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Russia faces “first made-in-Moscow economic crisis”, Gubaryev says

“I goofed”
Russia faces “first made-in-Moscow economic crisis”, Gubaryev says
“Russia is entering the first systemic economic crisis in post-Soviet times” which is of its own making and which has only been “deepened by the fall in world prices for oil” that Moscow and many others want to blame for the problems the Kremlin faces, according to Valentin Gubaryev.

In a commentary in “Gazeta”, the Moscow commentator argues that Russia now “lives in a more ‘terrible’ economic reality,” given the price of oil and the ruble exchange rate with the euro and the dollar, “than even the most alarmist variant” of government projections only three months ago.

And this crisis is both different and more serious than the two others with which it is often compared, Gubaryev says. The 1998 crisis which led to default “was the result of half-heartedly radical in intention and less radical in execution of market reforms,” one that arose” when the political and economic system of post-Soviet Russia was still not put in place.”

Russia’s default at that time was triggered by the decline in oil prices that meant that Russia was earning “approximately three times less than it was spending” and consequently was “not in a position to service its short-term government obligations,” a problem that some are beginning to say is returning now.

And the crisis of 2008-2009 was “to a significant degree not a Russian one.” Instead, the Russian economy simply followed the path downward of the world and “above all the American” economy. But “today we have a serious economic crisis with the label ‘made in Russia,’” one that is the product of the political and economic systems in the country.

In that situation, Russians need to recognize that “no one except [themselves] are going to lead the country out of [this] crisis.”

Russian officials today suggest that the declining value of the ruble is not a bad thing because it allows them to meet their budgets, but while that might be true, meeting the budget by relying on the weakening of the ruble “is in absolute contradiction with the growth of the incomes of the citizens.”

They face rising prices, a reduction of jobs, and the possibility that their incomes will be cut. (Today’s “Nezavisimaya gazeta” features an article suggesting that fears are spreading that the Russian government may cut salaries of government employees, even though the regime is denying this (

In the first two post-Soviet economic crises, in 1998 and in 2008-2009, the Russian government “tried to apply defensive measures.” In the first, it devalued the ruble and more importantly “cut budgetary expenses.  And in the second, it formed a commission that in extraordinary fashion ensured the liquidity of the most important banks and companies.

Today, however, there is “only silence and inactivity.  The government and the prime minister are silent. The deputies and senators are silent or propose wild legislative initiatives like the confiscation of property of foreigners in Russia … The expert communities are silent.” And the opposition “only criticizes the authorities” but without hope of influencing the situation.

In sum and as a result, Gubaryev says, “both the authorities and society have not begun talking about the threats or formulating programs for getting out of the crisis. They do not even recognize its existence,” and instead, he argues, they are operating only with the hope that something will turn up.

Perhaps oil prices will rise, they think, or the European Union will lift the sanctions or Ukraine will support the Donetsk and Luhansk peoples republics even though Kyiv doesn’t control their territories.

So far, the government’s “social therapy” has been directed to protecting bureaucrats and big business, but “the economy has simply been excluded from the discourse” that the regime promotes.  Moscow media talk about the Ukrainian and European economies as such; they don’t talk about the Russian one but only the details.

There has not been “any serious and honest conversation with people about the difficult situation” in which the Russian economy and hence Russia finds itself. Instead, Russian television viewers are offered a combination of “’dances with stars’ and ‘the struggle with the Banderites.’”

As a result, there is the growing impression, Gubaryev says, that “the authorities are afraid to recognize not just certain errors of their policy but also the complexities of the current economic situation” and fear “questions from the population, especially when, as polls suggest is now the case, “the majority is beginning to recognize” how serious the situation is.

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