Vladimir Putin is the main enemy of the Russian economy

1

Владимир Путин — главный враг российской экономики

Russian President Vladimir Putin is trying urgently to revive the economy of his country, but his biggest obstacle is himself.

At a time when Americans are arguing about the degree of Russian interference in presidential elections in the United States, Putin is at home struggling with the recession. Trying to achieve his goal the last time he focuses on the exchange rate of the ruble: currency depreciation can improve competitiveness of Russian exports, as well as helping to balance the budget, which heavily relies on ruble revenues from exports of oil and gas. Some analysts expect the Central Bank of Russia will fulfill its obligations due to a decline in interest rates at the end of this week.

A fuss on the edge, is used only in order to hide economic weakness is more fundamental than the exchange rate, oil prices or Western sanctions — the despotic rule of Putin. The grip of his regime for power is too much dependent on the undermining of the principle to enrich allies and punish opponents — an approach that destroyed a long list of companies from the oil company Mikhail Khodorkovsky’s YUKOS to media group RBC, which had the temerity to investigate the lives of the friends and family of Putin.

This attitude to private ownership sets the tone for the entire bureaucracy. Any entrepreneur can become a target of the authorities, fire inspectors, to the criminal investigation, which can be punished with fines or even imprisonment — or just close the business in favor of a more pleasing to the authorities of the competition. Deterrent for doing business are the fears: Why invest in future development, if all that we build can take?

While there is nothing surprising in the fact that Russia’s economy has resisted. Companies sitting on cash, investments fall and local producers are unable to expand their business despite the devaluation of the ruble and a ban on the import of most Western goods. Food production that competes with imports grew by only 1.8 per cent for the first 5 months of 2016 compared with a year earlier. Economic growth is expected to remain below 2 percent for more years to come that far from the 5 percent plus that prevailed throughout the greater part of 2000 years.

With the growth of popular discontent and the coming parliamentary election in September, Putin recognizes the need for action. To search for new ideas, he created a Council of economists, which includes former Finance Minister Alexei Kudrin. In all disagreements, economists agree on one thing: Russia cannot prosper without reforms aimed at strengthening property rights, and easing the bureaucratic burden on business. This would require, for example, the creation of a truly independent judiciary and a sharp reduction in the number of persons who have the right to check and to penalize.

These sensible ideas can have far-reaching consequences for the Putin regime. If Russia wants to acquire a system of impartial justice, the Kremlin elite does not need to fabricate charges against perceived enemies or to destroy the assets of the businessmen who support the opposition. And when the opposition will not be so easy to shut up, Putin, you may have to provide more competitive elections. In other words, economic reforms will also require the strengthening of the political system.

It is hard to imagine that Putin, even with his still high approval rating go to all these changes — not to mention the effort required to convert the bureaucracy and justice system, which has long been adapted to the abuse of power. However, if he wants to stop economic decline, which ultimately could topple his regime — that’s exactly what it needs to do.

LEAVE A REPLY

Please enter your comment!
Please enter your name here