The New American Cold War

"As a result of the Soviet breakup in 1991, Russia, a state bearing every nuclear and other device of mass destruction, virtually collapsed. During the 1990s its essential infrastructures--political, economic and social--disintegrated. Moscow's hold on its vast territories was weakened by separatism, official corruption and Mafia-like crime. The worst peacetime depression in modern history brought economic losses more than twice those suffered in World War II. GDP plummeted by nearly half and capital investment by 80 percent. Most Russians were thrown into poverty. Death rates soared and the population shrank. And in August 1998, the financial system imploded.

No one in authority anywhere had ever foreseen that one of the twentieth century's two superpowers would plunge, along with its arsenals of destruction, into such catastrophic circumstances. Even today, we cannot be sure what Russia's collapse might mean for the rest of the world.

Outwardly, the nation may now seem to have recovered. Its economy has grown on average by 6 to 7 percent annually since 1999, its stock-market index increased last year by 83 percent and its gold and foreign currency reserves are the world's fifth largest. Moscow is booming with new construction, frenzied consumption of Western luxury goods and fifty-six large casinos. Some of this wealth has trickled down to the provinces and middle and lower classes, whose income has been rising. But these advances, loudly touted by the Russian government and Western investment-fund promoters, are due largely to high world prices for the country's oil and gas and stand out only in comparison with the wasteland of 1998.

More fundamental realities indicate that Russia remains in an unprecedented state of peacetime demodernization and depopulation. Investment in the economy and other basic infrastructures remains barely a third of the 1990 level. Some two-thirds of Russians still live below or very near the poverty line, including 80 percent of families with two or more children, 60 percent of rural citizens and large segments of the educated and professional classes, among them teachers, doctors and military officers. The gap between the poor and the rich, Russian experts tell us, is becoming "explosive." "