Russian economy succumbs to the oil curse

Moscow is the most expensive city in the world, like Tokyo before the Nikkei bubble burst. A taxi from Domodedovo airport to the Kremlin costs $170 (


This is the curse of commodity wealth, the “Dutch Disease” that eats at the competitive foundations of an economy and incubates a parasite culture. No doubt Russia’s scientists, engineers, and cyber talent, will enrich the country, but first it must overcome the toxic effects of oil at $90 a barrel.

“We can no longer afford to buy Russian equipment,” said Yevgeny Ivanov, head of Polyus Gold.

“The prices here are one and a half times higher than abroad so we’re having to break our rigid rule and turn to foreign-made machinery. It is bad news for Russian firms. The commodity super-cycle is catching up with us through higher prices. It is a disheartening picture,” he said.

“There’s no infrastructure, no power, no roads. Electricity costs twice what they pay in Alaska and Canada. We face a Soviet bureaucracy passing decrees that make you weep,” he said.

Telegraph