Russia » Economics

Terrorism and Politics

Many  respectable  economists  have  negatively  evaluated  the recent declarations  of  changes  in  policy  of Russia made by the President Putin  in  terms  of  economic  status  of  Russia  and its appeal for investors.   Yevgeni  Yasin,  the  scientific  director  of  the  State University  Higher  School of Economics, provided us with his point of view on this matter.

Yevgeni  Yasin:  "The  State  wants  to  get hold of as much power as possible,  and the society should resist that. In our country only the first part of the formula works".

-  Will  the political course change because of the last events, which are  characterized  by  many  politicians  as the building of a strict vertical of power?

-  I  would say that recent proposals of the President mean the change of  polity  of  Russia. I am not a law specialist and I can't say that the  Constitution  is violated, but from my point of view this changes are  directed  against  the democratization of the country and towards the  authoritarian  regime.  The increase of expenditures for national defense  and  security  put  in  the  budget  of 2005 will benefit the
economy  at  first.  So  I  can't  say  that  it will be bad tomorrow. Besides, democracy is connected with certain expenses, competition for instance.  That  was  one  of  main  arguments  of  planned  socialism advocates  –  that  it will remove all the expenditures of "rapacious" competition.  They  managed  it,  in  a  way. But we know the ultimate result.

You  can also say that strong regime, which combines authoritarian vertical with the unity  of  the country, will lead to the point when political stability would  be  a  necessary  condition of prosperity. Of course, there are examples  when  in some countries this model worked for some time, but the  most  developed  countries  are  all  purely  democratic. I think they've  gone  through  hard times, but finally the forms in which the economy  works  at  its  best were found. And we should have gone that way, but it seems to me that we won't.

- Do you agree that economic society can't influence this situation?

- Sure it can't. It is in depressed state. It is frightened and follows the principle to "stay low".

- Will the strengthening of defense weaken other sectors of economy?

- This is the matter of priorities. I can't say that 50 billion rules spent  for  the  army will restrain the country. The army has just too many  needs  that weren't paid attention to for a long time. Right now the Armed Forces are in such deplorable state, that it's impossible to put  too  much  money in it. We are getting super incomes from the oil export  so  we  can afford some super expenses. But should we put them all  in  the  army?  I  doubt that. If I could I'd spend this money on science,  education, on innovative business projects that would revive the creativity of Russians.

- How would this last changes correlate with plans of doubling the GNP, in your opinion?

-  If  you  would ask mister Putin or mister Kudrin the same question, they  would  answer  positively.  If  you  would  ask  me, I would say negatively,  because  I  am  sure  that  the time to use authoritarian methods  in  Russia  has  gone.  But  I  agree  with them that we need political   stability.  But  I  would  add  that  we  need  democratic institutions  in  which political stability goes with high dynamics. I think we deserved it after all.

- Can we say that the economy of Russia eventually gets militarized?                

-  Well,  Russia  is  all  militarized  for long. I would say that our perception  is defensive. "The enemy is everywhere". If somebody tells that we need to add some limitations in the name of public safety – we agree  easily.  Right now the war with terrorism goes on. All over the world  people  are  checked  by  metal detectors and all other similar measures are taken. And all over the world this measures are discussed in  the  way  they  affect human rights. Our authorities will possibly face  the criticism from this side. And I am sure they reply similarly to Mr. Bush's and his administration's reply to Americans: do you want repetition  of  September  11th? Do you want the repetition of Beslan? Stand it, then.

The  main  difference  between  the situation in Russia and the USA is that  American  citizens  wouldn't  ever forget about their rights and they'll  insist  on  their rights observance, but Russians will forget about  them  because  we're not used to it. Everything that is done by the authorities will be considered in the light of terrorists' threat. We'll  be  told  that  we  need  to  sacrifice  commercial  classified information,  freedom  of  movement to security. This is very bad. The problem  of  human rights and freedoms in Russia is much more critical than in other countries.

- Does that mean that terrorists' actions are favorable for the regime?

-  Such idea,  that Basaev could have been acting in the interests of the  authorities,  visited  me. And I must say that I find terrorists' actions favorable for the regime.

-  And what do you think about statements of the highest authorities - Vladimir  Putin  and Sergei Ivanov that terrorists declared war to us. Who  else  if  not  the Supreme Commander-in-Chief and the Minister of Defense should know that?

