Strategy Page
May 6, 2021:
Russians are dismayed at the performance of their economy compared to the East European countries that also lost their communist government (and Russian occupation forces) after 1990. Those nations quickly established economic, diplomatic and military links with Western Europe and the rest of the developed nations. Russia tried to do the same but was hampered by more corruption and less experience with free market economies. In 1991 Russia had been without a free market economy for 70 years. There were was no tradition of free market economics. East European countries (as well as China) were different. They had not lost their free market economies until the late 1940s, meaning it was only 45 years since communism replaced free markets. These nations also had a lot of expatriates in the West who had prospered in the free market and still had ties with family back in the communist homeland. A lot of those expatriate kin were welcomed back even if they talked the local language with an odd accent. This made a big difference but Russian politicians chose to ignore this and blame the poor Russian economic performance on outsiders, namely the West. In 2014 the blame game turned violent when Russian invaded Ukraine, partly because Ukrainians wanted to emulate the East European nations. The invasion triggered economic sanctions from the West. Then there was a technical revolution in extracting oil (fracking) that turned the U.S. and Canada into major oil producers and exporters. This cut the world prince of Russia’s main export, oil and natural gas, by more than half. Over the next five years the major East European nations (Poland, Romania and Hungary) grew about 4 percent a year while Russian GDP grew by less than one percent a year. By 2019 most East European nations, including Turkey had higher per-capital income than Russians. This loss was widely felt, and experienced in Russia.