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Russian academics have begun questioning the level of economic and political intelligence being cited by the West when it comes its collective analysis of Russia, with many perplexed about how the West so consistently sticks to its statements that it is being threatened by Russia, that the country is collapsing, and economic decline is imminent. Meanwhile, US President Trump appears to flip-flop between being Putin’s buddy and dismissing him – a classic sign of indecision.
Russian critics have stated that it is those who have the ears of Trump – specifically the Vice President J.D. Vance, and the Secretary of State, Marco Rubio, whose own sources of intelligence may not be entirely accurate. No-one knows – apart from them – what sources and resources they have when it comes to assessing Russia – or indeed other countries – both economically and politically, however they appear to be consistent in one overall assumption: the Russian economy is crumbling, and Ukraine’s military are winning. Or, at the very least, the Ukraine military and its economy would be winning if only the United States would send more money and weapons.
Trump, to his credit, appears to be hesitant about both – he is not a “War President” – as George W Bush once declared himself to be – and he appears consistent in his desire to achieve peace – including his efforts in both Ukraine and Gaza. The financial aspect to funding Ukraine appears now to have been passed to Europe, while the military part – and especially the provisions of Tomahawk missiles – have apparently been discounted.
Yet still the misperceptions persist. Michael McFaul, a former US Ambassador to Russia, and now on the board of the Kyiv School of Economics, (KSE) has recently stated that the US economy is 13x larger than Russia’s. He does have a new book to promote, and he does have access to what is supposed to be a leading think-tank about Ukrainian and Russian economics. Yet as we pointed out here the KSE is hopelessly biased.
The reality is that the United States economy is not ’13 times’ larger than the Russian economy. It is huge, at about US$30 trillion, however the Russian economy, when measured in what economist’s routinely refer to as ‘purchasing power parity’ (PPP) when comparing economic data between countries, is valued at US$7.14 trillion. This means that the US economy is roughly four, not thirteen times larger than Russia’s and that McFaul has over-stated the US size of its economy over Russia by a multiple of nine. That is not a small mistake. Does McFaul have the ear of Vance or Rubio?
Yes, he does. McFaul sometimes comments on Vance’s position on topics like the role of the U.S. in Europe, the threat posed by Russia, and the effectiveness of Vance’s approach to foreign policy, as highlighted in responses to Vance’s speeches. McFaul also comments on Rubio’s foreign policy decisions and actions in his role as Secretary of State, while their interactions often revolve around U.S.-Russia relations and foreign policy issues. But if McFaul’s data passed around to other advisors as well – yet is fundamentally flawed, what does Trump get to base his opinions on?
This disconnect between the United States, the West in general, and Russia goes far deeper. Consider the role of the International Monetary Fund (IMF). They are supposed to monitor the global economy and provide data and intelligence from member countries, to enable them to provide opinion and analysis to other global governments – including the United States. Part of the World Bank Group, based in Washington DC, the IMF provides a significant platform to understanding global trade and economic flows. It can highlight coming problems, suggest reforms, and discuss cross border trade and other economic health data, and even approve loans and financing for infrastructure projects.
Both Russia and Belarus are members – and it should be remembered that the Russian economy is currently the world’s fourth largest, while the Belarus economy is linked to Russia’s. Both are important in examining the impact of sanctions imposed upon them, and especially as concerns their economic development since then, including the impact on Europe. This is vital at a time when the European economy is coming under fiscal pressure with several countries close to, if not already in recession – and in understanding the causes and any suggested remedial actions. Denied this, Europe’s own economic performance can be manipulated to appear rather more robust than it actually is.
Under Article IV of the IMF’s Articles of Agreement, the IMF should hold bilateral discussions with members, usually every year. An IMF team visits the country, collects economic and financial information, and discusses this with senior economic officials, such as the Head of the Central Bank, Minister of Finance and so on, of the pertinent country’s economic developments and policies. Questions and additional data may be asked for.
These are then cross-referenced against other national statistics and known data, including from neighbouring countries where the trade and economic impacts are generally more significant.
However, the last IMF mission to Belarus was in November 2017. IMF Article IV missions to Russia halted after November 2019 visit, with a planned September 2024 trip postponed indefinitely after intense Western political pressure not at attend. (What were they afraid of?)
While both Minsk and Moscow continue to provide data to the IMF, the IMF cannot verify this. It means that in part, in developing its financial analysis of these countries, and to compile comprehensive data amid geopolitical trends, the IMF also has to rely on alternative sources – such as the European Union and the Kyiv School of Economics.
This means that both global and institutional economic analysis has become unreliable. Global institutions such as the IMF cannot obtain the precise data they need, regional resources such as the KSE have become compromised, and ex-US Ambassadors feel they can publish economic ‘facts’ as reliable statistics when they are neither qualified economists, nor based in the country they are discussing. No wonder President Trump sometimes appears confused.
The classic book, “The Art Of War” written by the Chinese scholar Sun Tzu in the 5th Century BC, contains much advise about warfare and engaging with an enemy, a great deal of which is pertinent to contemporary economics. One of its principal instructions is to “Study the opposition. Know everything about them.”
The problem with the West is that it consistently fails to understand Russia. Washington, Brussels, and London, would be well advised to hire some new, impartial economists to sort the problems out. It is becoming clear that in the West at least, the existing economic, reporting, research and analytical structures appear to be woefully inadequate.
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