By Irina Yasina
Vladimir Putin had already put in place a treaty between Russias government and the countrys richest men, who agreed not to comment on the actions of the state in exchange for the freedom to earn as much money as possible in any way they
Owing to the harsh economic situation, it was decided to cut off the light at the end of the tunnel as a temporary measure. That is but one of the jokes making the rounds in Russia these days, as the country faces its most severe crisis in a decade.
Having been born in the early 1960s, my generation remembers two crises. The first, following the collapse of the USSR, was almost cataclysmic nothing in the shops, the country in bankruptcy, all savings lost. The other affected everyone but was less severe Russias 1998 default, which saw a fourfold devaluation of the ruble. Todays crisis is acute, but there is no sense of an approaching apocalypse.
Yet the crisis will be severe, not only because prices for the major Russian export commodities oil, gas, and metal have plummeted, but also because the government, which believed in its boundless force and wisdom, now seems inadequate to the challenges that Russia faces. Yes, Russia has enormous gold and currency reserves, but they are being depleted fast. They will not last for long while being spent mostly in defence of the ruble at the current pace.
Most importantly, there is no one in power who can change the countrys economic policies. Instead, Russia is ruled by yes men who are only able to agree and echo: As you say, Mr Prime Minister; As you wish, Mr. President. One reason is that the countrys leadership now appears to be digesting the same garbage information it feeds to the public.
Whole regions the Urals and Mordovia, for example are stagnant. Moscow, which used to rain gold on the economy, is also suffering, because it, too, depends on natural resources, and its biggest taxpayers Gazprom, Lukoil, Transneft are now in bad shape. Indeed, Moscows budget has lost about a quarter of its revenues. But, given the tastes and appetites of Moscows mayor, you can assume that he will continue to pour what money remains into the citys building boom. What does not bring in money roads, schools, hospitals, and kindergartens will suffer.
As in the early 1990s, everyone is again afraid of unemployment. But back then, there was almost no unemployment, peaking at 12 percent, because Russias Labour Code makes firing employees hard and very costly. Moreover, most Russians do not object strenuously to wage cuts, reductions in working hours, and unpaid leaves.
There is a good reason for this docility. Moving and buying a new apartment in a different place is almost impossible, which makes Russian workers highly immobile. In Soviet times, people were proud of the fact that they had only one or two jobs during their lifetime. Those who acted differently were referred to pejoratively as job-hoppers.
So, today, people stay near idle factories kind of employed, but having nothing to do and earning virtually no money. Occasionally the factory pays them something, but people mainly live off their own vegetable gardens. The outcome is widespread alcoholism, poverty, and lack of prospects.
Yet real signs of crisis are emerging. Electricity consumption fell 6 percent in November from a year ago, and freight traffic has decreased by 20 percent. Even the Ministry of Economics recognises that Russia has entered a recession that will last at least six months.
The strange thing about todays crisis is that Russias billionaires have been hit harder than others. Dont worry, Russias oligarchs are not starving, but the fortunes of many of them have collapsed. In another joke making the rounds in Moscow, a billionaire borrows 300 rubles (just over $10) from another to buy Forbes to check his place in the latest rankings of Russias richest people.
Indifferent to the poor, Russias government is actively supporting its fallen oligarchs, especially those who are close to the Kremlin. For example, the state has granted a $4.2 billion loan to the aluminium magnate Oleg Deripaska (who held first place on the Forbes list before the crisis) to pay off Western creditors. While experts are not sure whether Deripaska will repay the loan, the Kremlin and the oligarchs have their own ways of settling debts.
Deripaska, who accompanied President Dmitry Medvedev on his recent trip across Latin America, appealed to Russias rulers to study Franklin Roosevelts New Deal in the 1930s as a model for economic recovery. Roosevelts idea of a treaty between industrialists and the authorities appeals to the Russian oligarch. Notably, Deripaska has suggested that the government create an aluminium stabilisation fund, because the industry his industry is losing money and global market share.
Of course, Vladimir Putin had already put in place a treaty between Russias government and the countrys richest men, who agreed not to comment on the actions of the state in exchange for the freedom to earn as much money as possible in any way they wanted. And if a well-placed official wanted to enter into a successful business, refusals were not accepted.
Fortunately, Russians know how to survive hard times. I remember the late 1980s not only for its hopes for freedom, but also for a total absence of baby food for my newborn daughter. Twenty years have passed. My daughter has grown up. There is enough baby food in the shops. But now there are no hopes for freedom.
