Can The Russian Economy Survive the Sanctions & Falling Oil Prices or will it Crash Like The USSR ?

Russia has drastically paid down external debt and is building formidable Gold reserves. Russia also has a reasonable trade surplus. Russia has little external debt, decent foreign reserves for a rainy day. Unemployment is very low, at around 5 to 6%. Russian external debt listed in billion roubles;In equivalent US dollars, is just US$7.29 billion . This is relatively peanuts compared to the US DEBT, for example, which approaches US$23 Trillion. In other words, the US External debt is more than three thousand times greater than Russia’s. Russia does have an economy of nearly $1.7 trillion, which puts it at 12th place in the world’s largest economies. I am more reluctant to take official statistics for granted. The GDP per capita, average salary, and consumer’s basket are not good enough in presenting the real truth. But let’s start with the official statistics. From 1999 to 2014, before the political conflict with the west started, Russia had had fascinating GDP growth, economic and social development, modernization of infrastructure, and political system. The average salary reached some 600€ per month net, which, compared to the EU, had put it in the range with the Czech Republic, Slovakia, Slovenia, Hungary, Croatia… This was not a bad result at all. Additionally to that, Russia had the lowest fuel price on the market. Particularly speaking about Moscow and St. Petersburg, two greatest and highly developed cities, economy and wealth in those were completely comparable to Western Europe, with an average salary above 1000€. In the last five years, the Russian economy has stagnated due to sanctions and political crises. GDP has dropped for several percents, while the average personal income of families has dropped, even more, about 20%. In rural areas and in less developed towns, people work for 200–400 euros a month. Moscow is still a much better place to live, but investments have slowed down. Russia does struggle to trade because of trade sanctions imposed by western nations in retribution for the shooting down of flight MH17, which it now appears was actually carried out by Ukraine’s 223 Straya Regiment missile battery at Zaroshchenske. Some speculate Ukraine deliberately shot down Malaysian Airlines flight MH17 to sabotage losing revenue to Nordsream 2, which runs under the Baltic to Germany. The United States is also desperately trying to prevent Germany from buying natural gas from Russia via the Nordsream 2 pipeline under the Baltic sea. The United States is doing this by flooding Europe with cheap natural gas at below-market prices subsidized by US taxpayers. Russia Warns EU Over 'Obstacles' In Constructing Nord Stream 2. The object of US actions is to try and strangle Russia’s export markets. Russia, however, has strong trade with China, Europe, India, and Iran. But on the other hand, With the current budget deficit of roughly two trillions of rubles and no access to creditors, Russia will soon run out of reserves. It is evident that we will see another large-scale money-printing by the Russian government soon, like in 2014, when the ruble lost half of its value or even like in 1998 when the ruble lost three quarters of its value. Russian manufacturer continues to shrink, and businesses are closing. Almost 90% of the money the Russian budget gets comes from the export of oil and natural gas. They are losing this market as well. Import, however, almost hasn’t shrunk because Russia lacks the ability to manufacture pretty much anything, from medicine to clothes to industrial equipment. Russia has overblown military and social expenses, and they are losing their source of income. Basically, we see a repeat of the situation that lead to the collapse of the Soviet Union. I remember half a year before the Soviet Union collapsed. Nobody believed it would happen soon. Welcome to The Atlantis Report. Russia has its share of troubles because of volatile oil prices and Western sanctions. Bloomberg thinks that the sanctions alone have knocked 6% off the GDP since 2014. However, there has been a slight uptick in the GDP lately, thanks to improved oil prices early in 2018. Russia could face an economic collapse in the near future. The government is doing nothing to remedy the situation and what they are doing is doing more harm. Russia’s economy, in general, it is not sustainable and will run out of steam sooner or later. It is the repeat of what happened to the USSR. It became economically non-viable by the 1980s, and ultimately that was the main reason for its collapse in 1991. The Russian Federation is also an imperial state in many ways. Moscow conquered the far East in the 16th century. Although somewhat sparsely populated, it is mostly non-Russian and has a lot more in common with China, Central Asia, Mongolia, and so on. The Russian economy is based almost exclusively on oil and gas, so it depends on the price of oil. While there are sacrifices Russia can make - and has made since its invasion of Ukraine and the subsequently imposed sanctions - to adjust its budget, ultimately, the price of oil will decrease. The long-term movement away from fossil fuels to the renewable sources and the short-term policies of OPEC, USA, etc. And the economy is bound to crash. The Russian population is already suffering much, but they are kept in check by propaganda, ideology, war- and fear-mongering, and the many-century despotic tradition of obedience to the tsars and the General Secretary of the Communist Party, which Putin successfully exploits. Look at Vladimir Putin. He’s been ruling Russia for over 18 years, and it shows. He’s not as young as he was when he started, both from years and worries. Sure, he has really good doctors, but they’re just