By Paul Goble
Academician Abel Aganbegyan, the dean of Russian economists, says that the war in Ukraine is currently costing Russia a billion US dollars a day, a drain on the budget and the economy that is driving ever more Russians into poverty and undermining the possibility for recovery anytime soon.
According to the economist, by the end of this year, nearly one Russia in three will be reduced to living on 300 rubles (five US dollars) a day. The government is not doing enough to help them, and they are likely to be joined by others in abject poverty over the next several years (newizv.ru/interview/16-08-2022/akademik-abel-aganbegyan-k-kontsu-goda-30-rossiyan-budut-zhit-na-300-rubley-v-den).
He says that the situation is not as dire as it was in the 1990s but is increasingly close to it and that there are fewer resources available to do anything about it, likely indicating that the current crisis will last far longer than many now think. GDP may recover in 2025 but personal incomes won’t until several years after that.
According to Aganbegyan, Russia today has “created a socio-economic system without a motor to drive it forward.” That is, “we have no capital market” and without that the economy can’t grow. It can only stagnate or decline unless the government intervenes and imposes a tough system of state planning.
Lacking a capital market, Russia lacks investment and is losing capital. Between 2008 and today, he says, “a trillion dollars” left Russia. And this year is likely to set a record outflow of capital from the country. Without this money, there can’t be much economic growth or recovery for the population.
The Russian government doesn’t have the money. “To raise real incomes by 20 percent,” Aganbegyan says, would require 15 trillion rubles (250 billion US dollars.) With the war on and less money coming in, that is an impossibility – especially as the special military operation in Ukraine continues to cost so much.