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April 28, 2023

Will Russia collapse?

――in the eyes of a witness of the fall of the Soviet Union in 1991--


(Akio KAWATO, former Japanese diplomat, served in Moscow 1990~1994.
He later published an epic novel "Land of Legend... Land of Dream", which depicts the lives of the Russian people during the turmoil, available on Amazon Kindle)

The Ukrainian front is now at a stalemate. The US, with the presidential election coming up next year, probably wants to push for a ceasefire, but Ukraine will not agree to it unless they can push Russian forces back to the pre-war border. Russia, on the other hand, finds it difficult to agree to a ceasefire unless they can gain something more than what they had before the war.

Meanwhile, unprecedented sanctions from the West are beginning to take effect in Russia. The reduction of EU imports of Russian oil and natural gas has intensified, whereas the prices plummeted because of several reasons.

In this situation Russia, which depends on oil and gas in its governmental revenues, has had a record fiscal deficit of about 2.6 trillion rubles (approximately 32 billion US dollars) in January through February. This is probably due to the fact that they paid upfront for the weapon costs that they usually pay at the end of the year. Thus, the government has used up almost the total amount of the fiscal deficit planned for this entire year.

Therefore, Russia has begun to increase its issuance of government bonds. Russian private banks are the main purchasers of government bonds, but they borrow the funds from the central bank. In reality the central bank prints more money and buys government bonds issued by the government, which is a standard course leading to hyper inflation. It reminds me of the Russian government's default in August of 1998, when ruble's values plummeted to one-sixth of its previous value.

Russia's current account surplus suffered, too, approaching zero level by the end of last year. Russia's economic model, which had earned more than half of its national revenue from oil and natural gas-related industries, is no longer sustainable.

Moreover, beyond economics, the Russian people's pride (albeit a delusion) as a "white advanced country" has been stripped away and trampled in the mud, as they have been cast out of the European civilization sphere. Their military, once the second-largest in the world, has been proven powerless in Ukraine. The only thing that puts them on par with the US is their nuclear arsenal, but Russia probably won't have the opportunity to use it this time.

Therefore, one can say that Russia has lost the substance of its being as a state. Before we know it, the presidential election will take place in March next year, and the preparation has in fact already begun. Many speculations will swirl around the process; will Putin go for re-election, will he resign or is he going to be knocked down by a coup and etc. This may generate a vacuum of power in Moscow, which will incur defection in the regions, and terrorism.

In the West, there is a growing trend to discuss the possibility of Russian separatism. At the end of World War II, the West devised the Morgenthau Plan to divide and disarm Germany, and now there are those who suggest doing the same thing to Russia.

This is a dangerous and irresponsible idea. If the West were to suggest such a thing, even those Russians, who have been keeping distance from the war in Ukraine, will definitely rise with patriotic fervor. Furthermore, a divided Russia would become an uncontrollable entity that would become a cause of conflict everywhere. If nuclear weapons are not concentrated centrally, "nuclear-armed countries" will increase indiscriminately, and they will all try to get their demands met with nuclear power as a background.

Russia does not easily break up. Since Peter the Great established a modern state in the 18th century, Russia has only split twice: in the civil war right after the 1917 Revolution, and in the 1991 collapse of the Soviet Union. In the former case, Germany received significant territorial concessions, and in the Far East, the "Far Eastern Republic" was established as a buffer zone between Russia and Japan. Throughout Siberia and elsewhere, numerous powerful generals continued to fight against the communist government in Moscow.

This time, the situation is unlikely to deteriorate to that extent. At most, the central government in Moscow may weaken, while regional (ethnic autonomous republics and some wealthy provinces) powers strengthen.

Prior to the collapse of the Soviet Union in 1991, populist politician Yeltsin emerged and the power vacuum in Moscow led to local governments not sending tax revenues to the center. Some even elected their own leaders and called them "presidents," with their own constitutions and legal systems.

This time, a country with strong federalism similar to India, where regional power is strong but not to the extent of feudalism or a confederation, may emerge.

The provinces in the Far East may lean heavily towards China or strengthen their guard against it. Moscow, which is economically struggling, may try to resolve the Northern Territories dispute with Japan in exchange for money, but local Sakhalin Province is likely to resist strongly, as it did in the early 1990s.

Therefore, let us refrain from getting involved in "Russia's division" or making hasty moves thinking it is an opportunity. Let us watch and wait. China may even attempt to reclaim the land that Russia took from the Qing dynasty in the past (four times the size of Japan, including Vladivostok).