Why are we poorer than the inhabitants of the UAE, although we have one source of income - oil?

2024 Author: Seth Attwood | [email protected]. Last modified: 2023-12-16 15:55

The well-being of Russians is indeed often compared to the capabilities of the citizens of the UAE. Say, the main source of income for both countries is oil fields, but the standard of living for some reason is different.

Let's figure out how to compare correctly here.

10 Million Lucky People: How Is Oil Wealth Distributed?

Why not compare, in fact? Both countries are the largest fuel suppliers (Russia is the third in the world in terms of oil supplies, the United Arab Emirates - 7th), comparable in terms of total exports - $ 250-400 billion per year.

Proved oil reserves are also similar: as of January 1, 2016, Russia had 80 billion barrels, the UAE - 98 billion. Of course, we produce three times more: 540.7 million tons (12.4% of world production) versus 175, 5 million (4%) in 2015.

At the same time, according to the UN Human Development Index, Russia ranks 49th in the world, the UAE - 42nd. Life expectancy, according to the World Health Organization and Rosstat, is 72 years in Russia and 77 years in the UAE. But everyone knows about the fabulous privileges, about the almost free life given by the state to the citizens of the Emirates. Why is that?

The answer is simple: labor productivity in the UAE is several times higher than in Russia. GDP per capita in the Emirates is $ 38, 7 thousand (higher than in Germany), in our country - $ 9, 2 thousand.

Taking into account the price level, that is, according to the "purchasing power parity" - is also several times higher: in the UAE - $ 67, 2 thousand (more than in Switzerland and the USA), in Russia - $ 26, 0 thousand.

A thoughtful patriot will, of course, go much further in his studies. He will bury himself in statistics and discover that our happiness - Russian oil, gas and other raw materials - is produced by only 1.5 million people. And taking into account those who serve them, protect and feed them, and also manage them, it turns out about 5-10 million.

But in the UAE the population is also more than 9 million. And here we can be absolutely sure that these teams of people - 9-10 million people each both in Russia and in the Emirates - are absolutely comparable in terms of the money they bring into the world from the bowels of the earth. And they live about the same.

But in Russia, in addition to these lucky ones, there are still 135-140 million people with whom something needs to be done, but in the Emirates there are none. These "extra" people deserve a big universal economy, but they don't get it because they are living in the days of one of the most unsuccessful macroeconomic policies.

Twenty-odd years - a super-heavy ruble, super-expensive credit, an eternally tight monetary policy, a small and speculative financial system exploding with crises, the lowest investment rate, the heaviest taxes for an economy that is about to grow, an ultra-high regulatory burden, over-concentration of property along with nationalization, over-volatility, three financial crises and explosive devaluations - what else is needed for the economy to remain forever developing, oligopolistic, resource-based?

And yet with this "deindustrialization". We have turned into a backyard, a resource yard for the EU and China, into an economy of “raw materials versus beads,” or rather, raw materials versus supplies of equipment, technologies, tools and clothes.

With such an economic policy, life in Russia becomes an eternal bargaining between 5-10 million "raw material workers" and 135-140 million other citizens, who always get everything for the remainder. All the restructuring of the pension system, the shudder around taxes and the "optimization" of social obligations follow from this conflict of interest, which, while there is a lot of money, simply smolders, and when a crisis comes, it can swell into a fire.

Bedouins and the Russian Elite: Who Lives Better?

But is wealth smeared on a sandwich in a thin layer in the Emirates? Among many equals? Of course not. It is an absolute monarchy, a deeply estate-based society. The core is the emirs with personal wealth of $ 5-15 billion, dozens of their children and, probably, hundreds of grandchildren. And plus another 1.4 million "their" citizens of the UAE. This is a tribe, the very Bedouins who need to be fed, cared for and cherished, to keep their traditions, because they are their own, guards, key managers, the backbone of the Emirates.

The rest, almost 8 million people - well-fed expats, hired forces, specialists of all kinds, white, yellow, whatever (including 2-3 million people from India, about 50 thousand Russian-speaking). To naturalize in the Emirates, they have to live and work in them for an almost biblical period of 30 years.

