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#26 - JRL 2006-207 - JRL Home
Moscow Times
September 13, 2006
Editorial
Fradkov's Point Is Short on Development

Prime Minister Mikhail Fradkov told a Cabinet committee Monday that he believed the time was ripe to start "stimulating industrial production without concentrating too much on the cost."

Thus Fradkov handed another point to his Cabinet's economic liberals.

Since being named to replace Mikhail Kasyanov in early 2004, Fradkov has engaged in regular battles over economic policy with Economic Development and Trade Minister German Gref and Finance Minister Alexei Kudrin. Fradkov has favored an approach aimed directly at boosting growth, while Gref and Kudrin have argued that the government should focus on structural reforms in the economy and combating the destabilizing effects of petrodollars.

The squabbling is easy to understand. Fradkov inherited his Cabinet from Kasyanov, whose approach was closer to that of the economic liberals. Without a real base within the Cabinet, the prime minister adopted President Vladimir Putin's economic mantra of doubling gross domestic product by 2010 -- a goal that the economic liberals have dismissed as unrealistic.

Even though media coverage of the friction within the Cabinet often reduces it to a mere conflict of personalities, there are strong economic arguments and constituencies backing each side.

Feuding, of course, is not unique to the Russian government. The uneasy nature of the partnership in the British Cabinet between Prime Minister Tony Blair and Chancellor of the Exchequer Gordon Brown can be attributed at least partially to differences in their economic visions.

The open debate and competing visions between Fradkov and the economic liberals are probably a good thing. If nothing else, they increase the chance that the largest possible number of economic options receives real consideration.

It is unfortunate that comments like Fradkov's on Monday do his side such a disservice. Not much in the way of economic education is needed to understand that simply throwing money at problems isn't going to be particularly effective. Creating new industry at whatever cost is bound to mean ignoring fundamental issues such as the industry's efficiency and, ultimately, its ability to compete. For a country planning to join the World Trade Organization in a very competitive world, building uncompetitive industry is folly, pure and simple.

That this is so blindingly obvious may go a long way toward explaining why Gref and Kudrin tend to emerge victorious in their battles with Fradkov, who at least nominally is their boss. Against comments like these, the liberals win by default.

That is a shame. Russia would profit from a more reasoned economic debate.