The Revenge of Russian Imperialism?


Two years ago, in a note on Russia (1), we made the observation that the Russian bourgeoisie’s new course, in the incarnation of the old KGB man Putin, was aiming to rebuild its imperialist power which had been seriously compromised by the last phase of the “Soviet” era and the devastation of the Yeltsin epoch. It was and is - we said - a matter of a course counter to the tempo imposed by the increasing gangrene of capitalism’s world crisis and by the differences between the small and large imperialist bandits.

But the very same contradictions of capital which had produced the precipitous collapse of “Soviet” society and, initially, had brought about the victory of Uncle Sam, its historical antagonist, are now creating, from a certain point of view, conditions favourable for the revenge of the Russian Bear, which draws strength from its enormous natural resources, primarily, it goes without saying, its energy resources.

The birth of the euro, the triumph of central-left governments in Latin America - to whom the European currency offers an example to follow and a rebalancing weapon of blackmail against North American control, China’s rapid economic growth (2) and, finally, the high price of oil, are all factors which, in one way or another, a bridgehead for the neo-imperial ambitions of “Mother Russia”. Of course, this does not actually mean - and it is good to bear it in mind - that the game is already won, on the contrary. The rubble of the 1990’s and the wreckage of the Brezhnev period render the path rockier than ever, while the laws proper to the capitalist mode of production have not ceased to dictate the limits and the rhythm of its transformation to the Russian economy and social formation.

Economic recovery?

It is well-known that every discussion about Russia’s perspectives should start with its role as an energy power on the international scale, which it regained after the secession of some important oil regions (Azerbaijan, Kazakhstan) and the torment of the 1990’s which reduced its importance. And, within this framework, the company controlled by the state - in particular, by Putin’s entourage - Gazprom stands out, as the third largest in the world in terms of capitalisation, with a little more than $300bn. Through the lever of gas (but also that of oil: gas and oil make Russia the biggest “energy” country in the world), Russia is achieving important results of an economic and strategic order. Thanks, as has been mentioned, to the high price of hydrocarbons, a river of petro-dollars has been flowing into the state’s vaults, which have been used to try and put the ailing country back on its feet. In a short time, some of the principal economic indicators have begun to take a positive course, just as, to take an example, last August the Central Bank paid off its debt to the Club of Paris very early, thus saving billions of dollars of interest. Public debt, external debt, the state deficit: the whirlpools of the 1990’s are being slowly, or have already been, calmed, while the foreign reserves held by the Central Bank are growing without pause. In parallel, we are witnessing a progressive appreciation of the rouble vis-à-vis the principal foreign currencies, and, if this could have some negative effects, there are positive ones which will neutralise them and, probably, more than compensate for them. Certainly, a revalued rouble renders nationally produced goods less competitive, but, although this is a real problem, it is also true that Russian production in general has few strings to its bow to stand against the better quality for - relatively - low prices of products coming from abroad. In fact, the true problem of Russian industry is not so much the loss of competitivity stemming from a strong currency, but the structurally weak competitivity and productivity of its industry and economy in general. It is a problem which has dragged on from the Brezhnev era and which, in fact, led to the implosion of so-called “real socialism”. Therefore, it is primarily a matter of profoundly restructuring its industrial apparatus - and its infrastructure and services - if Russia hopes to aspire with any probability of success to the role of a world imperialist brigand. It is obviously a gigantic task, requiring enormous amounts of capital, both national and international, for which a strong currency and economic stability has always constituted a promising attraction. These are conditions that Moscow appears to actually offer, as its bonds (governmental and non-governmental) have once again become appetising after the collapse of 1998: bond-holders who didn’t throw them away, that is, didn’t sell them in haste, today have amply recovered, and more, the initial investment: indeed, some bonds have yielded a gain of 414%. (3)

These bonds are substantially guaranteed by enormous reserves of hydrocarbons (and by gold, diamonds, general raw materials), but, and we are back to the central point, to protect, or rather to increase current levels of extraction, it is necessary to modernise plant and to develop transport networks, which are at present being worn out or are, at least, not equal to future perspectives. As the Russian President says:

In a context of intense competition, scientific and technological advances represent the definitive factors for the economic development of a nation. Unfortunately, the majority of the technological installations utilised by Russian industry today have been left behind not just by years but by decades with respect to the most advanced technologies that the world can offer. And even taking account of the particular climatic conditions of Russia, our utilisation of energy sources is many times less efficient than that of our direct competitors. (4)

Obviously, Putin is more interested in the possibility of sharpening the energy weapon than in providing heating for Russia citizens (although, in the setting of a renewed imperialist strategy, internal consensus has its weight, too), and aiming at the objective of a “heavy” rouble is without doubt an important factor, as it eases the acquisition abroad of advanced machines and technologies. It is not an accident that plant, machines and vehicles are by a large amount the greatest elements of Russian imports, at about one half of its imports from non-CIS countries. In short, Russian imperialism needs a gigantic amount of capital, which, today, is assured by hydrocarbons, but, to guarantee the continuity of this flux of money, it must profoundly renew its economic structure.

