Russia’s ultimate problem - it will run out of people:

Russia’s ultimate problem will be population imbalance: I have written many articles about Russia over the years and I try to stop myself from writing too much about it. Nonetheless, it is said that you should stick to what you know and having spent a significant part of my life there, I feel I have learned a little about the country and its plight. I still have many good friends and former colleagues there who keep in touch, although sadly, many of the bright young people with whom I worked and mentored, have left for better lives elsewhere. Some will say they left because of the political situation but many more left for economic reasons.

St Basil's Cathedral - long seen as a symbol of Russia. Built in the time of Tsar Ivan the Terrible - things have changed but the system remaind the same.

Russia has numerous problems but chief of those is probably the fact that it is a top-down society and a top-down economy. Believe me, there are no lateral structures in Russia. Everything either goes up or down and the more important decisions and issues often go right to the top. It dates from the old Soviet communist system and while capitalism is now firmly in place, the command structures of the old system (and indeed the one before it) have never changed. Everything must be approved by someone higher up the ladder so innovation and entrepreneurism are very much discouraged. What this has led to is a society where the top one per cent own 99.9% of the wealth; there is a middle class who are reasonably comfortable and then the majority, probably over 60% are still at a basic or subsistence level. You will see more middle class in the larger cities like Moscow and St Petersburg but go out into the country and things are very basic and barely above the poverty line. This has led to migration into the big cities.

Red Square - Moscow.

Knowing Russia’s history, this is all understandable; it takes a long time for new political systems to bed in. However, if an economist who didn’t know the country’s history were to take a look at the situation, they would be astonished. Why, you may well ask? It’s because Russia is arguably the richest country on earth. It has reserves of oil and gas which have not yet even been documented; in other words, there is so much of it there that they haven’t bothered to quantify it. It is the largest country on earth, by some distance; Siberia, an integral part of Russia, is larger than Canada, the world’s second biggest country. Most people know about Russia’s endless reserves of oil and gas; fewer people know that it is the only country to contain all 118 elements in the periodic table – they don’t just have them – they have huge quantities of them. There are ten times more diamonds in Russia than in all of Africa. Russia doesn’t mine many of them though and allows the South Africans to dominate the world market in order to keep prices high.

There are other huge potential advantages: Russia has oceans of good arable land, estimated to be several times the size of Great Britain, which lies fallow; in other words, it’s not used; not farmed; not grazed by animals. Many people struggle to believe this but it’s true. I’ve seen it; driven through it. Effectively, Russia has the resources to solve world hunger if it just used its land. And why don’t they use it you may ask? It’s very simple – they don’t have the people to do the work; neither do they have the expertise. Back in the 1930’s and 40’s, when Stalin disenfranchised all land owners and organised the collective farms, most of the farmers who had owned the land were put to death, thereby at a stroke removing generations of expertise in crop growing and animal husbandry. Of course it has recovered somewhat in the meantime but the know-how handed down through the generations was lost forever. Sadly, a falling population has also contributed to the sheer lack of numbers of people available for agriculture. Hence Russia, with more land than any other country, astonishingly imports much of its food.

Beautiful, breathtaking, but imagine the problems they could solve if they farmed even a small portion of it.

Its problems don’t end there. The disastrous war against its erstwhile ally, Ukraine has drained resources. Military blunders have led to the loss of, conservatively, over a million young men. The economy is in trouble; the rouble is practically valueless outside Russia; inflation is high and apparently unemployment is growing. And yet, Russia prevails and for the top one per cent, life goes on as normal. Sanctions mean they can’t fly directly from Moscow, but it’s only a minor detour to transit through Istanbul, and from there, they are free to travel the world and spend their dollars or euro or whatever the currency of choice is.

Some people have told me that life within Russia goes on as normal also, particularly in the big cities. Apparently most of the recruits/conscripts for the armed forces are drawn from the regions so the ‘death’ impact is diffused and not felt in the larger conurbations. The war is rarely mentioned and the state-run media assure people that Russia is winning and that Ukraine’s collapse is imminent. Can Russia continue like this indefinitely? Despite the prophets of doom predicting collapse and dire consequences from the Ukraine war, I would be confident that it can.

