Feng Yujun: The political and social roots of the Russian economy and the prospects for national development
Author: Feng Yujun, Distinguished Professor of Fudan University, Vice President of the Institute of International Studies, Director of the Russian Center for Central Asian Studies
Source: Eurasian Economy, No. 1, 2022; Fudan Institute of Belt and Road and Global Governance
WeChat platform editor: Zhou Yue
Putin has been in charge of the Russian regime for more than 20 years since 2000. During this period, in addition to the recovery of high oil prices before 2008, the Russian economy has been hovering at a low speed or even falling into recession several times after 2009, the economic miracle promised by Putin has not been realized, and Russia's position in the world economic system has continued to decline uncontrollably. So an important question naturally arises before the researchers: What causes such an outcome? Studying this problem, of course, has different dimensions, and the results may also be a matter of opinion. The author attempts to explore the influence of the political system and social ecology on the performance of Russia's economic development from the perspective of the reaction of the superstructure to the economic base.
First, the trajectory of Russia's economic development
According to the policy adjustment at the subjective level and the economic performance at the objective level, we can divide the Russian economic development of more than 20 years into four stages.
The first stage was from 2000 to 2004, which can be called the period of "reformism". During Putin's first presidential term, the "Guelev Plan", the "Strategy for the Socio-Economic Development of the Russian Federation until 2010", adopted by the government in 2000, was developed and implemented. During this period, the government promoted taxation, progressive pension and civil service reforms, adopted the Land Law, vigorously removed administrative obstacles to starting a business, and accelerated negotiations on Russia's accession to the WTO. With the help of these reforms, Russia's economic growth accelerated, foreign investment inflows, and the ruble began to strengthen.
The second phase, from 2004 to the first half of 2008, ran through Putin's second presidential term. This phase can be called the "state capitalism" phase, the most prominent feature of which is the large-scale renationalization. Marked by the "Yukos Incident", the Government of the Russian Federation has tried to lead the economic revitalization by building a large state-owned state-owned aircraft carrier. During this period, most of the reforms stopped, and major reforms continued only in the macroeconomic and financial spheres. But the first phase of reform undoubtedly yielded tangible results: the national debt was almost fully repaid and a deposit insurance system, a key element of the stabilization fund and the competitive banking system, was established. Falling inflation and the introduction of deposit insurance have created new opportunities for the development of the financial sector and the increase in corporate and consumer lending. Macroeconomic stability and an increase in investment ratings have contributed to a sharp increase in foreign investment. In Putin's first two presidential terms, the economy grew at an average annual rate of about 7 percent. In the decade from 1999 to 2008, the Total Russian Economy almost doubled (the ruble strengthened sharply due to higher oil prices and foreign investment inflows, and GDP growth in dollar terms was even higher, from $210 billion in 1999 to $1.8 trillion in 2008, an increase of 7.5 times). This was the most glorious decade in Russia's modern economic history, growing at a rate comparable to the economic recovery of the NeA and higher than the average annual growth rate of 5 percent during the industrialization of the Soviet Union under Stalin. Of course, in addition to the follow-up effects of the first phase of reforms, the sharp rise in international oil prices has become an important external factor in the relatively high growth of the Russian economy in this decade. From 1998 to 2008, the international average price of oil rose from $13 a barrel to $97, almost 6.5 times. Therefore, some Russian economists believe that high oil prices have contributed 1/3 to half to economic growth in Putin's first two presidential terms.
The third phase is from the second half of 2008 to 2013, which is the stage of experiencing the global economic crisis and achieving economic recovery. In fact, the relatively high growth of the Russian economy came to a large end in 2008. Although the Government had formulated the Concept for Long-term Socio-Economic Development of the Russian Federation up to 2020 in 2008, which had put forward development ideas for integration into the global economic system, increased investment in human resources and innovative development, with the advent of the global financial crisis, the plans proposed in the development concept had been hollowed out and no substantive reforms had actually been undertaken. In the decade after the crisis (2010-2019), the Russian economy grew at an average annual rate of less than 2%. In January 2011, Putin instructed the Higher University of Economics and the Plekhanov Institute of National Economy to organize a large number of experts to formulate a new "strategy for 2020." To that end, 21 working groups had been established and a comprehensive reform plan had been reformulated. The main goal of the Strategy 2020 is to try to remove barriers to business and human resource investment and create a "new model of economic growth.". Meanwhile, in 2012, another plan for Russia's development was unveiled in 2012 and became Putin's campaign platform, with the economic section published in the Herald of January 30, 2012 under the title "We Need a New Economy." On May 7, 2012, after being re-elected president, Putin signed a "May Decree" that included 12 items, one of which was a decree on the country's long-term economic policy. He proposed to promote a fundamental improvement in the investment climate and reduce excessive state intervention in economic life, predicting that this would halve labor productivity and increase investment to 27 percent of GDP within seven years. But in reality, the promised reforms have not been implemented and the expected economic results have not been achieved. After a brief recovery after the 2010-2011 crisis, economic growth began to decline rapidly again.
