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#9 - JRL 9309 - JRL Home
Date: Wed, 30 Nov 2005
From: Vlad Ivanenko <ivanenko60@yahoo.com>
Subject: Re: 9308 - the state of public debate on Russia

Several recent events have highlighted keen attention that Russia's watchers pay to the reform process in this country. Discussion on the importance of NGOs and formation of Public Chamber, state attacks on the freedom of press and greater state control of the economy are interpreted in the light of their would-be impact on progress that this country makes towards becoming "normal".

Sharing the same basic desire to understand the direction that Russia follows, I find latest JRL debate to be rather uninformative. Missing is the attempt to express events in the language devoid of emotional details and clichs. Incessant criticism of events in this country may be rewarding for participants who wish to express their righteousness and it may be appropriate for journalists whose profession requires sensationalism to repeat platitudes. Yet, emotionally charged debate is hardly conducive to formulating a coherent assessment of Russian progress with reforms. In this respect, I have a number of comments.

First, the definition of "normalcy" should be spelled out before experts present their normative judgment about Russian trajectory. One appropriate characterization is Russian institutional convergence to the world standards. If this country wants to get integrated in the global community, it should have institutions of democracy and free market that make it a welcome member of G8, WTO, OECD and, if Russia decides to apply, NATO and EU. With this definition in mind, let consider if Russia has moved closer towards achieving this objective. My exposition is necessarily fragmented as more indicators and in a greater detail need to be considered.

(1) The state of democracy. The debates on the future of NGOs, interest in the freedom of press and skepticism related to the formation of Public Chamber articulate the concern that observers have regarding the development of democratic institutions in Russia. Partially, the above three issues are important because they can increase the level of public oversight, which is a serious problem. The structure of power in Russia is skewed as administrative authorities dominate legislative and, especially, judicial branches of power. Its operations are seldom transparent. However, the current debate rarely touches on the issue of public oversight when it discusses supposed democratic failures. ! Let me be more specific.

a) Theoretically, NGOs are important vehicles that monitor the performance of state administration. This potential importance explains why the bill on NGOs has attracted keen attention. Yet, the discussion has been practically limited to its impact on foreign-funded organizations that, being foreign entities, by definition cannot improve democratic oversight in this country. Regarding domestic NGOs, if democracy is somehow impeded with the bill, it is necessary to show that whenever the interests of NGOs and state apparatus collide, it gives preference to authorities on spurious grounds. The recent debate has failed to produce such evidence. Repetitive predictions of incoming travails for pro-democratic NGOs in Russia are a poor substitute for substantive argumentation against the bill.

I think that the current US Administration was reluctant to raise the NGO issue during the last meeting of Russian and American presidents exactly because of inability of US experts to explain in plain language why the bill is anti-democratic.

b) The scrutiny by media outlets is another device that may highlight and prevent power abuses. Because Russia! has a relatively high rate of offenses against journalists, the recent suspension of Olga Romanova of Ren-TV is a valid reason to discuss the state of press freedom in this country. Yet, this particular event has not been analyzed sufficiently to support the claim of censorship. Judging by comments, I cannot exclude that it is a case of workforce maltreatment so ubiquitous in Russian labor markets. The same reproach applies to general claim of widespread censorship in Russia. For example, the organization "Reporters without Borders" has documented 56 cases of potential media abuse in Russia in 2004. A casual investigation of the list does not reveal a pattern suggestive of organized state attack on independent media. It seems more likely that violence is a common device to resolve conflicts including media-related co! nflicts in this country.

Moreover, the claim that mass media is an important component of democratic system in this country is not well substantiated. Its public record is mixed at best. Polls show that readers mistrust journalists almost at par with Duma and courts, which are the other two least trusted institutions in Russia. Mass media has a role to play in fostering a vibrant civic society in this country but whether it is up for the task remains to be seen.

c) The administ! rative origin of supposedly non-governmental Public Chamber has been widely criticized as a state attempt to substitute grassroots NGOs with organizations that the state or, more precise, administrative bodies control. This interpretation makes sense if NGOs monitor the work of administrative bodies. Then, it makes sense for the state to fake the process creating phony organizations that are supposed to control its operations. However, I see two counter-arguments to this statement. First, the Public Chamber complements and not substitutes NGOs. Second, if it were a cover-up establishment, it would not start its career by initiating a public conflict with the Duma.

The latter event suggests a different explanation that is more in line with the explanation filed by th! e Presidential Administration. Public Chamber is a shadow, non-elected, Duma that is designed to monitor and discuss the work of Russian legislature. As such, it is unlikely to increase the level of public oversight over the administrative branch - where power abuses are most common - but it does not make Russia to be a less democratic country either.

(2) Free market institutions. The interest in this area is mostly confined to the cases of state intervention. Often, the attention is attracted to government attempts to impose control over private companies (YuKOS, Sibneft, AvtoVAZ) or studies that consider economic efficiency of public agencies (the Satarov's report on corruption bei! ng the prime example). This lopsided fixation on the operations of state apparatus explains why the situation with corporate practices - poor by the world standards - is casually overlooked.

a) A greater state control over certain economic sectors - dubbed "strategic" in Russian political parlor - is normally interpreted as a threat to free market institutions in this country. Strictly speaking, this interpretation is incorrect. As long as state-owned enterprises are not directed by the same body (Gosplan) and lack monopoly, they operate according to the principles of free market economy, albeit - as many claim - inefficiently.

Growing list of "strategic" sectors is worrisome for a different reason. It highlights the unfinished business of Russian privatization. The recent report on the state of economic crime in Russia - published by PricewaterhouseCoopers - underlines the lack of legitimacy faced by the owners of privatized holdings. It finds that top managers are most likely perpetrators of economic crime in this country. Such situation is abnormal unless corporate assets are seen as illegitimately owned and, thus, open to predation.

b) Observers point out that the level of corruption ! in this country does not match the standards of the developed world. This statement can be taken for granted as it is uniformly supported with various studies. However, the debate should go further and suggest measures that Russia can take to curb the abuse of public trust for private gains. In this area, the issue of favorable business environment intertwines with the problem of good public governance.

The issue of causality is often treated superficially within the context of corruption. Blaming public officials is a reasonable way to express indignation but some evidence suggests that it is not sheer greediness alone that nurtures this phenomenon. Private business is not less corru! pt and open to misbehavior than bureaucrats are. Ubiquitous incidences of health and environmental hazards are indicative of widespread practice of corporate violation of public norms. One should take a note of this fact before considering anti-corruption moves that the Putin Administration makes.

Conclusion. This rather sketchy exposition of the current debate on Russian reforms has stressed two issues. First, the debate cannot progress unless the participants agree on a common definition of progress. My personal preference is to trace the degree of Russian institutional convergence to the standards shared by the members of G8, WTO, or OECD. Minimally, this criterion measures the progress in the areas of democratic system of governance and favorable business environment. I am positive that opposing parties can come to a consensual agreement on the list of items to watch. Second, the interpretation of Russian developments is often reflexive and, in some instances, appears to lead to pre-conceived and barely related to reality conclusions. In this respect, I suggest to conduct a comparative overview of various descriptions of the reform progress in this country with the objective of identifying the shortlist of key institutional failings in this country. It is expedient to compile and substantiate such a list keeping an eye on the G8 meeting in 2006 when the issue of Russian belonging to the club will surely come to the fore.

In general, I do not find that the Western media coverage is specifically anti-Russian. Much of its current negativism is driven by factors that go beyond intentional Russophobia.

Vlad Ivanenko, PhD economics
Independent consultant, Ottawa.