Nigeria on Volga 48


I was struck during the Great Hispano-German Cucumber Scare to learn from the BBC that Russia had banned EU vegetables, and this was difficult as Russia imported 40% of its vegetables from the EU. I suspect that figure excludes Russian vegetables grown and consumed in the informal rural sector, but it is nonetheless astonishing that Russia, which has a greater area of unforested potential arable land per head of population than any other major state, is highly dependent on vegetable imports.

A small fact indicative of a huge malaise. As China and Russia hold a key summit today, China is heading for global economic supremacy, probably within my lifetime (though US resilience should not be ignored, and the process will be slower than many think). Russia, by contrast, slips further and further down the league table of global influence. We can predict future importance for China, India and Brazil. Europe faces genteel relative decline.

But Russia faces renewed absolute decline. It is a third world economy, configured around exports of raw commodities, exactly as African countries are. Because commodity, and especially energy, prices are high and likely to remain so, there is a superficial aura of wealth. But because these commodities are exported virtually unprocessed, the employment effects, and thus the distribution of wealth inside the economy, are extremely limited. Russia has oligarchs involved in energy and mineral export. They are unimaginably wealthy. It has a technocratic and labouring class employed in these industries. They are doing well. It has senior officials corruptly gaining from the state interaction with these commodity producers, either through regulation or ownership. They are doing very nicely. It has a limited service economy catering for the above groups.

All of this is the active economy. It just does not spread far enough into Russian society to carry it along. Russia is looking more and more like Nigeria, with a tiny elite, few technocrats, a corrupt officialdom and a few people servicing them, all doing OK, while ordinary people live in squalor.

Like Nigeria, Russia does not make anything. When did anyone reading this last buy a Russian manufactured good? The Soviet system collapsed in large part because it could not provide consumer goods to a population that wanted them. Like Nigeria, Russia makes very little indeed – less than in Soviet times. Russian manufacturing industry as a whole has still not recovered to Soviet levels of production. I am willing to doubt it ever will. Russia just exports commodities and sucks in manufactures – disproportionately for the luxury end of the market, reflecting its crazy wealth distribution. Exactly like Nigeria, in fact.

Of course, government extracts some tax from the commodity industries and puts it into social benefits and funds the bewildered and status diminished professionals in education, healthcare etc. But the government’s tax revenue is exceeded by capital flight, as the oligarchs simply export the mega profits from commodities into numbered bank accounts abroad. No oligarch has ever thought “Wow I made billions from aluminium or gas, now I will invest it in manufacturing expresso machines and cyclone vacuum cleaners in Russia.” They think “Which way is Switzerland? Where do I buy Highbury?”

Foreign Direct Investment into manufacture in Russia is negligible for a country of its size, because there is absolutely no guarantee of a fair rule of law, of redress against a government or that some oligarch will not covet your factory, or local big man decide to shake you down. Democracy has vanished as Putin has made it impossible for opposition groups to operate and tightened his grip on the media. The killing of independent journalists and investigators has become routine. The situation both on human rights and judicial independence is actually worse than Nigeria.

Russia is not a great power in decline. It is a third world country in decline.


48 thoughts on “Nigeria on Volga

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  • mary

    Russian President Dmitry Medvedev pledged to give up government control of some of the biggest state companies, burnishing his investor-friendly credentials as he bids for a second term next year.
    .
    “The dominance of state-controlled companies in a considerable number of industries” is making Russia less competitive, Medvedev said at the St. Petersburg International Economic Forum yesterday, ordering an expanded privatization plan by Aug. 1. “This economic model is dangerous for the future.”
    .
    http://www.bloomberg.com/news/2011-06-17/medvedev-promises-mass-sell-off-to-boost-chances-against-putin.html

  • tony_opmoc

    Apologies, I would like to make a correction to a post I made yesterday

    I wrote

    “Some towns in the North of England which were relatively prosperous 50 years ago are suffering abject poverty now, yet I am convinced the situation in many equivalent towns and cities in the USA is even worse.”

    I would like to correct it to

    “Some towns in the South of England which were relatively prosperous 50 years ago are suffering abject poverty now, yet I am convinced the situation in many equivalent towns and cities in the USA is even worse.”

    People are just so nice and friendly in the North of England – Lancashire and Yorkshire –

    They just talk to you like you are a normal person and a friend of there’s or some member of their family – when they have never seen you before in their life

    Without any prompting

    This is just so normal, despite the fact that the rain has washed the colours out of nearly everyone – so we all look the same…

    We are seriously considering moving back Up North

    People are just so nice.