In a certain sense, gas (and oil) serves Russia in the same way as the immense industrial army serves China: both secure massive inflows of currency with which they proceed to the restructuring of their economies. In parentheses, Russia’s demographic decline (which became serious under Yeltsin), that is, the difficulty in reproducing labour power, is another element which tends to accelerate change. Today, average productivity is rather low, and this is confirmed - if one can trust the official figures, which are regarded with suspicion by many - that the cost of labour in the last few years has increased by more than productivity. If this is true, that would not mean that the workers have taken to drinking champagne, but simply that the productive apparatus is threadbare and is so ancient that even the lengthening of the working day (see the extraordinarily elevated number of overtime hours worked), that is, the increase in absolute surplus value, is not sufficient to make the system competitive.

On the other hand, this last expedient, together with the enormous extension of the black economy, was the final resting place of the “Soviet” epoch, when state capitalism substantially ceased to invest in the face of a plunging profit rate and a progressive paralysis of society. Now, this way of “curing” can result in the least bad state of health, but it is obvious that it cannot constitute a solid launching pad for the economy and imperialist aspirations. Saying this does not contradict the fact that the pay, and, in general, the living conditions of waged labour have emerged a little from the abyss into which they fell in the Yeltsin years (5) as a result of the economic revival carried forward by gas and oil.

Moreover, a modern economic and industrial system cannot base itself exclusively on forms of exploitation which literally revert to those of the nineteenth century, as, for example, in Bangladesh: there must be at least a sector of the working class (in the wider sense) which has the time and means to reconstitute its own mental and physical energy. Apart from the appearance of situations which are always possible among capitalism’s barbarism, but are not in view today, it is unthinkable that one can work seven days a week, 15 hours a day, at the mercy of hunger and disease, operating a robot or a computer system: it would be physically impossible to keep this up for very long. But, although slightly improved, the living conditions of the Russian proletariat significantly vary from region to region. For example, the miners of Norilsk in Northern Siberia (nickel and platinum) “earn $600 per month, while those of small provincial cities take $100”. (6)

But these miners or the aeronautic engineers of St Petersburg remain much less expensive than their Western colleagues: a Canadian miner, for the same work, earns $4000-5000, an engineer gets five times more; one understands why Airbus and Boeing have delocalised part of their production to Russia. However, the cost of living in the big cities, in particular those where the large foreign firms have opened their offices, is no lower than in New York or London. It is also true that, despite the progressive increase of bills and the tendency towards charging for social services (in practice, the theft of indirect and deferred wages), the state continues to subsidise the domestic consumption of gas, water, light, etc., but only while it can still allow itself to do this, and it does this, because, not least, so as to stem social discontent, which has anything but disappeared. The plan for re-launching the economy needs social peace, which cannot be obtained solely by blowing the trumpet of ideological propaganda or through repression (both amply used), but must be supported by a sufficient economic basis, without which the other two means would be less efficacious in the medium to long term.

The indispensable intervention of the state

Social stability, or, expressed differently, the capacity to keep protest movements under control, is another important ingredient of the recipe aimed at attracting external capital, which has made Russia the sixth country in the world in terms of direct foreign investment (DFI) received. To increase its ability to attract capital, the government is drawing up a plan (which is already being carried out, in part) aiming at the creation of numerous Special Economic Zones (SEZ), just like those in China, which, using these means, stands at the head of the DFI rankings. In the SEZ’s, as is well-known, companies have reduced expenses and ample room for manoeuvre both as regards labour-power and taxes (which are already low for Russian companies, especially if they are compared to Western firms), which is, obviously, the reason for their convenience. But the Russian SEZ are intended, beyond their function as more abundant sources of surplus-value, to also be centres for scientific research and technological innovation: it is not for nothing that many of them are associated, at least at the planning stage, with “technology parks” which can count upon an availability of qualified and even highly qualified wage labour which is everything but negligible at a cost which is extremely interesting (for the bourgeoisie, of course).

