Russia’s Double Bind: Desperate Inequality Meets Resource Competition
Russia is in a nutcracker today, facing two fundamental pressures that are irreconcilable.
Internally, Putin has made Russia the planet’s most unequal large country. There is mounting social pressure for change.
Externally, new large gas deposits have been uncovered in Ukraine that could overturn Russia’s only source of external influence: its energy shipments to the West.
First, the internal inequality, which is a by-word in this former socialist icon. More than 80% of Russia’s wealth is now owned by its richest ten per cent of its population — a mutation even worse than that in the U.S., where 75% of wealth is owned by the top ten per cent. Its 500 wealthiest people own more than 99.8 per cent. Russia has twice the number of the world’s wealthiest billionaires as America, despite having an economy that is 15 times smaller.
The gap between these billionaires and the rest of Russia is growing. At the turn of the century, 1991–2011, these Russian super rich doubled their wealth, while in 2011 the bottom 20 percent of Russians had dropped to half of their previous 1991 income. While growing inequality is an issue in many countries, including America, Russia’s inequality is extreme. In general, Credit Suisse data suggests that while globally billionaires control 12 percent of total household wealth, Russia’s billionaires possess three times this average, owning 35 percent of the country’s wealth.
As a report from the European Parliament points out, these figures do not take account of the huge wealth — estimated at up to 75 % of Russia’s GDP — hidden in offshore accounts, and thus probably understate inequality.
Nearly half of Russia’s national income goes to its top 10 % — an amount even worse than in America. It was produced by companies owned by just eight families. No taxes were paid. It was a family affair.
Ordinary Russians have seen their real disposable income (the amount of household income left after essential purchases have been paid for) fall for the fourth year in a row. The percentage of the population living under the poverty line has grown from 10.8 % in 2013 to 13.8 % in 2016 — which means that nearly 20 million Russians now do not have…