Figure Page — Credit Market Activity in Brazil, Russia, and China, 2007 – 2012; Asian Credit Markets, Global Credit Markets 2 1.2 — Russian GDP, 1995 – 2007 4 1.3 — Russia’s Post-Default Framework 6 1.4 — Research Method 18 3.1 — Federal Tax Arrears, 1995 – 1998 61 4.1 — Average Monthly GKO Yields, 1997 – 1998 76 4.2 — Process Tracing Default Outcomes 81 4.3 — Levels 1 and 2 of Post-Default Framework 81 4.4 — Total Oil Production, 1992 – 2012 114 4.5 — Total Oil Reserves, 1992 – 2012 115 5.1 — Counterfactual GDP, 1998 – 2005 133 5.2 — Russian Imports and Exports (Counterfactual), 1998 – 2005 134 5.3 — GKO Yields, 1996 – 1997 138 TABLES
Table Page 1.1 — Research Sources 22 2.1 — Categorizing Financial Crises 28 2.2 — Potential Costs of Sovereign Debt Default 40 3.1 — Money Supply and Price Level in Russia, 1993 – 1998 56 3.2 — Exchange Rate (Ruble-Dollar), 1991 – 1998 58 3.3 — GKO Market Revenues, 1994 – 1998 65 3.4 — Russian Oil Industry Organization 68 3.5 — FDI in Russia, 1995 71 4.1 — 1998 Macroeconomic Overview 79 4.2 — Prime Ministers of the Yeltsin Administration 84 4.3 — 1999 Macroeconomic Overview 95 4.4 — Russia’s Reformed Tax Code 102 4.5 — Macroeconomic Summary, 2000 – 2002 103 4.6 — Financial Summary 109 4.7 — Sibneft Financial Growth, 2000 – 2002 110 4.8 — Rosneft Financial Summary, 2000 – 2003 112 4.9 — Brent Oil Spot Prices, 1997 - 2005 114 4.10 — Macroeconomic Summary, 2003 – 2005 118 4.11 — International Investment, 1997 – 2004 119 5.1 — OECD Projections, December 1998 122 5.2 — OECD Projections, December 1999 122 5.3 — Yeltsin’s Fiscal Regime 128 5.4 — Counterfactual GDP Calculation 130 5.5 — Calculated Magnitude of Output Cost 132 5.6 — Calculating Flows 133 5.7 — Russian Foreign Trade (Counterfactual) 134 5.8 — Calculating Borrowing 136
GLOSSARY Macroeconomic indicators of output Gross domestic product (GDP) — total value of production of all new goods and services in an economy over a fixed period of time and is most often measured per year Exchange rate (FX) — ratio between the values of two currencies and is determined on the international exchange market Purchasing power parity (PPP) — measures the equality of values for goods in two countries and can be used to construct a PPP exchange rate, which is calculated as a compliment to FX rates and provides a better perspective on real spending — the purchasing power of one unit of currency rather than its nominal value — in an economy. Rate of exports to imports — ratio between goods traded out of a country to goods traded into a country of exports over time — cumulative nominal worth, adjusted for inflation, of a country’s exports over a stated span of time Current Account— a record of a country’s balance of payments in terms of trade and foreign investment capital CHAPTER ONE THE EMERGED ORDER Over the next few decades, the growth generated by the developing countries, particularly the BRIC’s (Brazil, Russia, India, and China) could become a much larger force in the world economy than it is now—and much larger than many investors currently expect. — Goldman Sachs, “Dreaming with the BRICs: the Path to 2050”
more social scientists believe we confront.” Hall’s definition is the reason this method is best suited to tackle the research question. This design explores variables through qualitative analyses — weighing the relative importance of political decisions and dynamics — and quantitative analyses — measuring economic variables over time —, crafting a mixed-methods picture within the case study. As pictured in figure 1.4, this research design includes two chains—one empirical and one counterfactual chain. The empirical chain establishes through the narrative, while the counterfactual chain is a series of accretive projections that are based initially on the imaged reality of the removal of three critical junctures I identify in the empirical chain. This design’s purpose is to establish the different between measurements of the chosen variables—proxies for the three main categorizations of costs in the aftermath of debt default—in the empirical observations versus the counterfactual projections. The counterfactual analysis presented in Chapter Five uses baseline data from Goskomstat and the OECD to construct three sets of projections from 1998 to 2005 over tracing
CHAPTER FIVE COUNTERFACTUAL ANALYSIS Today's financial crash does not require you to abandon your march toward freedom and free markets. — U.S. President Bill Clinton Sept. 1998: Moscow, Russia This chapter manipulates the empirical trajectory presented in Chapter Four into a counterfactual example that theoretically removes the critical junctures around which I traced the empirical chain. In working toward the ultimate goal of explaining the empirical outcomes measured in the Russian case, I now attempt what political scientist James Fearon calls a fundamental tenet of the “logic of inference.” “The analyst, in explaining why some particular event E occurred, cannot help but explain why E occurred rather than some other possible outcome or outcomes.” In this “imagined” case of outcomes, the critical junctures are now assumed null and void, in so far as we can assume they and their associated effects did not play out. To recap the evidence presented in Chapter Four, there are three junctures that create the political industrial complex that propelled foreign investment in Russia’s economy and therein propelled Russia’s macroeconomic growth. First, Putin’s appointment as prime minister at the very end of the Yeltsin administration, placing him in the political forefront prior to the 2000 elections and solidifying his particular brand of leadership for Russia. Second, the Putin administration constructed a strong federal state and overturn of Yeltsin-era neoliberalism. And, third, the surge in global energy prices that resulted in a stronger domestic energy sector and increased state revenues.
Unemployment 11.3 12.0 12.5 12.5 Fiscal Balance (% of GDP) -8.4 -4.0 -3.0 -2.0 Current Account Balance (US $bn) 2.9 0.0 9.0 13.0 Current Account Balance (% of GDP) 0.6 0.0 2.2 3.1 1998 1999 2000 2001 Real GDP Growth -4.6 2.0 1.0 1.0 Inflation 84.4 40.0 30.0 20.0 Unemployment 13.3 12.0 11.0 11.0 Fiscal Balance (% of GDP) -6.0 -4.0 -4.0 -2.0 Current Account Balance (US $bn) 2.4 18.0 15.0 12.0 Current Account Balance (% of GDP) 0.5 10.0 7.5 5.4 REIMAGINING THE POLITICAL LANDSCAPE The empirical chain rests upon two major political dynamics. The first is the decline of the Yeltsin administration and the simultaneous rise of the Putin administration
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