Russian Economics (Putinomics)Kyle, Justin, CJ, Tabrez

Vladimir Putin

Straight Facts About Russia● Population: 143.5 million● GDP: $2.098 trillion● Per capita (PPP): $24,800

● Currency: Ruble (.019 USD)

Act I: The Transition

Soviet Era: 1970s to 1990s● Soviet Economy was centrally

planned, with controlled targets and price controls.

● Bureaucratic corruption, inefficiency, and foreign factors like the Nixon Shock and the Afghan War took a toll on the economy.

Gorby Screws Over the CCCP● Under Gorbachev, attempts economic

reform through Perestroika

● “Restructures” economy by rolling back bureaucratic control and promoting small-scale private enterprise.

● Plan only exacerbated rage from both sides of the spectrum, leading to the tragic fall of the CCCP.

Shock Therapy● In the 90s, Boris Yeltsin carried

out Shock Therapy, rapid privatization of the economy.

● Resulted in hyperinflation and GDP contraction over time

● Insider Privatization of formerly state-owned businesses.

Results● Rise of the Oligarchs, men who

amassed enormous sums of wealth during the Yeltsin Era.

● Loans-for-shares Program in 1996

● Disproportionate wealth, high poverty, widespread corruption, rise of the Bratva

● GDP Decline by around 40%

Act II: Tsar Putin

Economic Recovery● Devaluation of the Ruble after

the 1998 Financial Crisis promoted domestic industries and promoted trade growth.

● Increase in Oil Prices lead to rapid GDP growth early in Putin’s reign.

Brief Successes● Putin is credited with

“weakening” the power of the oligarchs over the economy.

● Move to a mixed economy with a balance of private enterprise and state control.

● Rapid GDP Growth and rising middle class.

Act III: Russia Today

Characteristics of Economy● Heavy reliance on natural

resource exports: 90% dominated by oil, gas and metals

● Due to resource concentration, GDP growth is uneven across Russia.

● High levels of inflation due to inefficient Central Bank procedures.

Black Gold● Russia is too dependent on oil, gas

and steel (90% of total exports and 50% of government revenue)

● Energy industry run by parastatal monopolies, such as Gazprom, unfriendly to foreign investment.

● Dependence leads to fluctuations based on oil prices, just like in Nigeria.

Corruption● Terribly low score on the

Corruption Index due to poor rule of law.

● “Corruption market” is estimated at $300 billion

● Thriving black market, organized crime and endemic corruption

Current Economic Crisis● Due to the “annexation” of

Crimea and drop in oil prices, investor confidence declined.

● Resulted in collapse of the Ruble by 19% to the US Dollar.

● Devaluation spiked inflation of goods and a general recession.

Current Economic Crisishttps://www.youtube.com/watch?v=lVgW6fylzQg

https://www.youtube.com/watch?v=G9ciSWoXZ9c

https://www.youtube.com/watch?v=8ny_flllVC8

A Bleak Future● Financial collapse, poor rule of law

and extent of state capitalism coupled with reliance on oil reserves dooms Russia’s fate.

● Reforms should target corruption, improve infrastructure, promote investments, alter the banking sector and diversify the economy.

Act IV: The Environment

Northern Development● Russia leads the charge into the Arctic for oil

companies that want to drill for oil and natural gas

● Miners continuously dig for precious stones, metals, and minerals in Northern regions

● Logging industry faces crisis, commercially available forests shrinking in number, could face deficit in 10-20 years

Offshore Drilling● Huge surge in Arctic drilling due to

untouched oil reserves (planted a flag in the seafloor)

● Sanctions against Russia target offshore drilling efforts to cripple economy

● Protests from organizations like Greenpeace because of lack of safety/cleanup plans . Government responds with repression.

Oil Pollution● One percent of Russia’s annual oil

production, or 5 million tons, is spilled every year

● Oil ruptures threaten large supplies of fresh water as well as fragile environments/ecosystems

● Precise numbers and amounts never determined due to poor recordkeeping and lack of concern

Love is in the air…..

Feel free, ladies

Works Citedhttp://www.seattletimes.com/nation-world/constant-oil-spills-devastate-russia/

http://www.huffingtonpost.com/2011/12/18/ap-enterprise-russia-oil_n_1156030.html

http://www.nytimes.com/2011/02/16/business/global/16arctic.html?_r=0

http://www.washingtonpost.com/blogs/worldviews/post/massive-diamond-field-discovered-in-russia/2012/09/18/590837a4-019c-11e2-9367-4e1bafb958db_blog.html

http://www.themoscowtimes.com/business/article/russia-is-running-out-of-forest/508149.html

http://data.worldbank.org/country/russian-federation

http://www.economist.com/node/12628030