It's been a busy week for foreign news editors: the ISIS attack in Brussels, President Obama's trips to Cuba and Argentina, North Korea's ballistic rocket test, Europe's new refugee policy, presidential candidate speeches to AIPAC, and, now, an airstrike killing ISIS's second-in-command.
For all these important stories, though, the most consequential development in international affairs this week may have come, believe it or not, in a proposed change to Russian tax policy.
Bear with me.
According to the New York Times, Russian leaders, as they struggle to keep their country's economy afloat, are considering something drastic: a major new tax on the oil industry.
This has been debated for some time, but if it now goes through, it would be a major and long-term blow to Russia's economy, one so severe that it would have potentially sweeping implications for the future of Russia itself, and thus the future of a world in which Russia has become increasingly active.
Read more ....
WNU Editor: Russian personal taxes, corporate taxes, etc. .... are low .... virtue of an oil economy that finances much of the Kremlin's budget. I know this is going to change .... governments rarely pursue a trend of getting smaller ... their focus is to always grow. But raising taxes on an industry that is going through rough times is never a good policy .... a fact that appears lost on the economists in the Kremlin.
1 comment:
This is the price Russia pays for its expansionist policy. It continues to entangle itself it foriegn affairs with its military for domestic consumption. The leadership believes that the more it drives nationalist sentements, the more the population will ignore it's increasing economic situation.
The seziere and anxiation of Crimea was very popular with the Russian people in general, it left it with a powerless terittory which is not connected to the rest of the country. Power has to be delivered through cable(s) under the sea. The population of Crimea also depended greatly on pentions which Ukraine once paid, now it's Russia's tab. It also caused the start of sanctions that were only directed at the regime's base, but has had some long reaching consequences for the economy in general, it as the least sawn instibility, the poison of all economies.
The support and probable direct intervention in East Ukraine has left it with several semi autonomous region which only provided an increasing drain on its resources. The infastructure is damaged and travel hazerdous, it was also dependent on Ukraine, but its Russia's problem now. Much of the population depended on pentions from Ukraine that going unpaid and will stay that way for the time being, but tensions are again rising and new fighting could breakout on a general basis. That would drag Russia back into the fight, that would invigure it population, but drain it none the less. It could and probably would be subjected to increased sanctions. The nuclear option could come in the United States prohibiting it's banks from dealing with Russia or its industry, that would be crippling if not the death blow for the economy. The only thing it could gain is a land bridge to Crimea, to some what elliviate the first problem.
The intervention in Syria has put it's government back in a strong position before the peace talks and on the offensive again Isis, probably for the first time as its existence as it was a good foil for its prosecution of the war. But it was very expensive and cost Russia a large share of its targeting munitions reserves. The replacement of which will be an expensive and long proposition for Russia and leave it exposed in a larger entanglement or in returning to old ones like Syria. It may have pulled a sizable portion of its air from the region, but it is still entangled in the conflict on the ground. The government is dependent on Russian aid and an increasing direct support on the ground. The aid for the rebel, non Isis forces, continues to drive life into the conflict and shows no sign of decreasing. A reversal on the battlefield or a breakdown in the peace talks could drag Russia in on the ground and cause it to be stuck in the quagmire the United States as been trying so hard to avoid. A fight of that nature on the ground will be debilitating to the Russian economy and challenge potentially it's military conscript forces which are not on pare with Western militaries in a long costly commitment that would drive increased Western funds for the rebel forces.
Russia needs more money and the oil industry, which is on its back feet, is the only source for the government and it's foriegn policy. It can't ask it's population to pick up the difference, that would destroy the nationalist illusion of Russian power and stability. The government might not make it through a resulting back lash. The leadership can't afford such a situation and increasing evidence of its personal gain for individuals leaves them personally in danger. That is a great motivation for this new tax or anything that will preserve the leadership. No one wants to end up like the Czar.
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