1999:Russian economy remains heavily militarized, with weapons production
An American businessman with intimate ties to Russia, who wishes to remain anonymous, spoke to me recently. He said that living conditions in Russia have sunk dramatically. "The children are suffering," he explained. "There are no hospitals
. The social safety net has collapsed."
I asked this businessman about the tens of billions we have poured into Russia, in support of free-market reforms.
"What reforms? The Russian leaders are mostly Communists!" he exclaimed. "I mean, basically, they think in terms of power, lines of organization, personal contacts -- to gain personal control."
In other words, Russia's political machine has not adopted a true market system. The old system of bureaucratic back-scratching and favor-swapping continues to control economic outcomes much as before. Consequently, Russia's economy is not based on a capitalist model. State control dominates in sector after sector. Even Russia's largest private company, Gazprom, is 40 percent state-owned. More suggestive still, the Russian economy remains heavily militarized, with weapons production and heavy industry at the forefront.