Old Saint Basil's Cathedral in MoscowJohnson's Russia List title and scenes of Saint Petersburg
Excerpts from the JRL E-Mail Community :: Founded and Edited by David Johnson

#13 - 7037
No. 3
January 2003
[translation from RIA Novosti for personal use only]
About The Authors:
Mikhail LEONTYEV is a political analyst with the ORT television channel.
Alexander PRIVALOV is the scientific editor of the Expert magazine.
Maxim SOKOLOV is an author.
Valery FADEEV is editor-in-chief of the Expert magazine.

The perestroika drive was launched in the spring of 1985, that is, almost 17 years ago. Why has this country failed to ensure sustainable economic development over this period?


Russia used to implement a negative economic policy throughout the entire 1992-2002 period. Such a policy tended to deny something all the time; moreover, it kept fearing various forces or circumstances

Prices were liberalized all over Russia in January 1992; instead of deliberately establishing a market-economy system, that move feared a possible famine. Russian property also began to be privatized in 1992; that post-haste and slip-shod policy was also motivated by certain fears, i.e. a possible Communist come-back and the "red-director" rampage.

Furthermore, Russian economic authorities feared inflation, thus virtually demolishing the entire national processing industry and depriving the economy of money. Budgetary-deficit fears led to the creation of the state securities market, i.e. the ill-fated GKO (treasury-bill) pyramid. That pyramid came tumbling down in no time at all, with the Government of Russia begging the IMF (International Monetary Fund) for money and fearing a possible refusal. The IMF did loan some money to Russia; however, this didn't prevent an economic and financial melt-down in August 1998. Consequently, the GKO pyramid collapsed, what with Cabinet fearing a possible default all the same. Add to this sky-high external debts, which have to be repaid, no matter what. So, how can this objective be accomplished? Some people invented the so-called 2003 problem, bemoaning a possible economic collapse and saying that the end of the world was apparently in sight. The year 2003 has already begun; but where are all those irresponsible and incompetent people, who had sowed this panic?

Global oil prices are yet another eternal fear. The entire country, including its Prime Minister and retired farmers, are afraid that such oil prices might plunge anytime now because they are sure that Russia's well-being depends on these prices. Russian authorities also feared over the last 10 years that the global public at large might think that Russia was not progressive enough. Therefore they feared the IMF, the World Bank, Bill Clinton, as well as just about any quack, who taught us how to behave.

Our terrified economic authorities don't want to comprehend their responsibility for specific developments; they are also unable to do this because they don't comprehend the relevant economic policy goals. An erzatz ideology has substituted this economic policy; to cut a long story short, the Government perceives a budgetary surplus as its main goal and criterion of its activity.

This policy of fear has produced really pitiful results. This country now depends on raw materials prices to an even greater extent than the Soviet Union did. Its consumer market sector has shrunk considerably on Soviet levels; moreover, the Russian innovation sector is withering on the vine. Russia's weak economy has been liberalized at a time when public and state will is lacking. As a result, our economy is moving toward a miserable existence, stagnation and degradation. Frankly speaking, these are our only "free" options." This is the price one has to pay for the reign of fear. Still we should discern between different kinds of fear, such as fear of God, which makes it incumbent on every man and woman to be wise and prudent, as well as another type of fear, which paralyzes one's mind and will-power, also denying any possible state creativity. Terrified people can't rebuild Mother Russia.

Why Is This Happening?

Russian society has become apathetic; as a matter of fact, such apathy always sets in after any upheaval. The Russian elite has succumbed to destructive indifference at a time when it must use the unchained potential of public forces skilfully enough. Intellectuals keep complaining that everything once again hasn't worked out the way it should have. Many big-league businessmen, who have amassed their fortunes in no time at all, no longer perceive any ambitious tasks for themselves. Meanwhile Russian officials are eagerly accepting bribes and embezzling money. The Russian elite, which emerged as a result of this catastrophe, can only re-enact disaster.

The Russian elite is sure that the ship is sinking; such is the main problem facing our elite. The national elite keeps naming quite a few reasons, which are not conducive to prosperity. Their list includes incorrect ethics, lack of market economy traditions, people, who like to steal, people, who are too poor, as well as the Dutch disease. All this rubbish is portrayed as in-depth research.

There is only one reason, i.e. an irresponsible and defeatist elite, that will prevent Russia from developing rapidly enough. The national elite is afraid to set serious goals before itself and the entire country.