Thus, gas, oil, investment from various origins, state intervention at many levels (and the intensive exploitation of labour power, it goes without saying), allowed Russia to achieve, over the last twenty-five years, economic growth rates which have swung between about 6 and 8%; but, and we are not the only ones to have made this observation:

the present growth in the Russian economy is not investment, but renovation, (7)

meaning that it is not a question of real expansion but of clearing away the rubble and catch up on the historical retardation accumulated over thirty years. This, too, should make those “on the left”, who see the rising of the Sun in the East for a new capitalist prosperity, reflect...

But, in the meantime, “Tsar Putin” and his “friends”, secure in the command of the strategic sectors (energy, the military-industrial complex, finance and communications) of the economy (8), are seeking to manage this delicate moment in Russian history and are accentuating state intervention, notwithstanding the lamentations of a part of the bourgeoisie, ever ready - with their good shopkeepers’ blood but no mind - to rend their clothes and cry against the “communist” wolf every time the state, as the collective capitalist, is constrained to take decisions which, by protecting the general interests of Russian capitalism, might go beyond individual and/or short-term capitalist interests.

On the other hand, and this should be remembered, this state intervention enjoys a certain consensus among “the people”, who are deeply disillusioned in the savage neo-liberalism of the 1990’s, who approved of the political cutting down to size of the oligarchs, the protagonists of the dirty robberies at the end of the century, and of the offensive against the large Western energy companies, the deserving colleagues of the above-mentioned oligarchs. After the imprisonment of the oil man Khodorkovsky, the spearpoint of the US’s intrigues, the oligarchs continued to accumulate billions of dollars, but politically they had been rendered innocuous, with the threat suspended above their heads of a judicial revision of the privatisations of the 1990’s. In the same way, there are more and more cases of the suspension (or the threat of suspension) of the agreements for the extraction of hydrocarbons, which were once granted with conditions very advantageous for the Western companies, with a view to their renegotiation. Finally, in chronological order, was the “full stop” imposed on Shell’s operations on the island of Sakhalin, in October. Shell planned to invest around $20bn in the prospecting for, and exploitation of, new deposits. Total too, from Russia’s “friend” France, appears to be running the same risk. Of course, the dangers of environmental pollution, cited as the motivation for government intervention, don’t really come in here, whereas the political will to re-take control of energy resources and the river of money which streams from the oil wells is what this is mostly about.

These are bad times for the poor multinationals depending on black gold: in Latin America too, the new governments of the populist left are forcing the revision of concessions which the US doormat governments more than generously granted the above-mentioned multinationals. This, obviously, has very little to do with communism and is not even very “left”, even if pen-selling journalists and naïve anti-globalisation activists argue that it does. It is “simply” an attempt to re-appropriate national resources which have for years - or forever - been sold to the strongest, in total disregard for the mythical “free market”. (9)

The time is more than favourable, in the light of the high prices for fossil fuels, which have already been mentioned more than once. With the oceans of money which follow from this, it is possible to (or to try to) follow a political course which is less subordinated to foreign interests or more aggressive towards them. Today, therefore, Russia has very good cards to play, even in the world of international high finance. Moscow finance’s initiatives have made the EU’s ears prick up, in particular those of France and Germany, and especially after one of the most important Russian banks, the Vneshtorgbank (unsurprisingly, controlled by the Putin circle), acquired 5%, or even 7% of EADS, the European aerospace entity behind Airbus (Berlusconi’s Italy, Bush’s valet, stayed outside of this). If, on the one hand, the influx of fresh capital gave a bit of relief to the tormented story of Airbus (late deliveries, penalties to pay, etc.), on the other, the Europeans fear that the Russians might have a determining weight in the aerospace giant, with the concomitant control over vanguard technology. At the same time, the Russian government has promised the constitution of an aeroplane consortium - UAK - which will unite the most important aeroplane builders - MiG, Sukhoi, etc. - to renew the whole aeronautics sector and has opened the way to the entry of European companies into both military aeronautics and other strategic sectors, like energy plants, in particular nuclear plants, but they are simultaneously increasing the share controlled by the government in the affected undertakings. For example, the German company Siemens has recently begun to participate in the large company Silovye Mashini (nuclear and “allied” plant) to the tune of $2 bn. (10)

It is an affair where both the partners are satisfied: Russia acquires, as well as capital, vanguard technologies, while Seimens (and, consequently, Germany, the EU, ...) the possibility of getting into an important market like Iran, with which Russia has intensive, although not always overt, economic and military relations. For one thing, Iran has obtained surface-to-air missiles from Moscow, which enable it to keep the aerial and naval traffic in the Persian Gulf under its thumb, or at least to threaten it more efficaciously...

