{"id":77552,"date":"2016-08-15T12:00:50","date_gmt":"2016-08-15T11:00:50","guid":{"rendered":"https:\/\/www.transcend.org\/tms\/?p=77552"},"modified":"2016-08-12T17:06:27","modified_gmt":"2016-08-12T16:06:27","slug":"will-russia-reject-neoliberalism","status":"publish","type":"post","link":"https:\/\/www.transcend.org\/tms\/2016\/08\/will-russia-reject-neoliberalism\/","title":{"rendered":"Will Russia Reject Neoliberalism?"},"content":{"rendered":"
\"Russian<\/a>

Russian President Vladimir Putin
Ververidis Vasilis | Shutterstock.com<\/p><\/div>\n

11 Aug 2016 – <\/em>According to various reports, the Russian government is reconsidering the neoliberal policy that has served Russia so badly since the collapse of the Soviet Union.\u00a0 If Russia had adopted an intelligent economic policy, its economy would be far ahead of where it stands today. \u00a0It would have avoided most of the capital flight to the West by relying on self-finance.<\/p>\n

Washington took advantage of a demoralized Russian government, which looked to Washington for guidance in the post-Soviet era.\u00a0 Thinking that the rivalry between the two countries had ended with the Soviet collapse, Russians trusted American advice to modernize its economy with best-practice Western ideas. Instead, Washington abused this trust, and saddled Russia with an economic policy designed to carve up Russian economic assets and transfer ownership into foreign hands.\u00a0 By tricking\u00a0Russia into accepting foreign capital and exposing the ruble to currency speculation, Washington made sure that the US could destabilize Russia with capital outflows and assaults on the ruble\u2019s exchange value.\u00a0 Only a government unfamiliar with the neoconservative aim of US world hegemony would have exposed its economic system to such foreign manipulation.<\/p>\n

The sanctions that Washington imposed \u2013 and forced Europe to impose \u2013 on Russia show how neoliberal economics works against Russia. Its call for high interest rates and austerity sank the Russian economy \u2013 needlessly. \u00a0The ruble was knocked down by capital outflows, resulting in the neoliberal central bank squandering Russia\u2019s foreign reserves in an effort to support the ruble but actually supported capital flight.<\/p>\n

Even Vladimir Putin finds attractive the romantic notion of a global economy to which every country has equal access. But the problems resulting from neoliberal policy forced him to turn to import substitution in order to make the Russian economy less dependent on imports.\u00a0 It also made Putin realize that if Russia were to have one foot in the Western economic order, it needed to have the other foot in the new economic order being constructed with China, India, and former central Asian Soviet republics.<\/p>\n

Neoliberal economics prescribes a dependency policy that relies on foreign loans and foreign investment.\u00a0 This policy creates foreign currency debt and foreign ownership of Russian profits.\u00a0 These are dangerous vulnerabilities for a nation declared by Washington to be \u201can existential threat to the US.\u201d<\/p>\n

The economic establishment that Washington set up for Russia is neoliberal. Most notably, the head of the central bank Elvira Nabiullina, minister of economic development Alexei Ulyukayev, and the current and former finance ministers, Anton Siluanov and Alexei Kudrin, are doctrinaire neoliberals.\u00a0 This crowd wanted to deal with Russia\u2019s budget deficit by selling public assets to foreigners. If actually carried through, that policy would give Washington more control over Russia\u2019s economy.<\/p>\n

Opposed to this collection of \u201cjunk economists,\u201d stands Sergey Glaziev.\u00a0 Boris Titov and Andrei Klepach are reported to be his allies.<\/p>\n

This group understands that neoliberal policies make Russia\u2019s economy susceptible to destabilization by Washington if the US wants to punish the Russian government for not following Washington\u2019s foreign policy.\u00a0 Their aim is to promote a more self-sufficient Russia in order to protect the nation\u2019s sovereignty and the government\u2019s ability to act in Russia\u2019s national interests rather than subjugate these interests to those of Washington. The neoliberal model is not a development model, but is purely extractive. Americans have characterized it as making Russia or other dependencies \u201chewers of wood and drawers of water\u201d \u2013 or in Russia\u2019s case, oil, gas, platinum and diamonds.<\/p>\n

Self-sufficiency means not being import dependent or dependent on foreign capital for investment that could be financed by Russia\u2019s central bank.\u00a0 It also means keeping strategic parts of the economy in public, not private, hands. Basic infrastructure services should be provided to the economy at cost, on a subsidized basis or freely, not turned over to foreign owners to extract monopoly rent.\u00a0 Glaziev also wants the ruble\u2019s exchange value to be set by the central bank, not by speculators in the currency market.<\/p>\n

Neoliberal economists do not acknowledge that the economic development of a nation with natural resource endowments such as Russia has can be financed by the central bank creating the money required to undertake the projects.\u00a0 They pretend that this would be inflationary. \u00a0Neoliberals deny the long-recognized fact that, in terms of the quantity of money, it makes no difference whether the money\u00a0comes from the central bank or from private banks creating money by making loans or from abroad.\u00a0 The difference is that if money comes from private banks or from abroad, interest must be paid to the banks, and profits have to be shared with foreign investors, who end up with some control over the economy.<\/p>\n

Apparently, Russia\u2019s neoliberals are insensitive to the threat that Washington and its European vassals pose to the Russian state. On the basis of lies Washington has imposed economic sanctions on Russia.\u00a0This political demonization is as fictitious as is the neoliberal economic propaganda. \u00a0On the basis of such lies, Washington is building up military forces and missile bases on Russia\u2019s borders and in Russian waters.\u00a0 Washington seeks to overthrow former Russian or Soviet provinces and install regimes hostile to Russia, as in Ukraine and Georgia.\u00a0 Russia is continually demonized by Washington and NATO.\u00a0 Washington even politicized the Olympic games and prevented the participation of many Russian athletes.<\/p>\n

Despite these overt hostile moves against Russia, Russian neoliberals still believe that the economic policies that Washington urges on Russia are in Russia\u2019s interest, not intended to gain control of its economy. Hooking Russia\u2019s fate to Western hegemony under these conditions would doom Russian sovereignty.<\/p>\n

_____________________________________<\/a><\/p>\n

Paul Craig Roberts<\/em>\u00a0is a former Assistant Secretary of the US Treasury and Associate Editor of the <\/em>Wall Street Journal.\u00a0Roberts\u2019\u00a0<\/em>How the Economy Was Lost<\/a>\u00a0is now available from CounterPunch in electronic format.\u00a0His latest book is\u00a0<\/em>The Neoconservative Threat to World Order<\/a>.<\/p>\n

Michael Hudson\u2019s<\/em>\u00a0new book,\u00a0<\/em>Killing the Host<\/a>\u00a0is published in e-format by CounterPunch Books and in print by\u00a0Islet<\/a>. He can be reached via his website,\u00a0mh@michael-hudson.com<\/a><\/em><\/p>\n

Go to Original \u2013 counterpunch.org<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Paul Craig Roberts and Michael Hudson explain why hooking Russia’s fate to Western neoliberalism would doom the country’s sovereignty.<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[180],"tags":[],"class_list":["post-77552","post","type-post","status-publish","format-standard","hentry","category-brics"],"_links":{"self":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/posts\/77552","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/comments?post=77552"}],"version-history":[{"count":0,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/posts\/77552\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/media?parent=77552"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/categories?post=77552"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/tags?post=77552"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}