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Friday, May 26, 2006

Shocking Inaccuracy from the Carnegie Endowment's Moscow Center

In a post on the Carnegie Moscow Center's web site, Andrew Kuchins writes:

The Russian recovery is truly impressive. According to Moscow-based investment bank Troika Dialog, in 1999 Russian GDP in nominal terms was less than $200 billion; in 2006 it'll be close to $1 trillion -- growing at a rate of more than 25% per year, though nominal dollar growth rates will of course taper downward as the ruble appreciates in value.
This statement is so bizarre La Russophobe hardly knows where to begin.

First of all, by what bizarre logic does the Moscow Center choose to rely upon a Russian investment bank, whose raison d'etre is to tout Russia, for statistics about Russia's GDP? Incredibly, Kuchins does not even make an attempt to document the flimsy source he relies on; no person at Troika Diaglog is named much less is a link to the data provided by Kuchins.

Second, was Mr. Kuchins smoking when he wrote that Russia's GDP had "grown at a rate of more than 25% per year"? According to Reuters, which relied on World Bank data, Russia's GDP was $581.4 billion in 2004, up from $431.5 billion in 2003. True, this might appear (to an utter, clueless moron) to be a 34% increase of $149.9 billion, but Reuters indicates that the World Bank reported Russia's rate of GDP growth as only 7.1%. Moreover, Reuters relied on World Bank data published in 2006 which stated that 2004 was the most recent year for which fully reliable data was available. And all that is to say nothing of the fact that $591.4 billion is barely $4,000 per person in Russia, less than $12 per day.

In other words, not only is Kuchin's statement about Russia's 2006 GDP nothing but meaningless speculation, his statements about the growth rate are absurdly misleading, hiding behind the phrase "nominal terms." What Kuchins doesn't see fit to mention is that Russia experienced hyperinflation of consumer prices at a startling rate of 18.1% in 2004, which dramatically undercuts the value of its GDP growth, and changes in the price of oil and currency fluctuations account for virtually all the rest.

Why doesn't Kuchins feel it necessary to mention that, even if Russia's GDP were $1 trillion, that would still only work out to $6,993 per person, $19 per day, five times less than the average for Western Europe.

Why does Kuchins think he can just ignore the fact that the top 10% of Russia's population consumes nearly 25% of its wealth, so that 90% of the population continues to live in squalid poverty?

Above all, how can Kuchins possibly talk about an "impressive" recovery by a country which may have lost as many as 7 million people from its population, 4.6%, over the period of time he is discussing. Some people consider it a crisis that America has taken 2 thousand casualties fighting a war in Iraq.

The only thing that has been remotely impressive about Russia's economic performance over the past seven years is the Kremlin's ability to ride a wave of luck based on oil prices and worldwide terrorism. This wave has allowed it to retain its power and even begin to construct a neo-Soviet Union. But the condition of Russia as a nation, apart from the Kremlin, has dramatically deteriorated in every way that can be measured.

It's understandable that the "Center for International Peace" would be concerned about the world relapsing into a Cold War scenario where it will have little role to play. But perverting facts in order to try to convince the world not to confront the rise of the neo-Soviet state does nothing to advance the cause of world peace. If fact, it only makes things that much worse.





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