Wednesday, August 26, 2015

Fwd: Russia

'Cheap oil, however, didn't destroy the Soviet empire: Communism did. Putin's Russia is more oil-dependent than its predecessor, but it isn't bound by ideology or principle, and that may help the regime stay in power.

The Soviet Union was a strange kind of petrostate. In 1985, fuel accounted for 52.7 percent of its exports. But only 24.7 percent of the exported crude, 61.6 percent of oil products and 45 percent of natural gas were sold for hard currency, in other words, at market prices. The rest was supplied to Comecon countries for "transfer rubles," the Soviet Bloc's common currency, or was bartered to other nations within the Soviet orbit. Satellite countries were able to obtain oil and gas in exchange for goods the Soviet Union didn't particularly need. This was, in effect, a system of subsidies.

Much of the hard currency earned by exports to the capitalist world was used to purchase grain. The collectivization of farming under Stalin and the subsequent decline of Soviet agriculture turned Russia from the No. 1 grain exporter into the biggest importer. '


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