A crisis is better than a disaster

The rise in oil prices is a negative scenario for Russia. Why?

The US Department of Energy, followed by the Department of Economic Development, raised its annual forecast for oil prices. A barrel of Brent will cost an average of at least $102. This means that prices will, on average, be higher than in crazy 2008 (average...

The US Department of Energy, followed by the Department of Economic Development, raised its annual forecast for oil prices. A barrel of Brent will cost an average of at least $102. This means that prices will, on average, be higher than in the crazy 2008 (the average price for the year then was $99.75). For Russia, this is terrible news. It's funny that everyone understands this more or less. For example, according to the Levada Center, 51% of Russians surveyed believe that expensive oil does Russia more harm than good. Business elites and experts are well aware of the consequences of expensive oil. But…

But our country here is like a drunkard who mournfully listens to the admonitions of his loved ones: how he has changed, even outwardly, what hopes he gave, and now he doesn’t even go to work, - with all sincerity he realizes the correctness of these words and, through welling tears, pours himself an unsteady half a glass by hand. So what? Do not pour out if the bottle is already open and chatty.

The dramatic nature of the situation underscores the continued outflow of capital against the backdrop of rising oil prices. Explanations for this phenomenon are inconsistent and contradictory. For example, they say that this is a technical effect: with rapidly rising oil prices, companies do not have time to transfer revenue to Russia. Strange, in 2008 they were doing great. Representatives of the Central Bank do not get tired of repeating that the outflow is about to be replaced by inflow. But for now, it makes sense to remember that over the past seven months, $47 billion has already flown out of the country. That is, an inflow of 50 billion will be just a return to the situation of the summer of 2010. In general, since the beginning of the crisis (from the second quarter of 2008 to the first quarter of 2011), the net outflow of capital from Russia has exceeded $260 billion. Such is the modernization.

One way or another, the continued outflow against the backdrop of rising oil prices means that the verdict known to the population and elites confirms capital as well: an increase in oil prices is a negative scenario for Russia. Why?

By the end of last summer, it became more or less clear that the level of $70-80 per barrel is already a serious problem for the Russian economy. It does not save from a significant budget deficit and a real threat of a trade deficit. This, in turn, means that macroeconomic stability is a thing of the past and borrowing conditions are deteriorating. There is almost no money for development and stimulation of economic growth. This will not lead to an immediate social or economic crisis—not at all. But this means that the uncertainty of the elites, the growing sense of uncertainty give the development of the situation a fundamentally different vector. Manageability is declining, inter-elite conflicts are escalating, political issues are being put forward at the center of the agenda. Roughly speaking: something must be done, otherwise there will be no growth. The political crisis in this scenario occurs in the relatively near future.

In turn, the level of 100-110 dollars per barrel means that there are no two deficits. The ruble is strengthening again, which means that borrowings are becoming cheaper - they can replace the missing direct investments. It is possible to warm up the domestic market by throwing money at state employees and pensioners. In general, it is possible to maintain growth of 3-4% without real investment and improving the business climate, but with high budget spending. It is as if nothing needs to be done, and even if someone wants to, they will not be able to. The party for the preservation of the status quo will be too strong in such a situation. The crisis has been postponed, but its future scale is growing. This is a typical "Brezhnev" scenario for Russia, which, at such oil prices, threatens to turn into a base one.

Imagine two patients. In one, appendicitis develops against the background of severe pain and high temperature, he goes to the doctor, gets on the table to the surgeon, who makes him, in essence, a standard, simple operation. Another has a very slight temperature, a tingling in the abdomen, which can be mistaken for poisoning. He, too, will eventually end up on the surgeon's table, but with peritonitis and unclear prospects for life.

In order to understand why expensive oil is so bad and why in both scenarios we seem to see the end of the crisis, we must try to formulate the main problem that hinders our development and creates a sense of the futility of inertial scenarios. This main, fundamental problem is by no means the absence of free competitive elections. Their absence is only one of its consequences. The main problem is the role of law in modern Russia.

For various reasons, law has not become a regulatory mechanism for the life of society and the functioning of the market in Russia. On the contrary, laws, legal norms and law enforcement practices have become a mechanism for market distortion: the redistribution of resources, property and profits. And as a result, these norms, no matter how you refine them and rewrite them, and these practices, no matter how you regulate them, do not set up and do not support the market, but undermine it. They distort prices, block investments, reduce the efficiency of any useful activity. Seeking and taking rent becomes a more advantageous strategy than ordinary market behavior, that is, the production and sale of goods and services. Those who follow the latter strategy invariably lose, while rent-seeking elites seize profits and power.

This plane is flying with one engine off, and it is shaking, and the passengers are sausage and sick. And only the crew does not get tired of celebrating: you see, we do not fall! We don't fall! Our market economy is half running, and in the 2010s we ran headlong into the problem of the second engine. The matter is further complicated by the fact that neither the evil navigator, who always suspects passengers of intrigues and treason, nor the complacent captain, who is always proud of his tunic and cap, can launch it. They are hostages of the situation, not demiurges or even just mechanics.

The problem of law is so fundamental, and the system of profiting from its absence has grown to such an all-encompassing scale during the years of the oil boom, that it is rather difficult to imagine an evolutionary transition to a new state. It seems much more plausible that the transition to a new social contract based on law will be the result of a crisis or even a series of socio-political crises. Which will convince the players that the mandatory restrictions for all are a necessity for collective survival. And whoever is not convinced, will be destroyed.

And do not be afraid of the word "crisis". In Greek, a crisis is simply "a turning point, a decision." A crisis is an ordinary mechanism for revealing and removing contradictions. Another thing is the Greek word "catastrophe". The closer the socio-political crisis associated with the dysfunction of law in modern Russian capitalism, the less likely it will have catastrophic consequences. Conversely, the greater the amount of external resources available to us to delay and postpone this crisis, the deeper will be the corrosion of the market and state institutions, and the greater these consequences may be.

And who is the bastard and enemy of Russia that drives oil prices up?