Braid: Russia's economy is too small and weak to sustain Putin's delusions – Calgary Herald

Published

3 years ago

March 8, 2022

Harry Miller

Russia’s economy is both fragile and pathetically small for a giant nation with such abundant resources

Author of the article:

Don Braid • Calgary Herald

Publishing date:

Mar 08, 2022 • 1 hour ago • 3 minute read • 9 Comments

Russian President Vladimir Putin chairs a video meeting with members of Russia’s Security Council on March 3, 2022. Photo by Andrey Gorshkov/Sputnik/AFP via Getty Images

Vladimir Putin’s Russia looks big and tough these days, a malign giant on the world stage.

There’s no doubt about the bigness. Russia has the largest area of any nation, 17 million square kilometres, followed by Canada, with nine million.

Russia occupies about 10 per cent of the world’s inhabitable land mass. The Soviet Union was even more vast, with 22.4 million square kilometres.

Putin appears to fret because his is no longer that much bigger than ours.

Russia also has a large, well-equipped military backed by nuclear weapons. This makes the Putin regime dangerous and murderous, as Ukrainians know all too painfully.

But behind the appearances lies reality: Russia’s economy is both fragile and pathetically small for a giant nation with such abundant resources.

The Russian system not only fails to create wealth by any standard of international success, but also diverts vast sums of existing resources to oligarchs.

“Russia has about two per cent of the world economy,” says U of C economist Trevor Tombe.

“Canada’s is slightly larger, just above two per cent. That sort of puts things in perspective.”

The comparison doesn’t mean Canada is economically weak, however. We do much more with our two per cent to generate wealth and benefit citizens. And our economy is the world’s ninth largest.

Among the rich G7 nations, Canada had a competitive per capita GDP of $43,000 in 2020, according to the World Bank. The U.S. ranked highest with $63,000.

Russia’s GDP per capita was only about $10,000. That’s after it fell by one-third during the era of low oil prices beginning in 2014.

Many countries large and small have higher per capita GDP than Russia, including Finland, with $48,000.

That’s one reason the Finns fear an invasion. Finland is a rich prize that the Soviet Union already tried to grab once, in the early months of the Second World War.

The first act was to bomb Helsinki and kill civilians. Twenty-one Soviet divisions swarmed into Finland. Sounds familiar.

But Soviet forces stalled miserably in the face of fierce resistance.

Soviet Leader Josef Stalin, worried that the West would intervene, eventually reached a settlement. The same scenario could play out now.

From another angle — total GDP by country — Canada still ranks above Russia, with $1.6 trillion compared to $1.5 trillion.

The numbers vary somewhat among sources, but the relationship doesn’t change: Canada’s economy is larger than Russia’s.

That’s true even though Russia’s population of 146 million is nearly four times Canada’s 38 million.

Russia strives to expand and conquer with even less economic power behind it than Canada would have, should this nation suddenly be stricken by steroid psychosis.

Wider comparisons also illuminate the weakness behind Putin’s pretensions.

The total GDP of the United States is about $20 trillion, more than 10 times Russia’s.

The U.S. spends a mammoth $778 billion on its military. Russia spends $61 billion, the world’s fourth-highest amount.

But America’s defence spending, gigantic though it is, amounts to only 3.7 per cent of its GDP. Russia’s military budget is 4.3 per cent of that country’s GDP.

The economic output of all 30 NATO countries facing Putin, including Canada and the U.S., is nearly $35 trillion.

And there’s Russia, with $1.5 trillion.

Economic strength and military might are not equivalent, of course. A dictator with ultimate power and dreams of conquest can do enormous harm.

But Putin is reaching far beyond his country’s capacities. That will do him in eventually.

Meanwhile, how tragic it is that Ukrainians suffer and die for his transitory delusions.

Don Braid’s column appears regularly in the Herald

Twitter: @DonBraid

Facebook: Don Braid Politics

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B.C.’s debt and deficit forecast to rise as the provincial election nears

Published

2 days ago

September 10, 2024

Anne Joseph

VICTORIA – British Columbia is forecasting a record budget deficit and a rising debt of almost $129 billion less than two weeks before the start of a provincial election campaign where economic stability and future progress are expected to be major issues.

Finance Minister Katrine Conroy, who has announced her retirement and will not seek re-election in the Oct. 19 vote, said Tuesday her final budget update as minister predicts a deficit of $8.9 billion, up $1.1 billion from a forecast she made earlier this year.

Conroy said she acknowledges “challenges” facing B.C., including three consecutive deficit budgets, but expected improved economic growth where the province will start to “turn a corner.”

