Russia House, Once in a Lifetime, Authoritarian Gridlock

We traveled to Boston last week which distracted us from making our usual International Need to Know rounds. We arrived on Beantown’s first day of nice weather after a long, cold winter. As our Lyft drove us from the airport to our hotel, taking us by the innumerable universities in the city, it seemed that nearly every Bostonian was basking in the first warmth of the year. We gazed out the car window seeing people biking, throwing a Frisbee, going for a run, rowing on the St. Charles River, or just generally lazing around outdoors. This is our favorite time of year as the weather brightens, baseball takes bloom and the NBA playoffs provide bountiful entertainment. Bike riding beckons (as soon as our knee cooperates), as does the spicy smell of the barbecue. It has been a long winter across much of America, and there was something invigorating, almost primal, in the celebration of its end in Boston. Our tolerance for the cold, dark months has weakened as we have grown older. And thus our plan when we retire, alas many years from now, is to live in that great northern Caribbean town of New Orleans during the winter months. As we await the backbeat of the tuba, the taste of the etouffe and the warmth of distinctive culture, we take you on a tour of Russian military spending, Saudi Arabia’s continued dependence on oil and authoritarian gridlock.  It’s this week’s International Need to Know, Ooh Poo Pah Doo’ing all the amazing and important international events of our times.

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Without further ado, here’s what you need to know.

Russia House

Russia is in the news a lot and at least in Western news sources, the coverage is not particularly positive (in Russia, of course, the news glows…like Chernobyl). Under Putin, Russia reasserts itself globally, whether invading Crimea, meddling in Syria or interfering in elections in Europe and America. But perhaps surprisingly, according to the Stockholm International Peace Research Institute (SIPRI), Russian military spending last year decreased by 20 percent  in real terms (accounting for inflation). That’s the first decrease in military spending since Putin first began striding the world as Russian leader bare chested in 1998. Certainly Russia’s economy and federal budget has been constrained in recent years by lower oil prices. But oil has increased in price the last 12 months so maybe Russian military spending will increase this year? Apparently not since Putin is concentrating on raising Russian living standards. Says Bloomberg, “President Vladimir Putin has also called for higher living standards and higher spending on social infrastructure, such as healthcare and education. Some government officials have called for lower military spending to free up funds for such initiatives.” So Russia has fallen to fourth in military spending behind Saudi Arabia. Speaking of which….

 

Once in a Lifetime 

Saudi Arabia is undeterred by lower oil prices as seen by its leapfrogging over Russia in military spending. What does this mean for Syria and other parts of the Middle East? Will Saudi Arabia play a larger role in world affairs and Russia a smaller one in the coming years?  A recent article points out that Saudi Arabia’s economy is still dependent on oil prices which they are actively trying to prop up. According to the Wall Street Journal, “the world’s biggest oil exporter will need crude prices to average almost $88 a barrel this year to balance its budget.” As we write, oil is currently $70 per barrel. We wrote two years ago that the long term price of oil will be low though there will be some mid-term upward fluctuations. The last year we have experienced that mid-term rise in price. Where will the oil price go within three years? Hint: we predict Saudi Arabia military spending will have to level off or decrease by then.

Authoritarian Gridlock

Much like music lovers and Kanye West, many have been questioning democracy in recent times. As we pointed out last year, democracy is not nearly as popular with millennials, who often see authoritarian rule as a viable alternative. And as the economist Tyler Cowen has pointed out, China’s three decade success has elevated the status of authoritarianism and diminished democracy’s. Many feel that authoritarian governments are more productive than gridlocked democracies. So we read with interest a recent paper that asserts authoritarian regimes suffer as much from legislative gridlock as democracies. The researchers studied China and found, “A unique data set from the Chinese case demonstrates that authoritarian regimes can have trouble passing laws and changing policies—48% of laws are not passed within the period specified in legislative plans, and about 12% of laws take more than 10 years to pass.” Perhaps freedom of speech and other democratic freedoms should be valued more than our post-modern world thinks.

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