Elections in Russia are held with unemployment on the rise and the Covid in full force -to the point of surrounding Putin. Predictable and contested results which, although deformed by fraud and the very nature of electoral processes in general, show the erosion of the political apparatus of the Russian bourgeoisie. What the European and Anglo-Saxon press does not tell openly is that the system lives in permanent and brutal war against the workers and that the economic bases of Russian capitalism see their expectations improving thanks to an unexpected ally: the USA.
Table of Contents
- The economic foundations of Russian capitalism
- The impact of the worsening 2020 crisis on Russian capitalism
- The Russian bourgeoisie’s response to the export crisis
- Nord Stream 2
- An unexpected ally
The economic foundations of Russian capitalism
Russia has, for all intents and purposes, the economy of a hydrocarbon exporting semi-colonial country. 40% of the state budget comes from the export of gas and oil.
The collapse of the stalinist USSR meant the end of protections against foreign competition and the massive loss of export markets, Putinism meant a recomposition of the Russian bourgeoisie inherited from stalinism around and within the state. A massive reconversion towards a new model of state capitalism that has remade from top to bottom the foundations of Russian capitalism.
After 18 years of “Putinist” government, the data tell us that Russia is the country in the world where inequality has grown the most and show us immense social costs systematically transferred to the workers dressed as “sacrifice for the fatherland” so as to increase a productivity that is still eight times lower than the European one.
Since 2005, more than 35,000 large or medium-sized factories have been closed. To this should be added 38,000 cooperative farms closed during the last twenty years. A new class of small landowners – the social base of Putinist power – now produces 50% of livestock and 90% of agricultural production. The consequence has been a new labor surplus and new internal migrations. Russia has lost over 3,000 towns and 20,000 villages over the past 20 years.
The costs to workers are immense. Nearly 20 million workers live on subsistence wages. Public services have been largely dismantled. In the last fifteen years, 4,300 libraries, 22,000 kindergartens and 14,000 schools were closed. Of the 10,700 large hospitals in operation in 2000 only 4,400 remained in 2015 and of the 21,500 community hospital centers only 16,500 remained in 2015.What to expect from Russia after the elections (in Spanish), 31/3/2018
Five years later, the official poverty figures have not gone down despite systematic data tampering, and economic power remains extremely concentrated.
State support for industry, typical of a semi-colonial economy, based on hydrocarbon revenues, is concentrated in a few monopolies and export-related industries with high productivity in terms of profit. Small and medium-sized enterprises, with very low productivities and without access to capital markets, barely represent 20% of GDP.
This explains the impotence of the petty bourgeoisie to make its presence felt in the Putinist political apparatus during the elections in Russia beyond the testimonialism of a Navalny, the Putinist rhetorical winks and the nationalist boasts of the stalinist remnants
The impact of the worsening 2020 crisis on Russian capitalism
The worsening of the crisis since 2020 could only have a full impact on Russian semi-colonial capitalism. And as in all these “export model” countries, the immediate barometer was the exchange rate. The national currency crossed the border of 90 rubles per euro in 2020, reflecting the drop in exports, estimated at around 20%.
In a poorly diversified economy, this drop led to the drop in all industrial production, down more than 7% in August in a year, the latest figure. To be sure, the decline was attenuated compared to June and July. But the trend is clear and illustrates the violence of the recession: the economy contracted by 8.5% in the second quarter and the heavyweights of public industry are accumulating bad results.
Rosneft, the oil giant, saw its net profits fall by almost 80% and its revenues halved in the second quarter. As for giant Gazprom, its net profit was divided by 25 and its sales plunged by almost a third in the first six months of the year.The Kremlin downplays the crisis in the Russian economy, Le Monde 12/10/2020
The “social model” toward which the Kremlin bourgeoisie is tending has been emphasized by the struggles from July 2020 to April 2021 of the workers of occupied Donbass, in the strikes and mass assemblies of those same months in the Gazprom’s Yakutia exploitations, in the mobilizations of a good part of the Moscow construction workers to collect wages owed after they were fired en masse to avoid paying them confinements, or in the mass accidents revealing the real working conditions in Russia.
It’s not just that unemployment has escalated massively in the cities. Nonpayment of wages is routine, companies count on repressive forces as just another means of personnel management, and the working conditions in the infinite subcontractors into which any construction or production site is divided produce bicontinental records for labor mortality.
If capitalism lives around the world increasingly in contradiction with human development and with the most basic universal human needs, in Russia it lives in open and permanent war against these. Something that, evidently, the elections in Russia would not show even if their tally were the cleanest in the world.
The Russian bourgeoisie’s response to the export crisis
But unlike Argentina, Uruguay or Brazil, the Russian bourgeoisie does have tools to influence the international prices of the raw materials it exports. Chief among them: a long, contradictory and meticulously nurtured alliance with Saudi Arabia established in 2018 that allowed both countries to design a joint strategy to try to impose on OPEC+.
The stumbling block posed by the Emirati resistance to the way in which its main ally had designed the quota sharing was finally resolved by the Saudis at their own expense. A triumph that Russian diplomacy could not have achieved on its own in any case.
As a result, rising gas and oil prices, which among other things are passed on to the electricity bills of all European countries, have allowed some recovery of Russian capital – but not of wages. This has been the regime’s best trump card for yesterday’s Russian elections. The ruble revalued and the euro was already this morning at 85.9 rubles.
Nord Stream 2
The influence on hydrocarbon prices in the midst of the rollout of the Green Deal in the EU and with China reorienting itself to do the same, redoubled the strategic value of the Nord Stream 2 pipeline, which doubles the capacity of Russian gas exports to Germany.
Already under Trump the US openly confronted the ongoing project, winning France and Poland to its cause. The French attitude led to the breakup for more than two years of the famous Franco-German axis which only from 2020 onwards seems to have recovered.
With Biden, despite the agreement reached with Merkel in Washington this past July, it didn’t take the U.S. government two weeks to break it and organize new sanctions against Germany. The Berlin government responded by increasing the “guarantees” that Ukraine would not be excluded from the revenue as an intermediary in bringing Russian gas to Europe that it had hitherto enjoyed a monopoly on and that Nord Stream 2 would only transport German demand surges.
The pipeline finally finished construction earlier this month and Russia is trying to accelerate its commissioning to benefit from domestic consumption surges characteristic of the central European winter. The regime is also aware that the sooner the new export channel is in place, the sooner it can try to turn it into a gateway into the entire European market.
An unexpected ally
But the unveiling of the AUKUS – and the subsequent cancellation of the French naval agreement with Australia – have bolstered Russia through more avenues than the recent centrality of the Shanghai Cooperation Organization (SCO) articulating its alliance with China.
France had so far been the main opposition to Nord Stream 2 in the EU. It had also vehemently supported the Baltic countries and Poland who feared that greater energy dependence on Russia would erode their political influence in NATO and Brussels.
But things are changing in a matter of days. This week we could read in the French republican press, in principle Macronist and not at all suspicious of Russophilia, the first reconsiderations. The Nord Stream 2 would be a first sign of “emancipation” of the EU from US tutelage whose opponents would believe that “the borders of the United States extend to the Urals.”
It is an unexpected victory for the Kremlin after its electoral “success”. New opportunities are now open to it in Europe, taking its own slice of the Green Deal and regaining influence in the Caspian and the Balkans.
But it will not be the pressure and concurrence of other imperialisms such as those of the EU that will put an end to the savage exploitation in Russia. Nor will its internal allies like Nalvalny. In any case, these quarrels will lay the foundations for new wars. The only thing that can confront today and defeat tomorrow the Russian regime, as any other, is a development of workers’ struggles.