Sunday, 21 December 2014

pot to kettle or the dutch disease

In the face of the precipitous downfall of the Russian rouble (₽) over a constellation of sanctions, perceived weaknesses, an alleged slack in demand for petroleum over weakened industrial demand, which is at the same time being offset by increased American production(which does smack as a bit suspicious, given the overall climate and charged accusations of conspiracy to undermine that seems like burning one’s wick at both ends), some economists are diagnosing Russia with the so-called Dutch Disease—which turns out to be a relatively recent market characterisation, describing the misguided attempts that the Netherlands committed in the 1970s when, after the discovery of off-shore oil reserves, began cultivating that natural resource at the expense of all other export sectors, whereas I would have guessed it to have had much more historic roots, like in the Dutch founding a stock-market based on tulips or an empire based on exotic spices.
By extension, they claim that Russia has no economy per se but rather is an oil company accorded the membership of statehood, but that is more than a little bit dangerous and near-sighted as the same could be said of most national marketplaces that call themselves post-industrial. America is hardly a competitive oil company—more a captive consumer—and is more akin to a name-brand that licenses its economic activity out to franchisees. This collective Schadenfreude over the fate of the rouble is woefully premature, too—I think, considering the range that the single currency has. Though by population and other measures of wealth, the rouble sphere of influence is not as great as the Euroraum, covering a large portion of Eurasia and extending from Norway to Alaska, the long way around and fully one eighth of the habitable land on Earth, I imagine that the internal needs of the country could still be met and indeed thrive without regard for external scalars. Moreover, if hostile voices insist on countering with the same poisonous rhetoric, I imagine that the foreign debt that Russia was formerly welcomed to both finance and borrow could be easily turned to tactical purposes. What do you think? Of course, there is real cause for concern, but there also might be old Cold War fears and prejudices pushing agendas as well—and not just the well-oiled oligarchs.