Letter From the Editors: May 15 - 21, 2017

Author: Matthew Larson

Kremlin Releases ‘Illuminating’ Economic Security Strategy; Russian State Budget Gets Quick Lube From OPEC; Beijing Touts Openness of One Belt, One Road Initiative.

How many economists does it take to change a light bulb? The usual punch line to the joke goes something like "eight, plus or minus 10," but when the bulb in question is the Russian economy, there is no telling how many economists may be required. Russia’s economy has started flickering, but not everyone with an idea about how to fix the problem understands how light bulbs work exactly, much less how to replace one: That’s the perception you get when you read the reactions of journalists Anastasia Bashkatova and Valentin Katasonov to Russian presidential Decree No. 208 "On the Economic Security Strategy of the Russian Federation to 2030." Both columnists are astounded at the apparent economic illiteracy of the strategy’s drafters that is evidenced by the strategy’s blatant contradictions, and its overly simplistic and generic approaches to pressing underlying problems that Kremlin policymakers largely overlook. Bashkatova and Katasonov wonder: Do the strategy’s drafters even know what the terms "economic security" and "economic sovereignty" mean? Do they understand how to properly interpret economic indicators?

One term all Kremlin economic policymakers have no trouble understanding is oil. The lifeblood of the Russian economy is running a little thicker these days, as prices continue to rise ahead of an OPEC meeting at which Moscow is expected to support extending oil production restrictions. Bean counters in the Kremlin are all smiles about forecasts that the price will hover at around $50 to $55 a barrel - higher than the $40 price point used in the model for Russia’s previous state budget. The most optimistic economic planners were shooting for a target price of $60, but, hey, they won’t complain too much. Demand from countries like China continues to be a big unknown, keeping the market ...

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