Project "ZZ". The root of Russian inequality
Sanctions are unlikely to change anything in Putin’s policies. Historically, gentlemen "sanctioners" rarely achieved their goals. This was especially true of Russia, both Soviet and present. However, to "tame" the Russian oligarchs, analysts believe, there is a loophole: you should hit offshore capital. By 2015, the rich Russians had accumulated in offshore, according to some data, 75% of the national income of the country, i.e., 3 times more gold reserves!
If sanctions change something, it rarely happens, writes Stefan Kaufmann in the publication "Frankfurter Rundschau".
Historically, financial and economic embargoes imposed by the United States, the West, rarely led to the weakening of unwanted regimes. One of the current examples is the sanction opposition of Donald Trump and Kim Jong-un. Another famous example is the war of sanctions against Russia. The same lever Washington used against Iran and Venezuela. However, Kaufmann doubts the success of American politicians on these financial "fronts".
Already a hundred and twenty (!) Times the United States announced sanctions from 1945 year. There are only a few examples of success. Economist Gary Hufbauer (USA) gathered some interesting statistics on this issue, looking at history even deeper. He took the period from 1914 to 2009. and counted two hundred cases of international sanctions. Only thirteen times the sanctions forced political regimes to change course.
Because of the Yugoslav sanctions in 1921, she refused to annex parts of Albania. After World War II, there was another case of success: the United States stopped helping the Netherlands according to the Marshall Plan, which forced the country to grant independence to Indonesia. At the beginning of the 1960's US sanctions contributed to the overthrow of the government in Ceylon, which had previously nationalized American oil companies. In 1970-s. South Korea and Taiwan abandoned their plans to develop nuclear weapons - and also because of the sanctions imposed on them. And another example: in 1980-s. sanctions contributed to the collapse of apartheid in South Africa.
And what is interesting is that prohibitive measures did not hit those to whom they were addressed, but rather harm mainly the poor. Sociologist Joy Gordon writes that because of the sanctions in Iraq in the 1990-s. died before 880 of thousands of children (for the period in 5 years). The same scenario can be repeated today with the DPRK: in this poor country, 40 percent of the population is undernourished, 70 percent gets food aid. US sanctions against the DPRK have existed for a long time, since the Korean War. So what? The Kimov dynasty rules to this day, and the rocket program does not stop, but, on the contrary, develops.
Sanctions also couldn’t do anything about the Assad regime in Syria: prohibitive measures were in effect since 2004, the foreign capitals of the Assad family were frozen, but it didn’t have any particular effect.
And here is Russia. Its economy, the sanctions of the West hardly hurt it for real. Basically, the raw material Russia was hit by the collapse of world oil prices. Today in Russia there has even been a growth: according to IMF forecasts, in 2017, the country's economy will grow by 1,4%.
The restrictive measures imposed by the US and the EU could have infringed upon the interests of Putin and his entourage, but they have no effect on these people unnoticed: they still take their places.
With the opinion of the German author agrees American Shelley Carabell. She explains in the magazine "Forbes", why do not work sanctions against Russia.
According to the observer, since when sanctions were imposed on Russia, almost nothing has changed in either Moscow or the outback of the country. On the Russian outskirts, people have never received any benefits from the high oil prices observed in the years preceding the sanctions. And therefore, in their life under the sanctions nothing has changed, the journalist said. She has an economic explanation for what is happening.
In the post-Soviet economy, she points out, the redistribution of goods, in fact, did not happen. The so-called communism collapsed, but its leaders, sitting at the top, took everything they could. The rest got crumbs - and they hurried to sell it off by selling the goods to where the market was outlined. Even uranium went on sale, not to mention weapons.
The article by Carabell cites material from economist Andrei Movchan, who heads the Economic Policy program at the Carnegie Moscow Center. In the article “Decline, not collapse: the dark prospects for the Russian economy,” Movchan recalls the following: when Putin came to power in the country (2000 year), most of the key assets belonged either to the state or to a small group of individuals who received assets from the state in exchange on political loyalty.
In an interview with Movchan, an observer created an interesting picture of the state economy of Soviet and present-day Russia.
According to Movchan, by 2008, before 70% of the RF budget consisted of revenues from the sale of hydrocarbons abroad, directly or indirectly. Later, by 2013, no more than 10 percent of GDP was accounted for by an independent private sector and non-mineral production. That year, inflation was 6,5%, GDP growth did not exceed 1,3 percent, but real wages increased by 11,4%. Such a difference has developed because of the "careless" social policy of the Russian government.
