Rights in Russia Interview with Juergen Kaehler, Professor of Economics at the University of Erlangen-Nuremberg

This month Mary Page talks with Juergen Kaehler, Professor of Economics at the University of Erlangen-Nuremberg. From 1991 to 1994 he was employed at the Centre for European Economic Research (ZEW), where he established and headed the Research Department ‘International Financial Markets and Financial Management’. He was then Lecturer in Finance and Statistics at the University of Exeter for five years. He received his PhD from the London School of Economics and Political Science in 1995 with a thesis in Economics. In 1999 he took up his current post at the University of Erlangen-Nuremberg. Last year he received a honorary Professorship from the Kharkiv National University of Economics. Prof. Kaehler has been a visiting professor at the University of Exeter and at the University of KwaZulu-Natal (Durban, South Africa). He has taught courses in economics, finance and econometrics at universities in Ukraine, Mexico, South Africa, Turkey, Chile and the Netherlands.

Professor Kaehler has published widely on economics and among his most recent articles (a book chapter, forthcoming) is one entitled ‘Economic Aspects of the War in Ukraine’, written jointly with Dr Vasyl Namoniuk,  Associate Professor at the Taras Shevchenko National University of Kyiv.

This interview was recorded on 5 June 2024

This interview is also available on Substack and Patreon.

Mary’s questions:

  • In a recent paper ‘Economic Aspects of the War in Ukraine,’ written jointly with Dr Vasyl Namoniuk [publication forthcoming], you argue that the difference in economic size of nations is an important factor in determining the outcome of wars. To what extent is that being borne out in the Russo-Ukrainian war over the last two years?
  • You point out in the paper that in terms of GDP Russia has a very large economy. But in terms of per capita GDP Russia remains far behind Western countries. To what extent is that a factor in the war? Is it a disadvantage, or on the contrary does it mean the Russian government can squeeze its population even more because they are used to a lower standard of living?
  • Another point is that the Russian economy may be very large in terms of GDP but it is also ‘unbalanced’ being almost entirely dependent on oil and gas. So the non-oil-and-gas economy is therefore relatively small. Is that the case in your view?
  • The West presented its sanctions in some sense as an effective instrument that would severely limit Russia’s military capabilities and be an ‘alternative’ to military action. Has that argument held up in practice?
  • What explains the limited impact of Western sanctions on the Russian economy?
  • What measures has Russia taken to protect itself from sanctions?
  • To what extent did Western sanctions fail to take into account Russia’s relationship with China and other countries such as India?
  • In your paper you note that wars can stimulate economic activity. To what extent has Russia been able to compensate for sanctions by putting the economy on a ‘war footing’? I have in mind the production of military equipment and so on and so forth.
  • Economists love the notion of ‘rational actors’. To what extent do you think Putin has shown himself to be a ‘rational actor’ in terms of the Russian economy since February 2022? For example, were there any economic motivations for Russia’s invasion of Ukraine? I have in mind that, while climate change will reduce the value of Russia’s resources of oil and gas, in coming years Ukraine’s food production capacity will become yet more important to the global market.
  • In one part of your paper you describe how post-war recovery can be rapid. But elsewhere you emphasise the destruction caused in Ukraine and the difficulty for recovery. You give a very vivid picture of the dire economic consequences of the war for Ukraine. Just to cite one example, you say Ukraine’s housing stock has seen the loss of 167,200 residential buildings, with the explosion of the Kakhovka dam alone causing a loss of 37,000 residential buildings. Given such devastation, what do you think is the most likely post-war scenario in terms of economic recovery?

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