Monday, May 19, 2014

Russia: Its Monopoly Capital and its Status as a Great Imperialist Power from RCIT

Democracy and Class Struggle publish this analysis from RCIT has it is one of the few attempts to concretely describe Russian Imperialism. We would like readers views on this article.

Russia’s economy is dominated by a small group of monopolies owned by super-rich capitalists, called “oligarchs,” who have close relations with the state apparatus. In fact, Russia’s monopolies dominate the domestic market even more than their counterparts in other imperialist states.
 According to a recent OECD study, Russia’s small and medium-sized enterprises account for only about one fifth of employment and an even smaller share of output, whereas in most OECD economies both figures are above one half. (28)
Probably the most important Russian monopoly is Gazprom, the world’s largest gas company, which controls over 93% of Russia’s natural gas production and about a quarter of the world’s known gas reserves. (29) Another important monopoly is the Sberbank which is Europe's third-largest bank when ranked by market capitalization.
These two companies, Sberbank and Gazprom, account for more than half of the turnover of the Russian stock exchange. (30) Other huge corporations are Rosneft and LUKoil, both oil companies; Transneft, a pipeline company; Sukhoi, an aircraft-manufacturer; Unified Energy Systems, an electricity giant; and Aeroflot.
These Russian monopolies are closely linked with the imperialist state apparatus. The state-capitalist sector plays a decisive role among many Russian monopolies. For example, the state has retained Golden Shares in 181 firms. (31) State-backed companies account for 62% of Russia's stock market. (32)
The state capitalist sector controls 36% of Russia’s oil sector and 79% of its gas sector. (33) According to the German magazine Der Spiegel, the Russian state controls more than 50% of the country’s banks and 73% of the transportation industry. Likewise, government control of the oil industry has grown from 10%, at the beginning of the Putin era in 1999, to 45% in 2013. (34)
Russia’s Rise as an Economic Power
According to the World Bank, Russia is about to overtake Germany as the world’s fifth largest economy in terms of purchasing power parity for 2012. (35) It calculates Russia’s GDP at US$ 3.4 trillion.
The International Monetary Fund lists Russia as the eighth largest world economy with a GDP of $US 2 trillion. Regardless, Russia has become a great economic power. Its ruling class has successfully overcome the collapse of the 1990s.
Russia is not dominated by other imperialist countries but rather dominates and exploits other countries and peoples.
Russia’s successful resistance to being taken over by foreign imperialist powers is related to the history of the country’s capitalist restoration. According to one estimate, by 1998 “only 3% of former state properties had been sold to foreign buyers in the Russian Federation, compared to 48% in Hungary and 15% in the Czech Republic. Moreover, privatization sales to foreigners in the latter groups accelerated after 1998, while it remained practically non-existent in the Russian Federation.(36)
Russia’s rise as an economic power is also reflected in its relatively low level of debt. Since Putin’s rise to power, Russia’s external debt stocks – as a percent of its Gross National Income – declined from 57.9% (2000) to 31.1% (2011). (37) Equally, Russia’s government debts have fallen dramatically from 99% of GDP in December of 1999 to 8.4% of GDPin 2012. (38)
At the same time Russia’s foreign monetary reserves have increased significantly to about US$ 500 billion (equivalent of about 25% of Russia’s GDP).
Russia’s rise as an economic power is also reflected in the turnaround in the ratio of its reserves and external debt. While the ratio of Russia’s reserves to external debt stocks expressed as a percent stood at 16.6% in 2000, by 2011 it reached 83.6%.
Capital Export of Russian Monopolies
Since 2000, Russia has been able to substantially increase its outward foreign investments. Russia's share of global FDI outflows increased from 1% in 2000, to 1.5% in 2005, and reached 4% in 2011. For example, in 2010 Russian companies invested $US 9 billion for cross-border mergers and acquisitions, up from $US6 billion in 2005. (39)
Table 4 demonstrates that Russia is increasingly becoming a major foreign investor. Russia (and China) have already overtaken Italy and are in the same league with Germany.
Table 4                Foreign Direct Investment Outflows of various Countries, 2007-2012 ($US millions) (40)
Where do Russian capitalists invest abroad? If we don’t include fake foreign investments, i.e., investments in countries which serve Russia as off-shore centers, we see that Russian monopolies exported about 38.1% of its foreign investments to Western European EU countries. The US and Switzerland were also important destinations. However, the Russians also invested about 25.5% of their capital in former USSR countries and Eastern Europe. An additional 4.1% of their FDI went to other former Stalinist states like Serbia, Montenegro, and Vietnam. If we add other semi-colonies like Turkey and Ireland, we see that Russian monopolies invested about 36% of their FDI in semi-colonial countries.
