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Author`s name Michael Simpson

Financial Times: Scandalous Interview of Russian Vice-premier

Russia has no administrative reforming plan?
The press has already reported about the ill-fated interview of Russia's Vice-premier for industry Boris Aleshin with The Financial Times. However, it is still not clear who has become indignant and at what issues.

It is particularly important however that the vice-premier of the Russian Government overseeing the administrative reforming and industry has devoted an hour to the interview at the instance of chief of Moscow's FT office Andrew Jack. The vice-premier answered a great number of questions that the FT editorial office had questioned beforehand. The number of questions Boris Aleshin was asked supposed that FT journalists intended to work really hard on the material.

As a result of the meeting with Boris Aleshin, The Financial Times published a brief article that contained only three quotations of 23 words of what the vice-premier said during the interview. To write an essay of this kind, the journalist might not have met with the vice-premier at all. What is more, the first paragraph and the headline were quite contrary to what Boris Aleshin had been explaining to Andrew Jack for an hour. It turns out from the publication that Russia has no reforming plan at all and that this plan may be created not earlier than February 2004; this phenomenon is explained with the fact that the state formation process is interrupted especially for the election. Unfortunately, the British journalist did not understand from the conversation with the vice-premier that a commission for reforming of 1,000 people is working actually very hard to complete an analysis of the 5,600 functions of the state machinery and submit a report on the analysis for consideration of the government by February 2004. At least, this is what Andrew Jack's commentary to the publication given by phone the other day was.

Another fault of the interview is wrong interpretations of quotations of the vice-premier. This concerns the issue of Yukos and Mikhail Khodorkovsky. In fact, a good share of publications in the newspaper is devoted to the oil industry now which is quite understandable.

The rest of the FT publication is Andrew Jack's personal discourse during his examining of the Russian vice-premier. Probably, the FT editorial staff believes this discourse is more interesting for the readers than actual words of one of the RF government members. I wonder if the British edition would be allowed to publish this sort of an interview with Dick Cheney.

This is strange how Andrew Jack explains the unusual form of the interview with Boris Aleshin. He says that the edition does not do interviews in the traditional question-answer manner. This sounds strange because an interview with former Ambassador to Russia, today's Boeing Vice-president Thomas E. Pickering published in the previous issue of The Financial Times is done in the traditional question-answer manner.

Andrew Jack could not but saw that the press-secretary of Boris Aleshin was recording the interview. So, today there is evidence proving that the British journalist has made up a lot in his interview. This is strange that the situation turned out to be so insulting for the Russian side: an interview that lasted for an hour was published as a brief story under a headline contradicting to what had been said in fact.

Present-day officials do have a notion of honor, pride and professional responsibility. Governmental officials are actually responsible for what they are doing, no matter what their bosses think about it. The press-secretary of Vice-premier Boris Aleshin believes it is his duty to defend the reputation of the vice-premier and publishes the taped conversation between FT journalist Andrew Jack with Russia's Vice-premier Boris Aleshin. Before making the decision, the press-secretary handed in his resignation. Now, when readers have two variants of the conversation with the vice-premier (the one published by The Financial Times and another published here) they can compare the truthfulness of what Boris Aleshin actually said during the interview. Here is a slightly abridged version of the taped conversation of the FT journalist with Vice-premier Boris Aleshin that covers the most important issues. 


Boris Aleshin: The main issue is that industry and administrative reforming must be dealt with from dawn till sunset. The objectives of these two problems are very similar. First of all, the main problem now is to find new resources in the economy, to allow much initiative to business and to develop medium-sized and small-scale business. These are the main issues I have been working on all days long.

-You were appointed to the position not long before the elections. Do you think you have enough time for work on the reforming?  

It is rather easy to make some things agree with common sense. First of all, it is necessary to make a number of decisions which will allow to develop different spheres more intensively. We have made a decision to support small-scale business through the Russian Bank for Development; we are establishing cooperation with the European Bank for Reconstruction and Development. We are developing joint programs that I expect will be rather effective. There is some share of financing fixed in the Russian Federation budget, not a very big sum, but this support of the government is important for the machine-building sector and makes for a high value added level. We do understand what and how is to be done.