doctors, not wizards. One day, he is going to die. Now know this: much like Stalin before him, Putin made the country dependent on himself. Should he die, there is nobody who has fame among the common people and influence among the rich to take over immediately. When he dies, anything can happen, except Russia steadily going on without him. Sure, Russia will eventually recover. It might drop Chechnya and a few other antagonistic places, it might get split into 2–3 big chunks, or it might remain intact, but most importantly, it would not be Putin’s Russia anymore. In Russia, the salary is 200-250 dollars a month. And it's a lie that money is not important for Russians and that costs in Russia are very small. In Russia, gasoline, rice, oil, etc. cost as in the US. In Russia, there is really medical insurance for all; but it will only cure the most simple illnesses - like Medicaid. If you need surgery - pay. Only traumatology is really free. If you need medications that are more complex than aspirin - pay. In Russia, almost 30 percent of people have a dacha. In most cases, it is not at home, but a piece of land with sheds in a field where people grow food that would survive on a salary of 200-250 dollars. Russia is rich in natural resources and in natural talent, but it is very poor in its ability to make use of them. It exports a lot of its natural resources rather than adding value to them or using them at home. And its talented people rarely learn how to use their talents effectively because there is an overall lack of communication and management skills and training. There are a lot of filthy rich people in Russia. Their wealth can be coming either from "the roaring 1990s" from the privatization era or from the gang wars era. Or from the "state capitalism" era getting rich from government contracts or from bribes to get those contracts. There are also legitimate entrepreneurs because there is still a lot of untapped business opportunities in the country. All this creates a high level of inequality. Russia's per-capita GDP places it reasonably high and far from poor countries. However, several trends make that ranking misleading. #1. Russia's current GDP standing is relatively recent and follows many years of severe under-investment in infrastructure. This is why most places outside large cities are dilapidated, while large cities are overpopulated and congested. Villages tend to be semi-abandoned. #2. Being the largest country in the world by territory, Russia heavily relies on its roads and railroads, which have been crappy throughout Russian history (especially the roads). #3. Russia ranks very high in income inequality, which means that a small fraction of families control a large fraction of wealth (more skewed than in the US, believe it or not). A handful of large cities and oil-producing regions are much richer than the rest of the country. #4. Crime rates are high in Russia for various reasons, such as an ineffective legal system, with a long, inglorious history, and questionable traditions. #5. Given the high corruption in Russia, the environment has been relatively neglected. Add to this dense cities and poorly maintained infrastructure, and you get fairly regular environmental emergencies, more common to poor countries. For example, people in Moscow regularly complain about noxious fumes that may last for weeks at a time. If things continue as they are, we may expect a significant change happening in a part or all of Russia. Today’s Russia looks strikingly similar to the Soviet Union in the 1980s: a stagnated economy, massive military expenditures, demographic decline, foreign conflicts, political isolation, etc. Does that mean Russia will collapse as the Soviet Union did? No. There are no secessionist movements waiting to be heard, and the public dissatisfaction is pointed at the ruling politicians instead of the political-economic model. Though the media may categorize Russia as a strong adversary of the liberal West, the fundamental problems of the Russian nation make it very weak to its core. Think about it: #1. Russia’s economy is smaller than South Korea’s. #2. Their life expectancy (average 70 years) is similar to Bolivia. #3. The only important commercial centers in its territory are Moscow and St. Petersburg. #4. Demographic decline and brain drain continue to affect the country. #5. The only thing separating Russia from any other third world country is its nuclear weapons. And keeping in mind that Russia is the largest country in the world and has access to Europe and Asia may give you an idea of how bad Russia has been governed. Certainly nothing of that would change during Putin’s current term; since his support comes from foreign policy achievements instead of reforms. But in the future, he may find his macho persona won’t solve the problems of the ordinary Russian. It may happen in a couple of years or may not happen in two hundred. Russia became the world’s biggest state (bar British Empire and colonial kingdoms of Spain and Portugal, that disintegrated since) by the 16th century, and all its peoples are pretty much used to it. You can say that the truth is somewhere in between, but it takes more than political will to disintegrate Russia. To make a complicated story short and simple - yes, Russia is near collapse. How “near”? That’s the question. Much depends on geopolitics, the global economy, and a number of other factors. In the long term, however, it is hard to envision how such a perverted style of governance can lead to anything but state failure. I hope Russia would emerge as a better place to live in. As Russia has always survived external forces given enough time. This was The Atlantis Report. Please like. Share. And Subscribe. Thank You.













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