The disproportionate size of the primary-resource sector spells trouble for the rest of the economy, as the experience of many other countries has shown, from the ‘Dutch Disease’ of the 1960s to the impact of oil on Nigeria and Venezuela. The overwhelming weight of lucrative export commodities causes currency appreciation that leaves other industries uncompetitive; this makes it all the more difficult to pursue alternative strategies for growth, deepening the ‘resource trap’. The Russian government has repeatedly affirmed the need to diversify the economy – perhaps the peak expression of this being Medvedev’s 2009 pseudo-manifesto ‘Forward, Russia!’, which bemoaned the country’s ‘primitive resource economy, chronic corruption, our outmoded habit of relying on the government, on foreigners or on some “almighty teachings” to solve our problems – on anything except ourselves’.{15}
Yet for all that, the ‘modernization’ Medvedev promised never materialized, and Russia’s dependence on natural resources if anything increased, especially under the impact of the 2008 economic crisis and the post-Ukraine sanctions. After tumbling for several years, oil prices stabilized in 2016 and then crept up again, and in the meantime the economy had staged a modest recovery, allowing the Kremlin to balance its budgets once more. But growth estimates for the next few years are sluggish at best – in late 2017, the OECD projected Russian GDP growth of under 2 per cent for 2018–19{16} – and certainly insufficient to fund a wholesale overhaul of the economy. Based on current trends, it’s hard to imagine Russia’s resource dependency being reduced by much before the 2028 of Sorokin’s fantasy.
What this means in turn is that Russia will struggle to regain its Soviet-era niche as an industrial power. The transition to capitalism brought an accelerated deindustrialization, increasing Russia’s reliance on energy exports without producing any compensating gains in employment. After all, one of the features of what is known as the ‘fuel-energy complex’ is that it requires considerably less labour than manufacturing. Russia’s already diminished industrial sector has thus far been unable to attract the levels of investment, domestic or foreign, that would be required for a new burst of growth, making a Chinese- or East Asian-style ‘miracle’ hard to imagine, even if those earlier successes hadn’t already raised the levels of global competition still higher.[17] Unable to compete with China and the Asian Tigers on wages, Russia similarly lags behind its wealthier Western peers in terms of high-value goods – another instance of the country’s difficult middle position. Having moved up the economic hierarchy over the course of the twentieth century, Russia is likely to find itself stuck several rungs lower down in the twenty-first.
A further constraint on Russia’s ability to manoeuvre – and one that is equally symbolic of its global downsizing – is its dwindling population. It is still the ninth most populous country in the world, with 143 million inhabitants at the time of the last census, in 2010. But that number is set to contract inexorably in the coming years: the UN Population Division envisages a drop to 133 million by 2050, and to 126 million by 2050; by the start of the next century it could be as low as 124 million. This will push Russia down the global demographic hierarchy: the fourth most populous state in the world in 1950, by 2050 it will have fallen to fifteenth place, overtaken by Pakistan, Ethiopia and Egypt, among others.{17}
This decline represents the continuation of a demographic crisis that first became visible in 1992, when deaths exceeded births in Russia for the first time since the Second World War. Between the collapse of the USSR and the last census, in fact, Russia’s population decreased by an estimated 5.4 million, an annual average drop of 284,000. The traumas of transition played a role in this shrinkage, the post-Soviet years bringing a spike in mortality and a collapse of the public health infrastructure. But its roots are broader and deeper, going back to longer-term processes of demographic change over the course of the twentieth century – declining birth rates linked to urbanization and rising female literacy – as well as the catastrophic losses inflicted by war and Stalinist terror.{18} Though the Kremlin has enacted some pro-natalist policies, offering monetary incentives for women to have more children, these efforts will not be enough to offset the decline, much less reverse it.
The shrinking of the population is taking place at the same time as a marked ‘greying’ of Russian society: an increase in the proportion of middle-aged and elderly citizens. In 2010, 18 per cent of the total population was over sixty – the same proportion as in the US, and considerably less than in Germany or Japan. The UNPD’s projections show the percentage rising over the coming decades, to 29 per cent by 2050, levelling off thereafter until 2100 – an estimated 36 million people. This would again be a share similar to the US’s, but less than Germany’s or Japan’s.
In Russia as elsewhere, such trends imply a formidable rise in the ‘dependency ratio’, requiring more and more of the resources generated by a shrinking workforce to be deployed in caring for pensioners. In much of the developed world, these looming pension obligations – the term ‘overhang’ is frequently used – have been used to justify increases in the retirement age. But in Russia there are powerful moral arguments against such moves: shorter life expectancy and higher mortality rates than in the West or Japan, say, mean that the Russian pension system is already heavily subsidized by men and women who do not survive to retirement age. Shifting back the date at which they can claim their pensions would compound the injustice of working lives already too harsh to last as long as they should. While Russian demographic trends in many ways echo those of the industrialized world, then, there are differences that seem likely to make the politics of the ageing society particularly sharp-edged there – perhaps demanding an even more thorough rethinking of the country’s economic model.
The only thing that can mitigate the effects of a contracting and ageing population is a substantial inflow of migrants. According to a 2006 study led by Anatoly Vishnevsky, Russia’s leading demographer, in order simply to maintain Russia’s population at its present level, an annual net migration of around 900,000 people would be required until 2024, rising to an average of more than 1.2 million migrants a year until 2050. Accurate figures are hard to come by, but at present migrants in Russia probably number around 12 million, something like 8 or 9 per cent of the total population. Given Russia’s low birth rates, if the population does stay steady, an increasing proportion of it will be recent immigrants: according to Vishnevsky’s team, as much as 15 per cent by 2025, and 35 per cent by 2050.{19}
At present, most migrants to Russia come from former Soviet republics – the lion’s share from Tajikistan, Uzbekistan and Kyrgyzstan. If anything like the influx required to offset natural population decline materializes, it will rapidly alter Russia’s demographic make-up. Migrant workers have already been subjected to chauvinist harassment and violence, and one could be forgiven for fearing there is worse to come, given the tide of empowerment and impunity the far-right has been riding in recent years. It is likely, too, that what is already an ethnically segmented workforce will settle into a more permanent ethnicized social hierarchy, like those of other post-imperial societies such as France or Britain. But at the same time, the very processes and experiences of migration might just propel a rethinking – however halting or partial – of the idea of Russianness itself, giving a stronger emphasis to civic components over ethnic ones, and allowing that idea to inhabit a wider range of forms and meanings.
17
The fact that so many of Russia’s wealthy park their money overseas rather than investing it in Russia itself not only fuels tremendous domestic inequalities, but also puts the country at a strategic disadvantage internationally.