Russia’s Weak Fundamentals
Via Robert Farley, Charlie Whitaker makes the important and too-often-neglected point that notwithstanding Russia’s evident ability to kick around a tiny country that borders it, present-day Russia is really a poor man’s peer-competitor:
Now that we can measure it,* we find that Russia’s GDP is approximately equal to that of Portugal (which is not to knock Portugal). Much of Russia’s wealth comes from resource extraction: in other words, Russia is not making stuff. Is it thinking stuff instead? Well, is there a nascent biotech or semiconductor industry in Russia today? (Or is there maybe some other, more esoteric kind of activity that hasn’t yet permeated popular consciousness?) How are Russian universities doing?
Russia is fairly populous, although no one would call it densely populated. However, its population is shrinking; in part, because it is not a healthy country.
High prices for oil and natural gas have allowed Russia to pick itself off the floor it found itself on during the 1990s, but this is still not an economically dynamic country and as Farley says “the equipment it’s using in front line units is still a generation behind Western (to say nothing of American) capabilities.” Russia’s combination of resource wealth and nuclear weapons makes it a hard country to push around which, in turn, makes it difficult for anyone to stop Moscow from pushing Georgia around. But on the whole, Russia’s clout is still puny compared to what it was back in the day and demographically it continues to be in decline while a large number of countries once subservient to Moscow are growing more prosperous than ever in the western orbit.
Long story short, the whole “Russia’s Back!” narrative needs to be kept in perspective. There’s a lot of demand out there for “new cold war” scenarios featuring Russia or China or maybe both, but fundamentally that kind of talk is out of step with reality.
Photo by Flickr user memekode used under a Creative Common license.
35 Responses to “Russia’s Weak Fundamentals”
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August 11th, 2008 at 12:19 pm
Anyone know what happened to the Soviet manufacturing base? Or was their GDP always low?
Note that the quote was corrected in the source. Russia matches Brazil’s GDP, not Portugal’s.
Good to be reminded how much needless fear there was of the Soviet system. It’s funny how many folks on the Right thought that communism worked better than capitalism.
August 11th, 2008 at 12:25 pm
I’ll let the software folks speak for themselves, but the Soviets/Russians have always been pretty good at chemistry. Some of their chemistry vendors are quite good and are able to compete at the global level.
It will be interesting to see if Russia can/will take their newfound oil wealth and funnel it towards newer technologies.
August 11th, 2008 at 12:39 pm
Such a cute bear!
I also like the one pictured at the top of the post.
Sorry, I couldn’t resist. Welcome to Think Progress, Matthew!
August 11th, 2008 at 12:45 pm
Well, okay, but that’s a pretty important caveat. And add in Russia’s nuclearness and their importance (for better or worse) to, say, just about every multilateral diplomatic effort and you’ve got some serious non-GDP reasons why Russia is, while hardly a Cold War-style peer, still a much more significant country than most others.
So I don’t know, maybe I’m splitting hairs here, but I’d guard against reducing Russia too much.
August 11th, 2008 at 12:58 pm
Who could believe that Russia’s GDP was the same as Portugal’s, even for a New York minute? Brazil, sure: it’s about the same size as Russia and has a fair amount of industry and a healthy agriculture. But Portugal ? 1/15 the population of Russia?
Only someone totally clueless.
August 11th, 2008 at 1:28 pm
Problem is that there is more than one way to measure GDP. Russia’s nominal GDP is small (though still much larger than Portugal’s). Using purchasing power parity, Russia’s GDP will soon pass UK and become the second largest in Europe (after Germany).
August 11th, 2008 at 1:47 pm
While Russia’s economy is largely dependent on resource extraction, Western Europe is rather dependent on Russian resource extraction too (as the natural gas tussle over Ukraine proved a few years back). That gives the Russians leverage over far more than diminutive troublemakers like Georgia.
August 11th, 2008 at 2:17 pm
Large segments of the Soviet manufacturing economy were value subtractors: their material inputs were more valuable than the crap they made, and pretended to sell.
When the USSR went away, a lot of the distress was workers in those industries needing to find something else to do.
JC
August 11th, 2008 at 3:01 pm
But was is your point ?
Russia borders quite a lot of countries, and could invade any of them tomorrow if only it wanted to.
