Tuesday, February 16, 1999
Russia is rapidly unravelling
ECONOMY: Capitalism must be figured out to save crumbling
country
While writing this column, my roommate asked me: Who wants to
read about Russia other than a handful of Russian students roaming
the dark musty halls of the Kinsey building, home to the Slavic
language department? Although political apathy runs deep across
campus, I firmly believe that there is something vital and
interesting to be said about a country with which we shared a
Mutual Assured Destruction (MAD) policy. We actually agreed to
annihilate each other if nuclear war ever broke out.
And who can forget our purchase of Alaska for a few million
bucks? (Don’t tell the Russians, but we suspected there was oil
there.)
Didn’t you enjoy watching Sean Connery playing a defecting
Russian submarine captain in "The Hunt for the Red October"?
Who can forget the Cuban missile crisis of the ’60s (Soviet
Intercontinental Ballistic Missiles in Cuba were pointing at us),
or the Star Wars debacle of Ronald Reagan. (The anti-missile laser
system sounds cool, but for the billions we spent, it didn’t work.)
So now that the once glorious Soviet Union lies in shambles, we
should take a closer look at why Russia is in an economic and
political mess.
The Russians have always aspired to be a part of the G7, the
group of leading industrial countries. But maybe they should
consider another club, which I call the D7, the most heavily
indebted group of nations that have borrowed incessantly and failed
to pay back the International Monetary Fund (IMF).
With last year’s financial crash, the Russian government
defaulted on $40 billion of ruble bonds. In the past few months,
the government has declared bankruptcy, the ruble has been devalued
to almost nothing, the country faces over $160 billion in foreign
debt and has $17.5 billion due this year to the IMF and the world
bank (mostly just in interest). Yes, Russia is hurting.
But what the world bank, the IMF, the United States and European
countries need to do is stop lending Russia money because they just
seem to keep squandering it anyway.
Misfortune has piled upon misfortune. Since the ruble’s crash in
August, Russia has had the worst harvest in 45 years. The long
lines of perestroika may be back. The price of oil, Russia’s main
foreign exchange commodity, has tumbled. The inflation rate may
rise to 100 percent or even higher if the government decides to pay
its citizens by printing more money.
If you think teachers are underpaid in this country, think about
the $20 a month salary that teachers earn in Russia and have not
been paid for a year. And it’s not just teachers, but factory
workers, the militia, and just about anybody else you can think
of.
In one town with a population just over 100,000 somewhere off in
Siberia, the citizens have run out of logs for heating, have no
running water or electricity, and are killing their neighbors’ dogs
for food. How could a town even exist in such desolate
isolation?
Well, during Stalin’s brilliant industrializing years, he
decided Russia needed to develop its remotest permafrost regions
and began a program that created incentive for people to move out
to places like Siberia, where they are now trapped and
starving.
The country is back to a feudal economic bartering system.
Apparently, in one city the canned beef industry pays the aluminum
packaging industry in canned beef.
A company that produces drill bits had its contract terminated
by the government, but continued having employees make drill pieces
just to give them the illusion of work. Since the company didn’t
have any money to pay its workers, it paid them in drill bits,
which the workers sold on the streets. This in turn put the
merchants who sell the drill bits out of business because they
couldn’t compete with a cheap and saturated street market.
The murder rate in Russia may now be the world’s highest. The
Russian mafia controls the better half of the economy and unless we
can help it, cheap nuclear weapons may be hitting the world
markets.
Right now, the United States is debating about buying Russia’s
leaky nuclear arsenal, but fears that this may just motivate them
to produce more weapons.
Other problems include the decline in male life expectancy,
which has fallen to levels similar to Africa’s 58-year average life
span, and the decrease in population by 800,000 souls a year.
I’ve heard some strange stories about the Russian Mafia.
Supposedly, an undercover FBI agent foiled the plans of some
Russian entrepreneur who wanted to exchange a Russian submarine for
millions in Colombian cocaine. Apparently, this deal transpired at
some bar in Florida.
Also a friend of mine who recently visited the country said he
was harassed by police who demanded a "mind your own business tax."
He ended up emptying his wallet. Steve Forbes should run using that
slogan.
Yeltsin has shown a remarkable inability to lead the country. He
is usually seen stumbling around drunk, making unintelligible
comments at world conferences or waving to his citizens on his way
to yet another vacation. I can’t figure out if he is ill or simply
intoxicated with good Russian Vodka.
Ever since the inception of a pseudo-democracy in 1991 when
Yeltsin came to power, Russia has been on a steady decline. The
country has no idea how capitalism is supposed to work.
You see, when we normally earn money, we spend it, faithfully
putting it back into the economy by buying products, stimulating
business and thus keeping the wheels of the system spinning
smoothly. But in Russia, the money is either squandered by corrupt
government officials, wired into the Swiss bank accounts of a
wealthy few, or simply stuffed under the mattress by the country’s
citizens because they want to save their wealth until it’s worth
more.
I think Russia really needs to abandon its space projects. The
other day, Russia’s newest 80-foot mirrors failed to unravel on
some satellite. The space station is falling apart, but cosmonauts
continue to tinker around up there anyways. Why does Russia even
try to maintain a semblance of having a leading space program? It
just seems silly and futile for them to even be up in space when
they can’t take care of problems at home.
In this "unipolar" world, Russia’s days as our No. 1 enemy are
over. I feel almost nostalgic looking back at all of those Cold War
movies like "Rocky IV," watching Dolph Lundgren train with the most
state-of-the-art equipment, while our American Rocky ran through
the snow. Wait, shouldn’t it be the other way around now? I don’t
think the Russians can afford to train their athletes on treadmills
anymore.
With Russia due to elect a new Parliament in December, and the
next presidential elections in 2000, the West can only wait and see
if these changes will bring reform and progress to the ailing
country. Russia now has Yevgeny Primakov, the former KGB agent and
currently prime minister, as the front runner to lead the
country.
I hope things improve soon, because otherwise we might see Boris
Yeltsin appear side by side with former President Gorbachev in
another Pizza Hut commercial.
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