[LINK] "What Putin Wrought Has World Asking What Russia Might Have Been"

[rfmcdonald]

Bloomberg's Simon Kennedy and Henry Meyer describe how recent events, including sanctions imposed following events in Ukraine, appear to have caused very serious long-term damage to the Russian economy. Things started off well enough under Putin's first terms, more's the pity.

For what could have been, look no further than the $2 trillion economy, which expanded an oil-powered average of about 7 percent from 2000 to 2008.

As Putin resumed the presidency in 2012, the International Monetary Fund was predicting growth of 3.9 percent in 2013. Instead it was 1.3 percent, an undershoot equivalent to about $50 billion. A similar shortfall is forecast for this year, according to Anders Aslund, a senior fellow at the Peterson Institute for International Economics in Washington, who advised Russia on privatization in the 1990s.

Even worse, Alexei Kudrin, who as finance minister from 2000 to 2011 helped return Russia’s budget to surplus, said Sept. 16 that his country will post zero or negative growth for the next two to three years.

[. . .]

Putin’s dream of making Russia one of the world’s five biggest economies by 2020 is now in ruins, according to Sergei Guriev, a former economic adviser to Prime Minister Dmitry Medvedev who fled to Paris last year. He says it could have been achieved had Putin focused on delivering economic growth of 5 percent to 6 percent as promised.

“Russia had such a massive potential because of its inefficiencies that it was perfectly feasible to achieve this rate of economic growth,” said Guriev. “What changed is that the government decided not to fulfill its promises.”

The sentiment was different in 2000, when Putin replaced Boris Yeltsin. One of his early acts was to close Russia’s radar base in Cuba, the only intelligence-gathering center it had in the Western Hemisphere. He also shut a naval base in Vietnam, its biggest outside Warsaw Pact countries. After the Sept. 11 attacks, Putin pledged unconditional support for the U.S.