The fourth phase, from 2014 to the present, is the period in which Russia is increasingly isolated and stagnant from the global economy in the wake of the Crimean crisis. In fact, the Russian economy showed weakness in 2013, when it grew by only 1.8%. The ensuing fall in oil prices, the Crimean crisis, Western sanctions and the COVID-19 pandemic have hit the Russian economy hard, with an average annual growth rate of just 0.35% from 2014 to 2020. Russia's GDP in dollar terms remained at 2008 levels, with its share of the world economy falling from 3 percent in 2008 to 2 percent in 2018. Investment did not grow to 27% of GDP, but remained at the level of 20-22%. Foreign investment declined and capital outflows accelerated, with total capital outflows reaching US$320 billion from 2014 to 2018.
Second, the political and social root causes of economic downturn
The reasons for the Russian economy from relatively high-speed growth to sustained low operation and even several recessions in the past 20 years are undoubtedly manifold, and external factors such as the decline in oil prices and Western sanctions have indeed limited Russia's economic development to a certain extent, but the most fundamental reason is that the political system, political culture, governance methods, social ecology and other superstructure factors make the endogenous power of economic development insufficient.
Beginning with the Yukos incident in 2003, the institutional environment previously aimed at the social market economy and the reduction of state intervention gradually changed, and gave way to a new political and economic system with political authoritarianism and state capitalism as the core. The growing vertical system of power is constantly changing the political climate and social ecology in Russia and has a significant negative impact on economic development.
Under the new political and economic system, state intervention in all processes of the political, social and economic system has increased significantly. Since 2003, government intervention has continued to increase in almost all major macro and microeconomic links such as investment, price, profit distribution, rate of return, import and export, procurement and sales, and the adjustment of laws and policies in taxation, tariffs, finance and other aspects has increasingly constrained business operations. Although the government has not yet controlled all economic resources and has not yet implemented comprehensive control over the economy, the space for market allocation of resources and independent operation of enterprise entities has been greatly compressed, resulting in the difficulty of full and free operation of business entities and the increasingly low economic efficiency. If the nature and speed of administrative regulatory expansion remain unchanged, the market space may be further compressed in the next few years, and eventually lead to a full-scale outbreak of contradictions between the market and supervision. Russian economist Sergei Gurryev argues that "a political system in which the state interferes excessively in all spheres of social life limits economic growth" and that this "super centralized management system is not suitable for managing a country as large as Russia's." Another Russian scholar, Nikita Maslennikov, also stressed that "the root cause of the economic problems that have not been resolved for many years is that the power is too strong, and it is impossible to achieve rapid economic development within the framework of the existing system." The future process of power transitions could have too severe an impact on the political and even economic systems. ”
No type of political and economic model operates in a vacuum, and the human factor is crucial in realpolitik, especially the behavior of the power elite, which greatly affects the investment environment, social ecology, human resources and even changes in popular sentiment. Since 2003, the re-nationalization of Russia has been accompanied by a new round of profit distribution and power struggles (such as in the Case of Ulyukhaev). In the process of re-nationalization, many senior government officials have served as chairman of the board of directors or chairman of the board of supervisors of large state-owned enterprises, while their relatives, friends, protégés and protégés have seized favorable positions and enjoyed state dividends in these state-owned enterprises.
Compared with scientific and technological progress, innovative development, and the optimization of human resources, these people are more concerned about how to divide natural monopoly resources and financial resources, which leads to the overall inefficiency of state-owned enterprises. State-owned enterprises occupy market resources and are protected by the government, making it difficult for small and medium-sized enterprises to have a good business environment for a long time. More importantly, re-nationalization has led to a loss of confidence among domestic and foreign investors in the Willingness and Ability of the Russian Government to protect reliable private property rights, triggering a long-term large-scale outflow of funds that has been difficult to contain effectively.
