#12 - JRL 9067 - JRL Home
Moscow News
February 23-March 1, 2005
Will Putin Have a Think-Tank Coup?
By Valery Vyzhutovich
Last thursday, the Council on National Strategy (CNS) presented a report titled The State and Business: A Union for National Modernization. Both the report itself and the backdrop behind it contain a strong element of intrigue
Russia needs creative rather than 'liberal' reforms; viable institutions rather than abstract dogmas.
National Modernization
The aforementioned words are written on the title page of the report. The word 'liberal,' placed in inverted commas, suggests in no uncertain terms that the reforms spearheaded by German Gref with his Center for Strategic Studies (CSS) are not really liberal.
"The report," the opening lines read, "is called upon to specify national strategic priorities in the economic sphere and work out concrete recommendations on reviewing the country's economic policy."
Here are the main highlights:
- the government's 'liberal' course has failed to achieve any results and has lost public support;
- State regulatory institutions are weak and need to be strengthened;
- economic modernization is only possible when the leading role belongs to the State;
- neither 'authoritarian' nor 'market' modernization will produce any effect. It is critical to create a new social modernization front - a modernization coalition. Its initiator and driving force should be the Russian president;
- there is an urgent need to legitimize large private property;
- the country needs a nationally and socially responsible domestic business community.
The report was drawn up by a working group comprised of leading Russian economic and political experts. It was directed by Iosif Diskin, D.Sc. (Econ.) and CNS co-chairman. In an interview with this reporter, he clarified the report's focus, dispelling possible doubts and warding off possible attacks:
"The State has scored a political victory over the oligarchs. But this is not enough. The State needs to raise a national bourgeoisie and form an alliance with it. Only a nationally oriented bourgeoisie is in a position to modernize the economy. It is wrong to think that patriotism and liberalism are incompatible. It was in fact liberalism that shaped the patriotic idea in Europe. As far as the main thrust of the report is concerned, it is, basically, the advocacy of liberalism. We are only opposed to liberal dogmatism and doctrinairism.'
CNS in Place of CSS?
The Council on National Strategy was created in June 2002. It was thrust into the limelight in May 2003 with the publication of a report, The State and the Oligarchy. The document, which declared an open season on the oligarchs, was authored by Stanislav Belkovsky, the council's general director. It is not important now whether he knew about the upcoming crackdown. Belkovsky grasped the ideological mood of the new ruling elite, above all that of the siloviki (the favored faction comprised of former KGB and law enforcement officials), represented in the Kremlin by Igor Sechin and Viktor Ivanov.
This January, Stanislav Belkovsky stepped down as CNS general director, but remaining as a board member. The leadership role on the council passed to one of its co-chairmen, Iosif Diskin. "The council is set for an ongoing dialogue with the ruling establishment," Diskin says, making no secret of the fact that this dialogue is direct. CNS patrons include Igor Shuvalov, a presidential aide and former KGB officer, who has a close and confidential relationship with Vladimir Putin; and Vladimir Yakunin, vice president of the joint-stock company OAO Rossiyskie Zheleznye Dorogi (Russian Railways).
Once a dialogue with the ruling authorities was set up, the council began to receive funding from major Russian corporations (including Norilsk Nickel and Russian Aluminium). At the same time, the CNS signed a contract for the provision of information services with the Rosbalt news agency (its director, Natalya Chaplina, is the wife of Viktor Cherkesov, head of the Federal Anti-Drug Service, who is also closely associated with the Kremlin's siloviki faction). These factors put the council on the map as a leading think tank.
Last July, Iosif Diskin started gathering material for the report - the one that has just been officially presented. More than 50 experts were surveyed for the purpose - from liberals to hard-line dirigistes; six specialists from the Ministry of Economic Development and Trade were tapped to work on the report, and the All-Russian Center for Public Opinion (VCIOM) was commissioned to study public attitudes to the government's economic policy. According to informed sources, Diskin used the report's preparation to consolidate leading experts around himself and the CNS with a view to turning the Council on National Strategy into a major think tank funded from the State Budget and making it a viable alternative to German Gref's Center for Strategic Studies (CSS).
