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Russians “missing looming economic catastrophe” – Moscow scholar

Article by: Paul Goble

Like Argentinians in the 1950s and 1960s, Russians are focusing on politics to the extent that they do not see the economic catastrophe for the future that Moscow’s current policies guarantee – decades of stagnation and missed opportunities for a better life, according to Konstantin Sonin.

The Higher School of Economics professor says that Argentinians did not notice how quickly they were falling behind other countries two generations ago because their leaders encouraged them to focus only on political issues, and as a result, this economic disaster became “an unnoticed catastrophe”.

Now, he says, Russians are doing the same thing to their peril.  “On the one hand,” he says, the course the Russian government has embarked on is truly “catastrophic.” But “on the other, this catastrophe which now appears completely inevitable will not be similar to the catastrophe of 1990-1991 which led to catastrophic political consequences.”
Rather, Sonin argues, what is coming will be “a catastrophe of the ‘Argentinian type,’” involving “long years of slow development” which will leave Russia even further behind the West than it is now and which will be looked back on as “decades of lost opportunities” just as the Argentinians do today.
“The sanctions which have been imposed from outside and the sanctions which have been imposed by Russia itself are completely impermissible. They are making stable growth practically impossible,” even though Russia needs to grow “a minimum of two to three percentage points faster than Europe in order to catch up.”
From an economic development point of view, Sonin says, “this is no less impermissible than some territorial or even more geopolitical losses.” The expenditures on war both in the direct and indirect sense are simply “incompatible with stable economic growth,” even if few in Russian are paying attention to that reality.
Today, Russians are focused on geopolitics even though that is “a subject which is in no way connected with the problems of [Russia] in 2014.”  Sonin asks rhetorically “What then can economists do to attract attention?” Perhaps he says they should talk about what will happen when it will cost 100 rubles to buy a single US dollar.
Or perhaps they should suggest that Russia is converting itself into North Korea and will have to send all its oil to China to keep itself afloat? Or perhaps, he says, they should talk about the risk that Russians in the future will have to watch as their children become slaves to Baltic barons? But at present, he suggests, even that might not be enough to change their focus
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