After seizing the power to manipulate economic resources, the Russian political elite lacks clear strategic planning and practical actions on how to achieve long-term economic development and cope with increasingly fierce economic competition among major powers. Despite the increasing concentration of political power in Russia in 2003, electoral politics remains ostensibly practised. On the one hand, to maintain the stability of power and even long-term governance, on the other hand, to gain the support of voters, under the pressure of the goal of such inherent tension, the purchase of votes in the hands of the people with basic living security and social welfare has become a basic logic of Russia's political and economic life. In this context, maintaining macroeconomic stability and controlling inflation have become the core concerns of the government's economic policy, and the stabilization fund and the national welfare fund established with petrodollars earned when oil prices are high have become important "airbags" and have not effectively invested in the strategic development of the economy. Much of the money that the Russian banking system has drawn from the oil and gas sector over the past 20 years has ended up flowing to international speculative businesses rather than to invest in the domestic real economy. Gratziev, the former economic adviser of the Russian president, believes that for many years, Kudrin, Glev, Nabiurina and other high-ranking economic officials have adhered to the "Chicago School" monetarism and restricted the money supply to reduce the rate of inflation, which has become one of the important reasons for the country's recession. Vladimir Kimpersen believes that the key to Russia's economic recession is the gap and contradiction between the current government's conservative policies and the long-term modernization trend of technology, education and culture. According to a September 2021 study published by the Carnegie Center in Moscow, the authors confirmed in multiple conversations with people who understand the logic of power's high-level thinking that the survival principle of those in power is "enough oil and gas to generate revenue for the federal budget in our days in power, and to buy voter loyalty and suppress civil society and media opinion with budget spending." After that (2036), the flood was monstrous. It can be said that under the current institutional environment, a considerable part of the Russian power elite is short-sighted, indifferent to the long-term strategic risks facing the country, not only fundamentally rejecting modernization efforts, but also losing pragmatic strategic thinking. Many of them are satisfied with existing management models, accustomed to surviving in what they consider comfortable "small worlds", ignoring the rapid changes in the external environment and unprecedented new challenges, and increasingly listening to expert opinions. Not only that, but policymakers are quite conceited, believing that the economic policies they have set are ideal. Instead of thinking holistically and systematically about economic development, they self-righteously divide the economy into different parts such as exports, state-owned economy, and social consumption, and even delude themselves into thinking that "everything is fine." With the bureaucracy growing, society and the populace have lost their political and economic autonomy, they seem to be consumers who have no choice in restaurants, chefs have to eat whatever they do, and it seems that chefs know their tastes better than their guests.
Under the guidance of this way of thinking, the power class pays more attention to "dividing up the cake" than "making the cake bigger". As the economist Andrei Movchan has said, Russia as a social system does not create value, but extracts value by exporting raw materials and distributing it domestically. Compared to the competitively premised diversified economic development, this distribution of benefits is easily in the hands of the ruling clique, who benefit more in the process. This also leads to "the preservation of control over the value distribution process premised on the suppression of independent value-forming centers, the result of which is to suppress the entrepreneurial process and diversified economic growth." ”
This analysis reveals from another aspect the long-term political and social roots of the "raw materialization" of Russia's economic structure.
Although the vast majority of the profits from the export of resources are taken by the power elite, the vast majority of the Russian people have chosen to live by because they can get a piece of the pie for the time being, coupled with the fear of being suppressed by showing dissatisfaction and provoking the power class. The top power core is also adamantly opposed to any change, content to remain stable "in the manner of the Kremlin", trying to meet the challenge by increasing the rigidity of the system.
Proponents of vertical power systems argue that concentration of power improves decision-making efficiency. However, more than 20 years of Russian political and economic practice show that because the centralization of managers conflicts with the objective trend of social development, the result of the increasingly reinforced vertical power system is that management is inefficient. The concentration of power and management capacity are negatively correlated, and the concentration of power and resources often brings about the internal dynamics of the market, the reluctance or ignorance of the responsibility of officials with great power, and the neglect of the interests of more and more minorities.
