Russia's Economy: Down, Down, Down!

June 22 (EIRNS)—Both announced policies and current trends show that Russia's Presidency is still confused and disoriented, respecting the nature of the general breakdown-crisis of the planet. As long as Russia fails to grasp the British Empire's top-down direction of both the policies of the Obama Administration, and the fact that the world financial situation is presently hopeless for the short term, it cannot see the necessity for the alternative presented by Lyndon LaRouche to be adopted, instead, very soon.

At present, the world as a whole is gripped by a general breakdown-crisis of a type similar to that which Europe experienced in the 14th-Century "New Dark Age," but this time on a global, rather than regional scale. Admittedly, President Obama is, currently, his own worst enemy on this account; but, it must not be presumed that ignoring the fact that Obama is a British puppet will be helpful to Russia, or any other nation. A few recent developments directly affecting Russia's situation, illustrate the deadly trend in current developments:

Even while Russia's government leaders keep on their dangerously misguided course of proposing to undermine the role of the U.S. dollar as the world's reserve currency, their domestic "anti-crisis" policies are only serving to preside over the collapse of the national economy. Russian industrial output contracted even faster in May—by 17.1%—than it had in April, the state statistics agency Rosstat announced June 16. This is the seventh straight month of collapse; overall, industrial production has fallen 15.4% from a year ago. Capital investment has fallen over 23% from a year ago, although it increased, by 11%, compared to April.

Economic Development Minister Elvira Nabiullina had to report that the national economy had shrunk by an annualized rate of 9.8% in the first three months of 2009, which is the worst in 15 years—that is, since the depths of the shock therapy destruction of Russia's economy.

An indicator of the disaster, is that on June 17, Vladimir Yakunin, president of the huge Russian Railways complex, met with representatives of its labor organizations, the 17 national railroads, and the State Duma, to announce that 53,700 employees will be made redundant this year through voluntary retirement and other measures. These job losses are minimal, Yakunin said. "From an economic point of view, at the present time we have to lay off 180,000 workers," Yakunin was quoted by Progressive Railroading. "But the board has taken a strategic decision to preserve the workforce as much as possible, avoid mass redundancies so as to enter the post-crisis period, when traffic will increase, with the necessary staff." Russian Railways is the biggest single employer in Russia, with a workforce of 1.2 million. On June 5, Yakunin had said that the Railways carried 20% less freight in May than a year ago. This actually was an improvement: Freight volumes were down 25%-33% earlier this year.

Russian manufacturing overall contracted by 23.7%, with the automobile industry hit the hardest. There, production contracted by almost 64%, and sales of cars and light passenger vehicles were down 58%. Cement production, a key indicator of construction, was down almost 25% from a year ago. Natural gas production fell 28.7% due to the evaporation of the European market. Gas exports to nations outside the former Soviet Union (the CIS nations) had already fallen by 56.7% in the first three months, to 26.4 billion cubic meters, while exports to the CIS were down 37.4%. Coal output was down 11.7%

At a meeting of the Russian government regional development commission in Barnaul on June 19, Prime Minister Vladimir Putin, who was presenting his government's second anti-crisis program, told regional governors that budget revenues had fallen 5% in the first three months, and as much as 15% in some regions.

Unemployment had improved, but only very slightly, and this is a seasonal factor, Putin said. The official rate is now 9.9%, down from 10.2% in April; wages are shrinking for those who do have jobs.

Obama Aide: Moscow Summit Not Meant To Offer 'Reassurances'

July 1 (EIRNS)—On a conference call today, advisors to President Obama gave an indication of the tone of the meetings the President was to hold while in Moscow the week of July 6. In addition to meeting President Dmitri Medvedev, he will have a separate meeting with Prime Minister Vladimir Putin, probably concentrating on the energy question. Obama will also meet with former Soviet leader Mikhail Gorbachov, business leaders, and members of the press.

This second day of meetings is intended to "reset" relations with "Russian civil society." "The idea here is that this is not 1974, this is not just where we go where we do an arms control agreement with the Soviets," said Mike McFaul, Senior NSC Advisor on Eurasian Affairs, "but that we have a multi-dimensional relationship with the Russian government and with the Russian people. And that's what we're going to try to begin to establish in this first substantive discussion that we have with the Russian government, and then to follow up with that with different parts of Russian society." Obama will give a speech at Moscow's New Economic School.

In response to a question on NATO expansion and missile defense, McFaul said that the President's visit was not meant to "reassure" the Russian leaders that these were not going forward. "The door is open" for these countries, he said, and Vice President Joe Biden would be going to Ukraine and Georgia a week later to discuss that issue with them.

On the planned Polish missile defense installations, McFaul said, "With regard to missile defense, as you know, we have a review that's underway right now. It's a congressionally mandated review, but we'd be doing it anyway, because we're reviewing all policies. And the way I understand that review, we want to enhance missile defense in Europe and around the world as it relates to real threats. And by 'real threats,' I mean countries like Iran, and not Russia. But we also have to do it in ways to make sure that it works and it's affordable, as the President has said many times before.

"We believe that when you think about enhancing missile defense in that part of the world, that Russia could play a very—a role that would enhance their security, as well," McFaul said. "And when we're in Moscow, we're going to talk in those terms, not abandoning the third site in order to do a deal with Russia. That is a formulation we just don't use at all. But we want to enhance European missile defense.

"We're going to define our national interests, and by that I also mean the interests of our allies in Europe with reference to these two particular questions," he said. "We're going to talk about them very frankly as we did in April when we first met with President Medvedev. And then we're going to see if there are ways that we can have Russia cooperate on those things that we define as our national interests."

Secretary of State Hillary Clinton announced that she will not be travelling with the President, ostensibly because of her convalescing from a broken elbow, but will send someone from the State Department to represent her.