Is the CNS in a position to crowd out the CSS and take its niche?
"I believe that it is," CNS's Valery Khomyakov told this reporter. "The Center for Strategic Studies has been losing ground. Moreover, it is not independent. As a matter of fact, we do not have any really independent expert centers. Some of them, such as the CSS, are beholden to the political establishment, while others are laboring on behalf of the vested interests. By contrast, the CNS is genuinely independent. It comprises people of diverse economic and political views. There is no monopoly whatsoever."
Diskin made no secret of the CNS's claims to being the leading think tank now shaping Russia's economic strategy:
"Up until now we've had no opportunity to get involved in draft legislation. This requires a solid financial base. So we established a special foundation. Of 17 future members of the trusteeship council, nine will represent the CNS, while others will be drawn from the outside. We are currently in negotiations with some highly respected figures, and several are ready to provide financial support. The foundation will soon be registered at the Ministry of Justice. We hope that it will be up and running as early as March.
Swapping Gref for Diskin?
How did German Gref become the economic development and trade minister? He was tapped from the Center for Strategic Studies, which he headed at the time and still heads today. It is quite likely that Diskin could follow in his footsteps. As one person interviewed for this article observed, smiling: "Swapping a smart German for a smart Jew? Why not. This is part of the Russian State tradition."
Gref's replacement with Diskin is not ruled out. The political backdrop to such a scenario is fitting: Gref has serious disagreements with Prime Minister Fradkov. Addressing a State Duma session last week, the Russian prime minister remarked as if in passing that it was high time to reform the Economic Development and Trade Ministry. According to well informed sources, a coalition of Kremlin insiders and influential figures in the expert community has emerged that is ready to promote the CNS co-chairman for the ministerial position. But this is not going to be easy: Diskin is not acceptable to all quarters. Representatives of the government's macro-economic bloc will hardly agree to his appointment. Nor will it be embraced by the group of avowed liberals within the ministry itself. Specialists at the Higher School of Economics and Yegor Gaidar's Institute for Economy in Transition, who have until now been supplying the Economic Development and Trade Ministry with ideas, will not be able to find a common language with Diskin. Finally, he is not the West's idea as Russia's pointman for economic reform.
Here is what Diskin himself had to say on the issue:
"Should such an offer be made, I would not be too happy. I have other plans. Besides, an economy minister should be 15 to 20 years younger than me. Furthermore, I know what an economy minister should not be. He should not, like the incumbent minister, publicly declare: Nobody but us needs our products. A minister who says such a thing must immediately resign. A person who has never made a single ruble in the business sector is an armchair general. He has no right to occupy the post of economy minister."
There are many serious impediments to Diskin's appointment as economy minister. But as for the CSS's replacement with the CNS as the Kremlin's main economic think tank, this is quite a viable proposition. This would mean a final victory by the Kremlin siloviki over a handful of government liberals. At that moment, reform concepts would be shaped by Igor Sechin, as opposed to German Gref, under the CNS trademark. Image losses would be inevitable of course. The Council on National Strategy is certainly not the best possible showcase for liberalism. However, the ruling establishment no longer seems to have much need for such a showcase.
MN File
VERBATIM
"The country's economic policy should be freed from enslavement to doctrinaire liberalism and reoriented to deal with outstanding problems of socio-economic development.
"The elaboration and realization of a compromise model of Russia's economic modernization is a historical challenge to its social forces, aware of their national-historic mission. The State assumes the role as the mastermind behind the nation's economic development and provides for consolidation of all of the nation's responsible public forces, capable of ensuring the country's dynamic advancement.
"Social justice requires State-controlled income re-distribution mechanisms as well as institutions applying the principles of solidarity of all Russian people, their mutual support and assistance.
"What will be the economic effect if two assumptions are made in the expert model - specifically, that the State will pursue a robust industrial and investment policy, while State institutions operate strictly in accordance with the law? The result will be truly remarkable: GDP growth will double; the probability of high economic growth will increase considerably; the role of the raw materials sector will decline;
the export of goods with a high share of added value will increase with export expansion becoming principal corporate strategy."
(From the CNS report: The State and Business: A Union for National Modernization)