The 2015 December event of the Great Decisions forum was held in Chanhassen Minnesota. The focus for this session was on Russia covering both foreign policy and international business aspects of the current global environment. The event covered a broad range of questions that helped to define the current situation ( see gallery for detailed lists of the areas explored ).
After the fall of USSR over 25M people found themselves no longer a citizen of Russia but part of another country. Over 33M where also in satellite countries just reforming at the breakup. The overall region has suffered from an identity crisis of being a super power to a collapsed and divided region. The size of Russia spans from Europe to Asia crossing 9 time zones and many cultural groups.
The breakup broke all existing processes and impacted trade internally and externally. The countries economy is primarily tied to oil & gas and the lack of diversification make the economy unstable as prices of gas & oil vary due to global competition. Today, with inflation over 15.6%, loans over 11.6%, and the value of the ruble dropping by over 50% this year, the economy under massive strain. The international friction and trade sanctions imposed by the west serves as a primary reason that public sentiment for the west has become quite negative and is also the convenient source of the government and media to place blame on the hardships. Currently there is 314 single industry cities, whose economy rests solely on the success of that corporation. Those companies provide much of the education, jobs, and overall investment in the region. With many companies out of money, the entire region fails around them. Already there are over 94 red zones; areas that are bankrupt. There are many that see the return to global influence is to return to a military based economy exerting influence. This may see an increased international strategy of being involved in conflict as key to support that side of the economy.
Rise of Putin and his history in the KGB where discussed at length. His career had suffered many ups and downs, but now in power. It is impossible to leave that power and the security it affords at an individual level. After the breakup the country moved to an auction based system of key services and contracts. The root problem was the rich and influential controlled the auction and they won all the contracts. Corruption has spread to all levels of the government and to all processes. Personal networks, trust and bribes are standard business practice and this creates a great deal of problems for international companies to operate successful and sustainably in Russia. There is no rule of law to make business sustainable. The law has been developed by those in power to protect those in power. Frequently they exert this power to levy charges against anyone who may disrupt or speak out against the corruption. The corruption is seeing many citizens trying to migrate out of the country and more importantly, get their capital out of the country and into other financial markets. Talent of all ages are attempting to leave and is creating a brain drain of a country that has a deep academic and trained society. Attempts to create a version of silicon valley and spur innovation have been government led and controlled and lack most of the organic and genuine nature of entrepreneurship found in economies across the globe. While the internal media control all the messaging, the overall society is extremely well informed and rational in world views. They can appreciate how broken the situation is, but also how inaccurate media is all over the world as it is used to drive perception vs. truth.
Discussion ranged from the middle east to the overall relationship between China and Russia. While both countries prioritize a relationship with the west, both are struggling in those relationships. This has created an increased opportunity for them to explore mutual partnership to benefit both economically and politically. This has been slowed due to the economic slowdown in China as of late, but that alliance could change political dynamics globally. There are many political, social, and overall values difference that will complicate this partnership, but they may find momentum in areas of mutual benefit. China is also working to become an infrastructure and manufacturing leader around the world. They are following a new silk road strategy positioning to be at the center of trade and making massive investments in developing markets like southeast Asia, Africa, and high interest in investments in north and south Americas.
I’m also placed the agenda of upcoming talks in 2015 & 2016. Refer to the gallery to learn more!