This week Russia is hosting the first summit of BRIC nations in Yekaterinburg, which is the third summit in a row in under a week - all of which do not include any participation of North American or Western European countries. It appears that Russia living up to its promises to built a "new global architecture" of multilateralism. We think that this is a positive trend, and that the world can only benefit from the foundation of greater rule-based international institutions, especially among non-traditional powers. We also think that it would be even better if Russia and its new rising star partners had a clearer idea of what they wanted to accomplish, but the fact that these meetings are happening is indisputably important and noteworthy.
For example, President Dmitry Medvedev (who appears to be getting pushed aside this one photo), has called out for the creation of a "fairer global economic order." That sounds awesome - sign me up - but I do wonder what steps that may include. Aha, it means substituting the dollar as a global reserve currency (check out a vigorous series of debates on this subject kicked off by our guest editor and former currency strategist, El Maestro.)
At least one guy from the conservative RAND corporation thinks that the BRIC group of economies should be reduced to just the BIC - though I think this outlook is premature and motivated just as much wishful political projection as the Michael Hudson piece I linked to above. Russia is going to have the worst 2009 out of the lot, but by sheer size of its consumer market it is not going to disappear from the world's top economies any time soon.
From Andrew S. Weiss, published over on Foreign Policy:
And they are far from a group of equals. While the Russians tend to relish any opportunity to tweak Washington, the others actually want closer ties with the Obama administration. Hu Jintao, preoccupied by the global economic crisis and urgent threats to China's domestic stability and economic vitality, will hardly be in the mood for geopolitical grandstanding. (It was China, after all, that blocked any endorsement of Russia's invasion of Georgia at last August's Shanghai Cooperation Organization summit in Dushanbe, Tajikistan.) Brazilian President Luiz Inácio Lula da Silva and Indian Prime Minister Manmohan Singh have their own clear priorities: keeping economic growth on track, easing the social impact of the crisis, and accelerating domestic reforms. They're not interested in causing trouble.
More and more, Russia looks like the BRIC countries' odd man out -- and it's not only because the Russian economy is in much worse shape than the others. (The IMF projects a 6.5 percent drop in GDP in 2009.) A big part of the problem is Russia's growing complacency in the face of its worst economic crisis since August 1998. Now that crude oil is back above $70 per barrel, hopes for long overdue structural reforms are fading.
Quel supris. The RAND guy is yet another Westerner complaining that Russians have been insufficiently improverished that Russia can forgo Western-advocated "reforms", of the sort that killed a few million Russians in the 1990s, and rendered tens of millions more destitute.
Yeah, he's got the best interests of Russians in mind. NOT!
Rkka, how do you read this in their comments? As far as I can see, they say that Russia is sufficiently impoverished, and becoming poorer (due to the world crisis) faster than the other BRICs, which makes it the odd one out. Besides, the point of the paper seemed to be that the other BRICs are less interested in tweaking Washington than Russia is, which seems to be true.
Who do you think has the best interest of the Russians? I certainly wouldn't go for the RAND guy (he has other interests in mind), but I don't see Medvedev and/or Putin doing much better than the RAND guy, frankly. Concentrating the economy in oil and weapons -- so that Russia's destiny will fluctuate with the market prices of these two items? China, the other authoritarian regime, has already learned that this is not a good idea.
Asehpe, it's this bit here:
"A big part of the problem is Russia's growing complacency in the face of its worst economic crisis since August 1998. Now that crude oil is back above $70 per barrel, hopes for long overdue structural reforms are fading."
Note the lack of specifics, or analysis of how reforms would help the Russian economy. He just falls back on "reforms = goodness" and laments the recovery of commodity prices as allegedly giving Russia an alternative to unspecified "reforms".
As to who has the best interests of Russians in mind, it looks to me that Russians include their top government leaders in that group, and I can't think of any obvious reason to say they're wrong. And if you look at where the Russians are making investments, it isn't to boost production of energy. It looks to me that their strategy is to maintain present production levels, rather than make big investments to increase production.
So I'd say Medvedev and Putin are planning to use the energy sector as a "cash cow" to fund development in other parts of the Russian economy.
Rkka, inasmuch as China shows that democracy and economic development are independent variables, I agree that political reforms wouldn't (necessarily) improve the economy.
However, I think political reforms (= more democracy, more transparency, etc.) are a good thing regardless of expected good impacts on the economy. I don't like the authoritarian regime in China, despite its clear economic success. Hell, Pinochet, the old Chilean dictator, used to say that his military dictatorship was justified by the economic success of his country in that period! I totally disagree with that: if economy and democracy are independent variables (as again China seems to be showing), then economic success is also no justification for a political regime.
I see the complacency you mention in the paragraph you quoted; it is necessary to specify what exactly is wrong in the structure of Russian economy, and what should be done about it (i.e. which reforms are necessary?). But I do see the main point also: when our main source of money is going up, we don't care much about the details and inefficiency of our domestic budgets: as long as money keeps flowing in, the problems become less visible.
Is Russia doing that? Is Russia simply hoping for more piles of money from oil, so no need to check how exactly the economy is working? You claim Putin and Medvedev want to use the money from oil to finance development in other areas -- diversification, etc. I hope you're right; that would make sense. But I do note that the very same Putin failed to do that during the last peak in oil prices; Russia continued to be a kind of Venezuela or Saudi Arabia. I hope he will look more towards China this time.
As for the best interests of the Russian people... I am sure they think well of their leaders. Are they right? People have been wrong about their leaders before. Any obvious reasons why they might be wrong? I'd mention the authoritarian regime (repressing the people is never a sign of having the people's best interest in mind, but of fearing it and trying to control/force it to do what the leaders want--just ask any dictatorship). Also, the extent to which government and oligarchs/industry are intertwined is another reason to distrust the leaders--it looks more like a little "old boys' club" where they take care of their own interests while paying lip service to "the people". (This was the situation in my own native country, Brazil, for most of its history, and it's not pretty.)
Your example of Pinochet is telling, in a way you probably don't expect. Chile's economic growth wasn't all that good while he let "The Chicago boys" run the economy, and its distribution got worse. Living standards for the lower income groups actuially declined.
So inadvertently, you've brought out an excellent example of what "reforms" do. They divert income from the poor to the rich.
Pinochet was a repulsive animal whose human rights abuses could never be offset by whatever happened to the economy ... but Chile is a pretty bad example to select if you want to beat up on economic reform.
The pension privatization was a disaster for example, but in many other respects Chile's economic transformation has made it one of the most successful economies in Latin America, thanks largely to good governing from the Concertacion - not the overly draconian measures from the Chicago boys. Interestingly, groups of opposition from both Russia and Venezuela have been holding meetings with the Concertacion to discuss how they transitioned from dictatorship back to democracy... just sayin'.