Let me explain: In 2022, a few months into the Russian invasion of Ukraine, I was in Turkey and one night at dinner I fell into conversation with a group of people from a mixture of countries including Britain, Ireland, France and Germany. There was universal condemnation of the war, support for Ukraine and fury at Russia. There was one Russian guy in the group and he sat quietly through most of the debate. Towards the end of the evening, he said, quietly: ‘none of you may like to hear this but I believe Russia will ultimately win this war.’ A phalanx of people immediately rushed to disagree with him but I had an idea of where he was going so I asked for calm and for him to be allowed explain. He said: ‘there are two things that you don’t understand; firstly, Russia has limitless resources and secondly, it has an incredible capacity to take losses and punishment, so ultimately it will win out, because it always does.’ Looking at the weight of history, it was difficult to disagree with him. Hitler sent superbly trained troops armed to the teeth with the most modern weaponry to fight against poorly trained, poorly led and poorly motivated Russians armed with old and rusting equipment; indeed, many of them were not armed at all. Napoleon sent what was thought to be the finest army ever assembled, from multiple nations and again, the Russians prevailed. But it was at a huge cost. In World War 2, it is estimated that globally, including all nations, thirty million people lost their lives. What is not commonly known is that twenty million of them were Russians. So they were victorious but at a terrible cost. Our friend in Turkey was trying to make the point that Russia can take these losses indefinitely because their leaders don’t care and are never held accountable. He’s probably right. There is also the point that western sanctions seem to have little or no effect and people find ways around them.

From the economic side, there is also a powerful argument. Russia has limitless oil and gas and its two best customers are China and India, the two most populous nations on earth, who together account for over a quarter of the world’s population. It has little or no manufacturing industry but it can afford to import everything it needs, indefinitely. If the truth be known about the oil and gas industry, it is said that more is wasted than is actually extracted due to old and leaking pipelines, massive distances, remote or inaccessible locations, gas burnoff, theft, apathy and corruption. But it doesn’t seem to matter because the reserves are endless. Personally, I would love to see peace in Ukraine and some form of a just end to this dreadful and unnecessary war but I fear it won’t be any time soon. Russia can afford to wait – indefinitely.

There is one thing that will eventually damage Russia irreparably; it won’t happen in this generation or maybe not the next, but it will happen. That is the population imbalance. When I first visited, almost forty years ago now, I was struck by the fact that there appeared to be far more women than men. This was partially explained away by people saying there were three million men in the army so it made the imbalance seem starker. When I came to live in Russia, I learned for myself that this wasn’t the only reason. For a start, of the twenty million who perished in WW2, most were men. Now that was many generations ago but since then Russia has been involved in wars and conflicts all over the world. I had never heard of most of them until I visited the war memorials in some of the cities. Each one has a wall where all the soldiers from that city are listed and where they died is stated. It is written in Russian of course but it is not complicated to understand. It is impossible to estimate numbers but they are substantial; add to that the huge numbers who die each year from alcohol poisoning, road deaths and other accidents, the vast majority of which are men and you begin to get the picture. In the early 2000’s, international estimates put the population spread at 63% female to 37% male. Russian sources said it was closer to 55:45. My personal estimate was 60:40. Most of the women I worked with were either single or divorced. The trend was to marry young but 80% of marriages ended in divorce. Women rarely remarried or had the opportunity. Numerous women did not have relationships at all because, as they explained to us many times, there were just not enough men. Apparently this had also led to men becoming lazy, not caring, having multiple relationships and drinking to excess. As several genuine intelligent Russian people told me, our society is a mess and longer term, our country is *ucked.

But remember that was twenty five years ago. In the meantime, significant numbers of young Russians have been killed in Syria and elsewhere and now a conservative estimate of the numbers killed in Ukraine is well over a million. Think about that for a moment; a million young lives, almost all men, wasted needlessly; then think that there are a million young women who will never marry or bear children and the significance begins to become clearer. When the Soviet Union broke up, Russia had a population of 163 million. In the 2000’s it was 147. Now I think it is 143. That is still a lot of people but tiny for the size of the country. There are 171 million people in Bangla Desh, a country which would fit into Russia 115 times. Aside from the drop in numbers, I dread to think what the male to female ratio is now. If this continues and there is every indication that it will, ultimately Russia’s very existence will be undermined and threatened.

