Friday, March 12, 2010

Window on Eurasia: Russia has Gone from Being ‘Locomotive’ of the CIS to Being Its ‘Caboose,’ Moscow’s Sberbank Says

Paul Goble

Vienna, March 12 – Russia, despite “all its imperial ambitions and pretensions,” is no longer “the locomotive” for the economies of the Commonwealth of Independent States but instead, as the current economic crisis has shown, is now “the caboose,” according to a study prepared by Moscow’s Sberbank.
In a report released this week, that bank’s Center for Macro-Economic Research compares the vectors of economic growth in the former Soviet republics and draws from that two conclusions, neither of which will be welcome to the powers that be in the Russian Federation (
On the one hand, the bank’s experts found, the other petroleum-exporting countries have performed far better than Russia, thus showing the regular claims by the powers that be in the Russian capital that the situation in the Russian economy now is largely the result of falling energy prices on the world market.
Such claims, the report shows, in the words of commentator Maksim Blant, thus are shown to be “a lie and an attempt to escape responsibility for [their] failed economic policies.” Indeed, he says, the report’s greatest contribution would be realized if it led the government and analytic community to stop invoking “raw material dependence” as an explanation.
But the Russian powers that be have pushed that line so hard and so long and even “independent experts” have made it part of the “mainstream” that any move away from it seems unlikely anytime soon, even with all the evidence that the Sberbank report provides, Blant suggests.
And on the other – and this conclusion too calls into question many of the pronouncements of Russian leaders– the Sberbank experts concluded that while a decade ago, the countries in the CIS were “strongly dependent” on Russia economically, “the crisis has shown that such a situation is receding into the past.”
In dramatic language, the bank’s analysts suggest that Russia is no longer “the locomotive” but rather “the caboose” in this regard, although they acknowledge the importance Russia serves as an employer for migrant workers from many CIS states and as a source of financial assistance to their governments, two key forms of influence.
Up to 60 percent of migrants from Belarus, Armenia and Ukraine are going to Russia, the bank reports, while 85 percent of those leaving Kyrgyzstan and 40 percent of those in Moldova seeking work abroad do so. And with regard to assistance, Russia has provided more to its CIS partners “than the IMF, the EBRD and the World Bank taken together.”
That may have slowed but it has not stopped the reorientation of the economies of the CIS countries away from Russia, the Sberbank analysts said, with “the role of Russia falling as it were because earlier it dominated without any alternative” while now these countries have choices (,
Russia was the basic and unchallenged trading partner of all these countries ten years ago, but “now this situation has changed significantly. The countries located to the east of the Urals [, for example,] even before the crisis were ever more focused on the rapidly developing markets in Asia, and in the last year finally reoriented themselves toward China.”
The Sberbank report, according to Blant, thus highlights the unfortunate reality that “as long as the Russian powers that be and expert community start from false premises, the situation [that Russia and the other CIS countries have experienced in recent years and especially during the crisis] will repeat itself.”
“The present crisis,” he writes, is not the first in the world economy and won’t be the last.” And if Moscow fails to draw the lessons offered by the Sberbank report and thus does not correct its mistakes and shortcomings, he concludes, then it will make its own situation even worse. But “unfortunately,” he says, “the Russian powers that be are not capable of doing so.”

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