At that time, many capitalists sold their business to the state and went abroad, not forgetting to grab money with them. The state controlled more than 2013% of commercial firms in 70. The figure is higher than under Gorbachev: in the years of perestroika, the figure was 60 percent. As for today's realities, then today, probably, the private sector has only 25 percent of GDP.
In addition, state economic statistics should be taken carefully, because "more than thirty percent of it is classified." It is believed that the classified budget items contain expenses for the military-industrial complex and special services, but the expert admits that money is also used for other needs, for example, to support foreign “friends of Russia” or plugging holes in state-controlled companies. In addition, of these funds, “high-ranking officials” may allegedly make personal purchases.
From this, the observer concludes: opacity is a national feature of Russia, and not a model built at the time of the Soviets.
Leonid Bershidsky in the publication Bloomberg View spoke about the study of Thomas Piketty, who recently turned his attention to Russia. To those who survived the transition from communism to capitalism in Russia, Piketty’s hypothesis may seem weak and not without deep flaws in the general methodology. However, Western politicians should take into account some of the findings of the scientist.
In the new work, Piketty, his colleagues Philip Novokme (Paris School of Economics) and Gabriel Zuckman (University of California at Berkeley) showed that policy makers in the United States significantly underestimate the inequality in Russia and the degree of influence of oligarchs on this inequality. Piketty and colleagues came to the following conclusion: the standard of living in Russia in 1989-1990 was about 60-65% of the European average, and by the middle of 2010 it reached about 70-75%.
These indicators Bershidsky ridicules. They would have been ridiculed by any resident of the Soviet Union of the 1989-1990 period. Those people remember the bread lines and the widespread shortage of many consumer goods up to toilet paper. In grocery stores there were only banks with birch sap. The author, having come to Greece for the first time in 1992, was struck by the contrast: the Greeks seemed to him much richer than the Russians.
Piketty himself admits that the data with which they worked may be unreliable. In addition, non-monetary inequality was important in Soviet times.
However, this imperfect work has its merits. They appear where statistics acquire a different quality - from the 2000-s. In those days, 13 percent income tax, a flat scale tax, was introduced. Russian rich people rejoiced at this. Politicians like Reagan, Thatcher, Trump could only dream of such a low tax. That epoch in Russia is characterized by the cessation of massive tax evasion, and therefore government statistics in the country deserve a serious attitude.
And here are two points. First, the researchers found the difference between the trade surplus and net worth of foreign assets: 25% of the national income to 2015 g. The researchers explained this huge discrepancy by the large profits made by foreign investors from buying for Russian pennies in the middle of the 1990s. But here is the second point: the flight of capital from the country turned out to be a much more significant factor. Piketty believes that by 2015 the amount of wealth in offshore accumulated by the Russian rich was 75% of national income - three times more than the gold reserves of the Russian Federation!
The author of the material is not surprised by the amount of Russian money abroad. The authorities do not hide this. For example, presidential adviser Sergei Glazyev says that the Russians ’offshore wealth will be worth a trillion dollars, and half of this wealth will not return to their homeland. By the way, a trillion dollars is 78 percent production for the past year.
The picture painted by Picchetti and his co-authors shows a country ravaged by oligarchs who now own fabulous wealth. What allows them to maintain such an unequal position? Such inequality seems “acceptable” as long as the oligarchs “remain loyal to the Russian state.” So say scientists.
From here Bershidsky goes to the very question of the effectiveness of sanctions. Do Western sanctions really beat the heart of the Russian system? And another burning question: since the introduction of sanctions, no Western government has made serious attempts to find out the origin of hundreds of billions of dollars in Russian offshore accounts. Western actions to trace sources of wealth to the benefit of democratic Russia, which could have arisen after Putin’s departure, would radically change the situation.
On the other hand, does the West want “unpleasant revelations” that could affect both business and politics?
The latter, I suppose, is a purely rhetorical question. His silence is the point in the “sanction case” that the West itself has set. It is much easier to speculate on the topic of the Crimea and the “armed aggression” in the Ukrainian east, than to show by your own actions who in the West helps launder Russian money. London has already tried to announce a corresponding new financial policy in relation to the “new Russians”, whose dark capitals are divided between the UK and offshore companies, however, the initiative announced at the level of the Prime Minister soon died out. The same is true in Washington. The capitalist world is built on chistogane, and those who read the notations on freedom, democracy, legality, morality and other things have nothing to put their nose into big business. Curious Varvara in the bazaar nose torn off.
