FacebookTwitterRedditEmail

Will Russia Reject Neoliberalism?

According to various reports, the Russian government is reconsidering the neoliberal policy that has served Russia so badly since the collapse of the Soviet Union.  If Russia had adopted an intelligent economic policy, its economy would be far ahead of where it stands today.  It would have avoided most of the capital flight to the West by relying on self-finance.

Washington took advantage of a demoralized Russian government, which looked to Washington for guidance in the post-Soviet era.  Thinking that the rivalry between the two countries had ended with the Soviet collapse, Russians trusted American advice to modernize its economy with best-practice Western ideas. Instead, Washington abused this trust, and saddled Russia with an economic policy designed to carve up RussianScreen shot 2016-08-09 at 3.57.13 PM economic assets and transfer ownership into foreign hands.  By tricking Russia into accepting foreign capital and exposing the ruble to currency speculation, Washington made sure that the US could destabilize Russia with capital outflows and assaults on the ruble’s exchange value.  Only a government unfamiliar with the neoconservative aim of US world hegemony would have exposed its economic system to such foreign manipulation.

The sanctions that Washington imposed – and forced Europe to impose – on Russia show how neoliberal economics works against Russia. Its call for high interest rates and austerity sank the Russian economy – needlessly.  The ruble was knocked down by capital outflows, resulting in the neoliberal central bank squandering Russia’s foreign reserves in an effort to support the ruble but actually supported capital flight.

Even Vladimir Putin finds attractive the romantic notion of a global economy to which every country has equal access. But the problems resulting from neoliberal policy forced him to turn to import substitution in order to make the Russian economy less dependent on imports.  It also made Putin realize that if Russia were to have one foot in the Western economic order, it needed to have the other foot in the new economic order being constructed with China, India, and former central Asian Soviet republics.

Neoliberal economics prescribes a dependency policy that relies on foreign loans and foreign investment.  This policy creates foreign currency debt and foreign ownership of Russian profits.  These are dangerous vulnerabilities for a nation declared by Washington to be “an existential threat to the US.”

The economic establishment that Washington set up for Russia is neoliberal. Most notably, the head of the central bank Elvira Nabiullina, minister of economic development Alexei Ulyukayev, and the current and former finance ministers, Anton Siluanov and Alexei Kudrin, are doctrinaire neoliberals.  This crowd wanted to deal with Russia’s budget deficit by selling public assets to foreigners. If actually carried through, that policy would give Washington more control over Russia’s economy.

Opposed to this collection of “junk economists,” stands Sergey Glaziev.  Boris Titov and Andrei Klepach are reported to be his allies.

This group understands that neoliberal policies make Russia’s economy susceptible to destabilization by Washington if the US wants to punish the Russian government for not following Washington’s foreign policy.  Their aim is to promote a more self-sufficient Russia in order to protect the nation’s sovereignty and the government’s ability to act in Russia’s national interests rather than subjugate these interests to those of Washington. The neoliberal model is not a development model, but is purely extractive. Americans have characterized it as making Russia or other dependencies “hewers of wood and drawers of water” – or in Russia’s case, oil, gas, platinum and diamonds.

Self-sufficiency means not being import dependent or dependent on foreign capital for investment that could be financed by Russia’s central bank.  It also means keeping strategic parts of the economy in public, not private, hands. Basic infrastructure services should be provided to the economy at cost, on a subsidized basis or freely, not turned over to foreign owners to extract monopoly rent.  Glaziev also wants the ruble’s exchange value to be set by the central bank, not by speculators in the currency market.

Neoliberal economists do not acknowledge that the economic development of a nation with natural resource endowments such as Russia has can be financed by the central bank creating the money required to undertake the projects.  They pretend that this would be inflationary.  Neoliberals deny the long-recognized fact that, in terms of the quantity of money, it makes no difference whether the money comes from the central bank or from private banks creating money by making loans or from abroad.  The difference is that if money comes from private banks or from abroad, interest must be paid to the banks, and profits have to be shared with foreign investors, who end up with some control over the economy.

Apparently, Russia’s neoliberals are insensitive to the threat that Washington and its European vassals pose to the Russian state. On the basis of lies Washington has imposed economic sanctions on Russia. This political demonization is as fictitious as is the neoliberal economic propaganda.  On the basis of such lies, Washington is building up military forces and missile bases on Russia’s borders and in Russian waters.  Washington seeks to overthrow former Russian or Soviet provinces and install regimes hostile to Russia, as in Ukraine and Georgia.  Russia is continually demonized by Washington and NATO.  Washington even politicized the Olympic games and prevented the participation of many Russian athletes.