The $8.9 billion deficit forecast for 2024-2025 is followed by annual deficit projections of $6.7 billion and $6.1 billion in 2026-2027, Conroy said at a news conference outlining the government’s first quarterly financial update.

Conroy said lower corporate income tax and natural resource revenues and the increased cost of fighting wildfires have had some of the largest impacts on the budget.

“I want to acknowledge the economic uncertainties,” she said. “While global inflation is showing signs of easing and we’ve seen cuts to the Bank of Canada interest rates, we know that the challenges are not over.”

Conroy said wildfire response costs are expected to total $886 million this year, more than $650 million higher than originally forecast.

Corporate income tax revenue is forecast to be $638 million lower as a result of federal government updates and natural resource revenues are down $299 million due to lower prices for natural gas, lumber and electricity, she said.

Debt-servicing costs are also forecast to be $344 million higher due to the larger debt balance, the current interest rate and accelerated borrowing to ensure services and capital projects are maintained through the province’s election period, said Conroy.

B.C.’s economic growth is expected to strengthen over the next three years, but the timing of a return to a balanced budget will fall to another minister, said Conroy, who was addressing what likely would be her last news conference as Minister of Finance.

The election is expected to be called on Sept. 21, with the vote set for Oct. 19.

“While we are a strong province, people are facing challenges,” she said. “We have never shied away from taking those challenges head on, because we want to keep British Columbians secure and help them build good lives now and for the long term. With the investments we’re making and the actions we’re taking to support people and build a stronger economy, we’ve started to turn a corner.”

Premier David Eby said before the fiscal forecast was released Tuesday that the New Democrat government remains committed to providing services and supports for people in British Columbia and cuts are not on his agenda.

Eby said people have been hurt by high interest costs and the province is facing budget pressures connected to low resource prices, high wildfire costs and struggling global economies.

The premier said that now is not the time to reduce supports and services for people.

Last month’s year-end report for the 2023-2024 budget saw the province post a budget deficit of $5.035 billion, down from the previous forecast of $5.9 billion.

Eby said he expects government financial priorities to become a major issue during the upcoming election, with the NDP pledging to continue to fund services and the B.C. Conservatives looking to make cuts.

This report by The Canadian Press was first published Sept. 10, 2024.

Note to readers: This is a corrected story. A previous version said the debt would be going up to more than $129 billion. In fact, it will be almost $129 billion.

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Economy

Mark Carney mum on carbon-tax advice, future in politics at Liberal retreat

Published

3 days ago

September 10, 2024

Anne Joseph

NANAIMO, B.C. – Former Bank of Canada governor Mark Carney says he’ll be advising the Liberal party to flip some the challenges posed by an increasingly divided and dangerous world into an economic opportunity for Canada.

But he won’t say what his specific advice will be on economic issues that are politically divisive in Canada, like the carbon tax.

He presented his vision for the Liberals’ economic policy at the party’s caucus retreat in Nanaimo, B.C. today, after he agreed to help the party prepare for the next election as chair of a Liberal task force on economic growth.

Carney has been touted as a possible leadership contender to replace Justin Trudeau, who has said he has tried to coax Carney into politics for years.

Carney says if the prime minister asks him to do something he will do it to the best of his ability, but won’t elaborate on whether the new adviser role could lead to him adding his name to a ballot in the next election.

Finance Minister Chrystia Freeland says she has been taking advice from Carney for years, and that his new position won’t infringe on her role.

This report by The Canadian Press was first published Sept. 10, 2024.

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Economy

Nova Scotia bill would kick-start offshore wind industry without approval from Ottawa

Published

3 days ago

September 10, 2024

Anne Joseph

HALIFAX – The Nova Scotia government has introduced a bill that would kick-start the province’s offshore wind industry without federal approval.

Natural Resources Minister Tory Rushton says amendments within a new omnibus bill introduced today will help ensure Nova Scotia meets its goal of launching a first call for offshore wind bids next year.

The province wants to offer project licences by 2030 to develop a total of five gigawatts of power from offshore wind.

Rushton says normally the province would wait for the federal government to adopt legislation establishing a wind industry off Canada’s East Coast, but that process has been “progressing slowly.”

Federal legislation that would enable the development of offshore wind farms in Nova Scotia and Newfoundland and Labrador has passed through the first and second reading in the Senate, and is currently under consideration in committee.

Rushton says the Nova Scotia bill mirrors the federal legislation and would prevent the province’s offshore wind industry from being held up in Ottawa.

This report by The Canadian Press was first published Sept. 10, 2024.

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