Behind the Bluster, Russia Is Collapsing

[ProfJohn]

Interesting story.

Despite all the noise coming out of Russia it seems that their internal problems may become a huge issue in the future.
link

The bear is back. That's what all too many Russia-watchers have been saying since Russian troops steamrolled Georgia in August, warning that the country's strongman, Vladimir Putin, was clawing his way back toward superpower status. The new Russia's resurgence has been fueled -- quite literally -- by windfall profits from gas and oil, a big jump in defense spending and the cocky attitude on such display during the mauling of Georgia, its U.S.-backed neighbor to the south. Many now believe that the powerful Russian bear of the Cold War years is coming out of hibernation.

Not so fast. Predictions that Russia will again become powerful, rich and influential ignore some simply devastating problems at home that block any march to power. Sure, Russia's army could take tiny Georgia. But Putin's military is still in tatters, armed with rusting weaponry and staffed with indifferent recruits. Meanwhile, a declining population is robbing the military of a new generation of soldiers. Russia's economy is almost totally dependent on the price of oil. And, worst of all, it's facing a public health crisis that verges on the catastrophic.

To be sure, the skylines of Russia's cities are chock-a-block with cranes. Industrial lofts are now the rage in Moscow, Russian tourists crowd far-flung locales from Thailand to the Caribbean, and Russian moguls are snapping up real estate and art in London almost as quickly as their oil-rich counterparts from the Persian Gulf. But behind the shiny surface, Russian society may actually be weaker than it was even during Soviet times. The Kremlin's recent military adventures and tough talk are the bluster of the frail, not the swagger of the strong.

While Russia has capitalized impressively on its oil industry, the volatility of the world oil market means that Putin cannot count on a long-term pipeline of cash flowing from high oil prices. A predicted drop of about one-third in the price of a barrel of oil will surely constrain Putin's ability to carry out his ambitious agendas, both foreign and domestic.

That makes Moscow's announced plan to boost defense spending by close to 26 percent in 2009 -- in order to fully re-arm its military with state-of-the-art weaponry -- a dicey proposition. What the world saw in Georgia was a badly outdated arsenal, one that would take many years to replace -- even assuming the country could afford the $200 billion cost.

Something even larger is blocking Russia's march. Recent decades, most notably since the breakup of the Soviet Union in 1991, have seen an appalling deterioration in the health of the Russian population, anchoring Russia not in the forefront of developed countries but among the most backward of nations.

This is a tragedy of huge proportions -- but not a particularly surprising one, at least to me. I followed population, health and environmental issues in the Soviet Union for decades, and more recently, I have reported on diseases such as the HIV/AIDS epidemic ravaging the Russian population. I've visited Russia more than 50 times over the years, so I can say from firsthand experience that this national calamity isn't happening suddenly. It's happening inexorably.

According to U.N. figures, the average life expectancy for a Russian man is 59 years -- putting the country at about 166th place in the world longevity sweepstakes, one notch above Gambia. For women, the picture is somewhat rosier: They can expect to live, on average, 73 years, barely beating out the Moldovans. But there are still some 126 countries where they could expect to live longer. And the gap between expected longevity for men and for women -- 14 years -- is the largest in the developed world.

So what's killing the Russians? All the usual suspects -- HIV/AIDS, tuberculosis, alcoholism, cancer, cardiovascular and circulatory diseases, suicides, smoking, traffic accidents -- but they occur in alarmingly large numbers, and Moscow has neither the resources nor the will to stem the tide. Consider this:

Three times as many Russians die from heart-related illnesses as do Americans or Europeans, per each 100,000 people.

Tuberculosis deaths in Russia are about triple the World Health Organization's definition of an epidemic, which is based on a new-case rate of 50 cases per 100,000 people.

Average alcohol consumption per capita is double the rate the WHO considers dangerous to one's health.

About 1 million people in Russia have been diagnosed with HIV or AIDS, according to WHO estimates.

Using mid-year figures, it's estimated that 25 percent more new HIV/AIDS cases will be recorded this year than were logged in 2007.

And none of this is likely to get better any time soon. Peter Piot, the head of UNAIDS, the U.N. agency created in response to the epidemic, told a press conference this summer that he is "very pessimistic about what is going on in Russia and Eastern Europe . . . where there is the least progress." This should be all the more worrisome because young people are most at risk in Russia. In the United States and Western Europe, 70 percent of those with HIV/AIDS are men over age 30; in Russia, 80 percent of this group are aged 15 to 29. And although injected-drug users represent about 65 percent of Russia's cases, the country has officially rejected methadone as a treatment, even though it would likely reduce the potential for HIV infections that lead to AIDS.

