Carnegie Moscow Center
Over the last decade and a half, the Russian economy has undergone a classical resource cycle, and now it lacks both the capacity and the momentum for new growth. But the wealth accumulated in the boom years will insulate the country against a crash for at least three years.
Thus far, the Russian government has been able to quell popular discontent over the ongoing economic crisis. But time is running short: in a year and a half to two years, the Kremlin will have a real crisis on its hands.
Serious economic reforms cannot be implemented unless Russia’s political atmosphere and institutions grow more supportive of individual freedom.
There is no reason to expect any serious changes in the Russian economy in 2016. The coming year is likely to see a behind-the-scenes struggle between two special interest groups: those who will profit if industries are nationalized, and those who will benefit from foreign investment.
The real cost of Russia’s current isolation will be felt in the long term: the country will miss opportunities for growth and will continue to stagnate.
Turkey is one of Russia’s strongest trade partners. Imposing economic sanctions on yet another country is likely to hurt Russia itself the most.
The 2016 budget openly declares that Russia will not compete with the rest of the world in science and technology—at least not outside the defense sector. It suggests that the Kremlin has chosen to wait for oil and gas prices to increase (regardless of the likelihood of this actually happen) while continuing to support the military-industrial complex.
Russia is reverting to the same economic level it had fifteen years ago. Small and medium-sized businesses, which could boost the economy, are held back by regulation and corruption. As a major economic catastrophe is unlikely, this state of affairs looks set to continue into the long term.
The proponents of the Petersburg Dialogue believed that cooperation between Germany and Russia would increase stability in Europe. But today expectations are self-deluding.
Since the first Five-Year Plan, the steel industry has been a major engine of the Russian economy. Despite being privatized, market-oriented and relatively competitive, it became burdened with large amounts of debt and may be headed for greater government involvement with the maladies that entails