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Economic Crisis Hitting Moscow And St. Petersburg – OpEd

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Because incomes in Moscow and St. Petersburg were higher to begin with, residents of the two Russian capitals until recently had been able to absorb the impact of the economic crisis better than the other and poorer regions, one reason why there have been fewer economic protests in the politically sensitive capitals than on the periphery.

But a new ROMIR survey shows that the economic crisis is not hitting the relatively well-off not only in the provinces but in Moscow and St. Petersburg, and if that trend continues, it could trigger the kind of protests at the center that the Kremlin might have far more difficulty in coping with or might try to use a new foreign adventure to head off.

The ROMIR survey found that Russians in the country as a whole are spending two percent less now than they did four years ago and that the greatest decline over the summer has taken place in Moscow and St. Petersburg rather than in the provinces or in the capitals of federal subjects (romir.ru/studies/823_1473195600/).

In a commentary on the Svobnaya press portal today entitled “The Crisis has Come to the Capitals,” Aleksey Golyakov says that the ROMIR survey’s finding that the largest reductions in consumer spending over the last month – some ten percent — occurred in the Central Federal District (svpressa.ru/society/article/156022/).

“Moreover,” he writes, “for the first time in many years the number of Muscovites who say they are reducing their daily expenditures has risen significantly.” They report that they have cut back daily spending over the last month by 4.7 percent. In St. Petersburg, that figure was even higher – 5.3 percent.

Such cutbacks have been characteristic of residents of other Russian cities with more than a million residents, while those who live in smaller cities (those with fewer than 500,000 residents) cut back less in August, largely because they had cut back more than Muscovites or Petersburgers already.

Leonty Byzov, a senior scholar at the Moscow Institute of Sociology, says that these results show that even in the capitals Russians are beginning to recognize that things aren’t good and that the current crisis is not like the one of 2008-2009 and will not be solved without a radical change of course.

Until now, he continues, residents of the capitals didn’t feel this way because their higher incomes had provided them with a cushion; but that is rapidly disappearing. Society is still “demoralized” and doesn’t know what to do, he suggests, although as the crisis hits ever more people, some may decide to act.

One idea that is being floated in Moscow to address this situation is to print more money, but that will only produce more inflation, Nikolay Troshin of the Moscow Institute for Strategic Research says. Only genuine economic growth can lift the population back up; pumping up incomes via inflation without any other changes won’t.


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Paul Goble

Paul Goble

Paul Goble is a longtime specialist on ethnic and religious questions in Eurasia. Most recently, he was director of research and publications at the Azerbaijan Diplomatic Academy. Earlier, he served as vice dean for the social sciences and humanities at Audentes University in Tallinn and a senior research associate at the EuroCollege of the University of Tartu in Estonia. He has served in various capacities in the U.S. State Department, the Central Intelligence Agency and the International Broadcasting Bureau as well as at the Voice of America and Radio Free Europe/Radio Liberty and at the Carnegie Endowment for International Peace. Mr. Goble maintains the Window on Eurasia blog and can be contacted directly at [email protected] .

One thought on “Economic Crisis Hitting Moscow And St. Petersburg – OpEd

  • September 9, 2016 at 1:27 pm
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    I think the author is confused and mixing between economic conditions of some different countries. He is also spreading negative propaganda on President Putin who has been outsmarting the political establishments in many places. Lies about others are not working, because world community are able to obtain correct information: Thanks to technology and IT. The Russian economy did take the heat but the economy has other sectors to grow. The author may have meant the economic crisis in the US economy. Majority of the American people are hurting in the USA except the top one percent, a class that is controlling the largest share of the distributed income. It is also the class that is making money through the military spending of the Obama administration, and this is the same class of financiers (and their cronies) who are making the best gain out of the Fed closed to zero interest rate. Although income inequality does contribute to economic crisis, it is actually the decline of the profit rate in the manufacturing sector of the US economy. This rate has declined but the rate of return in fictitious finance, the stock market, has been rising significantly. It follows that the industrial sector is not creating high-pay jobs, and the government is oppressing people by its high tax rates and low spending on infrastructure. The Obamacare has also added more squeeze ton the middle class and small business. Basically, no economy can survive on the military spending in the long run. Mr. Keynes’s theory was about the short run over which the military spending can provide a stimulus. Under the Obama administration productive economic sectors are slowing down, and productivity slowdown has continued. Economic growth has been disastrous as well: Never reached three percent. Yet, President Obama is talking about his legacy which is simply the rise of fictitious economy, politics, and imperialist foreign policy. He also thinks that Mr. Trump is not qualified to be the president. He has really forgotten that he is not qualified to be the commander in chief because his economic and political records have been D grade. His foreign policy is imperialist in nature and has destroyed many countries in the Middle East, as it has been using religious division and terrorism for more killing and chaos. He is using the same foreign policy that he ran against in 2008. Finally, the author of this article has no knowledge in the field of the business cycle. Therefore, he has no qualifications to write about economic crisis which breeds political crisis. Once again, he may be talking about the USA, not Russia.

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