There are a couple of other issues which are also having a negative effect on population stability. The first of these is that almost all Russian families have one child. Perhaps it dates from the communist era when all citizens were expected to be gainfully employed and child-care wasn’t yet established. Perhaps it is a more traditional thing though because when I asked some of my friends if they would consider having another child, their answer was almost always, ‘but I have a child.’ When I asked if they would like a second child they often looked at me with amusement. I think in thirty years, I probably only met a half dozen people with more than one child and in their case, the second child was with a second wife. I think I only ever met one man who had three children. Around 2006, Putin did recognise this as a major issue and offered incentives to people if they had a second or third child. The incentive took the form of a small grant at birth and a large grant when the child reached sixteen years of age, presumably to help with education. When I asked my friends if they would be availing of this scheme, most laughed heartily; one said, ‘Liam, surely you know by now that a Russian does not plan sixteen years ahead, nor sixteen months or sixteen days. We can’t plan anything because we have never known stability; we never know what might be on the horizon.’ On reflection, he was correct. It reminded me of the time when our Irish bosses asked us to prepare five and ten year strategic plans for the business. We were in a 50:50 Russian/Irish joint-venture. We prepared the plans of course but when they were presented to our Russian partners, they looked at them with a wry smile. Perhaps they were correct? The business is still there today but none of the partners nor indeed any of the original individuals are involved.

How can a country with such massive resources have arrived at such a situation; effectively facing extinction in a few generations? How can a country with such vast wealth have such a catastrophically disproportionate distribution of wealth? I’m afraid the answer lies in the system. Russia has had thousands of years of feudalism; 80 years of communism which were disastrous; about ten years of democracy and subsequently twenty five years of autocracy, totalitarianism, dictatorship, call it what you will. Will Russia ever produce a Gandhi or a Mandela? Some people argue that it has but that they never had a chance. Alexander Solzhenitsyn was held for thirty years in Siberia without trial. More recently, Alexey Navalny was killed in prison. I’m not sure either would have gained the necessary traction anyway because political change requires populist support and when the population are terrified for their lives, that won’t happen.

Stalin held power in Russia from 1924 to his death in 1953. No one ever ousted him. No one even tried. It will be the same with Putin. He's not a solo player, he's part of a KGB/FSB group that arguably have always held power, back to the time of the Tsars, when they were called the Okhrana and then NKVD. Today’s FSB is essentially the same secret police structure. The only time they failed to take power was in the failed coup of 1991 when they ousted Mikhail Gorbachev for a short period. At that time, Boris Yeltsin resisted and eventually took power in Russia but very shortly afterwards, the USSR collapsed. The KGB waited in the background while the economy grew worse and worse. Food shortages caused by disorganization led to massive queues and a dreadful existence for most Russians. But their capacity for suffering saw them through and eventually through western loans and investment and better organisation, the economy regained some sense of normality.

Boris Yeltsin famously stood on a tank in Moscow in 1991 and faced down a KGB sponsored coup against Mikhail Gorbachev.

Then after Yeltsin’s two terms as President, the FSB engineered a softer takeover, putting their own man, Putin in charge. He’s been there ever since. They don't plan to give up their power. They will make sure Putin is protected. So he won't be ousted, he will remain in power probably until his death. Then there will be someone else from the group. While this KGB/FSB gang is in power they will keep autocracy in Russia. The only way out is if someone from that inner circle realizes that the game is up and decides to stop the tyranny. The fact that they have allowed the country to descend to the level it is at gives me strong doubts that this will ever happen.

In the west, we currently have, in populist terms, generation Z. Their predecessors were the millennials. Unfortunately, in Russia, both these generations are informally referred to as generation P. The P stands for Pizdets, which is a very rude Russian word meaning ‘everything is fucked.’

I always try to end my articles on a positive note, so maybe I’m wrong and there will be a new dawn. Unfortunately I can’t see it any time soon.