- What exactly is to be done in the framework of administrative reforming?

This work means solution of mathematics problems. This means optimization of the management system on a wide range of parameters. At first, it is important to determine those parameters according to which the optimization is to be carried out at the next stage. As based on the parameters, it is important to outline the objectives we are having and to transform them for more effective solution. Transmission of some functions to business means development of public institutions, self-regulation and nonprofit organizations. Tasks and functions that must be carried out by the government are to be assigned to it.

As for the regulation sphere, there are different objectives. We are to solve really serious tasks, reforming of science for instance. The Russian Academy of Sciences may serve an example here. On the one hand, it is a complicated structure which is not clear for people; on the other hand, it has been having the early stages of self-regulation for 200 years already. That is why the government must hand some functions over to the Academy itself as it is a self-regulated organization in fact.

Much is to be done with transmission of scientific results to the producers, to those who develop these scientific results. We need to switch to the model employed in Europe and the US, but unfortunately we have not yet succeeded with this objective. We are set an objective of guaranteeing the minimal connection between the fundamental science and the production. We plan to give up the government regulation in science and switch from state-run scientific institutions to corporate science. Thus, I already know what is to be done and how the laws are to be changed to guarantee this result.

All developed countries have three basic supports: the revenue, the budgetary and the federal supply systems. The last one is not developed in Russia, while it is essential for establishment of order in making supplies by state-run monopolies. Control and supervision in guaranteeing of people's security, the security connected with consumption of goods and different services. We are planning to create a system similar to the western one. I believe the national standardization and accreditation systems will be represented by noncommercial organizations, the same as in majority of countries.

We are working on a number of problems to make the Russian business have the form adequate to the world one; we want Russian businessmen live and work according to the same regulations that any European citizen follows.

As for the transmission of functions to business, it supposes a two-stage process. First of all, it is necessary to examine the analogues to see what the business and the government do. Effectiveness is to be the basic criterion here. I pin much hope on the transfer of potential for development of small-scale and medium-sized business. As soon as we determine the regulations, we will be able to develop engineering and consulting, the sphere that has not been developed yet.

The above mentioned issues are paid much attention to because they do concern all people. We strongly criticize the licensing system, the system of business access to the market. In majority of cases licensing may be substituted with accreditation, an easier form; we intend to transform the whole of the national accreditation system. 

-By what time are you to complete the tasks?

February 24 is the deadline; the last session of the commission working on the administrative reform is scheduled for the day, then government session is to take place. We must develop all necessary solutions for the president.

The work is being done on a wide scale; over one thousand of experts are studying tasks and functions, majority of them are the community, prominent scientists, economists and entrepreneurs.

Many people ask how the government may reform itself. It would be absolutely impossible to carry out the administrative reform if governmental officials acted as experts in the process. For example, one of the workgroups studying reforming of the transport and power engineering sector is headed by Mr. Sharonov. The group must be dissolved as the number of government officials is great in it which makes the group's work ineffective. I recommended the head of the workgroup to form it of new experts. The discussion goes on in public and all documents are available for public reading. Officials take much effort to penetrate into the expert group, but we take measures to prevent it.

-What are the measures to fight against corruption?

 The other day I have visited the Russian city of Ivanovo and solved problems of Russian textile workers. Everybody complains that illegitimate business is developing in Russia. The whole of the world is fighting against the problem with the help of the community. Unfortunately, we do not have any organization for protection of consumers, any trade unions and public organizations to suggest to the government what is going on and what is to be done. Professional cooperation of the community and government may bring positive results.

Corruption flourishes where officials can abuse their functions. While there are 120 activity categories that are to be licensed or sometimes certified, this serves a wonderful basis for corruption.

-Wages of government officials are a big problem. What is today's average wage of a government official?

