Isolated, Impoverished, Backwards Russia

You already knew that Russia has an utterly pathetic, puny level of Foreign Direct Investment in its economy, roughly half that of tiny nations like Netherlands and Belgium, and that its level of FDI has been falling consistently under Vladimir Putin.

Maybe you even knew that things were so bad that the Russian Kremlin is actually bribing foreign investors to sink their cash into Russia.

But you still didn’t know how bad things really are. Because Ben Aris of the Financial Times reveals:  “Russia has a woeful record when it comes to investment. According to a paper about to be released by Aton, a leading Russian investment bank, some 70 per cent of all foreign direct investment into Russia comes from offshore havens – meaning it is Russian flight capital returning home.”

You read that right:  70% — seventy percent! — of all money Russia counts as FDI is in fact just money that is brought back to Russia by Russians in connection with capital flight, that is, money that’s now needed for spending purposes and is recovered from its hiding place. In other words, it’s an illusion!  So the true level of new money sent to Russia by foreigners who believe they can make more money in Russia than other places is so tiny that it’s barely measurable, comparable to a backwater like Chile or South Africa.

This is what Russians have given themselves by choosing proud KGB spy to govern them:  isolation, impoverishment and backwardness, for the foreseeable future.