The inventor of the Brics acronym says sanctions against Russia have exposed nations’ dependence on the western economic system

In 2008, I was asked by the organisers to give a special presentation on where Russia’s economy might be, by 2020, to the St Petersburg Summit, Russia’s own version of Davos. To my slight embarrassment, I hadn’t really appreciated that they would be quite irritated if I didn’t suggest that Russia was likely to be in the top five largest economies of the world by 2020, which I did realise afterwards, when my presentation and comments caused a bit of stir in the post-event coffee areas and media.

Essentially I suggested that given Russia’s challenging demographics, and that crude oil prices were unlikely to continue the one-way rise that had characterised the decade to date, Russia’s potential growth rate was probably not much more than 2%. And if they really wanted to have the powerful economic growth that had been experienced in (those) recent years, they needed to undertake significant reforms to boost productivity.

The reaction to my presentation among officialdom was my first real suspicion that Russia might have challenges ahead, which of course, was without realising the scale of chaos that was about to unfold in the global financial system and the subsequent economic collapse around much of the world. That set of circumstances contributed to a major multi-year peaking in oil prices, and much of what happened since, which for Russia, has been persistent economic disappointment.

I have no great expertise at geopolitics but I have broadly assumed in the past decade or so that Vladimir Putin had decided that his huge domestic popularity would decline because he couldn’t achieve the growth that had taken place pre-crisis. Nor could he really reform, because much of his personal financial benefit and those of some close to him depended on the status quo, so he had to shift to another platform, which was loosely based around the idea of making Russia great.

Read more

© Copyright LaPresse