Read Part 1 here (redistribution of assets, banditry).

What Russia does to its economy is suicide and criminal thinking will become the country’s main policy in the near future. A dark period is looming over Russia and will stay there until the end of this century, says an economist and scholar who had helped design Russian economic reforms in the 1990s. 

On Russia’s territorial integrity

In an interview for the Popular Politics, an independent YouTube channel, Igor Lipsits, doctor of economics, author, and a co-founder of the Higher Economic School in Moscow, says that Russia is trapped to subsistence by the size of its territory, which offered vast resources but is also plagued by plenty of differences (ethnic, economic) and killed or inhibited the desire to innovate or to look for alternative answers. 

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The favorite method to get rich in Russia is to conquer new territories, just like in the Middle Ages. The Russians got doomed on the day they conquered the Kazan Khanate [in 1552] – its first major territorial expansion. Since then it’s lived with the idea of expansion as a source of welfare.

Although there are no imminent premises for Russia’s disintegration at present, this process is possible if the country is struck by major catastrophes such as civil war and mass riots.

There’s little chance that the aboriginal peoples of Siberia will rise to independence. What really matters is distance. The Far East region, for example, has little in common with the European Russia – shipping goods from that region to Moscow makes them uncompetitive and locals prefer doing business with China and even trade for Chinese yuan rather than Russian rubles.

Times of hardship may transform the country, in the best scenario, in a confederation of independent but closely cooperating republics or push to disintegration into dozens of statelets under the control of warlords with no moral or legal constraints, acting as medieval feudals.

The restoration of the USSR in Russia, in its worst form, is the most likely script, he stressed.

A map of federal territories, autonomous republics, and historical regions in Russia.

On Ukraine

Unfortunately, Ukraine won’t fare better than Russia, he pointed out. In spite of its joy over the new tranche of US military and financial aid, it will not emerge victorious from the ongoing war – at least not any time soon.

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“It’s because the West is not interested in Russia’s defeat but won’t let Putin win either,” the economist thinks. “Nobody will let Russia occupy all of Ukraine, but neither will allow Ukrainians to become too strong in order to recapture all of their territories. The world is not fair or just, I’m sorry to say that.”

It doesn’t matter who is elected next to the US presidency – Donald Trump or Joe Biden – either of them will attempt to persuade Kyiv to accept a sort of frozen conflict under the Korean template. This scenario will be bad both for Ukraine and for Russia. 

“There will be an ‘Eastern European Poverty Zone’ consisting of Russia, Belarus, and Ukraine,” the professor specified.

Moscow will predictably try to replenish its arsenal, subjugating the entire economy to military needs and abandoning the civilian economy instead. While Russia’s population will continue shrinking and its economy will be dying slowly Ukraine in turn would become a NATO outpost.

The West will help Ukrainians build strong armed forces and some sort of military industry to enable them fight against the Russians alone, with very few chances to have a sustainable economy, the scholar predicted.

On a new arms race

“Few people know that a large part of Soviet weapons was made in Ukraine and Ukrainians continued maintenance services for the Russian army until the annexation of the Crimea. The equipment used in Russia to manufacture weapons is very old and will soon become dysfunctional. The latest major endowment of plants in the USSR took place in the 1980s,” Lipsits said.

Russia has indeed started rebuilding its military industrial complex but because of sanctions, old technologies and limited human resources it simply can’t compete even with the now defunct empire.

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Although the state of frozen conflict suits Moscow, which will obviously claim victory, this actually won’t help the Kremlin. Status quo will certainly embolden Vladimir Putin to rearm, but the dictator is not a good strategist because he has not learned much from past mistakes of the Soviet history. A new arms race with the West would push Russia to the brink of collapse as it happened with the USSR, Lipsits reminded.

The professor believes that Russia is simply not capable of a new arms race, from the technological and human resources’ points of view.

“Perhaps the Americans have sold another Star Wars doctrine to Putin, who decided to mount the economy on military rails; ultimately it will ruin Russia like it had ruined the Soviet Union,” Lipsits stated.

The agony of Russia will be long and painful, the economist concluded.

He added,

“By the way, do you know that Putin has jailed 16 scientists who helped him develop the supersonic missiles?”

Igor Lipsits emigrated to Lithuania in 2020. He is catalogued as a “foreign agent” and “undesirable person” in Russia.

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