This paper analyses the 2014-16 crisis in Russia in the context of the country’s mode of global economic integration that has evolved over the past 15 years. Russia’s model of political-economy has evolved around three main channels of global economic integration: (1) export of natural resources and a national system of redistribution of export revenues; (2) financialisation, acting as a boost for domestic consumption/demand; and (3) the offshore integration of Russian capital into global capital markets. The current crisis is affecting all three channels of Russia’s global political economy. Together, reduced export revenues, the deepening financial crisis and the dominance of offshore-sourced investments into Russia, serve as crisis transmission mechanisms, and thus constitute three sets of (interrelated) dilemmas for the Russian authorities. The paper ponders four scenarios of possible development of the current situation.
Paper prepared for the Istituto Affari Internazionali (IAI), July 2015. An earlier draft has been presented at the IAI seminar on “The Putin Dilemma: Russia’s Global Ambitions in the Age of Structural Economic Decline”, Rome, 24 March 2015. See also Against All Odds? Russia's Financial Crisis and Global Geopolitics, in The International Spectator, Vol. 51, No. 1 (March 2016), p. 113-130.
Introduction: A common view of the Russian crisis
1. Russia’s political economy: the “petro-state” and the secondary economy
2. Export of natural resources and a national system of redistribution of export revenues
3. Borrowed growth: financialisation
4. Capital flight and the offshore nexus of Russian investments
5. The crisis: policy dilemmas and risks