Russia’s thirty largest multi-national corporations rank among Europe’s largest 500 companies. (41)
Russia as a Great Political and Military Power
Russia’s relative power is even greater on the political level. Russia has a permanent seat in the UN Security Council and is/was a member state of the G8. Russia demonstrated her hegemonial role during the war in Georgia in 2008 when she annexed South-Ossetia and Abkhazia against the will of the Western imperialist powers which supported the Saakashvili regime in Georgia.
Similarly, Russia is the primary power behind the Assad regime in Syria. In the autumn of 2013, the Putin regime was able to force the Obama administration to back down from its military plans and to agree to a new round of negotiations in Geneva.
In the spring of 2014, Russia is once again demonstrating its role as a great power in the context of the Ukrainian crisis as Russia faces off against the EU and US for influence in the Ukraine. These are practical examples which serve to emphasize the extent to which Russia is a great power challenging the influence of the senior Western imperialist powers.
Russia’s status as a great power on a political level goes hand in hand with its status as a great military power. As we have shown above in Table 3, today Russia has the worlds’ third-largest military budget. In addition to this, Russia has the world’s second most powerful nuclear arsenal after the US. (42) Its arms monopolies are also the second-ranked competitors in the global armaments market.
Another manifestation of Russia’s status as a great power is the number of military bases which it possesses abroad. Russia runs military bases in eight CIS countries. In addition to them, Russia also has a naval base in Tartus (Syria).
Russia’s Internal Colonies
Lenin showed how great imperialist powers also strive to exploit other countries and to subjugate them to their sphere of influence. Russia oppresses and exploits other nations both inside and outside its state. Nearly one fifth (19.1%) of Russia’s population belong to ethnic and national minorities. The most important ones are the Tatars (3.9%), Ukrainians (1.2%), Bashkirs (1.1%), Chuvashes (1.1%), Chechens (1%), the Armenians (0.9%) and other, smaller peoples. All told, there are over 185 ethnic groups living in Russia.
As the following figures show, a substantial share of Russia’s raw materials – of which oil and gas are the most prominent but are by no means the only ones – are located in regions with a significant proportion of national minorities
Extreme inequality exists between the different regions of Russia. This is a legacy of the Tsarist Empire which was never really overcome by the Stalinist USSR. For example, the average monthly income in Moscow is about six times as high as in Kalmykiya.
Poverty is particularly widespread in the regions with sizeable national minority populations. Relative poverty varies from 40% in Amur Oblast and the Republic of Buryatia to 30% in Moscow. Absolute poverty is 36% in Buryatia and 21% in Lipetsk Oblast. Samara and Tatarstan show very similar patterns, with relative poverty rates of 37% and 35%, respectively, and absolute poverty rates of 28% and 25%. (46)
Putin’s Eurasian Union: An Imperialist Attempt to Subjugate Central Asian and Eastern European Semi-Colonies
Since the 1990s, Russia’s ruling class has undertaken a number of initiatives all of which have the goal of creating a political and economic sphere of influence under Russian leadership. Shortly after coming to power, Putin created the Eurasian Economic Community in October 2000. For several years, the Putin regime has undertaken serious steps to drive forward a closer economic and political bloc under Russian hegemony.
A so-called Customs Union was already established in 2007, its current members being Belarus, Kazakhstan, and Russia. A number of semi-colonial states are presently considering joining the Customs Union: Armenia, Georgia, Kyrgyzstan, Gagauzia (the separatist republic in Moldavia), and Tajikistan.
Under Yanukovych, the Ukrainian government also expressed interest in joining, but the Maidan coup and the takeover of pro-EU right-wing forces makes this unlikely in the short term. On the other hand, Crimea did split from the Ukraine and has joined Russia. Given the present political crisis in the country, the future of the eastern parts of the Ukraine is uncertain. Finally, the Vietnamese government has also expressed interest in joining the Customs Union.
Meanwhile, the Putin regime has moved ahead and introduced steps to form the Eurasian Union. This development would create a common market of goods, capital, and labor, and ensure the operation of common macroeconomic, competitive, financial, and other regulations, including the harmonization of policies such as energy and transport. In November 2011, the heads of Russia, Kazakhstan, and Belarus announced that a Single Economic Space would be launched as of 1 January 2012. The Eurasian Union, which will be similar to the European Union, is to be launched by 1 January 2015. While Russia, Kazakhstan, and Belarus are members, other countries currently have candidate status (Armenia, Kyrgyzstan, and Tajikistan). (47)
In addition Russia is – beside the European Union – the most important trading partner for the Central Asian and Eastern European countries. In absolute terms, the trade volumes between the Central Asian Republics and Russia increased during the period 1995–2011 by almost 1,100%.