August 11th, 2008 at 3:01 pm
Problem is, the old USSR was always overrated, and now many seem to be over inflating Russia’s prowess. To hear the neocons salivating over the weekend, they can’t wait for Cold War II.
August 11th, 2008 at 3:44 pm
Doesn’t Russia have the world’s best space program, which has been able to continue the ISS project after the Space Shuttles have been mostly grounded? That would suggest that they have some good scientists and engineers over there.
August 11th, 2008 at 4:08 pm
Hey there Mr. “Journalist.” If I were you, I would not call Premier Putin’s Russia “weak.” A sad fate may befall you yet. Tread with caution, my friend.
August 11th, 2008 at 4:11 pm
Long story short, the whole “Russia’s Back!” narrative needs to be kept in perspective.
Word. Moreover, what’s Putin gonna do when oil’s back at $70/barrel? Sure, it may not drop that low, but then again, it just may.
August 11th, 2008 at 5:48 pm
Working in Silicon Valley I’ve been surprised to see the high quality of Russian computer engineers, some of the smartest cookies around. But the fact that Russia’s brightest would rather hang around here making Web 2.0 crap does not bode well for their tech industry.
August 13th, 2008 at 1:01 am
Doesn’t Russia have the world’s best space program, which has been able to continue the ISS project after the Space Shuttles have been mostly grounded?
Without the Shuttle, the ISS project would never have gotten off the ground. Only the Shuttle is powerful enough to put those capsules into orbit. Once the Russians start making rockets that can deliver those payloads, I don’t think it qualified as the best. However the Russian rockets are certainly capable and reliable for putting small payloads and people into orbit. The main problem is that the idea behind the Shuttle (a launch every week or two) was never practical due to the enormous maintenance required between launches, especially on the heat shield. The Shuttle was also made to make it appear that we’re flying into space instead of shooting up and plummeting back to Earth, but the Shuttle pretty much does this anyways. That’s why NASA’s is going back to rockets once the Shuttle is retired.
August 13th, 2008 at 1:06 am
Russia is neither strong, nor weak. It is strong, and weak. The Russians are inscrutable, most of all to the Russians, which is what they love about themselves.
“Россия умом не понять.”
[Russia is not to be understood with the mind].
It seems that George Kennan’s 1997 prediction that NATO expansion would be the world strategic mistake of the post-Cold War era has come true again and again. First with the rise of Putin, and now with his coming of age.
I’ve got a Harvard degree in Russian history, and I’ve been reading Western accounts of the demise of the always-deficient Russia dating from at least the 17th century.
Excuse me if the latest iteration seems less than convincing.
August 13th, 2008 at 5:52 am
They do well as a crime empire. Especially in cyberspace. Got to admit that….and Tom, if Russia “is not to be understood in the mind”, where is understanding to come from? To think otherwise is one of those ‘ole school, new age’ homilies. Of course the response is ‘jonst ivannovich’….’you are souless’. Yeah, but I can dance.
August 13th, 2008 at 8:59 am
“Russia is never as strong as she appears; Russia is never as weak as she appears.” — Talleyrand/Churchill/Metternich/etc
You can scale that thought to any level. The ground forces involved in Georgia wouldn’t last long against US airstrikes, but late-model MiGs would certainly extract a pound of flesh from the strike force. The Russian people are in a social tailspin equal to US inner cities and its middle class has all but ceased to exist, but the country still produces top-shelf scientists and engineers. Russian politics gravitates toward authoritarianism like it always has, but Arab-style megalomaniacal blunders are nowhere to be found; there’s nobody over there ready to push the nuclear suicide-button for the glory of comrade Lenin or any other reason.
August 13th, 2008 at 11:36 am
Historically resource economies have not done well. I agree that this is not a representative moment in that respect, but people have always figured out ways to lower input costs. (For a contemporary example check out coolearthsolar.com.) Of course anything can happen, but common sense and historical experience tells you that if Russia’s population continues to shrink by 700,000 a year, and they continue to bet the store on resource extraction, and the culture continues to tolerate the current high levels of corruption, it doesn’t look good.
August 13th, 2008 at 9:14 pm
Putin’s Russia gets most of its wealth from natural resources, and hardly anything from non-military industrial production. Can you think of any imported Russian manuifactured products on store shelves in the West?
I once heard an expert say that Putin is presiding over the Saudi Arabization of Russia.
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