Image: Liu Rui, globaltimes.cn
President Donald Trump’s assault on globalism, something the Kremlin welcomes as a means of increasing disorder abroad, is going to hurt Russia and its population far harder than many now imagine and far more quickly now that Moscow’s reserves are running out, according to two Moscow analysts.
The first, Pavel Pryanikov, the founder of the Tolkovatel portal, says he can understand why many Americans oppose globalization because they have the domestic institutions and resources to cope with its demise but that he can’t understand Russian support for it because Russia will suffer as a result.
The US has strong engineering schools and research centers, he points out, and it will not be difficult for America to rebuild on its own territory the factories now in China or South Korea that are producing for its market. There may be some rise in prices, but given the size and strength of the American economy, the US will take them in stride.
But the situation in Russia is very different: It lacks the domestic institutions and financial capabilities the Americans have, Pryanikov says; and that means that it will face serious increases in the prices of imported goods without the capacity to substitute domestic production of them.
Consequently, he continues,
if globalization is limited, this will mean for Russia “in the mid-term range only a growth of mass poverty and the spending of budgetary funds on import substitution projects that are unlikely to work as planned and that would cost more than Moscow can afford.
That conclusion is supported by the following fact: currently, Americans invest 70 billion US dollars in venture projects each year, while Russia makes only 400 to 500 million in this sector. That is the US invests 150 times more than Russia does, and that should tell Russians and perhaps even the Kremlin all they need to know about what the end of globalization would mean.
And in a commentary on the Republic.ru portal, Oleg Buklemishev the director for the Moscow State University Center for Economic Policy, explains why the impact of an end of globalization on Russia will not only be serious but that it will come far sooner than many now expect.
The economist points out that
“Russia has exhausted its cushion of security” that its various reserve funds, which are now running out, had provided and that means it is “ever more dependent” on the price of oil and the attitudes of investors, factors over which the Kremlin has less control than it may think.
And that in turn means that any short-term shock to the Russian economy as a whole from changes in the international one is something that the Kremlin can no longer compensate for, as it has in recent years, by turning to reserves. These no longer exist, and so shocks from abroad will more quickly translate into shocks at home.
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