It is rather about 7,000 rubles (a bit more than $200). Sometimes, heads of administrations in Russia fix wages of 20-25 thousand rubles for themselves.

-Let us assume the recommendations are ready. When do you think first considerable decisions are to be taken?

We are working on the decisions simultaneously. The first normative documents are to be developed for the first block of solutions by November 20. As soon as the government approves them, we are ready to take decisions immediately and develop normative documents. It may happen so that there may be tasks and functions difficult for realization and some issues will not enjoy approval of the parliament.

Let us take the law on technical regulation that caused universal opposition everywhere and it had no supporters at the initial stage. The government made a decision taking the controversy into consideration, and then the government submitted it for consideration in the Duma. The second and third reading of the document was passed with a great number of votes. I devoted the period between the first and the second readings to meeting with people; I met with public organizations in many regions of Russia. The result of the voting on the law was very good. The whole of the process took us 1.5 years.

- What is the way to optimize the economy?

It is necessary to give up everything useless and optimize the business. We must review the laws that have been inherited from the Soviet period. It is necessary to reform such sectors as science to allow it to have maximal connection with industry; to reform the state supply system. This measure is to be effective and is expected to guarantee diversification. In addition to the fact that Russia extract resources, it is sometimes disadvantageous for the country to process raw materials at the present-day price for raw stuff.

There is no consultant to analyze the scale of changes in Russia and to tell what exactly is to be done in the economy. I would be grateful to colleagues from foreign analytical centers if they supplied conclusions they make with commentaries.

- Do you support the idea of creation of a new state-run industrial bank?

This is the dispute carried out by Minister for Trade and Economic Development German Gref and Finance Minister Alexey Kudrin who are considering if Russian banks must be turned into agents. Is it a disputable issue if Europe needs the Development Bank or the World Bank? This is the issue of the same sort. This is a support instrument to those who need it.

- How much money do you need to assist the reforming process?

Unfortunately, the statistics and analytics are rather poor. It is problematic to make forecasts having no analytical information. The imputed tax was introduced in 1998. Do we have nowadays any statistics on its efficiency? That is why the situation is that unfavorable. Consequently, people responsible for making decisions in the sphere do not see the ultimate end.

- It is believed that Russia's dependence upon international organizations will reduce.

I think this is quite logic. It is necessary to support development of the banking system in Russia. Borrowings abroad should be done at the most appropriate moments, when borrowings are particularly advantageous. The government must determine its priorities. If it is substantiated that borrowing abroad is profitable, the government will borrow finance abroad; but if it is profitable to borrow on the domestic market, it will be done at home.

We highly appreciate the opportunity of western financial institutions to influence not only the value of resources but also the conjuncture. In fact, every borrowing abroad means services rendered to experienced operators.

I think the country will change drastically in five years if we manage to preserve the recently registered education level. This is based upon the business activity estimate. There is hardly a country like Russia that combines the usage of two riches: resources and the highest level of people's education. The situation was quite different some time ago. Nowadays, the philosophy is quite different, that is why every man needs time to reconsider the situation.

- What is your opinion concerning the Yukos case?

My opinion is rather simple. This is right that every man can do politics; Khodorkovsky and his partners are very good entrepreneurs, but if they are also involved in politics they must be ready to face problems of any kind. They must be able to prove that they are competent in this sphere. Some political decisions are taken at the expense of financial resources. This is not correct to declare that it is easy to take seats in the parliament thanks to the popularity and richness. It is necessary to take into consideration those who have not much money. This is realization of the democratic principles. From time to time, conflicts of this kind occur at different structures. One thing is unfavorable in this situation is that political processes are so deeply interrelated with business. We are making attempts now to separate them.

Russia is to experience many merges and separation of companies and a great number of large-scale deals. But in five years the situation in the country will change; it will be very comfortable to run business and to live in Russia.

- There are still problems with the judicial system in Russia…

Right, and we do not conceal this fact. We cannot speak about the issue in general; we are trying to improve the system. It is better to consider every particular situation.

Anatoly Baranov