By pjain      Published Nov. 10, 2020, 1:30 a.m. in blog Geo-Politics   

Russian Economics and Reforms Needed

Instead of reforming the economy Putin is starting a Latin American populist style of governing by offering cash to whoever wants like 1% of GDP for more babies (the same like Chavez in Venezuela).

Oil: 2011 Boom but Economy was NOT developed

The oil boom as world's biggest oil producer and riding high on energy prices only underlines the need to move quickly to a new model of economic development while times are still good. With oil revenues surging, Putin said the government would cut its budget deficit to 1%-1.5% this year and eliminate it altogether in the future.

  1. FDI initiative Russia aimed to attract $50bn-60bn in foreign capital in the coming years, compared with a rate of $40.5bn in 2010.

  2. Health and pharmaceutical industry. Putin pushed for companies doing business in Russia may be required to invest more money in the country. "We spend billions on orders of medical equipment from foreign companies," he said. "I think it's natural to state that the foreign partners would also gradually move to Russia."

  3. Food and inflation hurting living. Wildfires last summer sparked shortages and sharp rises in grains and other foodstuffs. The government was closely watching the areas affected by the fires, he said, adding that inflation would not exceed 7.5% this year.

2016 Oil Crash hurt Russian Wealth

Russian economy needs to diversify away from energy and mineral exports, and reduce its economic dependence on the outside world. Economic weakness and sensitivity to external shocks result in threats to national sovereignty.


Putin's Wag the Dog - Distract Power Populace with Foreign Wars

2016-2020 Military Adventurism and Sanctions

2014 Annexation of Crimea

Ukraine - Moscow's invasion

The blatant invasion was masked as the work of rebel militants and a political movement in Crimea that supposedly voted for independence without any interference from the Kremlin.

Belarus - elections interference, possible invasion

Belarus remains Russia's remaining foothold in Europe, and the last of the Slavic countries it can count as an ally.

  • 1995+ Russia's man Alexander Lukashenko, after a quarter century in power and he remains one of Putin's staunchest allies, – "a trusted sidekick at various Russian-led Eurasian Economic Union integration projects and Moscow parades that most former Soviet republic leaders seek to avoid."

The Kremlin has increasingly bristled at the political protests in Belarus following the disputed reelection of its president

  • Aug 2020 civil unrest sprang up at the appearance of a rigged election - Belarus is a former Soviet state that serve as a template for the potential of unrest in the streets of Moscow itself. This points to citizens getting fed up of corruption within Russia itself.

  • Sep 2020 Putin in Sochi met and got concessions from Lukashenko.

  • Putin has threatened to take action in Belarus even a covert militarized response Russia employed in Ukraine. Some analysts believe Russia may have already dispatched unmarked troops and intelligence operatives to prop up their loyal ally in Minsk, or at least prevent further fallout.

  • Shock troops have been sent - possibly under cover as "military cooperation" as a stark warning to Lukanshenko of the consequences of not quelling the civil unrest among his countrymen.


– 2018 The same Novichok was used in the 2018 assassination attempt against another noted enemy of the Putin administration, former Russian spy Sergei Skripal in Salisbury, England.

  • Sep 2020 Germany hinted at the possibility of sanctioning Russia over the apparent poisoning of political dissident Alexei Navalny – what his staff considers an assassination attempt. The German government has confirmed Navalny was poisoned with a Russian military-grade nerve agent from a family of chemical weapons known as Novichok

2024 Next Russian Elections fraught with Protests against Putin

Recent popular saying is "Belarus in 2020 is what Russia will be in 2024, the next presidential elections in Russia. j.. This is inspiring things .. and protests started in far east of Russia, and can hit mainstream too." This is another reason Putin wants Lukashenko to "handle" Belarus rebels.

Energy Politics and Economics

Germany, Nord Stream 2 and Attempted US Sanctions

Chancellor Angela Merkel has also faced stepped up pressure from the German people to kill construction of Nord Stream 2, the nearly completed $11 billion pipeline project that not only gives Russia a direct outlet for natural gas in Western Europe but also created a wedge between America and its close ally in Berlin.

Oil Prices fall and Covid Lockdowns Beat Economy

  • 2020 Covid decimated Russia. Russia has the fourth-highest number of cases globally as the death toll there mounts and this week became the fourth country to reach 1 million cases.

