Upcoming Russian Collapse / Nation Building... again!?!?
Per Telegraph:
“There will be no money already next year,” Deripaska, the metals tycoon already subject to American, British and EU sanctions, told a conference in Siberia this week. “We will need foreign investors.”
That much is certainly true. The spending on the war has
escalated dramatically. According to an analysis by Reuters, the military and security budget has risen to $155bn, or a third of all state spending. Putin and his generals may have planned a lightning campaign leading to a victory parade through the streets of Kyiv within a matter of weeks. But that is not the way it has worked out.
Instead, Russia is bogged down in a brutal war of attrition along a stretched front line that is consuming men and machinery on an epic scale. And if the fighting is tragically reminiscent of the First World War, then there will be similarities in the economic context, too. The Great War was effectively over once the economic might of the United States was thrown behind the Allies.
It is possible that
China may step in to help Russia out. But it would be rash to count on it. The Chinese, and especially President Xi, are not sentimental, and they are certainly not interested in losers.
It is hard to see that they have anything to gain by bailing Putin out. And without help from China, it is impossible that Russia’s shrinking economy can match the spending power of the West (and the White House announced another $400m of help only yesterday). A total economic collapse is simply a matter of time.
The West needs to be ready for that. When the Soviet Union fell apart in 1991 the response was a total disaster. The country was allowed to sink into chaos, with GDP falling by a shocking 45pc between 1988 and 1998.
It was hardly surprising against that backdrop that industry fell into the hands of a corrupt group of oligarchs, and that an authoritarian state controlled by Putin quickly took charge. We ended up with a repressive, militarised regime, threatening its neighbours, and repressing its people. In other words, right back at square one.
The collapse of 2023 needs to be handled very differently. Like the post-war reconstruction of Japan and Germany, or indeed, the post-Soviet rebuilding of Poland, now on track to be richer than Britain, at least
according to Sir Keir Starmer (who conveniently forgets to mention that it will also be richer than Spain and France), it needs to create small businesses, back entrepreneurs not robber barons, and encourage free and competitive markets operating under the rule of law instead of a gangster clique entirely dependent on favours from the Government.
None of that is going to be easy, but then it wasn’t easy in Japan and Germany, either.
It will require massive financial assistance when the Putin regime falls apart to stop output going into freefall, and that will be expensive, especially at a time when we will need to help Ukraine rebuild as well.
Even more importantly it will take slow, patient institution building. If successful, however, there will be at least a chance of a modern, liberal democracy emerging from the ruins of this dreadful war. And that will be a neighbour the rest of us can finally live with.
In reality, Russia’s economic collapse is not far off – and this time around the West needs to have a plan ready for when it happens."