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Russia: Things That Are Not Discussed


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July 13, 2018:

The government has managed to maintain its 2011-2020 military procurement plan to replace cold war era weapons and equipment. This plan required spending nearly $700 billion over a decade to equip the post-Cold War military with modern gear. The urgency of this program gave it priority over everything else. And for good reason. After the Cold War ended in 1991 Russian military manpower shrank to less than 20 percent of Cold War levels and that made it possible (actually it was mandatory) to scrap the oldest weapons and equipment simply because it was no longer needed and there was no one left to guard it, much less maintain it. It got worse during the 1990s when there was very little military procurement and after 2000 even the late model Cold War gear was showing its age. The oil price drop and sanctions that hit after 2014 caused economic growth to stall, so badly that GDP declined for a few years. Russia made lots of cuts in the government spending, mostly in social and infrastructure projects. In addition there was borrowing (a larger public debt) and a lot spent on propaganda to convince Russians that it wasn’t so bad.

The military budget was hurt the least and the lower standard of living most Russians were subject to was blamed on NATO aggression. This appeal to nationalism and external enemies to avoid responsibility is working for the government, at least in the short term. Eventually most Russians figure out what is really going on. But politicians operate in a shorter timeframe and expect to evade long term consequences. Some of these consequences are arriving sooner than expected. The deficit spending and poor infrastructure has made Russia less attractive to economic partners (even China). The lower standard of living comes with higher unemployment and a growing number of younger and well educated Russians are unable to find work and emigrating. That brain-drain has immediate consequences if the economy recovers and firms seek qualified new hires to make the most of an expanding economy.

The economy continues to have problems. GDP growth is currently about one percent a year which, combined with many other negative economic indicators, confirms that despite optimistic government propaganda, living standards and employment opportunities continue to decline, along with manufacturing activity and so much more. The government made a big deal about the football (soccer) World Cup it hosted and how well things went. But while all the new or updated sports facilities look nice they cost a lot and that explains why Russia still has one of the worst road networks in the world and the railroad system is still awaiting delayed (for decades) maintenance and upgrades.



Not to mention the small fact if Russians don't start having Lots of babies...Soon there won't be any Russians for us to worry about.

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