  • Sputnik 5 Vaccine claims seem "despo" and designed to evoke the so-called glory days of Russian scientific and technological power. Instead it was panned by leading U.S. epidemiologist Anthony Fauci as "bogus," and researchers in the journal Nature highlighted what they saw as "questionable" claims about its effectiveness.

==== Russian Demographics, Family Emotions, Key Factors, and Futures

Real problem is high death rate and low Lifespan of 58 years of the Russian men - Better to Invest in Health Care

The present life expectancy for a typical male is about 58 years, below what it was 20 years ago in Russia. This is far below most of the developed world eg USA where it is 78 and upto 84 in Japan. Even Indian men live to 67.

That net population decline rate is a function not only of the birthrate mainly due to the high mortality due to the very poor health of the average Russian man.

While the Russian birth rate is comparable to that of developed countries, its death rate is much higher, especially among working-age males due to a comparatively high rate of fatalities caused by heart disease and other external causes such as accidents. The Russian death rate in 2010 was 14.3 per 1000 citizens.

  1. 1990s Collapse of USSR. Mass privatization, an element of the economic-reform package nicknamed shock therapy, clearly correlates with higher mortality rates. While many billionaires were created, the policies ignored the human cost of the policies they were promoting, such as unemployment and human suffering, leading to an early death.

  2. A deeper centuries old problem is severe alcoholism which kills millions early. This is a LONG TERM problem even from 1960-2005 not just the worst years of mid 90s collapse.

  3. Very early 1990s there was temporary compliance with Mikhail Gorbachev's anti-alcohol campaign which reduced deaths temporarily. 1985 death rate as the base, while that was in fact the very maximum of the effect of the anti-alcohol campaign.
  4. In fact, early 1990s spike was perhaps caused by exhaustion of the compliance as people just gave up.
  5. Then in the mid '90s attributed alcohol for more than half the deaths (52%) among Russians aged 15 to 54 compared to under 4% of all deaths in this age bracket in rest of world.

  6. Given Russia's issues with HIV - which have been hard to fix due to lack of drugs or value placed. Russia's recent attacks on homosexuals suggests the country is not a tolerant one.

Current health expenditures in Russia are only about 6 percent of GDP; putting 1% of GDP would be a 17 percent increase in health expenditures.

Low Birth Rates, TFR of 1.28

  1. TFR has had a far drop from mid 1800s when it was 7.0

  2. On Stalinism basically it has stagnated at 2.0 since 1970.

  3. Collapse of USSR - the worst was the decade of 1990s when the resources of Russia were looted and anarchy was common. Mass privatization, an element of the economic-reform package nicknamed shock therapy, clearly correlates with higher mortality rates. While many billionaires were created, the policies ignored the human cost of the policies they were promoting, such as unemployment and human suffering, leading to an early death.

  4. 2000+ TFR of 1.28 in 2006 went up TFR rose to 1.82 by 2020, but is now turning over. The number of Russians living in poverty has decreased by 50% since the economic crisis following the disintegration of the Soviet Union, and the improving economy had a positive impact on the country's low birth rate.

  5. 2016 the population growth started slowing down. TFR stagnating at 1.82 by 2020

Population of USSR

Year Pop TFR
1897 67
1939 108
1959 117
1979 138
1989 147
2002 145 1.22
2010 143
2019 147 1.58
2020 147
2050 132*

Key reasons for the slow current population growth are improving health care, changing fertility patterns among younger women, falling emigration and a steady influx of immigrants from ex-USSR countries.

Abortion is easy in Russia, but Stalin was heavily PRO-LIFE as Mother of Russia

  • The Orthodox church is surely anti-abortion and pro-life like the Pope.

  • Early 1917, etc Russia was well populated as industrialization and health practices spread.

  • The communists under Lenin, probably advocated abortions to handle problem of feeding so many mouths.

  • In 1940s Hitler and Stalin may be attributed to the "PRO-LIFE" category as these "butchers" outlawed abortions in their main "native" populations. After the war Russia experienced "baby-boom" period (like in the US) but I suspect that part of it was due to "pro-life" policies of Stalin. He also put very long waiting periods on divorces and made it a very complicated procedure. In this respect Stalin may be on the same page with the Pope.

One aspect that got shut down by Putin, etc. was the easy export of Russian (white) babies to US and Europe. So instead of getting paid, women went back to having abortions for unwanted offspring.

Even now, they probably still have easily available abortion in Russia, as hangover from old time communism, which was highly ambivalent about the family and sexual "freedom."