    Tony

  • CanSpeccy

    Courtenay Barnett said “You have some points Craig”
    *
    Only one point really. That Russia won’t import toxic cucumbers, indicating a shocking deficiency in Russia’s domestic production of cucumbers, and in general, a total failure of Russia’s economy.
    *
    This is a dopey argument that ignores the fact that cucumbers are in season earlier in Southern Spain than in Asiatic Russia, hence Russia imports cucumbers in the spring.
    *
    No doubt by late July they have plenty of home-grown cucumbers even in Siberia.
    *
    So the the only serious question this post raises is why is a former UK diplomat spouting such rubbish?
    *
    Russia, of course, is not popular with the Imperial powers and must, therefore, be denigrated at every opportunity. Is that the explanation?

  • Ruth

    ‘Russia, of course, is not popular with the Imperial powers and must, therefore, be denigrated at every opportunity.’

    I agree but even more so, an ambassador that didn’t tow the line must ‘be denigrated at every opportunity.’

  • mary

    Sad breaking news that Brian Haw has died aged 62. I think he had gone to Germany for treatment. A brave and honourable man and the war mongers who tried to get him removed should be ashamed. I expect some of them might utter some weasel words about him now that he is dead.

  • mary

    Parliament Square peace campaigner Brian Haw dies
    Brian Haw in Parliament Square Gardens in 2002
    Related Stories
    Haw loses Parliament camp appeal
    Parliament camp protester evicted
    Bid to evict parliament protester

    Peace campaigner Brian Haw has died after “a long hard fight” against lung cancer, his family has announced.
    .
    Mr Haw, 62, set up a camp in London’s Parliament Square in 2001 in protest against UK and US foreign policy.
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    In March 2011, a High Court ruling obtained by London’s mayor forced him to move his camp on to the pavement.
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    In a statement posted on Mr Haw’s website, his family said he had died on 18 June in Germany, where he had been receiving medical treatment. They said Mr Haw, previously from Redditch, Worcestershire, passed away in his sleep in no pain.
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    ‘Courage and determination’
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    An additional statement on his website from his campaign representatives said: “Brian showed great determination and courage during the many long hard years he led his Peace Campaign in Parliament Square, during which it is well documented that he was relentlessly persecuted by the authorities which eventually took its toll on his health.
    .
    “Brian showed the same courage and determination in his battle with cancer. He was keenly aware of and deeply concerned that so many civilians in Iraq, Afghanistan and Palestine did not have access to the same treatments that were made available to him.
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    “Parliament, the police, and courts etc, should forever be ashamed of their disgraceful behaviour towards Brian.”
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    http://www.bbc.co.uk/news/uk-13828800

  • Tony

    Russia’s overall economy shows much more solvency and liquidity than those of the US and UK, who are we to criticise? In recent times Russia has learned to be very grown up about involving itself in wars, but not involving itself in wars. We should not mistake its economy as being “Third World”, let alone its society as Third World.

    Russia’s foreign policy shows a great deal more maturity (or learning from past mistakes) than the way the US and UK behave, swaggering around like cowboys bombing fuzzy-wuzzies left right and centre whatever the legalitity.

    As an aside: no Third World country has arts and especially music up to the standard of Russia’s. Orchestras like the St. Petersburg Philharmonic, Mariinsky and the State Symphony Orchestra of Russia are at least as good as any of the top orchestras including Berlin, Vienna, London and anywhere in the USA.

    These facts should make us show them a bit more respect in my opinion. Maybe we could learn something from them, God forbid – especially steering clear of Washington’s, Tel Aviv’s and London’s relentless manipulative bloodthirsty warmongering.

  • angrysoba

    “Russia’s foreign policy shows a great deal more maturity (or learning from past mistakes) than the way the US and UK behave, swaggering around like cowboys bombing fuzzy-wuzzies left right and centre whatever the legalitity.”
    .
    Well, there is that little blot called Chechnya which they bombed completely to rubble. Aside from that, sticking up for Milosevic wasn’t a sign of maturity. Medvedev’s visit to Shiritori wasn’t particularly mature. Nor was that bizarre stunt of fastening a titanium Russian flag to the surface of the North Pole mature although it was amusing. Less amusing is the habit of muck-raking journalists and dissidents coming to a sticky end although I am sure the Russian state has absolutely nothing to do with that. And the “cowboys bombing fuzzie-wuzzies” metaphor is amusing but very mixed. How about “Crusaders napalming Argies”?
    .
    “no Third World country has arts and especially music up to the standard of Russia’s. Orchestras like the St. Petersburg Philharmonic, Mariinsky and the State Symphony Orchestra of Russia are at least as good as any of the top orchestras including Berlin, Vienna, London and anywhere in the USA.”
    .
    That’s true but Tsarist Russia was no model state worth following and in those days rural areas actually, really were like the Third World.

