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Friday, Jan. 6, 2012

Russia's mental adjustment


MOSCOW — Through the centuries, every people — big or small — has been working out its own approaches to various sides of life that, summed up, predestine its mentality and national character.

Such differences can be clearly seen in the economic field. In the age of globalization, some of them gain in importance and may strongly influence national destinies.

One of these variable traits is people's attitude to economic partners from the outside, to alien business practices, to foreign investment capital, and — as a general notion — to an alien presence in the national economy.

Some elements of national mentality and political culture have to do with the subconscious. Unfortunately, in Russia, few people realize that at the core of its own many weaknesses lies, among other causes, psychology in particular — the latent drive of the populist elite toward "autarky" in the shape of a "self-sufficiency cult."

Much harm comes also from the unhealthy "siege moods" and the paranoid idea that "America attempts to squeeze Russia out" of Europe and of the developed world in general.

Russia's leaders may make a controversial impression. On the one hand, they often make statements in favor of international cooperation; now and then, they drop curtsies toward Western businesses and, with an open hand, invite eventual partners, generously praising Russia's political and investment climate.

On the other hand, they seldom miss a chance to display certain anti-American and anti-European feelings, and are prone to lightheartedly pushing aside promising cooperation opportunities (as with Japan), and do little except pay lip-service regarding the necessity to overcome corruption.

The ruling "tandem" is capable of positive and promising steps such as pursuit of World Trade Organization membership or arranging far-reaching integration schemes in the Commonweath of Independent States. Yet, it represents the pinnacle of a self-perpetuating political formation that provokes many questions at home, hardly inspiring a strong liking and trust in Europe, America and elsewhere in the industrial and postindustrial world. Criticism from the outside is routinely regarded as a kind of "Russo-phobia" characteristic of Western powers and their approach to international relations.

As a result, Russia has been getting only a meager share of the eventual international investment. Considering its fabulous national riches and vast territory, this means a regretful loss of opportunities and a crying underuse of the growth potential.

Russia undoubtedly belongs to those countries that have something to learn from the existing rich international experience. I steadily come back to the economic history of North America, which offers a lot to think about. Over about 1½ centuries, Canada's stance in regard to foreign investment has been rather ambivalent and controversial. Its economic development in the 20th century was strongly influenced, at first, by the massive British presence, then — especially since mid-century — by the large-scale inflow of investment money from its mighty southern neighbor.

Correspondingly, the prevailing mood in regard to U.S. investment in Canada has been steadily changing — from one of inviting the Americans to come and counterbalance the British dominance to routine acceptance of U.S. investment funds, albeit unwillingly, while strongly criticizing "Americanization" of the Canadian economy and nourishing a special variety of nationalism ("Pro-Canadism"), to approving a free trade area.

As a result, a lopsided but increasingly more equitable partnership has emerged, a continental economic complex with steady and strong cooperation ties. Nowadays, it tends to include Mexico and is cemented by the famous North American Free Trade Agreement.

By all appearances, both the U.S. and Canada have benefited from this integrative symbiosis. America has got a reliable and unique raw-material hinterland, and has emerged as the one and only actual "economic superpower." Canada enjoys living standards comparable to that of the U.S. and has taken a worthy and growing niche in the continental and global economy. In this connection, several questions — some of them rhetorical — come to mind:

Doesn't Russia deserve to be in the same "economic league" — if not with the U.S. itself then, at least, with Canada?

Why can't Russia become a genially modern structurally mature economy, combining strong mining-drilling-processing industries with diversified manufacturing, large-scale productive agriculture and a developed service sector?

Why can't Russia get really well integrated into the global economy and secure high living standards for its people?

It is well known that even the rich and mighty United States houses more foreign investment than its own assets abroad amount to. Why does great Russia show caution bordering on paranoia when issues of foreign investment (and thus foreign control) are concerned, thus dooming it to lagging behind the rest of the world?

We can remember many other "success stories" besides that of North America — Australia or South Korea (with Japanese and U.S. capital as driving forces), and other "Asian Tigers" and "Dragons," which are objects of envy and jealousy in the developing world. Last, we should mention the current "economic miracle" — continental China.

In this particular context we should mention the benevolent attitude that foreign direct capital and joint ventures have enjoyed and are still enjoying in the People's Republic of China. Without this factor of paramount importance, nothing would have happened along the lines that China's economic history has taken thus far. At least half of China's miracle is foreign-made; the other half is to China's credit, thanks to the authors of its foreign economic policy.

Facing realities of the 21st century, Russia must demonstrate a capability to adjust its mentality, throw away some archaic mores and prejudices, and recognize that we all live in a vast but rapidly shrinking world, in a kind of a "global village."

It is human to try to withstand sometimes-shocking imperatives and to hold to habitual ways and means. But isn't it even more human to bravely face the challenges, to show breadth of mind and magnanimity, and contribute to mutually beneficial cooperation?

Russia's ruling party has often been accused of having no viable economic strategy. Why not accept the idea of a multinational recolonization mega-project for Russian Asia (partly discussed previously) as a core element of such a strategy? The party that would set such a paramount goal before society has a good chance of grasping the bird of fortune by the tail.

It is obvious that to grow up to the challenges that modern times put before each country, Russia needs further social evolution in the direction of democratization — demonopolization and decentralization — of political and economic life.

Andrey Borodaevskiy (annabo36@mail.ru), an expert on world economy and international economic relations, was a professor at Seinan Gakuin University, Fukuoka, from 1994 to 2007.


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