Moscow intellectuals debate whether the current economic crisis will bring a new wave of liberalisation to Russia. This is the key question for me. With a feeling of approaching freedom, any economic crisis can be endured more easily. So far, that feeling remains a ghost. DTPS
Irina Yasina is an analyst at the Institute of Transitional Economy, a weekly economic commentator for RIA Novosti, and a representative of the Open Russia Foundation
Vladimir Putin had already put in place a treaty between Russias government and the countrys richest men, who agreed not to comment on the actions of the state in exchange for the freedom to earn as much money as possible in any way they
Owing to the harsh economic situation, it was decided to cut off the light at the end of the tunnel as a temporary measure. That is but one of the jokes making the rounds in Russia these days, as the country faces its most severe crisis in a decade.
Having been born in the early 1960s, my generation remembers two crises. The first, following the collapse of the USSR, was almost cataclysmic nothing in the shops, the country in bankruptcy, all savings lost. The other affected everyone but was less severe Russias 1998 default, which saw a fourfold devaluation of the ruble. Todays crisis is acute, but there is no sense of an approaching apocalypse.
Yet the crisis will be severe, not only because prices for the major Russian export commodities oil, gas, and metal have plummeted, but also because the government, which believed in its boundless force and wisdom, now seems inadequate to the challenges that Russia faces. Yes, Russia has enormous gold and currency reserves, but they are being depleted fast. They will not last for long while being spent mostly in defence of the ruble at the current pace.
Most importantly, there is no one in power who can change the countrys economic policies. Instead, Russia is ruled by yes men who are only able to agree and echo: As you say, Mr Prime Minister; As you wish, Mr. President. One reason is that the countrys leadership now appears to be digesting the same garbage information it feeds to the public.
Whole regions the Urals and Mordovia, for example are stagnant. Moscow, which used to rain gold on the economy, is also suffering, because it, too, depends on natural resources, and its biggest taxpayers Gazprom, Lukoil, Transneft are now in bad shape. Indeed, Moscows budget has lost about a quarter of its revenues. But, given the tastes and appetites of Moscows mayor, you can assume that he will continue to pour what money remains into the citys building boom. What does not bring in money roads, schools, hospitals, and kindergartens will suffer.
As in the early 1990s, everyone is again afraid of unemployment. But back then, there was almost no unemployment, peaking at 12 percent, because Russias Labour Code makes firing employees hard and very costly. Moreover, most Russians do not object strenuously to wage cuts, reductions in working hours, and unpaid leaves.
There is a good reason for this docility. Moving and buying a new apartment in a different place is almost impossible, which makes Russian workers highly immobile. In Soviet times, people were proud of the fact that they had only one or two jobs during their lifetime. Those who acted differently were referred to pejoratively as job-hoppers.
So, today, people stay near idle factories kind of employed, but having nothing to do and earning virtually no money. Occasionally the factory pays them something, but people mainly live off their own vegetable gardens. The outcome is widespread alcoholism, poverty, and lack of prospects.
Yet real signs of crisis are emerging. Electricity consumption fell 6 percent in November from a year ago, and freight traffic has decreased by 20 percent. Even the Ministry of Economics recognises that Russia has entered a recession that will last at least six months.
The strange thing about todays crisis is that Russias billionaires have been hit harder than others. Dont worry, Russias oligarchs are not starving, but the fortunes of many of them have collapsed. In another joke making the rounds in Moscow, a billionaire borrows 300 rubles (just over $10) from another to buy Forbes to check his place in the latest rankings of Russias richest people.
Indifferent to the poor, Russias government is actively supporting its fallen oligarchs, especially those who are close to the Kremlin. For example, the state has granted a $4.2 billion loan to the aluminium magnate Oleg Deripaska (who held first place on the Forbes list before the crisis) to pay off Western creditors. While experts are not sure whether Deripaska will repay the loan, the Kremlin and the oligarchs have their own ways of settling debts.
Deripaska, who accompanied President Dmitry Medvedev on his recent trip across Latin America, appealed to Russias rulers to study Franklin Roosevelts New Deal in the 1930s as a model for economic recovery. Roosevelts idea of a treaty between industrialists and the authorities appeals to the Russian oligarch. Notably, Deripaska has suggested that the government create an aluminium stabilisation fund, because the industry his industry is losing money and global market share.
Of course, Vladimir Putin had already put in place a treaty between Russias government and the countrys richest men, who agreed not to comment on the actions of the state in exchange for the freedom to earn as much money as possible in any way they wanted. And if a well-placed official wanted to enter into a successful business, refusals were not accepted.
Fortunately, Russians know how to survive hard times. I remember the late 1980s not only for its hopes for freedom, but also for a total absence of baby food for my newborn daughter. Twenty years have passed. My daughter has grown up. There is enough baby food in the shops. But now there are no hopes for freedom.
Moscow intellectuals debate whether the current economic crisis will bring a new wave of liberalisation to Russia. This is the key question for me. With a feeling of approaching freedom, any economic crisis can be endured more easily. So far, that feeling remains a ghost. DTPS
Irina Yasina is an analyst at the Institute of Transitional Economy, a weekly economic commentator for RIA Novosti, and a representative of the Open Russia Foundation