The demand for abortion is pretty inelastic - as it is a VERY DELIBERATE act due to cheap contraceptives. Also the supply in Russia would be infinite - any attempt to tighten up abourtions would increase the cost of abortion and the number of black market abortions. Make abortion more difficult and the population will not fall as precipitately.

Russians have had it hard - Just don't want burden of too many kids!

"When I was born my parents were in a very desperate situation: they did not have a place to live, my mother was not divorced yet from her first husband, they did not have any money and, on top of that, my father expected arrest by KGB every minute. He even had a small suitcase ready for arrest, sitting at the corner of the room. In every other country family would not even dream to bore a child! But against all odds I was born, my father survived all purges, my mother become a manager and my father a professor!"

The point of the above story, is that just living was hard in Russia, raising kids would just make it harder.

High Divorce Rates, No Villages to Raise kids - means very few kids

All over Europe and now Russia, one problem is the "enlightened" women are choosing to either NOT have any kids at all or only have them when immature.

Anecdotally Russian women tend to marry early and often get divorced after a few years.

So it is likely that most of these young Russian women may only have one child. In past, these women had children so young, often while they're fresh from high school or in university, they used to rely on their own mothers to take care of their children. But with declining life expectancy plus poor elderly pensions which make it harder for people to help their divorced daughters with children. The grandfathers die early, grandmas are still working - not available to help raise grandkids like in past.

As they say, once burnt, the women are also unlikely to remarry, even though men may remarry.

Russian Population is ALREADY TOO High with Poor Living Standards

Lets face it - Russia has a few very capital intensive industries (oil, steel, large agri-farms, etc). It has very little service industry - except that is bogged down in communism and corruption.

So one view is that the Russian population is currently larger than the market will bear. Incentifying an increase in population is hardly the solution to this problem - it just sucks up to Putins super power ambitions, not what is good for the population.

Dependency ratio of retired to workers is very non-linear.

Curiously, when population decline is heavily influenced by excess adult mortality, the decline has less effect on the dependency ratio (the ratio of nonworkers to workers) than when it results solely from a low birthrate.

Japan has a very high dependency ratio because of that nation's combination of high longevity with a very low birthrate.

MEN: This might have a dramatic effect on longevity especially in useful work life from 58 to 67+ so you might think it would boost GDP and reduce the dependency ratio. However, it is not obvious it would work like that. Russia has low longevity and thus relatively few (male) retirees.

WOMEN: One can assume the burden of retired females is low (food only and babysit for grandkids cheaply). Or if women continue to work with "normal" lifespan, also if women forced to work to support other members of their family, they may choose to forgo extra children for extra work years. In that way, they can afford to support dependents.

Very Sparse Population means Lower Productivity, Lack of Free Trade means No goods to trade

A declining population means less pollution and congestion and a higher ratio of land to population.

In fact the Black Death in Europe contributed to a substantial increase in average wages as a result of the reduction in the population (by about a third). Some economic historians believe, it set the stage for Europe's subsequent economic takeoff.

  1. Countries in Europe have stagnant populations of 40-50m much denser, concentrated mainly in towns and large cities. A greater population increases the opportunities for specialization is not important to a nation's prosperity.

  2. Smaller countries like Switzerland, Singapore, and Denmark, are dense at ports and focus on trade and benefit from FREE TRADE. Such small countries specialize in a few products and trades them for products in which other countries specialize.

  3. But Russia is an extreme case - already large parts of Russia are virtually uninhabitable. It is too large and very sparsely populated. The costs of densifification or relocation would be too severe.

Immigration is a way to fill Sparse Country - like Canada and Australia - but people EMIGRATING OUT INSTEAD!

Inviting immigrants, by the way, is extremely cheap, efficient, but unpopular: people are afraid of competition; they have the wrong idea that immigrants will steal their jobs.

If Russia totally opened up its economy and allowed essentially free migration in, then that would get rid of the population bust without needing any subsidy. I guess Russia might need to work on assimilating the new minorities, but Russia has a history of doing that (albeit quite forcibly) as Central Asian countries were Russian-ized as part of the USSR.

As long as the Russian economy is not creating prosperity, people will continue to emigrate and the population will continue its decline.

Sino-Russian Eastern Alliance, Co-Federation or Farming out Territory?

Russia faces the prospect in the near future of holding its far east with a total pop. of 100M against an expansionist (and expanding) China, pop. 1,300M. Given that 80% of Russian population is in the West in the Slavic areas, this is actually means tens of millions of acres are nearly empty.

