Economic Crisis

27.09.2019

Last Chance Saloon: The Race to Grab Russia’s Reserves

Spending the surplus in the National Wealth Fund (NWF) via government decrees is the last chance for the state capitalists to get large sums of money for practically nothing, without looking beyond 2024. Meanwhile, it is the government that will have to bear the political risks of dispensing the NWF to the chosen few in full view of a society that is irate and becoming poorer for the fifth year in a row.
31.07.2019

Why the Russian Government Can’t Attain Economic Growth

The obstacles hindering growth are well known, and it would seem that the government has every opportunity to tackle these problems. It could easily resist lobbying by state capitalists: both the law and regulations would allow that. Instead of embarking on a path of empowerment, however, the government has turned into a place of ceremonial meetings for people with influential positions who are manipulated by officials from the presidential administration and by state capitalists.
18.07.2019

Playing the Long Game: United States Targets Russia’s Sovereign Debt

Financial sanctions that limit Russia’s borrowing are for now ineffective, as Russia currently has three surpluses: in the federal budget, balance of trade, and current account. The Russian state and most Russian business (at least the kind of business that could in theory raise investment abroad) simply don’t need major credit lines.
11.02.2019

Trading Dollars for Yuan: How Wise Is Russia’s Reserves Management?

The greatest risk, which will grow together with funds and reserves, is that of the open or creeping politicization of investment. In other words, the state will choose to invest in “friendly” but unstable currencies, as well as to extend loans to even “friendlier” states and companies. Experience of past crises should make the responsible government agencies stay well away from such initiatives—as far as it’s politically possible.
20.12.2018

Putin’s Courtiers: How Sanctions Have Changed Russia’s Economic Policy

Sanctions have thrust Vladimir Putin’s inner circle into the public domain. In response, the state has lent sanctioned individuals a helping hand. While previously, they would get individual government contracts, the lucky few are now setting their sights on entire industries via the mechanism of public-private partnerships. The president sees state capitalists as patriotic businesspeople, and they realize that sanctions have made Russia the only place where they can make money.
11.10.2018

Digital Monopolies: Dividing the Big Data Pie in Russia

Companies close to the Kremlin are creating a monopoly on data in Russia. Although the data market has yet to take shape, it has already been turned into a monopoly by the president’s decisions. Competition takes a back seat to matters of national importance.
12.09.2018

Russia’s New Agenda: Choosing Between Two Versions of State Capitalism

In an economic system that wasn’t so focused on solving government problems or fulfilling the “public agenda,” the state wouldn’t have to find ways of extracting funds from business to spend on social programs.
9.08.2018

“No Trust”: What Russians Think About the Pension Reform Plan

The government’s pension reform plan has shocked the majority of Russians, who, in focus group discussions, expressed confusion, fear, and frustration with the government, including President Vladimir Putin himself. Russians expect the proposed measures to pass. But they are also prepared to resist them in various ways, and they want concessions and guarantees of employment and healthcare, especially for society’s most vulnerable members.
21.11.2017

How Transitional Institutions Could Transform Russia’s Economy

Transitional institutions cannot be effective unless economic agents are confident that the state will fulfill its commitments and that the rules of the game do not depend on the discretion of a ruler. Empirical evidence shows that democracy protects investors from expropriation better than dictatorships do, thereby resulting in faster economic growth.
24.10.2017

RIP Russian Banks: How to Resuscitate a Moribund System

Watching the drama of Russia’s private banks collapsing one by one naturally triggers fear: of more than 3,000 registered banks, about 2,600 have already lost their licenses. After the bailout of Otkritie and BIN, the government’s share in Russia’s banking system assets exceeds 80 percent. Fixing Russia’s banking system requires addressing the deep and systematic flaws in the central bank and the financial sector at large.
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