#9
Nezavisimaya Gazeta
December 29, 2001
RUSSIA AT THE BREAKING POINT
Trust in the regime is essential to overcome mounting economic problems
Author: Sergei Alekseev
[from WPS Monitoring Agency, www.wps.ru/e_index.html]
NOTHING THE GOVERNMENT MAY TRY WILL WORK IF SOCIETY REMAINED DISTRUSTFUL. IT IS TRUST IN THE PRESIDENT AND THE GOVERNMENT, AND TRUST IN THEIR POLICIES, THAT WILL DETERMINE RUSSIA'S SUCCESSES AND FAILURES IN FUTURE. AND 2002 IS GOING TO BE DECISIVE FOR THE PRESIDENT.
There is reason to assume that 2002 will be a special year. It will be the year when numerous problems accumulated in the past will reach their peak. This primarily concerns the fact that several reforms were initiated all at once - reforms of natural monopolies (tariffs), military reforms (cuts), judicial reforms, housing and utilities (tariffs), education, finances, taxation, pensions, land, and administrative reforms. What does the background to all these processes look like? Is the state ready to handle the huge challenge of economic deregulation? Can the regime protect the policy of free-market reforms it has chosen?
State officials' reports leave the impression of real economic growth and confidence in correct nature of the policy pursued by the president... Society is not so confident about that.
The major question, that of trust or lack thereof in the government, is going to haunt Russia unless we learn to associate our actions with their consequences. Results of 2002 will eventually depend precisely on how well-founded the decisions made by the authorities are. Some consequences are already visible.
The nation's economic prosperity depends heavily on oil prices, and $14-16 per barrel is not going to be the critical price for Russia. It seems that the period when Russia basked in oil dollars is over for good. Even cutting oil production by 150,000 barrels per day in the first quarter of the year is not going to change the global situation. It is not going to happen - for a number of substantial reasons, which Russian politicians and economists do not mention.
The cost price of a barrel of oil in the Middle East is $4, but twice or three times that much in Russia. Not to mention the quality of oil. What should Russia do? Undercut rivals or radically change its behavior in the international market? The government is not ready for the latter option - which means that Russia should expect a chain reaction in all major macroeconomic indicators.
Nothing the government may try will work if society remained distrustful. It is trust in the president and the government, and trust in their policies, that will determine Russia's successes and failures in future. And 2002 is going to be decisive for the president.
Next Article