Figure 1.--

The collapse of the Soviet Union was one of the great events of the 20th century (1991). It was a shock to the Soviet people. There were few instances in history in which such a poweful empire imploded over such a short period. First it lost its colonies in Eastern Europe and then the Baltics. Russian policy has been to attempt to comntrol to various degrees the new post-Soviet states in Central Asia and the Caucauses. Here the Russians have had varying degrees of success. But only in Belarus have the Soviets created a new client state. Russia has become a petro state. The old Soviet industries are largely uneconomic. Large areas of the country such as Siberia were founded on the slave labor of the Gulag and now the economy is not coherently founded on ecomic realities. Russian industry produces few products that can exported or that is in grrat demand domestically. The arms industry is one of the few sectors that are efficent and compretitive. Russia economy today is founded on its huge energy exports. President Putin appears to believe that Russia's brief experiment with democracy has weakened the country and that a powerful central governmrnt is needed to maintain order and to control the ecomnomy. Outside onservers might say that Soviet totaltarian control and central planning has created the economic disaster, but this is not the conclussion that Putin has made.

Dissolution of the Soviet Union

The collapse of the Soviet Union was one of the great events of the 20th century (1991). It was a shock to the Soviet people. There were few instances in history in which such a poweful empire imploded over such a short period. First it lost its colonies in Eastern Europe and then the Baltics.

Russia and the Post-Soviet States

Russian policy has been to attempt to comntrol to various degrees the new post-Soviet states in Central Asia and the Caucauses. Here the Russians have had varying degrees of success. Only in Belarus have the Soviets created a new client state. Putin in 2004 has stumbled bady in first Georgia and then the Uktraine. Putin is obviously no believer in free elections and the necessary free press needed for real elections. His concern, however, is probably more based on Soviet-era geopolitics. The Baltics are now part of Europe and Poland is making consideranle orogress toward both democracy and a vibrant free economy. The other satellite countriues are gone. The central Asian "stans" are increasingly moving in their own direction. The Caucauses are roiling in turmoil. Only Belarus has decided to largely accept reintegration in the old Russian Empire.

Soviet Economy

Russia has become a petro state. The old Soviet industries are largely uneconomic. Large areas of the country such as Siberia were founded on the slave labor of the Gulag and now the economy is not coherently founded on economic realities. Russian industry produces few products that can exported or that is in grrat demand domestically. The arms industry is one of the few sectors that are efficent and compretitive. Russia economy today is founded on its huge energy exports. And here Putin has acted to seize the assetts of the major Russian oil company--Yukos (2004). Some argued that this was an isolated example. Some have argued that Yukos was assembled with criminal methods, the sale of state assetts to privlidged insiders. Perhaps but the actions against Yukos do not appear to be an isolated occurance. Similar actions have been taken against a telecomuications company. It is becoming increasingly clear that investors have no protection from arbitrary government action. The rule of law and the protection of private property is central to the free market system. Without it free enterprise will not function. Putin has turned to expropriation through the use of the tax system. Foreign and Russian investors are now aware of this. There will be few who will now want to make major investments in the Russian economy. The economic consequences are profound. There is no evidence that President Putin and his current advisers with what appears to be a Soviet economic mind set understand this.

Putin and Democracy

President Putin appears to believe that Russia's brief experiment with democracy has weakened the country and that a powerful central governmrnt is needed to maintain order and to control the ecomnomy. Many outside observers might say that Soviet totaltarian control and central planning has created the economic disaster, but this is not the conclussion that Putin has made.

Russia and the Future

One difficulty in assessing where Russia is headed is that no one really knows what is motivating Putin is his drive to stamp out democratic institutions and a civil society that briefly appeared in Russia in the wake of the collapse of the Soviet Union. There was at first some optimism about President Putin. President Bush displayed his incredible political naivity when he told americans that he looked into Putin's soul and saw a man who could be trusted. But still there was optimism. Even some of Putin's eaely advisers believed that he wanted to join the European community and create in Russia a society goverened by law. This of course is not where putin has taken Russia. There is not doubt that Putin has largely succeeded in reducing Russian to an authoritarian state that he largely controls. Largely unknown is why he did this and what it means for Russia's future. Why he has acted to destroy democracy in Russia is largely unknown. There are many theories. He comes from the Russian Sectret Police (KGB) and thus probably holds a basic distrust in democracy and a desire for order. As president he undoubtedly wants to control events. He apparently dislikes criticism and public scrutiny. There are long established concerns in Russia about foreign dangers and secruity as well as a desire for stability which may all be factors in explaining Putin's policies. Difficulty in adjusting to Russia's diminished power and nostalgia for empire may also be factors. One not often mentioned factor is a desire to control Russia's wealth. That wealth today is concentrated in the petroleum sector. Thus the attack on Yukos may be a matter of exerting control over Russia's wealth. As to the future. This is increasingly less reason for optimism. Dissent can be controlled by a police state. Effectively Stalin controlled dissent because the cost was death. Under Putin dissent can be costly, but it is not normally death. The situation is thus unstable. Putin hopes to manage Russia with the control of the media and financial enducements to friends and supporters which is why seizing Yukos was necessary. How can Putin now turn back. A more open society would reveal inproprities and legal violations. It would also take control of Russia's wealth away from Putin's supporters. Only maintaining power can prevent this. Putin is currently popular in Russdia. Limited supression combined with economic failure over the long run, however, may lead to instability rather than stability and Putin may find that he will have to increasingly turn to the instrumentalities of a police state.

Demographics

One of the results of governmental mismanagement is a demographic crisis in Russia. The Russian population is declining. Russia's population when the Soviet Union disolved was about 150 million people. Analysts suggest that Russia's population may decline to only 120 million people by 2030. The Russian population is alo greying, growing older. That means that the working population will have to support a very large population of retired workers. Life expentancy is falling, especially among men. There isa huge problem with alcohol. AIDs and tuberculosis is a serious and growing population. The failure of the Russian economy means that the Government has declining resources with which to address these problems.

Sources

Created: 5:36 AM 12/4/2004
Last updated: 12:56 AM 12/6/2004