In the modern economic decision-making process, structural policies should be the result of communication and continuous dialogue between economic policymakers and the diverse participants of the economic system. However, the growing expansion of Russia's vertical system of power for more than 20 years has undermined the channels of information exchange between the state and society. The only order for superiors is to lead to the lack of a normal and timely information feedback mechanism in the decision-making process, the power organs at all levels are unwilling to understand the real situation and listen to the opinions of experts, officials are trying their best to avoid angering their superiors, and the phenomenon of "reporting good news but not bad news" is becoming increasingly common. This completely distorts the normal decision-making process of making real and sober analyses, predictions and plans based on comprehensive, objective and accurate data and assessments. Lack of feedback and communication, including with professionals, hinders the sound formulation of economic policy. In an official culture where everyone is at risk, "inaction" has become the consensus of officials at all levels, and even the high-level political elite at the core of power is silent for fear of losing their official positions and dare not talk about the problem openly. This phenomenon is very similar to the situation at the end of Brezhnev's administration. In addition, the authorities have widely used modern information technologies such as big data, video surveillance, and facial recognition to collect data and information from ordinary citizens, suppress social dissent and prevent public protests. Instead of being a tool to help governments communicate with society, new technologies have the opposite effect. Since the operation of the existing mechanism of public administration depends on the will of the upper echelons of power and not on the feedback of society, it will not introduce modern technological solutions for the benefit of the majority, nor will it provide timely correction information for those distorted decisions.
Russian academics have different interpretations of the reasons for the erosion of feedback mechanisms in the decision-making process. Sergei Guriev stressed that "deliberately disrupting the feedback system is an active strategy of the authorities, because from the perspective of developing alternatives, the feedback system contains more risks for the Russian authorities than the benefits of receiving feedback." In his view, "the Russian authorities are fully aware of all the risks that exist, but their interests are different from those of ordinary citizens, whose interests are contrary to those of the country's development." Their goal is to retain the power in their hands and be completely satisfied with the status quo. In this sense, it should not come as a surprise that their actions are aimed at strengthening repressive institutions, intensifying censorship, investing in propaganda rather than human resources, and using foreign policy for internal purposes. Mikhail Krudishhin's view is relatively mild, arguing that "it is impossible for the authorities not to be aware of the challenge, but the power elite is more like temporary workers, without a real long-term plan and strategic vision, and their concern is how to monetize administrative resources." Mikhail Dmitriev also pointed to another risk, which is that "populism among the population may increase under the influence of the crisis, while the demand for development weakens." This would become an obstacle to the democratization of the political system and limit the possibility of implementing economic policies aimed at development. ”
Under the existing pattern of interest distribution, the two industries of energy and military industry are not only an important pillar supporting the country's fiscal revenue, but also the core areas for attracting investment. But it is precisely the priority of these two industries that perpetuates the deformed structure of the Russian economy, leaving Russia behind the pace of the new energy revolution and the fourth industrial revolution. As Mikhail Dmitriev put it, "Adaptation to the conditions of the global energy transition is constrained by strong interest groups representing the traditional energy and raw materials sectors, as well as by increased operational risks for medium- and large companies." This will inhibit innovation and the development of new markets in the non-resource sector, which will need to accelerate growth to compensate for the loss of traditional sectors of the Russian economy. ”
More importantly, as the global decarbonization process progresses, russia's energy sector will face increasingly severe medium- and long-term challenges and put enormous pressure on state finances. Russian economic experts expect that even a modest global energy transition and decarbonization program will bring growing losses to the Russian economy over the next decade. With the implementation of the EU carbon tax, Russian exporters lose at least $300-5 billion a year. And as the most important fossil energy consumption market contracts, the Russian energy sector will lose its previous initiative. By 2040, reduced demand for fossil fuels could pose serious problems for Russia's state revenues, and tax incentives to stimulate oil and gas production and exports would not help. This will ensue a deterioration in the state of the country's finances, and the problems of heavy internal and external debt burdens in the 1990s will inevitably re-emerge.