Gas, euros, dollars (and roubles)

Gas is great, and Gazprom is its profit, the “Putin gang” might well say. And it is with gas that Russia has brought about the failure of the so-called colourful revolutions financed by the USA (and, in a subdued way, not made entirely unwelcome by the EU) - see the Ukraine and Georgia - or has at least created great difficulties for them; it is with gas that they are bringing a few of the ex-Soviet republics back into the fold - included those in Central Asia. These Republics enjoyed favourable prices for their heating for years while they opened their hearts, arms and all the rest to Uncle Sam. In this context, the new gas pipeline from Russia to Germany under the Baltic Sea, which was built by a mixed consortium of Russians and Europeans (in particular, Germans), will make the economic ties between Brussels and Moscow even tighter, and will satisfy various objectives. Russia will be able to supply Germany, and, from there, Western Europe, circumventing the Baltic Republics and Poland and, in general, the countries of Eastern Europe, which are very sensitive to the lure of the dollar. These countries, although totally dependent on Russian gas, demand onerous duties on gas crossing their territory and, also, because of their ability to control energy flows between Russia and Europe, they have been, up until now, in a position to condition the EU’s policies with regard to both Moscow and Washington. When the new pipeline is in action, the bourgeoisies of these countries, from Riga to Warsaw to Kiev, will realise (and are already doing so) that they will lose not only an important source of foreign currency, but also a political weapon of primary importance. (11)

The same is true, more or less, for the planned oil pipeline crossing the Black Sea, Bulgaria and Greece which should convey oil from the Russian shore of the Caspian Sea to Southern Europe. If it is finished, it will reduce the importance of the Baku-Ceyhan pipeline, which is strongly desired by Western oil companies, the US and its Middle Eastern vassals to by-pass present Russian pipelines and weaken Moscow’s role in the Caucasus. In addition to this, the multiplication of direct agreements regarding energy between Russia, the European partners and other World regions - in the first place Venezuela and Algeria (12) - is fomenting a “side effect” which tends to degrade the US’s imperialist structure: it contributes to the questioning of the role of the dollar as the reference currency for international trade, starting with that in raw materials. If the euro hadn’t been born, the problem - for the USA - would not have been posed, obviously, but the euro is, and is becoming even more of, a temptation for those countries which finally see a developing escape route from the claws of imperialism à la Stars and Stripes.

Amongst other things, the “euro option” has the supplementary advantage that, for now, the politically weak European Union is not able to deploy a military control on a World scale as American imperialism can. Iraq tried to unhook itself from the dollar, with the results - still not concluded - that we see. But, after Iraq, Venezuela and Iran too are more and more frequently talking of gradually abandoning the greenback to switch to the euro, or, and this would be more complicated, to another continental or regional currency: see the announcements about this made a little while ago by a few Arab countries and by Brazil and Argentina.

Could “Tsar Putin” remain aloof from such a tumult? Clearly not:

The rouble must become a more widely diffused currency for the development of international transactions and must gradually expand its zone of influence. To this end, we must organise commodity exchanges on Russian territory for the sale of oil, natural gas and other commodities, markets which develop their own dealings in roubles. Our goods are exchanged on World markets, so why not here in Russia? (13)

Of course, words are not enough to make the Russian currency a means of payment accepted on World markets, but it seems that the Russian raw materials exchange is already something more than a dream of the Putin clique and its associatiates. (14)

Anyway, it is a matter of fact that the euro has increased in the among the large reserves held by the Central Bank, at the expense of the dollar, and that the “citizens’” savings are shifting from the dollar to the rouble: when the economy was in a total mess, anyone who had anything to spare converted it into dollars, the only, although weak, room for manoeuvre in the blackest misery.

A moment to conclude (provisionally)

To conclude this concise update on Russian capitalism, we have the duty to stress - a the risk of boring the reader - that the “revenge” of Moscow imperialism has begun, but it is long from being complete and that its enormous economic problems have scarcely been broached, let alone resolved. Some preconditions have been satisfied, without doubt, but the road is rough and full of obstacles. As well as those mentioned, there is very widespread corruption, which is impossible to eliminate for various reasons, among which is the fact that in state capitalist countries or those where the state controls important economic sectors, the bureaucrat who receives bungs carries out the same function as that exercised by business legal advisors in the “free” West.

