October 15, 2013
The talks of Russian politicians about the disaster, awaiting Ukraine after the EU Association Agreement, resemble the bible parable about the speck in your brother’s eye. The Russians had better handle their internal problems and not engage in the indiscriminate criticism of their neighbors – the former republics of the USSR. Otherwise, the transformation of the Russian Federation into a besieged fortress (the economic term of the Russian specialists themselves) will lead to the collapse of whole Russia.
However, saying that the Russians themselves failed to realize their own problems would mean an outrageous lie. For example, minister of economy of Russia, Alexei Ulyukayev openly states that since the second half of 2012 the dynamics of the economic development of the Russian Federation has been showing constant deterioration.
The global players agree. The IMF has lowered the forecast of the economic growth of the Russian Federation in 2013 from 2.5% to 1.5% recently. The World Bank has also lowered its forecast for Russia from 2.3% to 1.8% of the economic growth in 2013. However, the Russians themselves agree with the IMF, forecasting 1.5% as well, which is a very poor index for a country with the raw materials economy.
Now the plot thickens. Due to the enormous capital outflow from the Russian Federation, there is a hole, forming in the state budget, with nothing to fill it in. How can 70 billion dollars be compensated for; which, according to the Ministry of Economy, will have been withdrawn from the country by the end of the year.
The solution seems to have been found – at the expense of the personal retirement funds. Taking into account that there has already been an obvious hole of 30 billion dollars in the Russian state budget for 2014-2017, it can be filled in only with the money which the citizens of the Russian Federation will deposit at private pension funds. And it makes it about 8 billion dollars a year. By the way, Russian premier, Dmitry Medvedev, has already voiced this intention.
Against the background of the fierce overregulation of private business, the washing out of money from the country’s future (by the acute underfunding of medical and educational programs) and also the off-scale, although centralized, corruption, Russia’s near future looks dim. Even now some talks can be heard about the possibility of the recurrence of the defaults like those in 1998 and 2008. Hopefully, things will not go as far as that; but the chances are high.
In this context bringing up the question “whether Ukraine should possibly move in the direction of the Customs Union” sounds awkward. Right, Ukraine cannot be proud of even the same progress as the Russian Federation. But, nevertheless, the recent forecasts show that Ukraine’s economy as of the current year will still grow – although less than by 1% ;but against the background of the declines of the previous years it is a good index. It means, according to the latest forecasts of the IMF, the recovery from the recession for Ukraine. Considering that the IMF does not have warm relations with Ukraine, the given forecast can be thought of as quite unbiased.
Why join the company, which is about to enter the depression you have just begun to recover from? There is no point in doing this.
Moreover, Ukraine’s economic basis needs modernization; and the modernization effective enough to take a small leap. It is only possible in case of the deep and systemic cooperation with the European organizations. Let us be perfectly honest, Russia is far from modern technologies…
Author : nazimiacikgoz