Russia in the world economic crisis

[pampango]

An interesting combination of everyday observations in Moscow to national political views on how Russians are dealing with the global economic crisis and might react to future events.

Russia's economy has prospered recently with the revenue from high oil and natural gas prices, but is beginning to feel the effects of hard times as these revenues fall dramatically. The possibility of a political crisis which could result from an economic decline in Russia is a concern that would affect Europe and the US.

http://www.lrb.co.uk/v30/n22/gess01_.html

"And the stock market – boy, the stock market. The two Moscow stock exchanges, the Moscow Interbank Currency Exchange, which deals in roubles (MICEX), and the Russian Trading Stock Exchange, which deals in dollars (RTS), began losing value over the summer, after international investors got nervous: first there was a conflict over the future of a BP joint venture in Russia; then there was the war with Georgia; and finally Putin’s Putinesque suggestion that the recalcitrant owner of Russia’s largest mining company should watch his health, ha ha. But since the collapse of the American stock indices the Russian exchanges have been plummeting. In fact over the past few weeks they’ve been shut down more often than they’ve been working: trading is suspended whenever either exchange moves 10 per cent up or down. Naturally, this doesn’t make anyone any calmer. Every time the regulators open the markets, they start falling again."

"The tiny anti-Kremlin parties are doing their bit to address the crisis: the National Bolshevik Party has been putting fliers on cashpoints around Moscow: ‘Take your money, citizen, before it’s too late!’ But television doesn’t know it exists – or, as Vedomosti politely put it, ‘doesn’t wish to worry the populace unnecessarily’. Television knows about the perfidious pro-Western president of Ukraine, Viktor Yushchenko, who’s been selling weapons, it turns out, to anyone who asks (including Georgia and Somali pirates). Television knows about the important work of Prime Minister Putin, who visits factories, and President Medvedev, who meets political figures in the Kremlin. And television knows about the crisis abroad: the troubles in the US, the troubles in Europe, the troubles in Iceland (which wants to borrow money from the Russians). It knows that whatever effect all these things may have on Russia, Putin and Medvedev are on the case."

"To be fair to Putin-Medvedev, this may be for the best, at least as far as my grandmother’s life savings go. The Russians get to worry about other countries in crisis (the way they worried about Americans after 11 September, despite having a much more serious domestic terrorism problem), and meanwhile keep their money in the bank, and, most important of all, keep it in roubles. Because the rouble, for the moment, is the biggest problem facing the government. If oil prices fall too low and the rouble fails, as it did in 1986 (though this was kept secret) and in 1998, and if the coal miners go on strike again because they haven’t been paid and block the trans-Siberian Railway, savings will be wiped out. This would be a national humiliation – something more destabilising to regimes, as the Putinists know, than mere economic collapse. A few weekends ago there were rumours that the rouble’s collapse was imminent, and the dollar started climbing away from the official rate at the independent currency exchange kiosks around town. Reporting on the rumours the next day, Kommersant quoted a banker saying that Russians had a ‘genetic’ memory of 1998, and were being told, by their genes, to go and buy dollars. Except the truth is that Russians have an actual memory of 1998. Even I have an actual memory of 1998. The collapse of a national economy is not a pretty thing, and it was at this point – the end of the Yeltsin era – that the American commentariat began wondering ‘who lost Russia?’ as if Russia was a hat someone had left at a party or a child who’d wandered off at the fair."

And yet. If things are going to fall apart, Moscow could well be the place they fall apart most quickly. What happened in the years of extremely high energy prices was something more familiar than a yearning for the ‘strong hand’. The Russian people were offered a bribe and they took it. Why not? But now the bribe is running out, and anything could happen. What you realise under the giant vaulted ceilings of Garage, or simply on the streets, in the alleyways, where an ancient metropolis was once rearranged to serve the people, is that it’s happened here before."

[cobalt1999]

1. Great article, thanks for posting.

The Russians seem to have a fatalistic attitude and the ability to suffer quietly more than any other people.

It's going to be hard for all the oil based economies that thrived with over $100/barrel prices.