Why is Russia politically strong when it is an economic lightweight?
Russia has the combined GDP of Belgium and the Netherlands or is 13 times smaller than the US, 12 times smaller than the EU and 8 times smaller than China. Russia is not even a major player in military spending. Why does it then have such importance militarily and politically? De Grauwe argues that in addition to having a nuclear arsenal and raw materials…
Russia is powerful because Europe grants that power to Russia. Europe has built up an economic union but not a defense union. The European Union is economically 12 times larger than Russia; A huge potential power. However, this economic power is not converted into military and political power because defense has remained a national matter. By merging their military capabilities, it would be possible for France and Germany to build a credible defense against Russian threats, without having to spend more.
Why Russia is politically and militarily strong while being an economic dwarf
By: Paul De Grauwe – LSE
For Russia it’s like the 1920s
As current sanctions have cut Russia off from Western markets, technology and capital, autarky seems to be the only option. But will such an economic choice lead to dictatorial domestic policies as it did in 1920s?
Putin has thus, through a series of tactical successes, brought to Russia a comprehensive strategic defeat from which neither him, nor the governments that succeed him, will be able to extricate the country. There is moreover no ideology, short of extreme nationalism, on which the autarkic system can be built. Bolsheviks in the 1920s had an ideology which led them ultimately to accept autarky and to work within it. Such an ideology does not exist in today’s capitalist Russia.
When autarky becomes the only solution
By: Branko Milanovic – City University of New York
Surging inequality
Piketty and al. find that since 1990 inequality in Russia increased substantially more than in China and other ex-communist countries in Eastern Europe. In particular, the wealth held offshore by wealthy Russians is more than three times the official net foreign reserves. It seems that extreme inequality is acceptable in Russia, as long as billionaires and oligarchs appear to be loyal to the Russian state and perceived national interests. Is this fragile equilibrium sustainable?
From Soviets to Oligarchs: Inequality and Property in Russia 1905-2016
Authors: Filip Novokmet, Thomas Piketty, Gabriel Zucman
From: Paris School of Economics – UC Berkeley
