A Top-to-Bottom Review of the Russian Economy

Russia, as a global power, is in an irreversible decline.

by George Friedman
January 16, 2018

Summary

It’s no secret that we believe Russia, as a global power, is on the decline. And it’s no secret that Russia owes its decline partly to the fall of the price of hydrocarbons, which drive its economy and account for much of its tax revenue. But resources such as oil and natural gas are only one of the three legs that prop up the Russian economy, which would falter without the other two: resource distribution and social spending. The former is structured to prevent the oligarchy from challenging Moscow’s power; the latter is structured to prevent the people from usurping it.

The economic framework that underpins Russia has been in place for decades – even during the Cold War. When the Soviet Union collapsed in the early 1990s, money was transferred to the oligarchs in the hopes of maintaining political stability. But instead of reinvesting the money into Russia, the oligarchs sent it abroad, squandering an opportunity to create a long-term capital …