It is their own - and only they - 1.4 million citizens of the Emirates receive all imaginable privileges from the state, or rather, from the hands of their tribal sheikhs. In economic terms, this is a cut from the common oil pie in favor of a privileged class, one in nine residents of the UAE. Theirs are always above others, theirs like to work in the government, their rights are more significant and, of course, they always get the green light in any controversial situation.

And what about Russia? We completely repeat the caste structure of the Emirates. Of the 5-10 million people employed in the raw materials sector in Russia, 1-1.5 million are owners, politicians, the class of top managers, officials, security guards and expensive servants. And they receive all imaginable privileges - monetary and natural, no less significant than those who sit under the stars in the deserts of the Emirates.

They are also "theirs", also a tribe, although they are unlikely to have been under a Bedouin tent. They are the establishment supporting the modern political and economic system in Russia, which has direct access to an outstanding piece of the commodity pie.

Please fasten your seat belts. Below is a list of what is due to the citizens of the Emirates (not expats). They are free from taxes on their income. They are treated free of charge and with very high quality. Interest-free home loans or even free housing. Large pensions from the government. Free higher education at home and abroad. Subsidized gasoline. Subsidies for utility bills. About $ 20 thousand - a gift from the state for the wedding. Pay off debts if the business is in trouble. Guaranteed work for the government with high wages. Free land.

We have nothing to envy here. All this is also on the Russian plains - among those who are in the circle of their neighbors. Those same 1.5 million people or a slightly larger number, given that they have to keep not 84 thousand square meters. km, as in the Emirates, and one-eighth of the land. Moreover, well-being is not given to them automatically, not by the fact of birth or passport, but by the place and fact of faithful service.

Another 130 million Russians: what to do with them?

UAE "inside" the Russian economy? Indeed, matryoshka. Inside there is a "Bedouin tribe", 1–1.5 million people with all imaginable and inconceivable benefits. Then a bigger nesting doll - "hired", well-fed, those who extract and protect the resource rent - 8-9 million people. And then the widest matryoshka doll - 135-140 million, to which the rent, benefits, and privileges go to the remainder. What are they to do?

Like what? Live, work, enjoy. Strive for a reasonable economic policy, which, instead of the cynical “we will do what we are good at,” that is, extract raw materials, will build an open, social, market, universal economy, in which raw materials, of course, will remain an important factor of success, but will play a secondary role.

By the way, this is exactly what was done in the United Arab Emirates. Once a completely oil country, today it is the largest financial and trade center, offshore, and an outstanding aviation hub. There, oil fades into the background. In the structure of GDP of the Emirates, the first place (55%) in 2016 was occupied by the service sector, not industry.

Plus a cheap government, in spite of any monarchies. The share of final consumption of the state in GDP is 7.5-9%, for comparison in Russia it is more than 18%. Plus taxes are lighter than in Russia. The price of money, that is, the interest on loans, is 6-7 times lower than in Russia, inflation - 2-3 times. Work and build until you drop.

Behind all this is the understanding of the sheikhs that the economy cannot stand on only one oil foot. They turned out to be prone to innovation. They managed to invest with a firm hand the oil rent in the construction of a diversified economy and profitable wonders of the world. It turned out to be easy to implement the craziest and therefore the most effective ideas. It was necessary to create one of the best offshore companies in the world - the International Financial Center in Dubai with its English language, British law and legal proceedings, as in London, in the Arab, traditionalist society, in the Bedouin desert, reckless with oil revenues!

When you compare Russia and the UAE, you can be sure of only one thing. A matryoshka society, a resource-based economy built on a super-concentration of power and resources, in which 135-140 million people walk somewhere on the periphery, can be neither stable nor developed. Therefore, we must find a growth policy in order to become a diversified, one-stop economy for all.

This means it is worth copying the Emirates. But not in caste, not in creating their own "tribe of Bedouins" as a support for power. This has already happened. What then? In the ability of public design and generation of new ideas, in finally coming up with how to squeeze water out of stone, out of dry desert sand.