The document summarizes discussions from a panel on the impact of global economic ills on social frameworks. - Panelists agreed that while social networks have facilitated protest movements, the underlying cause is a loss of hope among young people due to unrealistic expectations not matched by today's global economy. Fixing this will take decades and sustain uncertainty. - Panelists also highlighted a lack of global political leadership and solutions. Countries appear equally floundering in policy responses. - One major problem is the widespread perception of inequality and unfairness in the world, which will be difficult to address without significant job creation.

1. RUSSIA
FEBRUARY 2 3, 2012
Russia Forum Buzz
Global Economic Ills and Their
Impact on the Social Framework
█ While the ease of communication via social networks has facilitated the rapid
spread of protest movements, the underlying cause is a failure of expectations
and a loss of hope, especially among young people. Fixing that problem will
take many years and will for a long time to come sustain the uncertainty that
has affected global markets.
█ Panelists commentated on the role that social networks are playing in helping
protest movements to emerge and grow. They make it cheaper to protest, as
well as easier. But clamping down on such networks would not solve or even
contain the problem – to a large extent the genie is now out of the bottle.
█ That “genie” is the fact that young people have grown up in a world that created
expectations of lifestyle and wealth that are simply not realistic. Now we have very
significant levels of young unemployed that do not have the skill sets required to
work in a more realistic global economy. Governments now have to refocus on
education and skill creation to help boost long term economic growth. But the
panelists agreed this may take one to two decades to achieve and, in the
meantime, the social pressures will remain and hamper economic growth.
█ Panelists also highlighted the lack of global political leadership right now. All
countries appear to be floundering equally in terms of policy response. The
G 20 is more like a G 0 today. This will also have to change if solutions are to
be found and implemented.
█ One of the major problems that political leaders need to address is the perception
of inequality and lack of fairness in the world. All agreed that this is a major issue
that will not easily be addressed – and not without major job creation.
█ The panelists also discussed the role of state capitalism and concluded that
this is a defunct strategy that has now been totally discredited. Countries such
as Russia need major structural reforms to attract more foreign investment.
█ The panel also discussed the usual pattern in resource rich countries where
the few “steal” from the many or the country borrows from its future. But,
while this is the usual “default option”, it may not be the case in Russia
provided the county creates an improved business and investment
environment from now.
www.TheRussiaForum.com

2. FEBRUARY 2 3, 2012 RUSSIA FORUM BUZZ – GLOBAL ECONOMIC ILLS AND THEIR IMPACT ON THE SOCIAL FRAMEWORK
Audience votes
█ People were asked to vote about which country they thought more likely to experience instability
over the next two years. They voted as follows.
 Europe: 53.7%
 Russia: 18.6%
 China: 14.1%
 US: 9.0%
 India: 5.0%
█ Gideon Rachman and Paul Collier disagreed because Europe has more of a solid bedrock of both
democracy and wealth, and this will sustain the social fabric. China is more likely to experience
instability because autocracies eventually become unsustainable as the middle class grows and
becomes more demanding.
█ The audience was also asked to vote whether it thought capitalism and democracy are
compatible.
 Always: 37.5%
 For the most part: 48%
 Seldom: 12.7%
 Never: 1.8%
█ Vladimir Mau reflected on the fact that, in Russia, as people take a greater role in the economy, as the
economy expands and people make a greater contribution via taxes, etc, they will demand a greater
say and will be much more demanding. That, he argued, is a very positive trend. The emergence of the
middle class is one of the reasons for the current demands for political change, he argued.
█ He also said it was inevitable that closer Russian integration with Europe will take place. He said
this would be good for both as Russia would benefit from adopting EU institution formats and the
EU would benefit from long term growth opportunities. He saw Russia, Germany and France at
the core of the eventual cooperation.
█ Collier also highlighted the need for a much more engaged and informed citizenry as a
prerequisite for change. His opinion was that social networks have helped that develop globally
and in Russia, and it is a positive global trend.
█ Rachman said that counties in the developing world need to build strong institutions and improve
the rule of law. That is a requirement for investment, for job creation and will go a very long way
toward maintaining social stability in Russia, as elsewhere.
█ Nouriel Roubini reflected on the fact that the problem exists at both an international and domestic level
and the latter cannot alone fix it. We need a global response that is then executed at a domestic level.
█ Shaukat Aziz identified the two main advantages that Russia has today as 1) very strong human
capital in terms of highly educated people, and 2) a big resource base that delivers steady budget
revenues. But Russia now needs to increase governance, strengthen institutions and improve the
rule of law in order to bring in more capital to achieve economic diversity.
█ Mikhail Dmitriev reflected on the fact that so many counties, such as the BRICs, are now
middle income countries but are pushing to join the institutions now dominated by the developed
rich nations, such as the World Bank and IMF. He said that the rich nations will have to make more
room for middle income countries if there is to be an effective global response to the crisis.
2 TROIKA DIALOG

3. RUSSIA FORUM BUZZ – GLOBAL ECONOMIC ILLS AND THEIR IMPACT ON THE SOCIAL FRAMEWORK FEBRUARY 2 3, 2012
█ Raghuram Rajan, in his concluding remarks, said that the core of the current problem is a crisis in
the financial sector, and this, primarily, will have to be fixed if the global social crisis is to be
solved. The world cannot function and jobs cannot be created without a properly functioning
global financial sector.
Panel
Raghuram Rajan Professor, University of Chicago, Booth School of Business
Shaukat Aziz Former Prime Minister of Pakistan
Paul Collier Director, Centre of the Study of African Economies, Oxford University
Mikhail Dmitriev President, Center for Strategic Research
Vladimir Mau Rector, Russian Academy of National Economy and Public Service at the President of the Russian
Federation
Gideon Rachman Chief Foreign Affairs Commentator, Financial Times
Nouriel Roubini Professor of Economics, NYU's Stern School of Business
TROIKA DIALOG 3

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