The Soviet Command Economy & Russia Today

Running Head: Russian Economy: Past, Present & Future

Russian Economy: Past, Present & Future 11

Russian Economy: Past, Present & Future

By [Name of Student]

Course

Professor

[Name of Institution]

November 04, 2018

Russian Economy: Past, Present & Future

Question 1:

INTERMEDIATE INPUTS

1. -----------SOURCES-------- ------REQUIRED BY-------- -----FINAL USE------------------

	Output	Stocks	Imports	Coal	Steel	Machinery	Consumption	Exports	Imports
Coal (tons)	975	10	0	10	500	50	50	100	210
Steel (tons)	2,000	0	20	200	400	1,000	300	100	20
Machinery	100	5	5	20	40	10	20	10	10
Consumer goods	340	10	20	0	0	0	100	100	230

The table shows the 4-sector input-out table of the Soviet economy in 1951.

Does a balance exist? Discuss which sector/s you believe may not be in balance and why (50-75 words)

The given input-output model depicts an imbalance. The output of coal, steel and machinery, as well as the consumer goods were in sufficient, but their final consumption was at the lowest level. The reason behind this maladministration, is the fickle economic policy of the government, which forced the agricultural farmers to work into the industries, and maximize the output, while the available resources were minimum. The concentration towards industrialization by ignoring the agricultural field ruined the whole mechanism.

What options does Gosplan have to bring the system into balance? Which options would be appropriate for each sector that might not currently be balanced? How will this bring about balance? Justify your choice of action. (100-150 words)

Soviet economy was managed by Gosplan, the State Planning Commission, responsible for drawing economic policy based on the input of the market and its advisors

1950s is considered to be a most successful period after NEP, when national income grew as much as 9 percent annually. Prices generally went down.

The major fault came through, was the falsification of presented data to the actual planners and policy makers.

There was a drastic expansion in the output of the consumer goods associated with agricultural in the past (Denton, 1968), but the post war period and the destruction of the cities, debris everywhere urged the Gosplan to forcefully minimize the agricultural farming and maximize the reconstruction and the industrialization of the country, which ultimately became the major mistake. The Gosplan should have focused on the agricultural, while tried its utmost effort on the exports of coal, steel and the machinery. And should have stabilized the production of the consumer goods, as per requirements.

Discuss five of the chief drawbacks to the system of central planning that was in place in the Soviet Union from 1935 - 1965. (250 words)

The central planning system of Soviet Union, usually called "material balance planning" which was to balance the total output with the total input, and by this way, there was an equitable of distribution of resources, and eliminate the waste. Although the system looks pretty better for the general public, the flaws that it carried made it a failed attempt. The management of information was dealt very badly, in fact, the macro level information was gathered by the high-class bureaucrats. It was estimated that nearly twenty thousand different commodities were included in the balance sheets, and gathering data and balancing all into one place simultaneously was a tricky problem, and the time consuming too. If it would have been today when we are living in the technological era, it might have been successful, but without having such sophisticated technological methodology, it looks awesome.

Besides that, it was the responsibility of the Gosplan to negotiate with the local manufacturers and regional administrations to check the demand and supply, and advise them, for the correct direction in order to meet the goals. That happened to be a failed attempt, since covering the vast area and holding the data, and negotiating at the upper and lower levels makes no sense when there were no proper communication tools. Here was the basic problem emerged in the materials balance mechanism.

The gap between the manufacturers, businessmen, owners of farms and mines became widened and the high expectations of the Gosplan to achieve the maximum goals in the minimum resources were become a history and ruined the economy badly.

From 1950 to 1955, official statistics underestimated the rates of real growth.

Similarly, as much we dig out the economic history of soviet, we see these differences in data produced by the TsSU and the data actually prevails.

d. The Turk stream project is supposed to replace the South Stream project. Outline this project:

Who are the players?

Where is the pipeline supposed to go?

You may have to do a Google search to find a map to show the class. Be ready to cue up the map and show the plans

What is Russia’s strategy in pushing through this deal? How does it enhance Russia’s influence?

What would be the geopolitical ramifications?

The South Stream was a Russian natural gas pipeline project that aimed to transport natural gas to Bulgaria through the Black Sea, and to Austria through Serbia, Hungary, and Slovenia. The project could not be sustained due to the opposition of the European Union since it was not in compliance with European Union competition and energy legislation.

The Russian Government had to cancel the project in 2014, although the construction of the onshore facilities started in 2012. The obstacles from Bulgaria, the European Union and its sanctions of Russia, and the 2014 Crimean crisis urged Russia to withdraw from the project.

The South Stream Project Map

Ultimately, the Russian government signed an agreement with Turkey and began the construction of the TurkStream gas pipeline project in May 2017 that would transport that natural gas from Russia to Turkey.

The TurkStream project will not only generate revenue for Russia but also verify its diplomatic position in the region, strategically.

