By Dr. Paul Craig Roberts and Michael Hudson:
Putin’s approval rating is high, but it has declined over the past year. The decline is mainly related to domestic policy. Apparently, the public perceives recent Kremlin economic policy as a continuation of the disastrous policies that Washington imposed on Russia in the 1990s when Russia was loaded up with foreign debt while state assets were privatized and plundered by oligarchs sponsored by the West who “cashed out” by selling the assets to foreigners.
The approval rating of Putin and the government dropped in response to the recent increases in the retirement age and value added tax. The former raised concerns about pension security and reminded Russians of the collapse of Soviet pensions. The latter reduced consumer disposable income and lowered consumer demand and the economic growth rate. These policies represent austerity imposed on the domestic population instead of on foreign creditors and reflect the neoliberal view that austerity leads to prosperity.
Russia is experiencing capital outflows due to the Russian private sector’s repayment of loans to Western creditors. Russia has experienced over $25 billion a year of capital outflows since the early 1990s, accumulating to over a trillion dollars. This money could have been invested in Russia itself to raise the productivity and living standards of its citizens. The outflow puts the ruble under pressure, and the interest payments draw money out of the country away from Russian uses.
Putin’s approval rating is high, but it has declined over the past year. The decline is mainly related to domestic policy. Apparently, the public perceives recent Kremlin economic policy as a continuation of the disastrous policies that Washington imposed on Russia in the 1990s when Russia was loaded up with foreign debt while state assets were privatized and plundered by oligarchs sponsored by the West who “cashed out” by selling the assets to foreigners.
The approval rating of Putin and the government dropped in response to the recent increases in the retirement age and value added tax. The former raised concerns about pension security and reminded Russians of the collapse of Soviet pensions. The latter reduced consumer disposable income and lowered consumer demand and the economic growth rate. These policies represent austerity imposed on the domestic population instead of on foreign creditors and reflect the neoliberal view that austerity leads to prosperity.
Russia is experiencing capital outflows due to the Russian private sector’s repayment of loans to Western creditors. Russia has experienced over $25 billion a year of capital outflows since the early 1990s, accumulating to over a trillion dollars. This money could have been invested in Russia itself to raise the productivity and living standards of its citizens. The outflow puts the ruble under pressure, and the interest payments draw money out of the country away from Russian uses.