And then there's tuberculosis -- remember tuberculosis? In the United States, with a population of 303 million, 650 people died of the disease in 2007. In Russia, which has a total of 142 million people, an astonishing 24,000 of them died of tuberculosis in 2007. Can it possibly be coincidental that, according to Gennady Onishchenko, the country's chief public health physician, only 9 percent of Russian TB hospitals meet current hygienic standards, 21 percent lack either hot or cold running water, 11 percent lack a sewer system, and 20 percent have a shortage of TB drugs? Hardly.

On the other end of the lifeline, the news isn't much better. Russia's birth rate has been declining for more than a decade, and even a recent increase in births will be limited by the fact that the number of women age 20 to 29 (those responsible for two-thirds of all babies) will drop markedly in the next four or five years to mirror the 50 percent drop in the birth rate in the late 1980s and the 1990s. And, sadly, the health of Russia's newborns is quite poor, with about 70 percent of them experiencing complications at birth.

Last summer, Piot of UNAIDS said that bringing Russia's HIV/AIDS epidemic under control was "a matter of political leadership and of changing the policy." He might just as well have been talking about the much larger public health crisis that threatens this vast country. But the policies seem unlikely to change as the bear lumbers along, driven by disastrously misplaced priorities and the blindingly unrealistic expectations of a resentment-driven political leadership. Moscow remains bent on ignoring the devastating truth: The nation is not just sick but dying.

 

[Dari]

This is old news. Very old news.

 

[Veramocor]

Russian Demographics

Looks like child tax breaks can reverse the trend, eventually.

 

[seemingly random]

Something other than politics

Boring.

We should get this renamed from the p&n forum to the p forum.

 

[miketheidiot]

i still can't believe people bought into the 'russia as a major power' crap

 

[theeedude]

Russia is a messed up country. Just mentally it's screwed up. Money is concentrated in overcrowded Moscow where people are focused on careers, entertainment, and showing off and aren't interested in raising kids, or simply don't have enough living space to do so. At the same time, majority of the country is destitute and lacking economic and other resources that would encourage people to have more kids. Moscow is the black hole that is sucking the life out of the rest of the country. Since power is centralized, and democratic institutions weak, Russian leaders are more afraid of violent discontent in Moscow than regional voters voting them out, so it is in their best interest to keep Muscovites happy at the expense of the rest of the country. Of course long term consequence of that political imbalance is the demographic situation on display now.

 

[miketheidiot]

Originally posted by: senseamp
Russia is a messed up country. Just mentally it's screwed up. Money is concentrated in overcrowded Moscow where people are focused on careers, entertainment, and showing off and aren't interested in raising kids, or simply don't have enough living space to do so. At the same time, majority of the country is destitute and lacking economic and other resources that would encourage people to have more kids. Moscow is the black hole that is sucking the life out of the rest of the country. Since power is centralized, and democratic institutions weak, Russian leaders are more afraid of violent discontent in Moscow than regional voters voting them out, so it is in their best interest to keep Muscovites happy at the expense of the rest of the country. Of course long term consequence of that political imbalance is the demographic situation on display now.

reminds me of france a few centuries ago when you look at it like that.

 

[razor2025]

Originally posted by: miketheidiot

Originally posted by: senseamp
Russia is a messed up country. Just mentally it's screwed up. Money is concentrated in overcrowded Moscow where people are focused on careers, entertainment, and showing off and aren't interested in raising kids, or simply don't have enough living space to do so. At the same time, majority of the country is destitute and lacking economic and other resources that would encourage people to have more kids. Moscow is the black hole that is sucking the life out of the rest of the country. Since power is centralized, and democratic institutions weak, Russian leaders are more afraid of violent discontent in Moscow than regional voters voting them out, so it is in their best interest to keep Muscovites happy at the expense of the rest of the country. Of course long term consequence of that political imbalance is the demographic situation on display now.

reminds me of france a few centuries ago when you look at it like that.

Or the Tsarist Russia...

 

[Brigandier]

Originally posted by: razor2025

Originally posted by: miketheidiot

reminds me of france a few centuries ago when you look at it like that.

Or the Tsarist Russia...

Tsarist Russia was France's bastard child. The only thing more fashionable in Tsarist Russia than to appear European, was to appear French. Much of the original revolutionary ideas in Russia were founded by fashionable noble men appearing European, bringing the seeds of revolution.

Who is to be surprised that this is repeating itself? History doesn't ever really change, after all.

 

[scruffypup]

Russia's military is outdated compared to ours, but they still are a force to be reckoned with. I would say that they could take on most countries very nicely with the exception of the United States, China and maybe the UK. It is also interesting that with the force they already wield that they are pouring more money into defense, which makes it even more imperative to keep an eye on what they are doing.