If sanctions change something, it rarely happens, writes Stefan Kaufmann in the publication "Frankfurter Rundschau".
Historically, financial and economic embargoes imposed by the United States, the West, rarely led to the weakening of unwanted regimes. One of the current examples is the sanction opposition of Donald Trump and Kim Jong-un. Another famous example is the war of sanctions against Russia. The same lever Washington used against Iran and Venezuela. However, Kaufmann doubts the success of American politicians on these financial "fronts".
Already a hundred and twenty (!) Times the United States announced sanctions from 1945 year. There are only a few examples of success. Economist Gary Hufbauer (USA) gathered some interesting statistics on this issue, looking at history even deeper. He took the period from 1914 to 2009. and counted two hundred cases of international sanctions. Only thirteen times the sanctions forced political regimes to change course.
Because of the Yugoslav sanctions in 1921, she refused to annex parts of Albania. After World War II, there was another case of success: the United States stopped helping the Netherlands according to the Marshall Plan, which forced the country to grant independence to Indonesia. At the beginning of the 1960's US sanctions contributed to the overthrow of the government in Ceylon, which had previously nationalized American oil companies. In 1970-s. South Korea and Taiwan abandoned their plans to develop nuclear weapons - and also because of the sanctions imposed on them. And another example: in 1980-s. sanctions contributed to the collapse of apartheid in South Africa.
And what is interesting is that prohibitive measures did not hit those to whom they were addressed, but rather harm mainly the poor. Sociologist Joy Gordon writes that because of the sanctions in Iraq in the 1990-s. died before 880 of thousands of children (for the period in 5 years). The same scenario can be repeated today with the DPRK: in this poor country, 40 percent of the population is undernourished, 70 percent gets food aid. US sanctions against the DPRK have existed for a long time, since the Korean War. So what? The Kimov dynasty rules to this day, and the rocket program does not stop, but, on the contrary, develops.
Sanctions also couldn’t do anything about the Assad regime in Syria: prohibitive measures were in effect since 2004, the foreign capitals of the Assad family were frozen, but it didn’t have any particular effect.
And here is Russia. Its economy, the sanctions of the West hardly hurt it for real. Basically, the raw material Russia was hit by the collapse of world oil prices. Today in Russia there has even been a growth: according to IMF forecasts, in 2017, the country's economy will grow by 1,4%.
The restrictive measures imposed by the US and the EU could have infringed upon the interests of Putin and his entourage, but they have no effect on these people unnoticed: they still take their places.
With the opinion of the German author agrees American Shelley Carabell. She explains in the magazine "Forbes", why do not work sanctions against Russia.
According to the observer, since when sanctions were imposed on Russia, almost nothing has changed in either Moscow or the outback of the country. On the Russian outskirts, people have never received any benefits from the high oil prices observed in the years preceding the sanctions. And therefore, in their life under the sanctions nothing has changed, the journalist said. She has an economic explanation for what is happening.
In the post-Soviet economy, she points out, the redistribution of goods, in fact, did not happen. The so-called communism collapsed, but its leaders, sitting at the top, took everything they could. The rest got crumbs - and they hurried to sell it off by selling the goods to where the market was outlined. Even uranium went on sale, not to mention weapons.
The article by Carabell cites material from economist Andrei Movchan, who heads the Economic Policy program at the Carnegie Moscow Center. In the article “Decline, not collapse: the dark prospects for the Russian economy,” Movchan recalls the following: when Putin came to power in the country (2000 year), most of the key assets belonged either to the state or to a small group of individuals who received assets from the state in exchange on political loyalty.
In an interview with Movchan, an observer created an interesting picture of the state economy of Soviet and present-day Russia.
According to Movchan, by 2008, before 70% of the RF budget consisted of revenues from the sale of hydrocarbons abroad, directly or indirectly. Later, by 2013, no more than 10 percent of GDP was accounted for by an independent private sector and non-mineral production. That year, inflation was 6,5%, GDP growth did not exceed 1,3 percent, but real wages increased by 11,4%. Such a difference has developed because of the "careless" social policy of the Russian government.