Despite these overt hostile moves against Russia, Russian neoliberals still believe that the economic policies that Washington urges on Russia are in Russia’s interest, not intended to gain control of its economy. Hooking Russia’s fate to Western hegemony under these conditions would doom Russian sovereignty.

Paul Craig Roberts is a former Assistant Secretary of the US Treasury and Associate Editor of the Wall Street Journal. Roberts’ How the Economy Was Lost is now available from CounterPunch in electronic format. His latest book is The Neoconservative Threat to World Order. Michael Hudson’s new book, Killing the Host is published in e-format by CounterPunch Books and in print by Islet. He can be reached via his website, mh@michael-hudson.com

bernie-the-sandernistas-cover-344x550

April 22, 2019
Melvin Goodman
The NYTs Tries to Rehabilitate Bloody Gina Haspel
Robert Fisk
After ISIS, a Divided Iraq, Wounded and Grief-Stricken
Binoy Kampmark
Julian Assange as Neuroses
John Laforge
Chernobyl’s Deadly Effects Estimates Vary
Kenneth Surin
Mueller Time? Not for Now
Cesar Chelala
Yemen: The Triumph of Barbarism
Kerron Ó Luain
What the “White Irish Slaves” Meme Tells Us About Identity Politics
Andy Piascik
Grocery Store Workers Take on Billion Dollar Multinational
Seiji Yamada – Gregory G. Maskarinec
Health as a Human Right: No Migrants Need Apply
Howard Lisnoff
Loose Bullets and Loose Cannons
Ricardo Alarcón de Quesada
Dreaming in Miami
Graham Peebles
Consuming Stuff: The Polluting World of Fashion
Weekend Edition
April 19, 2019
Friday - Sunday
Andrew Levine
What Will It Take For Trump to Get His Due?
Roy Eidelson
Is the American Psychological Association Addicted to Militarism and War?
Jeffrey St. Clair
Roaming Charges: Time is Blind, Man is Stupid
Joshua Frank
Top 20 Mueller Report “Findings”
Rob Urie
Why Russiagate Will Never Go Away
Paul Street
Stephen Moore Gets Something Right: It’s Capitalism vs. Democracy
Russell Mokhiber
Why Boeing and Its Executives Should be Prosecuted for Manslaughter
T.J. Coles
The Battle for Latin America: How the U.S. Helped Destroy the “Pink Tide”
Ron Jacobs
Ho Chi Minh City: Nguyen Thai Binh Street
Dean Baker
Fun Fictions in Economics
David Rosen
Trump’s One-Dimensional Gender Identity
Kenn Orphan
Notre Dame: We Have Always Belonged to Her
Robert Hunziker
The Blue Ocean Event and Collapsing Ecosystems
Theodore C. Van Alst, Jr.
Paddy Wagon
Brett Wilkins
Jimmy Carter: US ‘Most Warlike Nation in History of the World’
John W. Whitehead
From Jesus Christ to Julian Assange: When Dissidents Become Enemies of the State
Nick Pemberton
To Never Forget or Never Remember
Stephen Cooper
My Unforgettable College Stabbings
Louis Proyect
A Leftist Rejoinder to the “Capitalist Miracle”
Louisa Willcox
Aldo Leopold’s Land Ethic and the Need for a New Approach to Managing Wildlife
Brian Cloughley
Britain Shakes a Futile Fist and Germany Behaves Sensibly
Jessicah Pierre
A Revolutionary Idea to Close the Racial Wealth Divide
George Burchett
Revolutionary Journalism
Dan Bacher
U.S. Senate Confirms Oil Lobbyist David Bernhardt as Interior Secretary
Nicky Reid
The Strange Success of Russiagate
Chris Gilbert
Defending Venezuela: Two Approaches
Todd Larsen
The Planetary Cost of Amazon’s Convenience
Kelly Martin
How the White House is Spinning Earth Day
Nino Pagliccia
Cuba and Venezuela: Killing Two Birds With a Stone
Matthew Stevenson
Pacific Odyssey: Guadalcanal and Bloody Ridge, Solomon Islands
David Kattenburg
Trudeau’s Long Winter
Gary Olson
A Few Comments on the recent PBS Series: Reconstruction: America After the Civil War
Ellen Lindeen
What Does it Mean to Teach Peace?
FacebookTwitterRedditEmail