In Table 5 we see that Russia is one of the top three trading partners for Eastern European countries outside the EU.
Table 5Trade Patterns of Non-EU Eastern European Countries, 2010 (in percent) (48)
EU 27’s Share of Trade
Russia’s Share of Trade-
Turkey’s Share of Trade
32.1 (1st place)
20.8 (2nd)
4.4 (6th)
46.9 (1st)
7.4 (3rd)
8.2 (2nd)
25.1 (2nd)
48.2 (1st)
0.6 (10th)
31.7 (1st)
4.4 (7th)
15.6 (2nd)
52.3 (1st)
12.3 (3rd)
4.8 (4th)
In the Ukraine, the EU and Russia are the major powers which compete for market share and influence. Before the beginning of the Great Recession in 2008, the EU monopolies were able to continually increase their trade share. However, since the recession the situation has reversed itself. Between 2000 and 2010, the Ukraine’s exports to the EU fell to 25.4% and the share of imports from the EU to 31.4%. At the same time the Customs Union (Russia, Belarus, and Kazakhstan) was able to increase its trade with the Ukraine: exports to and imports from these countries increased to 32.3% and 42% respectively. (49)
When we examine the Central Asian semi-colonies, we note an even more hegemonial position for Russian imperialism. Central Asia is highly dependent on Russian imports (mostly energy products and manufactured products). While the EU comes as the second largest import source, China’s share has dramatically increased in the last decade and is now the third largest source of imports.
The EU, Russia, and China are also the main export partners of the Central Asian countries. The EU and China managed to increase their market share between 2000 and 2010. During this same decade, Russia’s share declined but it remained the second largest export destination for Central Asia.
To summarize, we can conclude that Russian imperialism has and is increasingly successful in subjugating a number of semi-colonial countries in Eastern Europe and Central Asia.
Migration and Super-Exploitation
As an imperialist power Russia also profits from migration. The migrants constitute a sizeable minority among the working class in Russia. As non-Russian workers, they are both nationally oppressed and super-exploited by Russian capitalists. Their lower wages provide an important source for extra-profits from Russia’s monopoly capital.
In their vast majority, Russian capitalists profiteer at the expense of migrants who originate from two different sources: On one hand, millions of migrants from Russia’s oppressed national minorities relocate to the country’s richer metropolises; on the other hand, millions of migrants from Russia’s peripheral semi-colonies enter the country.
The population in the poorer regions in Russia – such as the Far East District, Siberia, the Urals or Privolzhe – is being systematically diminished due to emigration. David Lane, a bourgeois expert on Russia, reports: “National ethnic minorities figured disproportionately in population movement. These areas were ones which had a continuous export of people.(50)
Migration from the Central Asian republics has increased dramatically in the last decade. According to official statistics approximately 12.3 million legal migrants currently reside inside Russia. In addition, another 5-8 million migrants have illegally entered the country in order to work there. Estimates of the percent of foreign migrants among all employed in Russia is about 8–10 %, which is close to levels in some European countries such as Germany and Austria. However, this appears to be an underestimation. In addition, this figure does not include the migrants from oppressed nations within Russia.
Such massive migration is driven by the extreme inequality of wages that exists between Russia and her semi-colonial periphery. For example, at the close of the first decade of the 2000s, the average wage in Tajikistan was just 10% of the average Russian wage, while those in Kyrgyzstan and Uzbekistan were just slightly above 20%. Average Russian wages were three times as high as those in Moldova and two and a half times higher than those in Armenia. (51)
Also contributing to migration from the poor semi-colonial countries is surplus population unable to find employment. The majority of Russia’s migrants come from Uzbekistan, Tajikistan, and Kyrgyzstan. By the end of 2010, migrants from these three countries accounted for 55% of the total legal foreign workforce in Russia.
Migration constitutes a massive drain on the human capital of the semi-colonial countries and hence reduces their ability to increase their own national wealth. Between 620,000 and 1,000,000 Kyrgyz migrants are estimated to work abroad currently (most of them in Russia). (52)Migrants account for 17% of the economically active population of Kyrgyzstan, for almost 37% from Tajikistan, and for 15% of the employed population from Uzbekistan.
The RCIT considers Russia, as well as the US and the EU, to be imperialist powers. As we outlined above in our discussion of China, in the event of a military confrontation between two imperialist powers, Bolshevik Communists will refuse to take the side of one of the two warring sides. Instead, in both camps, we will raise the slogan “The main enemy is at home”.