At that time, many capitalists sold their business to the state and went abroad, not forgetting to grab money with them. The state controlled more than 2013% of commercial firms in 70. The figure is higher than under Gorbachev: in the years of perestroika, the figure was 60 percent. As for today's realities, then today, probably, the private sector has only 25 percent of GDP.
In addition, state economic statistics should be taken carefully, because "more than thirty percent of it is classified." It is believed that the classified budget items contain expenses for the military-industrial complex and special services, but the expert admits that money is also used for other needs, for example, to support foreign “friends of Russia” or plugging holes in state-controlled companies. In addition, of these funds, “high-ranking officials” may allegedly make personal purchases.
From this, the observer concludes: opacity is a national feature of Russia, and not a model built at the time of the Soviets.
Leonid Bershidsky in the publication Bloomberg View spoke about the study of Thomas Piketty, who recently turned his attention to Russia. To those who survived the transition from communism to capitalism in Russia, Piketty’s hypothesis may seem weak and not without deep flaws in the general methodology. However, Western politicians should take into account some of the findings of the scientist.
In the new work, Piketty, his colleagues Philip Novokme (Paris School of Economics) and Gabriel Zuckman (University of California at Berkeley) showed that policy makers in the United States significantly underestimate the inequality in Russia and the degree of influence of oligarchs on this inequality. Piketty and colleagues came to the following conclusion: the standard of living in Russia in 1989-1990 was about 60-65% of the European average, and by the middle of 2010 it reached about 70-75%.
These indicators Bershidsky ridicules. They would have been ridiculed by any resident of the Soviet Union of the 1989-1990 period. Those people remember the bread lines and the widespread shortage of many consumer goods up to toilet paper. In grocery stores there were only banks with birch sap. The author, having come to Greece for the first time in 1992, was struck by the contrast: the Greeks seemed to him much richer than the Russians.
Piketty himself admits that the data with which they worked may be unreliable. In addition, non-monetary inequality was important in Soviet times.
However, this imperfect work has its merits. They appear where statistics acquire a different quality - from the 2000-s. In those days, 13 percent income tax, a flat scale tax, was introduced. Russian rich people rejoiced at this. Politicians like Reagan, Thatcher, Trump could only dream of such a low tax. That epoch in Russia is characterized by the cessation of massive tax evasion, and therefore government statistics in the country deserve a serious attitude.
And here are two points. First, the researchers found the difference between the trade surplus and net worth of foreign assets: 25% of the national income to 2015 g. The researchers explained this huge discrepancy by the large profits made by foreign investors from buying for Russian pennies in the middle of the 1990s. But here is the second point: the flight of capital from the country turned out to be a much more significant factor. Piketty believes that by 2015 the amount of wealth in offshore accumulated by the Russian rich was 75% of national income - three times more than the gold reserves of the Russian Federation!
The author of the material is not surprised by the amount of Russian money abroad. The authorities do not hide this. For example, presidential adviser Sergei Glazyev says that the Russians ’offshore wealth will be worth a trillion dollars, and half of this wealth will not return to their homeland. By the way, a trillion dollars is 78 percent production for the past year.
The picture painted by Picchetti and his co-authors shows a country ravaged by oligarchs who now own fabulous wealth. What allows them to maintain such an unequal position? Such inequality seems “acceptable” as long as the oligarchs “remain loyal to the Russian state.” So say scientists.
From here Bershidsky goes to the very question of the effectiveness of sanctions. Do Western sanctions really beat the heart of the Russian system? And another burning question: since the introduction of sanctions, no Western government has made serious attempts to find out the origin of hundreds of billions of dollars in Russian offshore accounts. Western actions to trace sources of wealth to the benefit of democratic Russia, which could have arisen after Putin’s departure, would radically change the situation.
On the other hand, does the West want “unpleasant revelations” that could affect both business and politics?
The latter, I suppose, is a purely rhetorical question. His silence is the point in the “sanction case” that the West itself has set. It is much easier to speculate on the topic of the Crimea and the “armed aggression” in the Ukrainian east, than to show by your own actions who in the West helps launder Russian money. London has already tried to announce a corresponding new financial policy in relation to the “new Russians”, whose dark capitals are divided between the UK and offshore companies, however, the initiative announced at the level of the Prime Minister soon died out. The same is true in Washington. The capitalist world is built on chistogane, and those who read the notations on freedom, democracy, legality, morality and other things have nothing to put their nose into big business. Curious Varvara in the bazaar nose torn off.
- Oleg Chuvakin
- https://www.eastnews.ru/
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