#6590 #6591
#16 - JRL 6589
Russian Round Table Experts Discuss Possible `Economic
Miracle'
Rossiyskaya Gazeta
3 December 2002
[translation for personal use only]
Report by Pavel Ernst: "Are We Threatened With
Economic Upsurge?"
Discussion of a report "The Burden of the State and Economic Policy: the Liberal Alternative", which was prepared by the institute of experts and the Liberal Mission Foundation with financial support from the Open Russian Foundation, took place in the conference hall of the Moscow Interbank Currency Exchange. Representatives of both chambers of the Federal Assembly, the executive authorities and Russian business took part in the discussion.
Opening the round table sitting, Mikhail Khodorkovskiy, the chairman of the board at the Open Russia ROO [Regional Public Organization] stated: "It is in business's interests for the pace of economic growth to increase, which will result in the formation of a liberal democratic social group - a broad-based stratum of successful citizens who aspire to live, work and achieve success in Russia and for Russia. For this reason, we must do everything possible to ensure that our state's economy becomes competitive from a global point of view as well. And the launch pad to ensure swift growth has already been created in Russia," he stressed.
The head of the group of writers, which prepared this report, Yevgeniy Yasin, was even more radical: "We are capable of creating all the necessary pre-requisites in the country for a Russian economic miracle. Not immediately, of course, and under the condition that the appropriate constitutional reforms are carried out in our fatherland in the very near future. If we miss this chance, we will lose all the positive elements that have already been achieved as a result of the reforms."
It is quite possible that carrying out the basic tenets set out by the writers in the program will enable these lofty aims to be achieved in the foreseeable future. Everyone now understands the need to modernize the economy radically and to improve methods for carrying out reform, but the question is how to achieve this result.
The report states that the convictions are wide-spread in society that the role of the state in the economy now needs to be increased. However, in the writers' opinions, Russia's backwardness can be explained primarily by the state's excessive interference in economic life and the suppression of entrepreneurial activity and private initiative. As a result, liberal reforms are impeded and state expenditure constantly grows, the number of officials increases without restraint and the arbitrary actions of the bureaucracy grow. "Whilst recognizing that society needs stability and that responsible decisions taken must be balanced and based on public accord, we consider it necessary to exacerbate the problems deliberately in order to cause alarm and provoke discussion. Balance comes later. The threat is now growing that it is moving more in the direction of populism and deviating from the principled policies needed to form a free market economy. This needs to be opposed. We see this as the main task of this report."
It should be said that this is how it was received by the majority of the round table participants. Sergey Dubinin called it "the liberal coalition's election platform" and he was probably not far from the truth. Nevertheless, everyone agreed that the document was interesting, clear and specific and contained a whole series of scientifically well-founded, although at times unpopular, measures and was merited serious attention and study in society, parliament and government circles.
The group of writers proposes reducing the state's share in the economy, which is currently 60-65 percent, which far exceeds similar indices in the European countries. Those who drew up the report consider it necessary to modernize the federal budget by lowering the tax burden and refusing to make the security agencies the priority. Decentralization should take place in the sphere of dividing finances between the center and the component parts of the federation and the powers of the latter should be extended. "The time has come to implement the principle of `one budget, one tax'". However, in Aleksandr Zhukov's opinion, powers first need to be strictly delimited between the center and the regions, between the regions and the municipalities and only then should we fully embark on resolving such an important and complex task.
The reduction of the state sector's share in assets and GDP production from the current 45-50 percent to 20 percent is also considered necessary. The writers think that the number of federal ministries alone could be halved. Moreover, they propose selling all state unitary enterprises within two-three years "for symbolic prices with the aim of attracting investment to modernize them", reducing the network of public-sector structures and replacing them with private or non-commercial public organizations. As for education, health care, culture and science, it is proposed that the majority of establishments operating in these spheres should be transformed into firms "competing in the market for state and municipal orders and funds from private individuals." And budgetary allocations should be allocated not in line with estimates but for "competitive purchases of specific services from the most successful manufacturers, irrespective of form of ownership".
With regard to natural monopolies, the position of the group of writers is such: guarantee that their investment programs will be approved by parliament and their estimates of current expenditure at sittings of the government in line with reports by representatives of the state in the administrative bodies. As a result of all these measures, the state sector's share may be reduced to 20-25 percent in terms of share of GDP and numbers employed.
The issue of the fight against corruption occupied a noticeable place in the report. The activities of the state services need to be placed under the control of the democratic public, they need to be made transparent and the functions and actions of officials need to be strictly regulated in order not to leave them opportunities for administrative arbitrariness. Nevertheless, the speakers noted that it was not that easy to resolve this task. Example: a Baltic country with good intentions substantially increased judges' salaries and as a result gained an increase in corruption.
The security structures were not ignored either. Proceeding from the theory that for virtually the first time in history Russia was not countering large-scale military threat, the writers consider it possible to reduce the total number of servicemen to 600-700,000. Of these, 200-250,000 will be sent on peacekeeping operations and 140-150,000 will be conscripts with a six-month term of service. The majority of the funds saved can be used to provide housing for officers sent into the reserve or retired and to pay the monetary allowances to which they are entitled by law.
They envisage in the social sphere, "an increase in the pensions and salaries of public sector organizations and subsequently in the commercial sector as well, so that families will be fully able to pay for housing and municipal services out of their own pockets". Moreover, it is recommended that the retirement age be raised to 65 years for men and women. It should be said that this clause in the report was the most contentious. In particular, Aleksandr Zhukov said that deputies would be unlikely to take such a step on the threshold of parliamentary and presidential elections. Other speakers also supported him.
All these measures taken together should produce a constant increase in the pace of economic growth by a minimum of 8-9 percent, starting from 2006-2007 "on the basis of the development of the internal market and increased trust and investment activity by citizens on the financial markets".
In conclusion, it was stressed that the majority of proposals put forward by the group of writers were not new. They were put forward at one time when market reforms were being carried out but, for a number of reasons, they sank into oblivion. It has not been ruled out that they will meet the same fate today as well because of active opposition from political forces. But surely it must be clear and understandable to everyone that in this case, Russia's prosperity will again be postponed for an indefinite period.
"The question is not," the report states, "to implement what and only what is suggested here. Better decisions may be found and additional measures, which were simply missed... The issue is the direction and energy of movement. The issue is not missing the chance. Only a free and democratic Russia may become prosperous."
Back to the Top Next Article
Dec. 6, 2002:
#6589 #6590 #6591
- Back to the Top -