Another problem is the violent collision between more or less hidden powers - sometimes living abroad... - which manifests itself in the startling homicides of recent months: uncomfortable journalists, like Politkovskaya, businessmen with strong political links, even the vice-director of the Central Bank. These assassinations do not help the efforts of the ruling class to give a respectable image of Russia - whose recent entry into the World Trade Organisation was a important step forward - and could contribute to the slowing or otherwise impeding the processes of decomposition and re-composition of imperialist line-ups. Without looking too far abroad, the “strategy of tension” and the so-called “red” terrorism of the 1970’s said something, and only the brass faces of European (especially Italian) politicians have the courage to accuse Putin - although it is true - of having little respect for liberty and human rights.

However, what basically really interests us, is not so much knowing how and if Putin and his gang will succeed in making the star of Russian imperialism shine again, but when and if the proletariat of that immense country will know how to re-appear as a protagonist on the scene of class struggle and express the political vanguard which can lead it on the road to a better world.

Celso Feltrami

(1) See “I problematici scenari del capitalismo russo”, Prometeo 10, 2004.

(2) On the role of Chinese economic development in the context of World capitalism, see “Cina, un boom dai piedi d’argilla”, Prometeo 7, 2003 (translated as [...] in Revolutionary Perspectives), and “Lo sviluppo della Cina”, Prometeo, 10, 2004.

(3)La Russia lancia un’emissione di bond trentennali in rubli”, in Uomini & Imprese (U&I) 70, 2006, . Much of the information in this article has been taken from this neo-liberal magazine, in particular for the years 2005 and 2006.

(4)Putin, serve fiducia nello Stato e nelle imprese”, U&I 72, 2006.

(5) Despite the fact that between 2001 and 2005 wages have tripled, at least a quarter of the population lives below the poverty line and the majority of “Western” style consumer goods remain a distant prospect; only those who are employed in foreign-owned firms or who work for foreigners can augment their spending power (15-20%). For a comprehensive look at the Russian economy, see U&I 68, 2006.

(6) Boris Kagarlitsky, Dove va Russia? [Where is Russia Going?], Di Renzo editore, 2004, pp38-9.

(7)Un presidente giornalista e la quadratura del cerchio” [“A journalist president and the squaring of the circe”], U&I 70, 2006.

(8) Carine Clément and Denis Paillard, “Dieci flash sulla società russa” [“10 glances at Russian society”], Le Monde diplomatique-Il Manifesto, November 2005.

(9) To give an idea of the contracts which the multinationals drew up for the local governments, the following will be useful: “For every $100 of crude extracted from the Ecuadorian rainforest, the oil companies received $75...”, John Perkins, Confessioni di un sicario dell’economia [Confessions of an Economic Assassin] , Minimumfax, 2005, p23.

(10)Siemens ottiene il via libera dall’antimonopolio per le partecipazioni in Silovye Mastini” [“Siemens gets the ok from the anti-monopoly authorities to participate in Silovye Mastini”], U&I 68, 2006.

(11) Also see Giullietta Chiesa’s articles: “L’asiatic fenice” [“The Asian Phoenix”], “Questione energetica: in ginocchie da Putin” [“The energy question: kneeling before Putin”] and “La cena delle beffe” [“The meal of hoaxes”]. The last article deals with the recent summit in Lahti, Finland between Russia and the EU, where the EU essentially failed to impose its plan for its penetration into the exploitation of Russian energy resources on Putin. On the contrary, it is Russia, through Gazprom, that has entered Western Europe as the distributor of its own gas, as is witnessed by the latest accord between the Russian company and ENI. All of the cited articles are on .

(12) On this, see Elisabeth Studer’s numerous articles on the relations hinging on energy resources between Russia, Venezuela and Iran, at . Most recently, Russia has signed an agreement with Venezuela for the sale of 100 000 Kalashnikov’s, as well as military planes and helicopters; in addition, a collaboration is being worked between Gazprom and the South American country, which would see a gas pipeline starting in Venezuela and crossing the whole of South America.

(13) U&I, 72, op cit.

(14) Elisabeth Studer, “Russie: bientot une borse pour le pétrole” [“Russia: soon, an oil Exchange”], on , 22nd October 2006.

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