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. Last Updated: 07/27/2016

EDITORIAL: Crisis Talk Hollow For Russians




The Russian government faces a much tougher job selling its austerity package than countries in Asia that are also grappling with financial crisis.


In Thailand, Japan or Indonesia, the average citizen does not need to be told that the country is facing a serious situation that requires serious remedies.


They have already seen a collapse in their national currencies, a huge rise in bankruptcies and unemployment and, in Indonesia's case, the descent of the nation's capital into anarchy.


The average Russian on the street can see little extraordinary in the current situation. As far as he or she is concerned, Russia is in the same mess that it has been in for the last decade.


Salaries and pensions have rarely been paid on time. Production has been declining. The government has been saying things are terrible but doing nothing about it. So what else is new?


The turmoil on Russian financial markets has meant absolutely nothing to most normal people. The collapse in the stock market is irrelevant to the 99.9 percent of the population who do not own shares. The climb in interest rates has almost no impact in a country where middle-class people have neither mortgages or savings in bank deposits.


As far as most people are concerned, the financial crisis is another rich people's problem that they hear about on television if at all.


Another thing that prevents average Russians from appreciating the severity of the crisis now facing the country is that so much of the pain still lies in the future. Russians cannot see what the costs of a ruble devaluation or a renewed bout of hyperinflation will be.


It is also hard to realize that things could get worse in the future because most people did not notice the subtle signs that things were getting better last year.


The popular conscience had not absorbed the idea that Russia was on the brink of economic recovery last year. In fact, it was. Production had started to grow, and salaries and pensions were more or less paid on time, breaking a decade of defaults. These achievements are now at risk.


It will be much better if Russia can convince the International Monetary Fund to hand over its promised $17.1 billion bailout package. It will be much less painful if the government passes a balanced financial austerity package now rather than if it waits and allows an Indonesia-style financial collapse.


But this will not help endear proposed tax hikes and inevitable power blackouts to the justifiably cynical and jaded Russian people.