#6
gazeta.ru
April 4, 2002
Putin’s Guru Slams Russian Economy in 1990s
By Olga Proskournina

Presidential economic adviser Andrei Illarionov has carried out a profound statistical analysis of the history of economic development in Russia over the past 117 years in order to establish the reasons why the latest economic recession that the country faced in the 1990s proved so long and dramatic. Mr Illarionov shared his conclusions with the Gazeta.Ru correspondent.

Andrei Illarionov presented the results of his study at the 3rd International Scientific Conference, “The Modernization of the Russian economy: results and prospects”, held in Moscow on April 3rd under the aegis of the Higher School of Economics. The event, hosted by the chairman of the Higher School of Economics Yevgeniy Yasin, was attended by many prominent economists and bankers, including, among others, the former deputy chief of the International Monetary Fund Stanley Fisher, the Minister for Economic Development and Trade German Gref, and vice-president of the World Bank Johanness Linn.

In his address to the conference Andrei Illarionov warned the state authorities against using the “recipes of economic growth” devised by Anatoly Chubais and Sergei Dubinin between 1995 and 1998. “If not for that irresponsible populist policy that led to further economic decline,” charged the adviser bitterly, “economic, and subsequently, demographic growth would have begun in Russia four years earlier!”

Gazeta.Ru asked Mr Illarionov to tell our readers about the results of his research.

Andrei Illarionov: Actually, this study is the result of a lot of research, whereby the time-limits of each decline and growth, and the number of recessions were determined.

And so, out of the 10 most dramatic slumps which Russia experienced in the past 117 years, the crisis that we lived through in the 1990s was the second deepest (the cumulative decline in GDP amounted to 45 per cent) and the longest of all. It lasted for a whole nine years, whereas, the deepest slump in the time span analyzed lasted only six years, namely the period from 1917 to 1922, when the cumulative recession in Russia amounted to 57 per cent of GDP. But this, you must note, was against the backdrop of World War I, two revolutions, foreign intervention, famine, military communism and civil war.

Does that mean that after World War II the economic situation in Russia was better than in the 1990s?

During the Second World War, Russian history faced two economic crises. The first broke out in 1941-1942, and was caused by the loss of a considerable amount of territory, as well as industrial and demographic potential. The second crisis was the after-war shock of 1945-1946, brought about by the transition of the economy from a war footing to the demands of peacetime.

Still, both those shocks were lesser than the one we survived recently. The economic crisis we have just lived through (in 1990s) was, beyond a shadow of a doubt, one of the most serious upheavals experienced by the state, not only during the past century, but throughout our whole recorded history. It can be ranked up there with such catastrophes as, for instance, the Time of Troubles (1598-1613: a period in Russian history fraught with public disturbances and unstable rule) – the disintegration of the economy at that time was quite considerable – and, of course, the period of world wars and revolution in the 20th century.

And can it be compared with the Tatar yoke?

We simply do not have access to any credible statistical data that could have helped us to come to any substantial conclusions. Even gleaning information about the Time of Troubles and discussing it, is not easy from the economic standpoint. Nevertheless, we did make use of quite a few written sources dating back to the Time of Troubles, allowing us to make some conclusions on the state of the economy at that time.

Given that you place a rather considerable part of the blame for the length of the crisis of the 1990s on the economic bloc of the Russian government of 1995-1998 and on the International Monetary Fund, it sounds somewhat strange: your conclusions in many aspects coincide with what the “leftists” have reiterated throughout the past decade. Does that not scare you?

I think that we all need to gradually distance ourselves from the political polarization, from all those “what the left says”, “what the right says”, especially since those definitions fail to give a clear view of economic policy conducted in Russia in recent years. For instance, the so-called “leftist” government of Yevgeniy Primakov, if to judge by its economic initiatives, was the most “right-wing” of all throughout the last 15 years in Russia. There’s no doubt, that it leaned more to the right than the governments of (Boris) Nemtsov and (Anatoly) Chubais.

Why?

Primakov’s was the government that conducted a firm and consistent fiscal policy, without making any huge or stupid mistakes in the structural policy. It pursued a very restrained monetary policy, and, in fact, it established the rules, which secured the economic growth of later years. That is why it is a big question as to who is really on the left and who is on the right. It is not so important what one calls oneself, but what one actually does. And now, when we abandon political antitheses (as I would like to hope) we have a chance to analyse more impartially what was happening in the course of the past decade. We need to learn lessons, in order not to make the same mistakes again. The price of an economic mistake committed by the state authorities is extremely high, and it is paid by an entire society, an entire nation.

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