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8 March 2017

Russia’s Exceptional Diaspora

Why aren’t many Russian emigres willing to contribute to their former homeland?

I was reminded of a striking difference between Russia and Israel when I walked past a Washington synagogue this winter. A handwritten poster hung by the door: “We help Israel!”

Nearly 10.5 million Jews live in countries other than Israel and as few as 6.5 million reside in their own state. Contemporary Israel has been built (both remotely and on site) by people who have spent years of their lives on other continents. Currently, Israel receives up to $8-11 billion per annum in the form of investment, aid and remittances from abroad donated by businesses run by Jews, Jewish charitable organizations or individual members of the diaspora.

Russia’s diaspora is also vast, but when it comes to giving back, it’s a vastly different story. Russia is only mentioned as a donor country according to the statistics of the Bank for International Settlements, which permanently keeps track of remittances from (and within) different countries. This means that incoming remittances do not exceed $500 million a year.

Of the tiny investments that actually do come into Russia from its diaspora, most primarily come from Russians who have businesses in Cyprus, the Virgin Islands, and other offshore tax havens. In other words, almost all of these funds re-entering the country are the same ones that some accuse of being stolen from Russia’s tax revenues in the first place.

Like the Israeli diaspora, Russia’s is not lacking in scale and a strong sense of identity. More than 6.5 million people have left Russia since the 1980s (not to mention the earlier “waves” of exodus). There are also more than 7 million ethnic Russians, born abroad with either one Russian parent or two, who have never spent a sustained period in Russia. More than 4 million citizens who had Russian passports 20 years ago (or have them to these days) live in EU member states today. Many ethnic Russians (or citizens of Russian descent, if you prefer) are successfully integrated into host societies and pursue great careers.

So it is not as if Russians around the world are cash strapped or struggling to adjust. According to statistics, immigrants from the former USSR to the US can boast 14.1 years of education on average compared to the 12.6-year national average. They are more active in business and earn 39% more than the average American. “Former Russians” reside mostly in metropolises or in their outskirts and make up between 2% and 5% of the populations of Vienna, Prague, Berlin, Paris and New York. There are more than 10 thousand scientists and professors working at American and European universities and scientific centers. Citizens of Russian descent are also among those entrepreneurs who control assets outside of Russia with a total market value exceeding $1 trillion – this is almost equivalent to Russia’s GDP at today’s market exchange rate.

A question arises: Do emigre Russians really believe their homeland is so rich and successful that it does not require their support?

Clearly, this is far from being the case. I do not even care to mention the dire state of a number of regions, the flawed education system, the pauperized elderly or the spread of AIDS. I am speaking of average GDP per capita which is precisely at the same level as Mexico’s (Russia ranks 63rd and Mexico 62nd according to IMF rankings and 65th versus 66th according to World Bank rankings). However, Mexico receives up to $28 billion from its emigre community per annum whereas Russia gets less than $500 million.

Russian Exceptionalism

It is not as if Israel and Mexico are the only countries with an active diaspora; rather, Russia seems to be unique one for its lack of engagement. There are many examples of peoples scattered around the world whose former compatriots did not sever their ties with their homelands, economic ties included. The people of Armenia are one such example. Three million out of approximately 12 million Armenians live there. Up to $2.5 billion (i.e. 21-23% of GDP) is remitted to this small country by ex-patriots every year. Since 1991, direct investment by members of the diaspora has exceeded $5.5 billion. The contribution made by 5 million Albanians living outside the country is equally significant. They transfer up to $2.2 billion to their homeland every year. In Albania, as in Armenia (and, frankly, many other states), ministries of the diaspora, which strive to improve the country’s attractiveness, exist.

The 1980 reforms in China would have been unsuccessful had ethnic Chinese living in more developed countries of Asia and the US, not offered their support: up to 70% of foreign investment in the People’s Republic of China came from Chinese nationals living abroad during the first stage of economic transformation (currently, Armenia enjoys the same level of support from its citizens living overseas). The contribution of immigrants from India to the economic development of their homeland is equally important. Not to mention the constant cultural exchange between the diaspora and the local population which is of utmost importance from the point of view of modernization since it involves the inclusion of a given people in the process of global civilization.

Even by reverting to the purely economic nature of the problem, we cannot underestimate the scope of emigrants’ ties with the societies they originate from. According to experts at the 2015 World Economic Forum, they transferred to their home countries a record total of $582.5 billion. Were this figure to account for GDP of a country, this country would be among the top 20 economies in the world. China and India top the list by far and away and receive $60-65 billion per annum from ex-pats, in excess of the volumes of annual direct foreign investment into these countries. Some states – those less economically developed – receive remittances which amount to 40-45% of Gross Domestic Product from their former citizens. However, although one may assume that assistance is targeted at poor countries first and foremost, this is not strictly true.

For instance, Mexico receives approximately $28 billion in remittances from guest workers and up to $7.5 billion in investment from companies owned by newcomers from Mexico (mainly in the US), although the income of a Mexican American is one-third less than that of a non-Mexican American on average. In Mexico itself, average GDP per capita was $9.4 thousand in 2016. Approximately $18-20 billion is remitted to Egypt from abroad, which is four times the income generated by the “gem” of the national economy: the Suez canal, which was expanded and modernized between 2014-2016.

Moreover, no government has developed a special program designed to support those who have left the country voluntarily. On the contrary, a number different states and societies expect assistance and investment from ex-patriots. Israel or Armenia do not finance the construction of synagogues and churches abroad (suffice it to recall how difficult it was to collect donations to finance the construction of a new Armenian church in Moscow). However, the Russian presidential administration is building a church in Paris while millions from the budget are spent on projects aimed at promoting “the Russian idea” – projects from which only a few organizers and executors will benefit.

Which leads us to a simple question: Why doesn’t Russia, which is constantly bragging about the pan-Russian world, the country’s greatness and uniqueness, not elicit the feelings of endearment and gratitude expressed in material form from those who used to be (or still are) part of it? 

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