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Russia Is Becoming More North Korean

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In the summer of 1990, I walked on Red Square’s cobblestones for the first time and took in the Kremlin’s solid red brick walls and the curvy candy cone of St. Basil’s Cathedral. It was a picture-perfect day. I was twenty-two and in awe. To my right, Lenin’s tomb, the spot Putin sat at this week to observe the May 9 Victory parade. Just behind the tomb is Stalin’s grave.

At its best, Russia has a European rhythm that is off just a beat from what you expect, like Red Square itself. That is the magic that produces Tolstoy, Bolshoi ballerinas, and Russian rappers like Monetochka (which means “small change”), who I am listening to as I write this. Conversations with Russian friends are a delight. They often better understand the full range of human behavior, from elevated to beastly.

At its worst, Russia murders its citizens and neighbors. Below is Putin earlier this week on Red Square. Putin has killed tens of thousands of Russians and Ukrainians in an effort to replace Ukrainian President Zelenskyy with someone more pliant, along the lines of Belarus’s Lukashenko, sitting a few places down from Putin and wearing sunglasses. Listen to my conversation with Georgian civil rights advocate Dachi Imedadze to get a sense of what it feels like to live next to Russia.

Photo: Sputnik, Gavriil Grigorov

Putin has turned Russia into a pariah state, at least in the West. More sanctions have been applied to Russia than North Korea. The shift in the perception of Russia from a country on the right side of history (following WW2 and then Gorbachev) to the wrong side probably began in 2008 when the Kremlin invaded South Ossetia (north Georgia).

Countries get off course. If it can happen in Germany (1930s) and Russia and Rwanda (1990s) and Chile (1970s) and Italy (1930s) and Cambodia (1970s) and China and…it can happen anywhere, including the US, which came close to spinning out of control on January 6. The root issue is that people have trouble accurately understanding evolving reality. It’s the same reason financial markets are inefficient.

For investors, losing money is a painful but necessary indication they hold a distorted sense of reality. For countries, changes in living standards are also instructive but often take time before they become obvious. Based on the numbers and a few simple assumptions, it looks to me like the Western sanctions are working to change Russia’s reality. Russian military spending is rising at the same time that raw materials revenue is falling, which is what the goal was. Below I describe:

a) how Russia veered off course and

b) current Russian economic conditions and

c) warning signs the US is also off course.

Veering Off

In the 1990s, Russia was chaotic but hopeful. Recall, there was not one but two coup d’etats (1991 and 1993) and in each case, the Soviet retrograde forces lost. After the Berlin Wall fell, tens of millions of people slipped off the Kremlin’s yoke. “Gorbachev was the greatest leader ever,” one Romanian acquaintance told me. Many Russians disagree, perhaps because inflation and corruption followed disintegration. When I lived in Moscow, cops with machine guns pulled me over at gunpoint and extracted bribes.

Putin is as corrupt as they come. While I was writing articles in Moscow, he was selling metals on the black market out of the St. Petersburg mayor’s office. He is a pathological liar. Yet, in this facility, he is less an exception than a stand-out student. In the Soviet Union, Russians were trained to lie. Students recited the miracles of Marixm-Lennism and then watched their parents hunt for toilet paper and salami.

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