Russia as a Banana Republic Resource Extraction Economy

 

As Vladimir Putin spends quality time forging alliances with fellow autocrats, all developing financial platforms to circumvent Western sanctions and seeking trading structures that avoid the US-controlled international trading banking behemoths, this vainglorious bastard has become a groveling supplicant. Sure, Russia has amazing great universities, amazing technologies, weapon systems of increasing sophistication and is among the top oil and gas producers on earth. But Putin’s territorial aspirations, particularly his war against an unexpectedly strong Ukraine, have taxed Putin’s resources to the max and made Mother Russia increasingly reliant, desperately reliant it seems, on others.

That Russia’s economy is not built around selling sophisticated manufactures – or much in the way of anything non-military that is in demand – and no one seems to want their consulting or financial services, limits Russia’s main value proposition to… er… selling oil, gas, minerals, and other non-renewable stuff taken from the earth. Look at the mineral rich nations of Latin America and Africa. Their economies also are all based on resource extraction or selling agricultural products. Just like Russia, those nations tend to concentrate their wealth on the chosen “families” and government leaders… and not with most of the people. Backward, huh?

Russia’s future is less than rosy under any scenario. Oil and gas may linger for a long while, but most of the planet is focused on generating energy through less polluting resources. Even Saudi Arabia is exploring investments that would eventually replace reliance on their abundant petroleum assets. Instead of investing in Russia’s future, Putin is flailing away at his nation’s wealth to fight a war where he has already run out of drones, warheads, artillery shells, replacement parts. His aging Black Sea fleet has proven vulnerable to Ukrainian drones.

He even flashed the US with his most dangerous state-of-the-art warships in a recent naval visit to Havana, his platforms to launch hyper-sonic missiles and nuclear warheads. But just like Russia’s undertrained army working with “stuff that keeps falling apart,” if you look carefully enough… well… For example, the Russian Yasen-M-class nuclear submarine Kazan, docked in Havana, has drawn attention for its apparent disrepair. Images shared online show missing soundproofing panels, compromising the sub's stealth.

Yup, the same Moscow that sent Russian pilots in MIG-15s to shut down the US Air Force during the Korean War, literally saving North Korea from probable extinction, the same Moscow whose military technology kept an isolated and cloistered People’s Republic of China under Mao Zedong in the 1950s and 60s free from any real threat of Western invasion and the same Moscow that made sure Iran had a seriously updated military hardware to counter Israel and the United States in their region. Mao once waited a month in Moscow to grovel for weapons before Russia’s leader.

Not that we should underestimate a rogue nation allied with other rogue nations, all equipped (or almost equipped) with nuclear weapons. A cornered and very angry predator just might do some very stupid things. And no, his people are so terrified at how Putin treats protestors and opponents, they are not likely to overthrow him. Besides, the elections are truly rigged, meaningful opponents are disqualified or just killed, and after the Wagner resistance, Putin no longer trusts his traditional security forces. Instead, he has reconfigured an elite National Guard, including special forces, to create a very large and powerful military body dedicated to protecting just him. They are each overpaid and accorded very special privileges; their loyalty was well-purchased.

In the past, most of the above pictured leaders visited Putin, asking Russia for favors and indulgences. The pomp and circumstance of the Kremlin halls reflected power and wealth. Putin’s long desk kept many prelates and dignitaries at a safe distance. Today, he’s even seeking new buddies, preferably in Europe, to play with him. Erdogan and Orban are going for it. But… the big boyz? So, while the Russian sycophant lives in nice quarters, is very, very rich and east well (food tasters, anyone?), it is Putin who must travel now, seeking favors and indulgences.

The China of Stalin and Khrushchev is long gone. No cadres in gray green “Mao” jackets sweeping streets with tree branches as only bicycles floated by. Modern high-rises, the largest military on earth, wealth from manufacturing and developing cutting-edge technology and a plethora of “put Russia to shame” wealth is now a very superior China’s mark. Putin desperately needs “them.” “They” want Russia… but really do not need it anymore. In truth, China just might need trade with Europe these days a whole lot more than granting Putin his “indulgences.”

I’m Peter Dekom, and this reversal in the power dynamic between Russia and its former dependent regional powers is gone for good, but this does not reduce the threat of a desperate autocratic pushing his envelope.