  • mark_golding

    Was it not the ‘cold war’ that defined countries that remained non-aligned or not moving at all with NATO or capitalism as ‘Third World?”. NATO countries I guess are First World – Blah!. I prefer the term ‘majority world’ because most people live in poorer countries. These people align with the Middle Age term ‘commoners’ or ‘third estate’ from which ‘Third World’ is derived; the 1st and 2nd being the clergy and the nobility respectively.

    Short answer – the ‘Third World’ expression sucks.

  • Tony

    I was not setting out to be an apologist for past Russian policy towards Chechnya. That has to be a separate discussion really. It is relevant though that activities in Chechnya were certainly directly relevant to Russia and Dagestan because they are direct neighbours. The deal with Milosevic again is fairly old news, and the ties between countries as near-neighbours geographically nearby equally relevant.

    The decade of US’ and UK’s bloodthirsty expeditions in the Middle East were and remain illegitimate, immoral, and even the Libyan campaign by now goes well beyond anything authorised by the UN. They are plain old fashioned aggressive colonial wars being waged thousands of miles away from any of our borders with countries offering no threat directly to the defence of our borders and realms. Labelling them as “Crusader” wars might well be appropriate if you want to see things that way. My point is that Russia has learned from painful expeditions in Afghanistan, Chechnya, etc. – we have not. Next we’ll give Libya more of a blasting, then Syria – und Morgen die Welt.

    I have been visiting Russia since the early 1980’s and find it a fascinating country, driven by culture and by family at its core. To write it off as a Third World country is an unconstructive and unfair approximation. Their history has more than a few blots, so do those of the US and UK. They have learned,… we have not.

  • ingo

    Thanks for that Ruth, I prefer muddy roads strewn with potholes, making do along the way and having contact with anything that scarpers into my horizon, otherwise its not fun.

    I also heard some cruel stories of people being drugged and robbed on trains in Russia, I’d rather prefer to wrestle the elements. Mind you I’m not getting younger, so should you have a Russian sugar daddy who can get us some cheap trans siberian tickets….. :)I’ll have to take my missis for protection thought, her rum babas can kill on the spot.

  • Mark

    Russian corruption is certainly at Nigerian levels ; it’s current TI ranking of 2.1 is actually lower than that of the home of the 419 scam (currently 2.4).However in most other respects Craig’s analogy with Nigeria doesn’t work, as several commenters have pointed out.

    Russia is still the 2nd largest player in the world of military hardware, and the latest version of the Sukhoi fighter is selling well (and not just because it is cheaper than the US equivalents or the Eurofighter). Russian oilrigs also employ Russians across the range of engineering technicial roles; on Nigerian oilrigs the only Nigerian you’ll find is often just the on site cook (the higher level tech jobs there being held by westerners of various nationalities, with Filipinos & Indians at lower levels). The professional/technocratic middle class in Russia is many times larger than it’s Nigerian equivalent- as a trip to any Cypriot, Egyptian or Thai beach resort will confirm.

  • evgueni

    Lifed from Bloomberg: “Russia has “enough” vegetables to meet domestic demand without imports from the European Union, Agriculture Minister Yelena Skrynnik said. The 27-nation union accounted for 11 percent of Russia’s tomato imports and 5 percent of its cucumber imports in 2010, she said, according to a statement on the ministry website dated yesterday. More than 70 percent of Russian imports come between January and April, Skrynnik said.”
    .
    The 40% figure doesn’t make sense. I can only assume that this must include pickled veg which used to be imported into the USSR from Bulgaria, Hungary, Poland etc.
    .
    So the reason for importing veg from the EU is to satisfy the demand out of season. Most Russians though, as most Ukrainians, still remember and are comfortable with the idea that fruit and veg are seasonal. So in season they buy domestic produce and CIS imports which are ripened properly and have a taste and a smell.. unlike anything out of Holland which is just an excuse to export excess water 🙂
    .
    As for the rest – Умом Россию не понять. Underestimate Russia at your peril, as Napoleon and Hitler did (60th Anniversary of Barbarossa today btw).

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