While devoid of people, Siberia is not devoid of natural resources. I Given the density of China could a Sino-Russian confederation result?

  1. China's needs for oil and mineral resources, has massive multi-national free trade connections, and exclusive footprints in Africa and SE Asia.

  2. Russia desires to remain a world power but has a limited number of future adult males given present low replacement rates. Should Russia do nothing it runs the risk of continued independence by its confederates, an ever decreasing population, and--perhaps worst of all--global irrelevance.

  3. Already China is farming and "colonializing" population. For example in East Africa there are thousands of Chinese businesses representing commercial interests. A similar Chinse impact could repopulate Russia in "useless" border areas occupying vacant spaces created by missing future Russian adults?

  4. Past Russian and Chinese History and Chinese Claims exist.

    • 1689 Treaty of Nerchinsk, Russia was hurt by this and made concerted efforts to weaken China
    • 1800s Treaties of Aigun and Beijing it gained the lands on the left bank of River Amur from China, or so-called Outer Manchuria.
    • China may want the land back eventually.


Russia's Demographic Causes - Declining Birth Rates, Lower Lifespans

1930s and 1940s Mother Russia - USSR after WWII to restore population levels

Stalin initiated cash benefits to mothers to encourage population growth.

The 1936 family law included a clause to grant 2,000 rubles per year for five years to women with seven children (according to Sheila Fitzpatrick in Everyday Stalinism this was "a really substantial amount").

In 1944, when the population situation in the Soviet Union was even more desperate due to the gigantic losses during the war, Stalin announced cash awards for mothers with three or more children.

1995+ Russia Lifespan and Population rapid declines

Russia's population has fallen 6% since the mid-90s.

Huge success of Putin 2006-2016

In fact, Russia, despite having only slightly more people than Japan, has recently had nearly twice as many births as that country. The number of births was expected to fall over the next few years as women born during the baby bust in the 1990s enter their prime childbearing years, but this didn't occur thanks to the continued growth of the TFR. The figures for 2013–2015 again showed around 1.9 million births, about the same as in 2012, but because the number of women of childbearing age is dropping, especially for those in their early 20s, the TFR actually rose to 1.777, which places Russia at first 9 or 10 countries out of 50 developed nations, and at 6th place in Europe.[

2017 Putin Initiatives Failure amid US Sanctions

  • 2017 birth rate dropped suddenly by 11% to lowest level in 10 years.

In 2017, the number of births took a drop mostly due to falling fertility rates, which, in turn, were affected by falling of fertility of 2nd children due to planned but postponed termination of maternal capital program, and falling of fertility of 1st children.

The more recent drop in fertility has been sharpest in the North Caucasus, including in Chechnya where the birth rate fell by one-third since 2010.

Change of number of reproductive-age women also played a key role. However, the number of deaths also declined due to improving healthcare, decline in violent crime rates and declining consumption of alcohol, tobacco and hard drugs.

In 2018, the number of births kept falling, but at much slower pace.

However instead of getting FDI and technology collaboration, Putin's aggressive arrogance has instead ended up with Sanctions.

Aging Russia could Resemble Japan by 2050

However, the number of deaths didn't decline by as much as it did the previous year because whilst life expectancy improved, the population aged leading to a higher mortality rate. By 2020 around 25.7% of Russians would be over 60 years, which is nearly double the percentage in 1985 of 12.7%. By the middle of the century it is possible that more than a third of the population will be over 60, similar to modern Japan.

Pessimism on Economic

Key: Declining Age and Health of Russian Adults

FAIL: Lack of Social and Health Investment

Russia's social policy - cutting down on the number of schools and hospitals, not creating new jobs, driving young families into mortgage servitude for many years, depriving us of simple confidence in tomorrow - do the authorities really want to increase the birth rate in Russia? - Tweet

2012 What is the problem with Low TFR?

With the ultra low TFR, and high death rates (men have lifespan of 58) it is expected that Russia's 150m population will decline to 100m by 2050.

This would greatly undermine Russia's prowess as a military super-power. As it stands the mandatory military service is severely disliked by Russians.

