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RFE/RL Russian Political Weekly
Vol. 5, No. 2, 12 January 2005
THE WRONG DIAGNOSIS
Copyright (c) 2004. RFE/RL, Inc. Reprinted with the permission of Radio Free Europe/Radio Liberty, 1201 Connecticut Ave., N.W. Washington DC 20036. www.rferl.org

On 3 January 2005, RFE/RL's Russian Service broadcast a long interview with State Duma Banking and Finance Committee Chairman Valerii Zubov (Unified Russia). A complete transcript of the interview in Russian can be found at http://www.svoboda.org/programs/FTF/2005/FTF.010305.asp.

During the interview, Zubov challenges the conventional wisdom on a number of major questions. For one, he argues that Russia's economy, political system, and society are fundamentally sound and that the government should be creating conditions under which the public can become more active rather than engaging in systemic reforms.

"There is no crisis in the country," Zubov said. "Not political, not regarding federative relations, not in the economy -- not a single crisis. But they are prescribing the kind of treatment where the patient is supposed to sit quietly while the surgeon does everything -- carrying out some sort of operation. This is the wrong diagnosis."

"Now, on the contrary, the patient needs to stand up, to move, to take an active part in his own recovery," Zubov concludes. "We need to create condition in which people think as much as possible, argue, suggest even unacceptable, but at least varying, solutions. Only then can we create a qualitatively new situation in society as a whole."

However, Zubov said, Russian society and the government are hamstrung by "linear, oversimplified" thinking. In particular, he criticized such controversial proposals as the elimination of the direct election of regional executive-branch heads and the introduction of a strict proportional-mandate system for electing the Duma. "I voted against all of those laws," Zubov said, despite the fact that his pro-Kremlin party supported them, "because I believe that the wrong diagnosis has been made. The political system that is being introduced will constrain the development of the economy."

In addition, Zubov named the law-enforcement system -- especially judges and the police -- as a major brake on the country's development.

Zubov also challenged the conventional wisdom regarding the structure of the economy. He argued that it might not be a bad thing to have a "raw-materials economy," and said that countries such as Canada, Norway, and Australia have chosen such a model and adapted it successfully.

"It isn't a matter of whether one has a raw-materials economy or a non-raw-materials economy," Zubov said. "A raw-materials economy can be either modern or not -- that is the real issue. If our productivity levels are lower than global norms by a factor of four or six, that is a problem. If our production is concentrated in inaccessible regions with poor living conditions, that is a problem. If our production generates an impossible environmental situation, that is a problem."

Zubov also argued that the economy does not particularly need foreign investment for the money it brings. "From the point of view of money for the economy, we have plenty within the country," Zubov said. "The biggest debates going on now center on the stabilization fund and on how it should be held, how it should be invested. The public holds tens of millions of dollars, which are just sitting there like dead weight, bringing no profit to the population and not working for the economy. Our banks face problems handing out loans -- there aren't enough credit-worthy borrowers [for the money available]."

However, he said that foreign investment should be welcomed for the management know-how and technical innovations that it can bring, particularly "the organization of production." He cited the legal system as the main obstacle to increased foreign investment.

Zubov also criticized the state's handling of the Yukos affair and the transfer of Yukos's main production subsidiary to Rosneft and, presumably, to Gazprom. "[The company] is being transferred from more effective management to less effective management -- I'm simply looking at statistics, at the dynamics of growth of the oil sector, of Yukos, and, for example, of Gazprom and I see that this is a transfer from more effective management to less effective and that for me raises a very big question." (Robert Coalson)