As distinct from other countries Russia learned little from the past year.
In the end of the past year, the prominent international economic institute IHS Global Insight analyzed the current state of the global economy. Its several thousand analysts studied in detail anti-crisis measures in 121 countries. They concluded that after the collapse of the American Lehman Brothers bank in September 2008, which signaled the start of the global financial downturn, 66 out of 121 countries went into economic recession. A small economic growth was registered only in China, India and Poland. Experts believe that in the second quarter of the past year leading industrialised European countries and Russia managed to cope with the crisis. Germany and France registered Europe’s highest economic growth of 0.3%. However, the crisis continued swallowing the economy in 41 countries. Upsurge was registered in the United States in the third quarter of the past year whereas recession continued in 20 countries. The crisis affected some countries with a delay, for instance, Venezuela. In the last quarter of 2009 only six countries continued fighting the crisis.
This recent global crisis was short but fierce and it is important to learn its lessons in order to create an effective anti-crisis mechanism. It is particularly important for Russia that has been through two financial crises in the recent decade.
International experts are divided on the anti-crisis measures Russia used. It is said that victors are not judged. Russia has managed to overcome the crisis and its economy is beginning to grow. Monthly rates of industrial production are on the rise. On the surface everything looks very good. The rouble is stable again, inflation is under control and there are only a few dozen bankruptcies in the banking sector. As the leading German economic weekly Wirtschaftswoche observed, the Russian government’s anti-crisis policy was effective and Prime Minister Vladimir Putin’s team was coping well enough with the financial and political aspects of the crisis. However the weekly noted that the crisis hit Russia harder than other countries with transitional economies and Russian anti-crisis managers had to make much more intensive financial and other efforts to cope with the downturn. Risks in Russia, as well as in some other countries, lie in bad loans, which are not likely to be repaid. They may cause a second wave of the crisis this year. Moody’s analysts believe that up to 20% of loans in Russia are bad. Judging by everything, the Russian Finance Ministry foresaw this. The government timely increased mandatory reserves in the Central Bank (CB) and helped the banks in need. However, this anti-crisis policy left deep traces in the budget. To support the rouble, the CB spent almost $300 billion of its reserves, and after the creeping devaluation the exchange rate stabilized at 44 roubles per Euro. Russia has yet to overcome the consequences of these moves. Some experts believe that only high prices on hydrocarbons may save Russia again.
Wirtschaftswoche writes that these CB interventions were not half as bad as what Putin calls “manual control” of the economy. He spent hundreds of billions of budget funds on saving some beacons of the Russian economy. As a result, sensitive but long overdue reforms were shelved again. Instead of toughening competition, Putin increased customs duties, and instead of compelling the dying giants to engage in modernisation, he gave them federal loans, thereby aggravating their structural problems.
Wirtschaftswoche made the conclusion that the crisis has hit Russia harder than other threshold countries. Russia’s ability to counter it is much weaker than that of China for many reasons. Russia has an obsolete industrial structure, lop-sided orientation to raw materials and is beset with bureaucracy and corruption. Medium-sized companies find it very difficult to receive loans. Therefore, Russia’s economic growth is extremely slow. If Putin’s government does not learn a lesson from the crisis, Russia will have a difficult time in the Eurasian geopolitical space.
Hans Henning Schröder from the Berlin-based Policy and Science Foundation said in a recent interview with Deutsche Welle that economically Russia is substantially lagging behind both the EU countries and China. This is why it is not attractive enough for other CIS countries and is not likely to keep them in the orbit of its influence. To change the situation Russia must rebuild its economy that is now based on the exports of raw materials, primarily fuel. The recent crisis offered a good opportunity for doing this but it was missed.
Oleg Nikiforov