-  I  don't think so. We are living in the situation of internal armed conflict  in which the opposing force is weaker and uses the weapon of the  weak.  Terror  is the weapon of the weak. I am more than 70 years old,  I've  survived  the  Great  Patriotic war and I know what war is like.  This  is  a  completely different story comparing to what we're seeing now.

-  How  much  time  will  our  country  need to become fully militant, hypothetically?

-  Not  much,  really. But that won't happen. Our national doctrine is heavily  oriented on American: local conflicts, elite troops, "clever" weaponry  etc.  Of  course,  a  country  like  Russia  should be armed correspondingly.  The  most dangerous for us now is the restoration of "defensive"   perception,  the  feeling  that  we  are  surrounded  by
"enemies".  Such  situation  is best suited for total control over the nation. And that's deadly for Russia.

- Let's talk about some of the sectors of economy that were or will be changed  due  to  the  recent events. Should the law about terrorists' financing be put into the banking rules?

-  As for me personally, I am not waiting anything good from this law. In  the  same  time  I  know  that  similar  limitations  work in many countries.  But  in the western countries all this limitations work in the  context of law and business can always count on just judgment and we'll  have  plain  arbitrariness.  Any  limitation  in Russia is more
dangerous  than  in  US.  The  same applies to Khodorkovski's case, in which I see only arbitrariness.

- And how will it affect the investment climate in Russia?

- Only negatively. Direct investments to Russia are very scarce. There are mostly credits that we would need to pay back. Foreign businessmen are afraid and they'll be afraid to invest money into Russian economy, while  Russian  businessmen  try  to  stay  as  low  as possible. Such business can't be successful. There is an ability to make good profits in  Russia  to but the risk of losing money is also very high. And the risks grew up recently. The events around YUKOS will have far-reaching negative consequences for the Russian economy.

-  So,  we can't rely on foreign investments. But everything goes well as  the  prices  for  oil  are quite high. What would happen when they fall,  how  do  you think? And what will happen with the Stabilization fund that is supplied by the profits from the oil-sells?

- Hmm, I don't think anything will happen with the Stabilization fund. If  it  will  have time to accumulate enough money it will benefit us, since  we'll have time to overcome hardships connected with low prices for  oil.  Well,  we'd  have  to  start working, thinking how to raise productivity,  competitiveness…  I think we have 3-4 years in reserve. In  this  time  high  prices  for  oil will influence Russian economy, positively.  They  will  let  us gain high dollar profits to transform them  into  rubles,  to continue the policy of raising monetization of Russian  economy.  This  is  one  of the key factors for high rates of economic growth.  

Then, in 2-3 years even if the prices for oil will remain high it will not  benefit  us,  as the real economy will have enough money. In this time  the  factor  of confidence would have started working. But it is almost  absent  in  Russia. If we'll be rebuilding our institutions to gain  more  confidence,  we'll  be  able  to  catch  up with developed countries. But I don't see that anybody is thinking about gaining more confidence,  and economic growth will stop in the following 3-4 years. So Mr. Putin is just lucky.

- Is the return of the "Iron Curtain" possible?

-  I  don't  think  so.  But  I must admit that I couldn't predict the present  situation  also.  So,  I  can't  give any guarantees. All the problems we have now – are the problems of the society and people. The only  thing  needed  to prevent the establishment of the authoritarian regime  now is the social resistance – the activity of people that are against of being turned into swines, again.

- And how long will we have to wait for such activity to wake, 70 years more?

-  Hell  knows. Time is passing by faster than before. To be honest, I am  being  shocked  with  all  this  changes and it's hard to forecast anything.  Putin  said  once: it's natural that the State wants to get hold of as much power as possible, and the society should resist that. We  have only the first part of the formula working. Our society isn't resisting, it's happy that it has got a new "father".

-  But  the  status of pensioners doesn't become better, for instance. They  are  offered  the  monetization  of  privileges but they refuse, because  they understand that they won't get any adequate substitution for privileges.

-  I understand that freedom won't benefit pensioners directly, but at the  same  time  I  understand  that  the  only  way  to the growth of prosperity  of people is the open market and free political system. If that would not exist we won't have anything to feed the old ones.

- What are you, personally, going to do?

- I am doing. Giving the interview to your newspaper, for instance.

Evlaliya Samedova

Translated by Dmitry Pavlov

The United States' Head of Diplomacy, or Secretary of State, is an anachronistic, incompetent, meddling, intrusive, insolent and arrogant, rude individual, a brash, foul-mouthed upstart, a conceited, self-important guttersnipe and an insult to the international community, as fit for the job as a pedophile janitor in a grade school.

Tillerson must go!