Many experts believe that Russia's technological backwardness is closely linked to the political system, which is not affected by innovation and is prone to self-isolation. According to Mikhail Krutiching, "The backwardness of conservation technology under conditions parasitic to natural resources will lead to a serious deterioration in Russia's separation from the world economic system, population and economic conditions by the middle of the 21st century." Stressing that technological backwardness will also lead to difficulties in maintaining the balance of military power and the development of new weapons, Oleg Weyykin estimates that in 15 to 20 years, Russia's possibility of maintaining military technological autonomy will be limited, "there is a threat of disruption of the military technology balance between Russia and the United States and even China", because "the global trend in modern conditions is that the development of weapons is achieved through the transfer of technology from civilian industry to defense industry, rather than from military to civilian, as was the case a few decades ago." ”
Some Russian scholars believe that the political line of the existing regime is conservative, contrary to the objective trend of global modernization, which itself will inhibit development. In addition, it distorts the understanding of domestic and foreign affairs, triggering erroneous or irrational reactions to world trends. An important manifestation is the post-2007 radicalization of Russia's foreign policy, which was fueled by a variety of factors. In particular, the two wars against Georgia and Ukraine led to a large-scale deterioration of russia's external environment. After the 1998 financial crisis and the 2008 international financial crisis, Russia had to usher in a "sanctions crisis." In the foreseeable future, in order to boost the presidential elections in 2024 and 2030, Russia may have major moves on the Issue of Russia-Belarusian Union countries and Ukraine, so this sanctions crisis is difficult to significantly alleviate. The closure of the investment climate and new ideas and technologies, coupled with tensions with the United States and the European Union, has plunged Russia into a state of "self-isolation." Self-isolation exacerbates the economic lag that already exists – without international cooperation, without access to advanced ideas and technologies, without access to the experience and capital of developed countries, Russia is doomed to remain behind. And a vicious circle follows — as the economic situation worsens, the impact of sanctions restrictions grows, and the threat of inflation returns.
In the social sphere, weak economic growth since the 2010s, stagnation of real disposable incomes and low-skilled jobs have worsened the quality of human resources. In turn, low-quality human resources limit opportunities for economic development and increased labor productivity. In the next 10 to 15 years, the human resource crisis will become a major constraint on Russia's national development. Today, the phenomenon that Russians prefer secondary vocational education to higher education due to low family incomes and the desire to earn money as soon as possible has become a phenomenon that has shocked and worried many experts. Yevgeny Gunter Maher called the challenge "all aspects of Russian life and will lead to the degradation of all institutions, including the state." "The important competitive advantages that Russia once had – the education system, respect for human resources – are being undermined, worriedly. Educated people are being lost, and universities and schools are lagging behind their competitors. In 10 or 15 years, Russia will have no obvious source of economic growth and will not narrow the gap with developed countries. ”
An important manifestation of the deterioration of human resources is the accelerated outflow of intellectual and wealth elites. According to a study released by a Russian research institute in August 2021, more than 10 million Russians currently live outside their home countries. Between 2000 and 2020 alone, between 4 million and 5.5 million Russian citizens emigrated abroad. 2016-2019 was the period when the wave of overseas migration was at its highest, with more than 300,000 people moving overseas each year, bringing the total to 1186138. The period between 2006 and 2011 was a few years of low emigration in the past 20 years, with 698,070 Russian citizens leaving their homeland in six years. The researchers' survey of Russians aged 20 to 70 who have moved to 65 countries around the world showed that 55 percent of immigrants were between the ages of 30 and 40, compared with the ages of 20 to 40 when they left Russia. 92% of immigrants are at least highly educated and 14% have high-level degrees. The main reasons for emigration range from considerations of improving economic conditions and giving future generations a better education, to factors such as corruption, dissatisfaction with lack of freedom, and fear, danger and despair about life in Russia. According to the survey, 79% of respondents prefer life in newly relocated countries, and they highly value the safety of their places of residence, social tolerance and the stability of the country. If there is a large-scale and high-quality talent outflow, it will undoubtedly be a huge loss to Russia's economic and social development.
It is also more telling than who is leaving, and who wants to adapt to the current political and economic environment and stay at home. In fact, what they choose to leave behind are basically those with budgeting ("eating royal food"),mostly people who prefer small salaries but stable jobs and don't want to risk starting their own businesses, mainly millions of government officials at all levels, security sector employees, military personnel and police. In the current social environment, most Russians tend to choose stable jobs, mainly in the public sector. The increase in the social strata that depend on the State budget for subsistence countersumbes the expansion of State power, while the increase in budgeters has reduced the activity and labour productivity of small and medium-sized enterprises.
