Russia's Impending Meltdown

Russia's new Tsar, Putin, has accelerated the downfall of Russia by writing huge new checks that the country cannot cash.

Russia will be weaker in 10 years. Its population is falling by a million people a year. From a Slavic Russian-chauvinist point of view (i.e., that held by many senior officials), even that dismal statistic is too optimistic. Russia's Muslim minority, currently around a fifth of the population, is growing fast, just as "ethnic Russians" are shrinking in number.

Russia will be weaker militarily, partly because it will lack the numbers of young men it needs to sustain a conscript army, but also because of corruption. Like all others engaged in public procurement in Russia, the military finds it almost impossible to spend large sums of money honestly and effectively.

That is a symptom of a wider problem: the failure of the Putin experiment to modernize Russia's archaic system of public administration. Putin's successor, Medvedev, talks a lot about anticorruption efforts. But it is hard to see those starting where they need to start: at the very top. It is there that tens of billions of dollars have been diverted into the "pocket companies" of the elite, such as RosUkrEnergo, Gunvor, and the like. Without a free press or a real opposition to ask embarrassing questions, such criminally cozy arrangements will persist.

The slide into a fascist kleptocracy is corrosive to Russia's chances of joining the rest of the developed world, where — by virtue of its education level and aspirations — it certainly belongs. That decline endangers even Russia's survival as a unified country. __Lucas

The unstable conditions that are stoking Russia's current economic boom may soon bring about a crisis similar to the financial meltdown of 1998, when, as a result of the decline in world commodity prices, Russia, which is heavily dependent on the export of raw materials, lost most of its income. Widespread corruption at every level of private and state bureaucracy, coupled with the fact that the government invests little of its oil money in fostering areas like technological innovation, corporate responsibility, and social and political reform, could spin the economic balance out of control. Rampant inflation might bring the Putin-Medvedev Kremlin down.

Even if Russia withstands that scenario, global forces will ultimately burst its economic bubble. ---Kruscheva

Its population shrinks by at least 700,000 people a year; that makes it hard to sustain a work force and an army. More, Russia has to worry about China, which has a growing population and an economy and military force that continue to expand. Some Russians are also concerned that their country's petroleum reserves will not be able to sustain production at the present level, and that its oil output may already be declining. Russia has little else to rely on. Oil exports generate two-thirds of the country's export revenue. If that revenue shrinks, so would Russia's prosperity and political influence. Putin and Medvedev have a lot to worry about.___Goldman

....the Russian military, which has modernized elements of its armed forces, remains weak. And though Russia's brazen invasion of Georgia demonstrated a willingness and ability to use its military for tactical gains and to send strategic messages, Moscow risks overplaying its hand. Russia's economic gains depend heavily on European energy consumers. That fact gives Moscow leverage with Europe, but also requires it to moderate its behavior towards its neighbors, so not to risk pushing the West toward a more assertive response.___Kay

_Chronicle_via_ALDaily

Russia's shrinking population is its biggest long-term problem, and is essentially insurmountable. Russian women leave the country whenever they can, and the ones who stay do not have babies. Russian men die in their fifties of complications from drug and alcohol abuse.

Russia's over-reliance on exports of one natural resource--fossil fuels--makes its economy vulnerable to price fluctuations, and substitutions of fuels from other sources by its customers.

The Russian people's apparently innate, centuries-old subservience to strong-man dictators leaves them without the inner strength to assert their own interests against the interests of Putin and his ex-KGB cronies.

The ongoing stripping of Russia's wealth by corrupt rulers at the top, with much of it fleeing to Swiss accounts, makes Putin's promises of a stronger, more technologically advanced Russia empty and cynical.

Russia's neighbors hate Russia, and will gladly move in on Russia's resources as the population of Russia declines. They see Russia as a rich soon-to-be corpse, almost ready to be looted, once the stench subsides.