The new RBC-500 ranking of Russia’s largest companies is enough to make you feel gloomy. Of course, we already knew about the economy’s heavy tilt toward raw materials and its dependence on oil.
It’s just all laid out so clearly here, it’s enough to make you cry.
Here they are—the companies that form the backbone of Russia’s economy:
These account for 77% of Russia’s GDP and employ just 7.5 million people. The country has 71.1 million employed people in total, which means that only 10.5% of the workforce generates 77% of GDP. Monstrous.
Now let’s roughly separate out oil, gas, metals, and mining—in other words, everything we make money from by digging something useful out of the ground and selling it abroad:
Imagine that tomorrow no one needs oil, gas, or basic processed metals anymore. Remove what’s circled in red—and that’s it: there is no Russian economy, and no Russia itself.
But the breakdown of profits by sector looks even worse:
In other words, 98% of the net profit of the 500 largest companies comes from oil and gas, and everything else accounts for just 2%. Sure, there’s a shadow economy and all that, but it doesn’t change the overall scale of the numbers.
In other words, there is nothing else. Oil and gas are the only sectors where there are legal profits—where real wealth can be made. And those are precisely the industries under the tightest state-oligarchic control. So it is not talented entrepreneurs who get rich, but a handful of oligarchs and hundreds of officials.
This is what that so-called “raw-material appendage of the West” looks like. For years they shouted that they would never let the Washington obkom (a Soviet-style regional party committee, used here sarcastically to mean the U.S. political establishment) turn Russia into one—and then they willingly turned into exactly that.
Look again at the top chart. All we have managed to build in 25 years is retail chains, the banking sector, and communications. Everything else—from oil production to machine-building and energy—is all inherited from the USSR.
And most importantly: over 15 years of high commodity prices, that very part circled in red received COLOSSAL revenues. Where did they go? What was built with them? Whose happiness and prosperity did they buy?
They dug treasure out of the ground, sold it to the West, and with the money bought themselves not even a shovel and a wheelbarrow, but merely the right to go on digging treasures out of their own land for the West.