Due to the peculiarities of the Russian labor market, the younger generation in Russia is more likely to choose to work in relatively stable state institutions or large companies. While many young people dream of working in the private sector or in freelance employment, it is easier for them to be employed as a police officer or property manager because of the unrivalled subject status of the state sector, and it is enough to have secondary vocational education. This indirectly confirms the underdevelopment of the knowledge economy in Russia, since the existing economic structure and labor market do not require complex knowledge and modern capabilities. In addition to the decline in the quality of the population, the imbalance in the regional development of human resources is becoming increasingly prominent. In Russia, which has such a vast land area, the population is mainly concentrated in the Greater Moscow region, the Greater Petersburg region and the Rostov-Krasnodar-Sochi region. In addition, the sharp deterioration of poverty, inequality, property rights and human rights also poses a strong constraint on the quality of Human Resources in Russia.
As the economist Oleg Veydkin has summed up, "Russia's loss of economic competitiveness on a global scale has its political roots, and the main challenges facing the political system are related to weak economic growth." Russia's political institutions have become rigid, and they are in a state that does not allow the creation of investment incentives, the attraction of foreign funds, the protection of property rights, the protection of competition and the guarantee of equality before the law. Without this, it is impossible to expect economic growth. ”
Russia's development prospects for the next 15 years
The development of any country depends not only on its own strategic planning, inner imagination and policy declarations, but more importantly on a series of subjective and objective constraints. In the next 10 to 15 years, Russia's development prospects will be affected by the dual influence of the world development trend and the interaction between Russia's internal and external situations.
First, the world economic system is facing a new round of differentiation and combination. On the one hand, the accelerated development of the world's new industrial revolution, whether it can catch the express train of this scientific and technological revolution and industrial revolution will largely determine whether a country will be in the center or the periphery of the world division of labor system in the future; on the other hand, the international economic order is being reshaped, and at a time when the WTO encounters many doubts, the CPTPP, the United States, Canada and Mexico New Free Trade Agreement, the Japan EU Free Trade Agreement, the United States-Japan Free Trade Agreement and other new regional trade and investment mechanisms are accelerating. It is not even ruled out that future integration will form a new cross-regional trade and investment arrangement with developed countries as the core and a series of emerging economies participating in the internal highly free zone. Although Russia has led the establishment of the Eurasian Economic Union, its scale and quality are not the same as the above-mentioned mechanisms, and the links between Russia and its dominated Eurasian Economic Union and the global economic system may be further loosened; in addition, the global industrial chain is also being reconfigured. But subject to factors such as economic structure, Western sanctions, and self-isolation, Russia is unable to take a favorable position in the process of resetting the global industrial chain. To be sure, the above changes will have a crucial impact on Russia's position and role in the world economic system.
Secondly, the global energy transformation is advancing in an all-round way, the traditional energy industry is facing multiple challenges, and traditional oil and gas producing countries and multinational companies are actively or forced to transform. Although the "energy shortage" in Europe in the summer and autumn of 2021 has given Russia a strong opportunity to return to the light, "the green mountains cannot be covered, after all, the east flows", Russia can not reverse the general trend of global energy transformation. This will pose major challenges to the development of Russia's energy sector, the state fiscal system and even the stability of the political system.
Third, the international security situation tends to be tense, which not only brings Russia the opportunity to take advantage of chaos, but also brings many security risks. On the one hand, the situation in the Middle East and Central Asia has brought geostrategic opportunities to Russia, while Russia and the United States have resumed strategic stability negotiations in an attempt to jointly shape new international arms control rules; on the other hand, security risks have also followed. Russia, for example, faces multiple challenges from Turkey in the Caspian-Mediterranean region. Militarily, while Russia continues to take advantage of opportunities to demonstrate its achievements in modernizing its equipment, the global military balance is accelerating. The U.S. military spending is 10 times that of Russia, and in the medium and long term, Russia is unable to maintain the same strategic balance with the United States during the Cold War. The reason why Russia continues to "show its muscles" is precisely because it sees the severe challenges it will face in the future, and it is precisely to attract the attention of the United States, force the United States to sit down and negotiate with Russia, and constrain future military competition among future major powers with the international arms control rules jointly negotiated by Russia and the United States.