In a conflict between Russia and an oppressed nation – like the Chechens – we unconditionally defend the right of national self-determination for oppressed nationalities.
(1) The RCIT has elaborated its position on these conflicts in numerous statements.
On the Georgian War in 2008 see: LFI (Predecessor organization of the RCIT): Georgia War with Russia - A Socialist Analysis, 10.8.2008,; LFI: After Georgia: inter-imperialist tensions growing, 22.8.2008,; LFI: Georgia conflict signals the rise of Imperialist rivalry, 21.10.2008,


(28) OECD Economic Surveys: Russian Federation, 2011, pp. 68-69
(29) Dirk Holtbrügge and Heidi Kreppel: Determinants of outward foreign direct investment from BRIC countries: an explorative study, International Journal of Emerging Markets Vol. 7 No. 1, 2012, p. 10
(30) The Economist: Emerging-market multinationals. The rise of state capitalism, Jan 21st 2012,
(31) Golden Shares gives the state the right of decisive vote, thus to veto all other shares, in a shareholders-meeting.
(32) The Economist: Emerging-market multinationals. The rise of state capitalism, Jan 21st 2012,
(33) Gyuzel Yusupova: Kartellverfahren gegen russische Erdölfirmen in den Jahren 2008–2010, in: Russland-Analysen Nr. 217, 25.03.2011 p. 30
(34) Der Spiegel: Promising but Perilous: German Firms Put Off by Russian Corruption, April 03, 2013,
(35) World Bank: Gross domestic product 2012, PPP; World Development Indicators database, 17 December 2013
(36) Kálmán Kalotay: The future of Russian outward foreign direct investment and the eclectic paradigm: What changes after the crisis of 2008–2009? UNCTAD 2010, pp. 16-17
(37) World Bank: International Debt Statistics 2013, p. 238
(38) See Russia Government Debt To GDP, and Ernst & Young: Russia 2013. Shaping Russia’s future, p. 9
(39) Benjamin Utter: Outward Foreign Direct Investment to the Natural Resource Sectors by Global Public Investors from Emerging Economies: Trends, Causes, Effects; World Trade Institute 2011, p. 14
(40) UNCTAD: World Investment Report 2012, pp. 169-172 and UNCTAD: World Investment Report 2013, pp. 212-216
(41) Wladimir Andreff: Comparing Outward Foreign Direct Investment Strategies of Russian and Chinese Multinational Companies: Similarities and Specificities, EAEPE Conference - Beyond Deindustrialisation: The Future of Industries, Paris, November 7-9, 2013, p. 36
(42) Stockholm International Peace Research Institute: Armaments, Disarmament and International Security, 2012, Summary, p. 14
(43) Asya Pereltsvaig: Traditionalism vs. Assimilation Among Indigenous Peoples of Siberia, March 22, 2012,
(45) Les Rowntree, Martin Lewis, Marie Price, William Wyckoff: Diversity Amid Globalization: World Regions, Environment, and Development 2nd Edition.
(46) Irina Denisova: Income Distribution and Poverty in Russia (2012), OECD Social, Employment and Migration Working Papers, No. 132, OECD Publishing, p. 30
(47) See on this e.g. Rilka Dragneva and Kataryna Wolczuk: Russia, the Eurasian Customs Union and the EU: Cooperation, Stagnation or Rivalry?, Chatham House, August 2012, pp. 4-5
(48) Ben Judah, Jana Kobzova and Nicu Popescu: Dealing with A Post-BRIC Russia; The European Council on Foreign Relations, 2011, p. 26
(49) Ramūnas Vilpišauskas, Raimondas Ališauskas, Laurynas Kasčiūnas, Živilė Dambrauskaitė, Vytautas Sinica, Ihor Levchenko, Victor Chirila: Eurasian Union: a Challenge for the European Union and Eastern Partnership Countries, Public Institution Eastern Europe Studies Centre, 2012, p. 31
(50) David Lane: Dynamics of Regional Inequality in the Russian Federation: Circular and Cumulative Causality, in: Russian Analytical Digest No. 139, 18 November 2013, p. 6
(51) Mikhail Golovnin and Aleksandra Yakusheva: Regional Effects of the Global Economic Crisis in the CIS: Migrants’ Remittance, in:  EDB Eurasian Integration Yearbook 2011, p. 76
(52) Evgeny Vinokurov and Vladimir Pereboyev: Labour Migration and Human Capital in Kyrgyzstan and Tajikistan: Impact of Accession to the SES, in: EDB Eurasian Integration Yearbook 2013, p

No comments: