The collapse of the Soviet Union is undoubtedly one of the most seismic historical events of the last century, with the collapse of the leader of the communist world having massive economic, political and diplomatic consequences that are still being felt today. With this collapse there was no longer any real opposition to the hegemony of the Western liberal-democratic economic and political model, causing the vast majority of nations formerly in the Soviet sphere of influence to join the western world in the years after the collapse of the Soviet Union.
Out of these nations, the Russian Federation was the clear and legal successor state to the Soviet Union, it was also the nation that had the roughest transition from having a centrally planned economy to having a market-based economy, leading to a sharp economic downturn, leaving the fledgling Soviet successor state in the weakest economic, diplomatic and territorial state it has been in hundreds of years, with the Russian Federation still struggling with the after-effects of the Soviet collapse to this day, with the goal of this blog being to explore the extent to which the collapse is responsible for the current weak state of the Russian economy.

The first key area to explore is how the Russian economy today has failed to fully shake off and recover from the economic downturn of the 1990’s with McFaul observing in 1999 that, since the Soviet collapse ‘the Russian economy has shrank faster and longer than any previous modern power’s in history’ and that the Russian state ‘struggles to provide the most elementary of public goods, such as a single currency, a common market, security, welfare and education’ (McFaul, M. 1999), since then the Russian economy is no longer in free-fall and has recovered functionality, being able to provide the ‘most elementary of public goods’ as mentioned above, however the nature of this recovery has left Russia with an economy reliant on the export of natural resources and riddled with corruption, with Joe Biden recently deriding the Russian economy as “an economy that has nuclear weapons and oil wells and nothing else (https://euobserver.com/opinion/152825), this description, whilst pugnacious, has much truth to it with this excessive dependency on energy exports and the lack of technological innovation being key themes of Vladimir Putin’s first state of the nation address in 2000. This is further evidenced by the fact that oil and gas revenues usually account for around 40 percent of the Russian federal budget, yet very little effort has been made to generate new sources of national wealth capable of replacing them (https://euobserver.com/opinion/152825), likely as a result of generally high oil prices providing little incentive for reform. Something which could prove to be Russia’s achilles heel in the future, as more states, especially those in Europe (Russia’s largest export market) move towards greener forms of energy.

Another important reason explaining Russia’s economic weakness is the fact that it is diplomatically very isolated with few reliable allies and economic partners, with its reliance on exporting to European markets leaving it vulnerable to economic sanctions from the West with Russia being the European Union’s third-largest trading partner (Zonova, T. Reinhardt, R. 2014), while this allows Russia to influence European nations, it also means that Russia is dependant on them to buy its resources, meaning that sanctions from Europe are more impactful.

The key reason for this diplomatic isolation is due not to the collapse of the Soviet Union, but instead due to a long-standing (even pre-Soviet) Russian policy of ‘peredyshka’ or ‘breathing room’(Shearman, P. 2018) remaining a consistent pillar for Russian governments through its entire history, with this policy referring to the creation of buffers between Russia and Western European powers as a result of a long history of invasions from the Central European plains. This policy has the knock-on effect of isolating Russia from the international community as it often leads Russia to use its hard power to influence and coerce its neighbours, as it doesn’t possess the ability to project much soft power as a result of its weak economy. Recent actions such as the Crimean annexation and Russian threats against the Donbas regions led to greater isolation and economic sanctions, hampering Russia’s economic prospects.

Russia seems more concerned with foreign policy objectives than internal improvement, prioritising security issues over internal economic progress and seeing international sanctions as a price worth paying for ‘peredyshka’, with the governments led by Putin seeming content with an economy that, whilst recovered from the free-fall of the 1990s, was still quite meagre, being roughly the size of economies of the Benelux nations combined, and is considerably smaller than the economies of Western and Central European powers like the United Kingdom, Germany and France.

Russia’s decline and stagnation is not just limited to the economic sphere, it is also facing a demographic crisis as observed by Pjotr Sauer who states that Russia’s natural population has undergone its largest peacetime decline in recorded history over the last 12 months, with the natural population, (a number calculated from registered deaths and births, excluding the impact of migration) declining by 997,000 between October 2020 and September 2021. Russia’s total population of about 145 million is lower than it was when Vladimir Putin first came to power in 2000.
(https://www.theguardian.com/world/2021/oct/13/russias-population-undergoes-largest-ever-peacetime-decline)
This higher than usual decline in population in the Russian federation last year is likely as a result of COVID-19, which, despite Russia’s ready supply of vaccines, took its toll on the country, with Russia having its highest rate of excess deaths since the late 1990s during 2020/1, whilst the birth rate remained steady.
This population decline could have catastrophic effects on the Russian economy if it continues, with the possibilities of the Russian welfare state not having enough working population to support its retired population, as well as reducing Russia’s influence and importance on the world stage.

It is clear that the Russian Federation never fully recovered from the collapse of the Soviet Union, with the economic woes from the 1990s, paired with its relegation to the role of a regional power causing a steady decline in Russia’s standing in the world. However, it is too simplistic to pin this as the sole cause of Russian economic weakness, just as important are the diplomatic isolation of Russia from its largest markets, the failure of Russian governments to innovate and diversify their economy and the bellicose positions Russia has taken against its neighbours, showing that Russia values national pride and security over internal economic improvement, with the Russian government being broadly content to coast on a functioning yet relatively weak economy.

References

• McFaul, M. (1999) ‘What are Russian foreign policy objectives?’, Carnegie, https://carnegieendowment.org/1999/05/01/what-are-russian-foreign-policy-objectives-pub-424

• Shearman, P. 2018, ‘Russian Foreign Policy Since 1990’, ‘Soviet foreign Policy 1917- 1991’ Routledge, https://books.google.co.uk/books?hl=en&lr=&id=FpVLDwAAQBAJ&oi=fnd&pg=PT7&dq=russian+foreign+policy+since+1991&ots=it_VPzl91w&sig=utmEjYBeEW8AwJRwTc_wtwnJc14#v=onepage&q=russian%20foreign%20policy%20since%201991&f=false

• ZONOVA, T., & REINHARDT, R. (2014). Main vectors of Russia’s foreign policy (1991-2014). Rivista Di Studi Politici Internazionali, 81(4 (324)), 501–516. http://www.jstor.org/stable/43580683

• Sauer, P. (2021). ‘Russia’s population undergoes largest ever peacetime decline, analysis shows’, The Guardian. https://www.theguardian.com/world/2021/oct/13/russias-population-undergoes-largest-ever-peacetime-decline
• Clark, D. (2021). ‘Russia’s biggest enemy? Its own Economy.’, EU Observer. https://euobserver.com/opinion/152825