Fourth, the strategic competition of major powers has been reactivated, and China and the United States have become the main axis of contradictions in major country relations. However, it is difficult for Russia to fully improve relations with the United States and Europe, and Russia is also facing many challenges in the "post-Soviet space", Ukraine, Moldova and other countries are gradually drifting away from them, and other former Soviet countries are also alienated from Germany.
Fifth, Russia faces multiple internal and external pressures, and maintaining the current regime's long-term governance is a core concern of the authorities. Creating a "strong country" image is an important means to mobilize populism and divert people's attention to economic recession and political rigidity.
Subject to the constraints of the above factors, Russia may most likely show the following development prospects in the next 10 to 15 years.
First, Russia's deindustrialization process continued after the collapse of the Soviet Union, while it did not catch up with the wave of the Fourth Industrial Revolution. With the global energy transition, the energy industry, an important pillar of economic development, fiscal revenue and even political stability, is also facing multiple challenges. At the same time, Russia's technological potential is generally shrinking, the momentum for subsequent development is limited, and its ability to participate in global economic, financial and climate governance is obviously insufficient. Russian economist Nikita Maslennikov expects that in the medium term, Russia's macroeconomic growth rate will lag 50%-100% behind the world average, which can already be called "stagnation with signs of structural crisis". Coupled with the acceleration of the global economy in the ESG agenda (ecological, social and governance standards for business), energy transition, global corporate minimum taxes, new trade and investment agreements, "Russia is still on the world economic train, but it is no longer possible to sit in the box and can only stand in the position of the carriages." ”
Second, political governance is sluggish, and corruption among officials at all levels continues unabated. As economic and financial resources tend to be tight, the struggle between various interest groups will show an upward trend. Political participation has become more restrictive and social apathy has become increasingly widespread. According to a recent report by the Carnegie Center in Moscow, low living standards, persistent poverty, stagnant or declining real disposable incomes, widespread social inequality have led to the devitalization of Russian society, and that high levels of social apathy, reluctance to work to improve their social status, and insensitivity to the deteriorating external environment are becoming the "new normal" of Russian society, and that social apathy will trigger other systemic crises.
Thirdly, the human resources situation in Russia will deteriorate further. On the one hand, the downward trend in population size has not been effectively controlled. On the other hand, the outflow of intellectual and wealth elites accelerates. The ethnic and religious composition of the country's population has also shown a trend that worries the Russian top brass.
Fourth, it is difficult to see a significant change in the external environment. In recent years, although Russia has achieved specific geopolitical goals through military operations such as the Russo-Georgian War, the Crimean crisis, and the invasion of Syria, it has been strongly sanctioned by the United States and Europe, and most countries in the post-Soviet space have also turned away from Russia. In the next 15 years, this trend is difficult to change significantly.
Despite the many challenges facing Russia, it will remain a variable in the international system that will be difficult to ignore. In the next 10 to 15 years, there are three issues worthy of attention: First, Russia will actively use hybrid warfare methods to achieve its own specific geopolitical goals with the help of disorders in the transformation of the international and regional systems, and the impact it will bring is worthy of great attention; second, although it is difficult to improve THE relationship between the United States and Russia in an all-round way, Russia will still actively seek to improve relations with the United States, and actively mobilize the Sino-US-Russian triangular relationship to alleviate its own pressure with the help of Sino-US conflicts; third, before 2024, Russia may become a real Russian-Belarusian alliance country On the one hand, it creates the image of a strong country, and on the other hand, it stimulates the market for the 2024 presidential election. Ahead of the 2030 presidential election, other "frozen conflicts" in the post-Soviet space are likely to flare up again.
From a larger historical perspective, the tension between great power ambition and insufficient power is a key factor in determining Russia's development trajectory. Looking back, great ups and downs are an important feature of Russia's historical development, and every failure and setback of foreign expansion will trigger a major turning point in Russia's national development. Stagnation in the broadest sense of the next 15 years – from economic depression to social apathy – is Russia's most likely development prospect. It is almost certain that in the next 10-15 years, Russia will face multiple challenges of climate change, energy transformation, and new industrial revolution, and Russia's position in the global supply chain and value chain will further decline. At that time, the backwardness of economic development will be counterproductive to domestic politics and foreign policy. By 2036 or even 2030, crises such as energy transition, economic stagnation, political rigidity, and aging leadership may erupt in a concentrated manner, and Russia may usher in major historic changes.
*Disclaimer: This article only represents the personal views of the author and does not represent the position of this official account
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