Thursday, November 27, 2008

Russia's Resurgence or Downfall?

Russia is rotting from the inside - morally and demographically. It may be strong enough to kick around weak neighbors, but that's about it.

Its population is increasingly falling into alcoholism, even among women now, with the resulting early death rates. Russians are literally drinking themselves to death. (The Russian government is now relying on alcohol excise tax receipts to take them through the economic crisis!) And the reproduction rate is not high enough to support any real resurgence in the world. They are aborting themselves into oblivion. The Western European abortion rate is 20-25%. The American abortion rate is 30%. The Ukrainian abortion rate is 45%. The Russian abortion rate is 60-70%. (That's according to Russia's Surgeon General.) That means two out of every three pregnancies in Russia end in death. How do they expect to build a great nation on self-destruction?

The Russian economy is not weak because it's monocultural. It's weak because it is highly dependent on oil and gas production and export (60% of the Russian budget!), and we all know how wildly the price of oil can swing up and down. The Ukrainian economy, by the way, has a similar weakness because it is still strongly dependent on metals exports. And when the world price of steel drops 4 times, like it did a couple months ago, all of the sudden the economy is in trouble. Both Russia and Ukraine badly need to diversify their economies away from natural resource extraction into value-added products and services. If you want to know where the main strengths of any economy are, all you need to do is look at who the richest people are. The richest people in Russia and Ukraine are oil and gas tycoons, and various metals oligarchs. Rinat Akhmetov, Ukraine's steel tycoon, has declared himself to be the richest person in Europe a half a year ago, with a $50 billion fortune behind his name. (And in Russia you would have to include the heads of state - because Putin's personal fortune was reportedly over $10 billion in 2004.) There are no billionaires in the post-Soviet space who have built their wealth from software production and marketing (like Bill Gates, Sergey Brin, Larry Page, et al), stock market investments (like Warren Buffet), department stores (like Sam Walton), etc. The bad thing about resource extraction and export is not just that its prices swing wildly and that it doesn't have a broad beneficial effect on the entire economy, but that it requires the least intellectual and creative labor, causing a certain degree of stagnation in society (look at the Middle East). The other major problem with natural resource extraction is that these are the most corrupt industries, and if they are dominant in a particular economy, they increase the level of corruption in the entire society.

The American quasi-empire is fundamentally a commercial empire. Its strength is primarily economic, and its cultural and military strength flows out of that.

The Russian (very real) empire is fundamentally a military empire. It was built through brute physical force, deception and propaganda, starting from the small fiefdom of Muscovy 700 years ago. And it should not suprise anyone that the Russian Federation is using those same tools to maintain or try to re-build their largest empire. Historically this strategy served Moscow well, as its neighbors were comparatively weak and its population and the military was comparatively large. This is no longer the case in several major respects. Russia neighbors a far numerically superior and economically dynamic China in the Eastern part of its empire and it neighbors NATO in the West, which is stronger than the Russian Empire, primarily because it includes the United States. So, Moscow's past strategy is counter-productive today, because if they keep pushing military conflict, they will inevitably get into a war with the world's major powers, a war that they will loose. (Unless they use major nuclear weapons, in which case everyone looses, but Russia still looses more.) It is also counter-productive because most European nations have abandoned brute imperialism and militarism in the second half of the 20th century. Only Russia has not shed its empire or its militarism. It is the wayward and unruly child of Europe.

Another major issue in mid-term perspective, that no one seems to be paying attention to until its going to be too late, is that radical Islamization of Russia. First off, Russia is fast turning into a Muslim nation. The Russian army recruits are already 40% Islamic. The next generation of Russian citizens after them is going to be majority Muslim (and non-Slavic). Aside from the religious factor this might not have been so bad if it it wasn't combined with the radicalization of Russian Muslims. When the Soviet Union fell apart, Russia proper had 400 mosques. Today it has over 40,000! The vast majority of these new mosques have been built on Saudi money (and money from other Gulf States), and are staffed with Wahhabi imams, who are teaching radical political Islam to Russia's historically moderate Muslims. That's why there is a high likelihood that in one generation Russia is going to be a majority radical Muslim state. Does anyone think this is going to be good for Russia's neighbors or for the world?

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