2. In his 90 minute lecture, “International Partnership in Russia,” James Henderson, Oxford Institute for Energy Studies, https://youtu.be/G-xjBh1HGjk     (this is a 90 minute video) IOC - international oil company

James Henderson, discussed the Russian oil market, its consumption, and besides that the overall energy policy of the Russian government. Russain invasion in Ukraine opened a myriad of discussion over its future and surrounding politics, especially by the European countries. The revisiting thinking of European countries also affected the energy sector.

Big Energy giants Shell, Exxon Mobil, BP, and Total are the few which are making their space in Russia, besides other big enterprises. The agreements vary different structures. The Shale Oil Company will install the liquefied natural gas plant in Vladivostok.

The British oil company, BP will work with the Russian oil company Rosneft in the Volga Valley and the Ural Mountains. Exxon Mobil will also be working there.

Russia has not limited itself to European countries, but it has also signed few major MoU’s with Japan and China who will work together in the exploration of various oil sites, besides that India has also signed a big MoU with Russia in the Energy sector. The energy sector is not confined to the drilling and exploration of oil and gas but also the other renewable energy resources which benefit both countries.

Henderson believes that the emergence of Russia as a strong economic power has subdued the big oil companies to seek their future in the Russian land. The ongoing energy crisis around the world also urging countries to come forward and make bilateral agreements that benefit both the countries. The Russian influence in the region and a strong economy is compelling the big oil companies to invest in the oil and gas sector of Russia.

3. This question deals with Blank and Kim’s discussion of Russia’s “economic warfare.” The primary thesis seems to be stated in the Introduction: “Energy policies operate constantly as a major weapon in Russia’s national security strategy and are often utilized together with the other elements of Russia’s political warfare to consolidate the Putin regime’s domestic power and authority, obtain a neo-imperial sphere of influence in the governments of the former Soviet borderlands and Eastern Europe, and fracture European cohesion and integration.”

Russia under the leadership of Vladimir Putin has been trying to achieve it consolidated position since the breakup of former the Soviet Union. In continuing its major theory, Russia invaded Ukraine and seized Crimea to capture the natural resources. Furthermore, Russia put forth two theories in the implementation of its warfare strategy. one is to regain the control of old captured areas and seize the power, and secondly, do not allow any European country or even another country to make any relationship with these countries, that might be a part of Russia. Russia assumes that the natural resources in its neighboring countries which were part of Soviet Union, are still a lost property of Russian government, and it the responsibility of the present regime to capture all those resources including the oil and gas. Although, sometimes the war is called a political war for maintaining the supremacy of Russia over its neighboring countries, and sometimes it is called the economic war that urged Russia to make its economy stronger since the reason for the break-up of former the Soviet Union was more economic than the political. Furthermore, sometimes, the recent Russian warfare strategies are called energy war, since Russian believe that Energy would be the sole issue in the future that could urge the countries to fight with each other. The same strategic options are seen in the Balkans and Gazprom. Russia not only wants to intensify its relations with neighboring countries but domestically it has suppressed every movement which might encounter the government and Russian interests.

4. Oskarsson and Yetiv’s 2013 article discusses Russia’s interest and involvement in the Middle East. Briefly discuss Russia’s current interest and involvement in the energy sector of Iran, Iraq, and Saudi Arabia, Qatar, and the UAE (250 words)

Katerina Oskarsson (2013) chiefly pointed out the relationship of the Russian Government with the Middle Eastern regimes. Following the Afghanistan and Iraq war, Russia tried utmost to enter the Middle East and warm up the cold relations with energy.

The bad diplomatic relations of Iran with the United States of America always push Iran towards Russia, the former superpower. Russia is the main trading partner of Iran, which reflects in the multibillion-dollar trade partnerships, and the construction of the Bushehr nuclear power plant with a cost of $1.2 billion. But, Iran's bad relations with the Gulf countries is a constant headache for Russia. Although, Russia has always tried to enter the Gulf markets but did not receive a warm welcome.

Russia is overwhelmingly shaking hands with the Saudi Arabia, UAE, Qatar, and Iraq in the energy sector and there are myriad small, medium and large scale nuclear, electricity and other energy projects are underway between Russia and the Gulf countries.

Saudi Arabia signed a MoU with Russia in 2010 that would cater to the rising electricity demands of Saudi Arabia in the future. The UAE also signed the agreements with the Russian government over the construction of a nuclear reactor. Concerning the Energy partnerships, Putin once said: "On the face of it, it seems that we are rivals, but considering the world's growing demand for energy, that is not so." Not only Russia, but Gulf countries are also urged to make healthy relations with Russia, and the energy sector is the basic hand-shaking tool of restoring relations. (Katerina Oskarsson, 2013)

References

Denton, F. G. (1968). A recent soviet study of economic growth 1951–63. Soviet Studies, 19(04).

Katerina Oskarsson, S. A. (2013). Russia and the Persian Gulf: Trade, Energy, and Interdependence. Middle East Journal.

Stephen Bierman, Anna Shiryaevskaya (2009). "Russia, Slovenia Sign South Stream Gas Pipe Accord".

Anatoly Medetsky (2010). "Croatia Agrees to Join South Stream". The Moscow Times.

Marja Novak (2009). "Slovenia to sign South Stream deal on Saturday". Reuters.