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The nuclear button is not enough | Business

Slim Wonders

Putin never accepted the collapse of the USSR. Since he took power he has sought to recover territories that according to his criteria belong to him, although probably the main reason for invading Ukraine was knowing that he was ignored by the great powers.

It is very likely that he was not pleased to find that the size of the Russian economy is approximately equal to that of Spain, a country that is far from holding the world leadership to which Russia aspires. Indeed, the GDP of the Spanish economy in 2021 was only 15% lower than that of Russia, when its population is approximately one third. As a consequence, the rent per capita of Spain is 2.6 times that of Russia. The differences in terms of efficiency are even more notable. Labor productivity in Spain —a country that is not distinguished by its good records in this variable— more than triples that of Russia.

But their concern is not Spain, it is the great world powers, the EU, and even more so the US. Both are perceived as a threat, the first due to their geographical proximity and strong trade relations, and the second, because since the years of the Cold War has been its brown beast and main responsible for its neglect. China is the third power in contention. Despite public demonstrations of brotherly love, and despite both sharing contempt for democracies in general and Western ones in particular, Russia has every reason to envy the Asian giant. China has followed a path very different from its own since Deng Xiaoping began —at the beginning of the eighties of the last century— the path of reforms that would take him from a situation of quasi-feudal backwardness to dispute the technological leadership of the United States.

The differences in economic size between Russia and the three great powers are staggering: the US’s GDP is 13.9 times Russia’s when its population is only slightly more than double; that of the EU is 10.4 times greater with a population three times that of Russia; while the GDP of China is 10.2, and the population, 9.4 times greater. It’s also a long way from the top two in terms of rent. per capita: that of the US multiplies that of Russia by a factor of almost 7, and that of the EU, by a little more than 3. On the contrary, that of China is similar to that of Russia today, but its growth has been spectacular : 8.1% per year on average in the period 1995-2021 compared to 2.9% in Russia. An abyss. However, it should still be a greater embarrassment than rent per capita of all the countries without exception that joined the EU from the Soviet orbit have grown since 1995 at annual rates higher than theirs, and in the case of the three Baltic countries, up to almost two percentage points more.

These poor results are the consequence of an economy trapped in the curse of natural resources. This expression is applied to countries rich in these resources, but unable to take advantage of them for the benefit of their citizens. Russia not only failed to take advantage of its favorable starting position in the past, but is currently facing the loss of wealth that the energy transition entails and the disappearance in the medium term of polluting energy sources that are its main asset.

China in 1990 was very poor, but it followed a very different strategy from Russia. Deng Xiaoping launched the 863 Science and Technology Program in 1986, the goal of which was to make China financially independent of foreign technologies. Between 1995 and 2019, R&D spending grew at an annual rate of 18% in China, compared to 3.7% in the US and 3.1% in the EU and Russia. This enormous effort has been aimed at building up China’s powerful technology sector and improving its global competitiveness, seriously threatening US leadership.

He knows in depth all the sides of the coin.

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The previous lines show that Putin, with the invasion of Ukraine, has accelerated the consequences of the curse of natural resources and now only has the nuclear button left, which does not seem enough to become the great power he dreams of being. They also confirm that China has made a great effort to challenge the US for world leadership. And, finally, they constitute a serious wake-up call to the EU, which has been gradually losing weight on the international board.

Matilda MoreUniversity of Valencia and Ivie.

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