Now I agree that their economy and a lot of the country itself is in disarray and a mess, however I think that they are trying to change that. Also they are very oil dependent for national revenues,... which is a big reason they were wanting to move into Georgia and capture the oil pipelines and are furthering their bonds with Venezuela.

I don't think dismissing them so readily is a wise thing, especially when they have recently threatened countries with nuclear attack. Of course that probably holds no serious teeth behind the threat, but it is something to consider, you just never know.

 

[JJChicken]

Originally posted by: senseamp
Russia is a messed up country. Just mentally it's screwed up. Money is concentrated in overcrowded Moscow where people are focused on careers, entertainment, and showing off and aren't interested in raising kids, or simply don't have enough living space to do so. At the same time, majority of the country is destitute and lacking economic and other resources that would encourage people to have more kids. Moscow is the black hole that is sucking the life out of the rest of the country. Since power is centralized, and democratic institutions weak, Russian leaders are more afraid of violent discontent in Moscow than regional voters voting them out, so it is in their best interest to keep Muscovites happy at the expense of the rest of the country. Of course long term consequence of that political imbalance is the demographic situation on display now.

1st Bolded: Ala New York?

2nd Bolded: Wall Street?

3rd Bolded: $700b Bailout?

The similarities are striking and scaring.

 

[Colt45]

Old news. If things get bad enough they'll just resurrect Lenin.

 

[StageLeft]

This is old news. Very old news.

Really? The guy wrote it before Georgia was fighting Russia, or are you pointing to the main points (which may be old news and probably are)?

In any case, interesting article.

59 years for men, that is absolutely AWFUL.

I would say that they could take on most countries very nicely with the exception of the United States, China and maybe the UK.

Not sure how they'd fare against France, but Russia has a massive nuclear arsenal but an aged military, to be sure. France has a few carriers IIRC vs Russia which has one carrier that doesn't really work very well, if at all most of the time.

Anybody watched what's happened to our markets? They are in tatters. Russia? CLOBBERED. I don't know what's up there but it's a complete horror show.

 

[Genx87]

afaik 59 is 3 years less than what it was in 05 when it was 62.

And this new Russian bear wasnt ever a real threat imo. Our federal budget is more than their entire economy. How in the hell are they going to compete militarily with that kind of economic buying power?

Their demographics are in trouble as well. It is hard to grow an economy with any kind of sustainability with a negative population growth rate.

 

[PokerGuy]

The problems in Russia should worry us a lot more than what they seem to. It's like a cornered animal -- as things keep getting worse they are more and morel likely to engage in risky "lash out" type behavior. Their military might be ancient and rusty, but they still have an arsenal of nukes that could end up falling in the wrong hands.....

 

[herm0016]

Originally posted by: Barack Obama

1st Bolded: Ala New York?

2nd Bolded: Wall Street?

3rd Bolded: $700b Bailout?

The similarities are striking and scaring.

the people of the rest of the country are not dying of TB because the hospitals suck.
I do not think they are worried about a bunch of people with rusty pitch forks either.

you are reaching to the extreme.

 

[GTKeeper]

I remember reading about this from time to time in the Economist since about 2002.... nothing new here.

 

[gevorg]

Some facts on Russian economy:

Russian GDP PPP per capita has grown from $4,200 in 2000 to ~$14,600 in 2008. Still below US and Western Europe, but that raise in GDP has reduced the poverty line from horrible 40% in 2000 to ~16% in 2008. Not bad if they can keep that pace or at least stabilize it.

Russian government budget for 2008 was calculated based on the oil price of $75/barrel. We can definitely see some corrections of oil prices and bubble busts, but its very unlikely that oil prices will stay under $100 in the long-term. Plus, recent contracts for energy pipelines with Germany and Italy can stabilize energy revenues even greater.

Russia's reserves of foreign exchange and gold is third biggest in the world, after China and Japan. Its seven times more than US reserves, but about three times less than China's. This shows that even though our economy is bigger than both Russia and China together, they still save more than we do. Those reserves can be used for bailouts, instead of issuing more fiat money.

In the past few years, thanks to oil revenues of course, Russia has paid-off most (if not all) of its Soviet-era debt. This allowed Russian banks to increase their ratings and use lower interest rates than before.

Financial Times made a very interesting comparison table of current Russian financial crisis due to credit crunch vs '98 Asian financial crisis.
Click on 10-year view here: http://www.ft.com/cms/s/0/0361...b148-0000779fd18c.html

Russia's IT sector has been growing on average by 25-30% per year since 2000. Although its still smaller than countries like India, some niche high-end markets like algorithm design already exceed India's.

Sources: mostly from CIA World Factbook 2008

 

[wwswimming]

Russians actually have something to sell. They have huge oil reserves that the world needs,
& natural gas reserves that Europe needs.

Maybe they'll work out an exchange rate based on Nehalem CPU's.