If you want an illustration of the primitiveness of the Russian economic and political system, and that of the systems in the Former Soviet Union generally, look no further than this story.
In terms of economic primitiveness, the fact that a dispute over potash (potash! FFS) is elevated to a matter of state requiring the direct involvement of heads of state illustrates perfectly the dependence of FSU countries on the production and export of basic materials. For all the yammering about economic transition, all the FSU economies, including notably Russia’s, remain dominated by the production of basic materials. As witnessed by evidence accumulating day-by-day that the FSU countries are becoming economic satrapies of China, as demonstrated by the Chinese acquisition of a large stake in Uralkali, the mooted Chinese acquisition of huge tracts of land in Ukraine, and the plethora of Chinese energy deals in Kazakhstan and Turkmenistan.
But the episode is more interesting for its demonstration of the institutional primitiveness of Russia, and the other FSU countries. In advanced countries, commercial disputes are adjudicated or arbitrated through institutional processes: indeed, they would have never have progressed to the point at which Belarus and Russia now find themselves. But the institutional underdevelopment in Russia and Belarus and other FSU states means that rule is personalized, and commercial disputes between large businesses must be resolved-or not-through the personal intervention of heads of state.
Could anything illustrate more tellingly the personalized, de-institutionalized nature of rule in Russia than Putin’s personal involvement in such a matter? Could you hallucinate, even after a bender that would put the Hangover I, II, or III to shame, Obama or Bush or Clinton doing any such thing? And this is not a one-off. Putin is repeatedly involved in grubby commercial negotiations (usually over natural resources) within Russia, and between Russia and other FSU countries.
This is a perfect illustration of why I have long believed that Russia is doomed for perpetuity to exist in an economic limbo as a natural resource state falling further and further behind not just more advanced, institutionally developed nations like the US, but even other institutionally challenged countries like China.
In other words, the Former Soviet Union is Totally F’d Up. And will remain so.