Re: Why did the USSR fall?

["Devine, James" <jdevine@xxxxxxx>]

I wrote: 
> > I am not an expert on Russia (not even close!), but it 
> seems that in structural terms, that country is economically 
> dominated by the IMF and the US.

Chris D writes: 
> How? US trade with Russia is almost zero. Russia's debt/GDP 
> ratio is lower than Germany's. Indeed, Amb. Vershbow tried to 
> threaten Russia economically over Iraq and quickly backed 
> down when everybody laughed at them. I suppose it is possible 
> that it the event of a crash in oil prices Russia would seek 
> an IMF loan, although the government has said that it would take none.

Dependent countries can escape dependency (or at least its effects) if they have a highly-priced export item. But if oil goes away (i.e., if prices fall back to 1980s levels), the Russian economy would be in Big Trouble, since there's not much else to export. (Used nukes anyone?) The country's dependency would then hit with a vengeance. They would then _have to_ kow-tow to the US and the IMF, the leaders of the core (non-dependent countries) whether they want to or not. I think this is quite likely: oil prices never stay high forever. 

I wrote: 
> > If Russia is able to use its temporary oil bonanza to 
> develop its economy in a balanced way, perhaps it can move 
> away from dependency. Is it doing so?

Chris: 
> This is one of the subtexts to the Khodorkovsky drama. The 
> Kremlin wanted to hike taxes on oil and other natural 
> resourse exports in order to put the proceeds into the rest 
> of the economy. (Everybody in Russia knows how dependent the 
> country is on world market prices for oil and other natural 
> resources, and that that is not sustainable in the long run). 
> Khodorkovsky was the main opponent of this plain. Now he is 
> in jail. The tax hike was voted through the Duma the other day.

It's very rare for a dependent mono-export country to use its bonanzas to develop economically. It's only when left-wing nationalists such as Peron or Venezuela's Chavez decide to shake things up (under the pressure from the workers and peasants) that we see any move in that direction. And often opportunites are wasted.

Jim D.