Source Pravda.Ru

Will Unpopular Reforms Result in Default?

“Voice of the president” dispels the myth on the advice of the Kremlin’s political technologists: there are things more important than Putin’s rating
Today at a press-conference in Moscow, Presidential Aide for economy Andrey Illarionov, whom the press calls “the voice of the president”, began his Christmas dispelling of the myths about Russia. To his opinion, numerous myths that reigned over the minds and influenced the governmental economic policy, were destroyed within the past two years.

The economists says, first of all, the myth saying that payment of foreign debts was unfeasible was successfully dispelled. “A complete servicing of Russia’s foreign debt will not only remove the debt problem itself, but also favorably influences the economic growth,” Andrey Illarionov says. The Russian people will be able to see the accuracy of his words next summer already. For the time being, everything looks rather credible.

The presidential aide thinks that the following myths were destroyed: about complete deterioration of the equipment in the domestic industry, about the use of high oil prices to Russia, about the harm of currency liberalization and about the importance of the ruble’s currency rate growth for continuation of economic development. Andrey Illarionov says that the following myths are about to be dispelled: the myth about the lack of investments in Russia’s economy and about the necessity of large-scale investments in the natural monopolies; the myth about understatement of the tariffs for energy, gas and railway transportation. “Directors of the natural monopolies themselves admit that continuous price increase won’t save the industry from crisis.”

Andrey Illarionov says, it is already recognized that it will be expedient to preserve vertically integrated companies during reforming of the power engineering sector. Nobody already mentions that the power engineering sector needs investments at the rate of 50-60 billion dollars. In 2005, the year when a free competitive energy market is planned to be opened, the electric energy supply will exceed the demand, which will inevitably entail reduction of the tariffs.

However, Andrey Illarionov focused special attention on new myths that arise right before our eyes and hamper realization of reforms. For instance, recently some Russian and foreign mass media, on the advice of politicians ignorant of the economic problems, started reporting that no reforms would be possible in Russia in 2003, a year before the presidential elections. The presidential aide thinks that this opinion is a very dangerous mistake. After all, the year of 1999 which preceded presidential elections as well, registered unbelievable economic growth in Russia’s economy. However, Andrey Illarionov didn’t go further in his reasoning. Obviously, the struggle with this myth is currently at its very beginning, and a corresponding ideological platform is not yet thoroughly considered.

However, it is known that the work on ideology of a new stage of economic reforms in Russia is in its full swing. As APN.Ru (Agency of Political News) informs with reference to a source from the House of the Government, the other day head of the Presidential Administration Alexander Voloshin held a meeting with presidential envoys in the federal districts. Alexander Voloshin told the envoys how they should correctly treat reforms started by the government in the power engineering, communal and housing sectors; he explained the necessity and the inevitability of these reforms. One of the session participants says that Alexander Voloshin reproved the presidential envoys for their brief and ineffective work with the State Duma deputies and members of the Federation Council for adoption of necessary legislations. At that, Alexander Voloshin wasn’t at all confused with the fact that some time ago the Presidential administration ordered to stop the power engineering reform suggested by Anatoly Chubais. So, when conditions change, the instructions change as well.

However, as it turned out during the meeting, not all of the presidential aides agree with the way the problem is posed. For instance, presidential aide in the Central federal district Georgy Poltavchenko is sure that unpopular reforms and their social consequences may ruin the rating of the incumbent president and of the united Russia. Alexander Voloshin supported the anxiety of the presidential envoy concerning the problem; he said that a political decision concerning reforming the power engineering, communal and housing sectors was made, that is why the decision must be carried out.

As APN.Ru informs, Georgy Poltavchenko didn’t change his opinion, which reveals the clearly-outlined differences between members of the president’s team from St.Petersburg and the “Family” of former President Yeltsin.

On the whole, the head of the presidential administration maximally tried to explain the party slogans. The main idea of his argumentation was as follows: it is not ruled out that another default may occur after the presidential elections in 2004, and then the parliament won’t support the reforms. It means that redistribution of property in the energy, communal and housing sectors must be started earlier. In Voloshin’s words, we shouldn’t fuss over Putin’s rating, as there are more important problems. What is more, decrease of the president’s rating will once again make him closer with the “Family”. And this will be possible only if Putin wins “a sure victory” after a severe thrashing; the head of the Presidential Administration thinks that nobody needs “an all-prize lottery.”

Picture: Putin, Voloshin

Ahtyam Ahtyrov PRAVDA.Ru

Translated by Maria Gousseva

Read the original in Russian: http://politics.pravda.ru/politics/2002/1/1/1/4958_ReformsInRus.html

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