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Clouds of Deepest Black above the Russian Economy

Wow, how did this slip through the “Russia Beyond the Headlines” censors? Felix Goryunov, a Moscow-based economics journalist, viciously condemns the Putin economy and concludes it is unworthy for WTO admission, which will crush it:

Although Russia can now join the World Trade Organization, it should not do so because its economy is inherently weak and uncompetitive.  Russia’s export product base is steadily deteriorating.  After 20 years of talk from the Kremlin about the need to diversify and modernize the economy, Russia’s economy still relies on the extractive industries.  The majority of Russian manufacturing, agricultural and service companies, to say nothing of small businesses, are uncompetitive even in the domestic market. Without strong state support, prohibited by WTO rules, they would lose even after the expiration of the transition period for full accession.

Although corruption has been condemned by the Kremlin as country’s Public Enemy No. 1, there are no visible signs it has decreased.   Many high-quality domestic consumer products can‘t be marketed across the country. Two decades after the start of market reforms, there are only a handful of nationally recognized brand names of products “made in Russia.”

It’s no wonder that the unfriendly business climate causes domestic capital to flee the country. The Central Bank of Russia estimates that this year the capital outflow will reach $70 billion. This would be an addition to the approximately $1 trillion that has left the country since the mid-1990s.

It is hard to find a clearer description of attitude of the Russian political elites towards business than its comparison with the famous wisecrack by U.S. President Calvin Coolidge: “The business of America is business.” If the Kremlin could be honest, its declaration must be: ”The business of Russia is to fleece business.”

Ouch. Speaking of corruption, by the way, Russia is still dead last on the Transparency International bribe-payers index.

5 responses to “Clouds of Deepest Black above the Russian Economy

  1. marknesop

    Yes, ouch. Felix, what happened to you? Don’t you remember, back in 2008, when you said,

    “In view of the unfolding global downturn, Russia’s robust and sustainable economic performance is even more significant. During the last eight years, the country’s economic growth has been accelerating, and reached an eight percent annual growth rate in 2007. Russia is now recognized as a global growth engine which may help, together with other BRIC members, to free the world economy from its former overdependence on the United States. This new role would only become more significant, because Russia’s capitalist system is still underdeveloped, and there is a lot of room for expansion. The country is set to speed up technological restructuring and innovation, and the government is funding programs of infrastructure development, as well as upgrading human resources. The current consumer buying spree made Russia into the most attractive country in Europe for exporters and investors…”

    Were you lying then, or are you lying now? Is the CIA torturing you? You don’t have to answer, just move the little finger on your left hand.

    And what’s with all the negativity on the U.S. economy? Remember this?

    “Simply put, the U.S. economy and public mood are going down, while Russia’s are heading up. These divergent economic trends encourage some of Russia’s top politicians to claim that the country’s markets are “islands of stability in the ocean of financial turmoil.”

    Why you gotta be hatin’, Felix?

    For the record, I agree with Felix – Russia should not join the WTO. I was once in favour of it, but guys like Anders Aslund changed my mind. The bulk of Russia’s exports are commodities, which are sold on the world market in any case – be pretty hard to slap a tarriff on Russian oil. Even with WTO restrictions, Russia exports 10 times the steel North America does, and I doubt that would improve much once the market slapped on a bunch of protectionist measures to safeguard its own industries. As far as consumables go, Russia is able to sell nearly all it can make domestically. The WTO needs Russia more than Russia needs the WTO, and Russia should tell them to go pound sand. Unfortunately, it won’t.

    • larussophobe ⋅

      Notably, you have not even tried to refute one single fact set forth in this analysis. The Russian economy is unqualified to participate in the WTO, just as is the Russian legal system. It is a stagnating wreck which has not been reformed and is led by unqualified KGB spies who have never run any business and never succeeded in any fair competition. It is doomed.

  2. To be fair, according to most REAL businessmen, most of the world’s leaders today have never run a business either, fact, like Hussein Soetoro-Obama, they never have worked a single day in their life. So they are ALL beholden to big government which have never produced anything other than wars, famines and pestilences…
    Dark days are ahead indeed. All these Keynesian cults these bureaucrats worship at are all oriented for the purpose of bloating the governments under the guise of “ecology”…

  3. Pingback: Obama’s Love of Neo-Soviet Russia Shines Through in SOTU Address | Command the Raven

  4. Pingback: Jesus Lives! » Blog Archive » Obama’s Love of Neo-Soviet Russia Shines Through in SOTU Address

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