What Do We Have?

Russia, which abounds in natural resources, therefore has every chance of launching an economic breakthrough. This country made two highly important gains throughout the 1990s. A new, albeit crude, economic system has been established, hinging on market relations and private initiative. Russian businessmen, who aspire for long-term economic development, have emerged, also firmly asserting themselves. Our businessmen have assumed responsibility for the lion's share of Russia's economy.

They alone ensure economic growth, despite extremely adverse conditions.

We boast a vast domestic market, which can grow for decades on end, that is, until we attain average European-style consumption levels. The Russian market will eventually encompass the markets of other post-Soviet republics, with its potential swelling almost two-fold.

The global crisis can also serve as an additional economic development factor. Globalization in its present-day form has now ended. No one knows anything about subsequent global development.

All countries, even the mightiest ones included, are equally weak in this sense. However, any crisis also spells new opportunities.

Anyone, who comprehends such opportunities well in advance, would win the next round of global development.

What Is To Be Done?

First of all, we must comprehend the fact that Russia now faces a basic dilemma. Russia should either admit its historic defeat; or it should restore its befitting positions among global leaders.

Russia would either plunge calmly and blissfully into complete historic oblivion; or it would stage a historic come-back based on the unconditional belief to the effect that death can be overcome by the power of resurrection. The Russian public at large has been advocating this only possible option over the last few years. The spiritual-metaphysical concept refers to Russia's resurrection; meanwhile the material-political concept envisages fast-paced modernization and powerful economic growth. The incumbent executive branch and disaster-minded elite still don't share this task. Russia's economic and political elites keep preaching the philosophy of disaster. The thing is that any economic growth policy doesn't merely boil down to enhancing popular living standards, which are also something essential, as well as to Russia's enhanced international positions. The latter is even more important because Russia has now been almost completely overrun; Russia will go under, unless its international positions are enhanced. One should keep in mind that an economic recovery is an essential pre-condition of incipient state unity because such an economic recovery is nothing but a fast-paced rotation of all state resources, i.e. people, money, ideas and goods, also amounting to the powerful circulation of life-giving blood throughout the entire national organism. An economic recovery boils down to the production of material wealth, as well as common national goals, essences and structures. Civil decay is just a matter of time, unless the current economic situation is rectified. Moreover, any civil and political unity is out of the question.

We must reject previous policies, i.e. the negative policy of fear and thoughtlessness. We must opt for a new and positive policy of growth. The state must assume responsibility for the results of nationwide economic activity. Still this doesn't mean that the state will once again start supervising production-and-sale matters. The very use of old-time industrial policy instruments, i.e. the choice of sectoral priorities and direct aid to such sectors, would amount to a mistake. We must do our best to unshackle the Russian business community's potential, also creating the most favorable environment for its work, rather than for some abstract foreign investors.

The state and the business community must pursue common goals. Only those specific countries, which boasted state will, ideological unity, and whose people mostly aspired for development, managed to accomplish an economic breakthrough. We must take advantage of the global crisis. Industrial countries and developing countries, which depend on the former, are now suffering from crisis. Free capital tends to emerge as a result, looking for cost-effective investment opportunities. We've got to enhance our economic competitiveness, thus attracting virtually unlimited investment.

The present-day historic challenge is too serious to be ignored. Our country has always paid dearly for the national elite's unpreparedness to firmly and adequately cope with specific challenges. However, Russia may not survive yet another national disaster. We are not going to make any trite statements about the healthy business community's might and brilliant politicians, who still remain unseen, but who are ready to act quickly and efficiently at the wave of our hands. We only hope that Russia will find the strength and people for coping with this highly important task.

That's why we are calling on all those, who share our concepts, to take part in the initial phase of the economic growth program.

Ideological production, which is now faring no better than real-life production is an essential pre-condition of economic growth. We have so far failed to predict subsequent Russian developments for the next 10, 20 and 40 years. We are not talking about some hare-brained plans, or a new version of five-year economic plans in this context. All we have to do is to draw a blue-print of Russia's future reminiscent of the medieval "Map of Muscovy", which would specify all kinds of national development and economic growth priorities. This would become the first and, maybe, the most important step in our efforts to emerge from the current somnolent state. Let's draw a blue-print of future Russia; and things will get rolling, no matter what.

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