Putin Initiatives to Boost Birth Rate and Fix Demographics - Analysis

2012 Putin Initiatives to Boost Birth Rate - may be a ploy to give free money to get Reelected!

The idea is they pay this huge amount of $9000 only for the second kid and not first one. So, for sure a lot of poor families with 2 kids and $9000 in the bank (which will make them not so poor?) Most families already want TWO Kids, now they have more incentive to have two children. So this is not interference, this is an option to get a subsidy. Basically it is free money - by giving it out, help Putin's successor (who will for sure strongly support the continuation of this program) to win the elections.

Russia is not going to end up with huge poor families with 10 kids.

Putin's government will spend 1.5tn roubles ($53bn; £33bn) announced Mar 2012.

  1. Raising the birth rate by 25-30% in comparison to the 2006 birth rate.

  2. Extending life expectancy to reach 71 years

How Much would Putin Lift the Birth Rate?

The Nobel-winner Economist Becker estimated the effect of the Putin plan would raise the birthrate by 15 to 20%. However, that would still leave the birthrate far below the replacement level TFR of 2.1.

Putin's second Child Payment seen as Unstable - leaving them in Poverty

"The Kremlin has got nothing to do with the previous spike in the birth rate. It has not left any reserves; people simply lack motivation to have children because you cannot give them anything besides poverty and the feeling of hopelessness. The current regime undoubtedly deserves credit for that." - Russian Blogger El Murid, LiveJournal

Problems with Putin's plan - Lacks credibility in Adult Women - See through Lack of Infrastructure!

Fundamentally, it appears the world over, the optimal number of children (from parent's point of view) becomes one in developed countries. One main problem is that bringing up children is becoming a more and more expensive affair every where - even in developing large cities educated people are taking much fewer children than a generation ago. So this is an universal desire to give fewer kids a better life, instead of groveling at low end.

But for political, retirement dependency/pension or military reasons governments may see the optimal ratio as two or more so controlling the fiscal budgets, they find it easiest to subsidize children even if they are low class and "disposable".

But the problem is such short term incentives cannot compensate for what people feel is optimal for their own lifestyles.

Russians are skeptical people having seen lies from generations of Tzars and rulers. Having a child is a long-run investment - needs a LOT OF FAITH. Russians cannot be confident that the long-run features of the plan--the increased housing allowances and child-care subsidies - will be implemented throughout the childhood of the second children. If they don't get guarantees, they face getting much poorer as costs for 18-22 years of raising a kid.

Russians Can see through even if Central pllaners cannot

Citizens see the total lack of Infrastructure even if they eventually get the cash!

a. A lot of birth hospitals were closed during low-fertility period.

b. Women don't have help child care as their own moms, etc. are busy working

c. Men don't help out at all - or women under stress end up getting divorced in just a few years

d. During the baby boom it will be hard for women to get good medical service.

e. Later in life the children will have higher competition to enter the university

f. Women think the military adventurism, foreign wars and mandatory draft just means boys have a higher probability to be drafted.

All in all


The upfront cash grant cannot be withdrawn from the bank until the child is three years old, which means three and three-quarter years after conception.

Maternity Leaves have Already backfired - Putin's make harder for Women to get Jobs

The paid-work-leave provision is supposed to last 27 (18 + 9) months after conception. Issue is who pays for the work-leave provision - implicit is an EXTRA OBLIGATION to be funded by employers. Without any actual enforcement it may be better for employer to just fire the employee?

There are strict maternity leave laws in Russia which mandate that a woman be given three years (unpaid) leave, after which she must be allowed to resume her job. Naturally this makes many businesses reluctant to hire would be mothers, and probably does not make child-bearing so attractive to women.

PROBLEM: Good time MEGA PROJECT hit Oil bust

This plan that costs 1 percent of GDP - a huge deficit that must be financed.

  1. When you give large cash bonuses that is a burden to the taxpayers - it's not a windfall. Spending more taxpayers' money has direct negative consequences on the development of the economy.

  2. Giving money for having children will discourage participation of women in the labour force. That is not a good development.

  3. Cash bonuses will increase birth rate for poor people - some of them will start living only on the "income" they take for having children and will certainly avoid working. Then you will have poor families with 10 children or more. Then you'll need to create a welfare program for these families - and you create a welfare dependency trap. That what's happening with the gipsy population in Eastern Europe and that is becoming a huge problem in these societies. The welfare expenditures will rise as well as the poverty. The literacy rates will fall. The unemployment will rise.

  4. Middle and professional class families will continue to have few children - they will not be incentified by short term bonuses. In fact they will see children crimping their lifestyle or adding intense stress. In fact is likely that they may go to ZERO KIDS.


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