Russia’s Rulers are Tripping

In an unusual move Michael Bohm, the opinion editor of the Moscow Times, has published himself.  For such a thing to happen, you know that a truly outrageous act must have been perpetrated by the Kremlin, and indeed it is so.  Bohm minces no words in declaring that Russia’s top rulers are totally out of touch with basic reality, lost in a neo-Soviet fog of the same type that brought down the USSR.  That’s the best-case scenario. The worst is that they are shamelessly lying to the people of Russia, leading them down the garden path that leads to ultimate destruction.

Several weeks ago in Voronezh, First Deputy Prime Minister Igor Shuvalov said the ambitious goals for “Strategy 2020” remain in place — despite the economic crisis. He also said Russia has every chance of becoming the world’s most desirable place to live by 2020. “This is no fairy tale,” Shuvalov added. But if you examine the strategy closely, it certainly looks like one.

Consider the four main goals of Strategy 2020:

1. Increase per capita gross domestic product to $30,000 from its current $15,800 based on purchasing-power parity. Although it is difficult to compare developed economies with developing ones, it took Canada 28 years, Britain 24 years, Japan 27 years and the United States 35 years (in 1985) to double their per capita GDPs. True, if you look at China, a BRIC country, it was able to double its per capita GDP income in less time, but China’s has enjoyed average GDP growth of more than 10 percent over the past decade (its “crisis growth” in 2009 is expected to be 8 percent!), while Russia’s growth rate has been much lower for this period. It would be more appropriate to look at Brazil, another BRIC country, since its profile matches Russia’s more closely. It took Brazil 21 years to double its per capita GDP in 2008. How will Russia reach this same goal in only 11 years, particularly when you consider that it will need a minimum of four years (by the most conservative estimates) just to climb back to pre-crisis growth and employment levels?

2. Increase life expectancy to 75 years. This doesn’t require any doubling, but it still requires a significant increase over the country’s current life expectancy of 66 years. The only way this goal can be reached is if Russia is able to bring its health care system up to Western standards by 2020 and if the majority of Russians are able to change their unhealthy lifestyles.

3. Increase the middle class to 60 percent of the population. This is a tricky one since it depends on how you define “middle class.” Russia often uses a monthly income of 15,000 rubles ($454) as a starting point. True, every country has its own definition of a “middle-class lifestyle,” but 15,000 rubles is a stretch any way you look at it, particularly considering Russia’s chronically high inflation.

4. Jump to the No. 5 spot from its 2008 ranking of No. 8 in the world in terms of nominal gross domestic product. Let’s look at who occupied that spot in 2008 — France, whose nominal GDP is currently about 70 percent larger than Russia’s according to the CIA World Factbook. Since Russia is so dependent on natural resource exports for its GDP growth, its economy can grow only if the economies of the leading oil and gas importers — mainly the Group of Seven nations and China — grow. If these countries decline, so does Russia — as the current crisis clearly shows. Of course, nanotechnology, commercial space and other high-tech sectors could, in theory, be the silver bullet that propels Russia to the No. 5 spot, but the logical question is: Even if Russia becomes a high-tech leader, who is going to buy all of that wonderful technology if the world’s leading economies are in decline?

Once the crisis passes, what would it take for Russia to replace France in the No. 5 spot? If France’s economy grows at a modest 2.5 percent annually, Russia’s economy would need to grow by 9 percent per year to close the gap. But even in the best oil-boom years from 2004 to 2008, Russia’s real GDP growth averaged only about 7 percent annually.

But the most important ranking is not mentioned in Strategy 2020 at all — the Transparency International’s corruption index, in which Russia ranks 147 out of 180 countries in 2008. Corruption is particularly suffocating for Russia’s struggling small and medium-size businesses, which make up only 10 percent to 15 percent of the country’s GDP. In the United States, small and medium-size businesses are the engine of economic growth, comprising roughly 50 percent of the country’s private GDP and creating about two-thirds of net new jobs annually.

As long as Russian bureaucrats (and competitors) are free to terrorize businesses by creating “administrative barriers,” extorting bribes and raiding, economic growth in the real sector will always be insignificant. To his credit, President Dmitry Medvedev is backing a new law to assist small businesses, which will, among other things, limit the number of government inspections of businesses. (Most likely, however, these limitations will be easily sidestepped when bureaucrats simply extort a larger amount of money per inspection.) After the global economic crisis blows over, Russia has a lot of potential to grow by 2020, particularly if it can develop what Prime Minister Vladimir Putin calls its wealth of “human capital.” But for this to happen, entrepreneurs, scientists and other innovators must be free to be creative and innovative — above all, they must be free from stifling administrative barriers and corruption.

To be sure, many Russians already consider Russia to be a very desirable place — without Shuvalov’s help. And this is also true for foreigners, including the editors and reporters of this newspaper, who voluntarily choose to live and work in this country. But for those who don’t believe this to be true, even the most advanced Kremlin propaganda will do little to make Russia more desirable. To rephrase a Russian expression, no matter how many times the Kremlin PR machine repeats the word “halva,” it won’t make Russia any sweeter.

Kremlin myth-making has a rich tradition, dating back to the very beginning of the Soviet Union. When British writer H.G. Wells met with Lenin in 1920 in the Kremlin, he learned of Lenin’s utopian 10-year plan to create wonders out of a country very much still in ruins in the aftermath of the Bolshevik Revolution and civil war. In Wells’ book “Russia in the Shadows,” which includes an account of this visit, he called Lenin “The Kremlin Dreamer.”

Shuvalov’s vision of Russia 2020 is also eerily reminiscent of Nikita Khrushchev’s grandiose promise that he made at the 1961 Communist Party congress: that full-blown communism — defined roughly in terms of a U.S.-style middle-class standard of living for every Soviet citizen — would be achieved in 1980. As the old joke went, instead of communism in 1980, the Soviet people got the Olympic Games for two weeks and the Afghanistan war for nine more years.

United Russia and the government should adjust Strategy 2020 to make it more realistic — and less heroic in the Soviet Stakhanovite tradition. Perhaps U.S. President Barack Obama could serve as a good example. He has done a lot to modify U.S. ambitions after the disastrous mistakes of President George W. Bush and after the humbling impact that the financial crisis has had on U.S. hubris. And Obama was able to do this with dignity.

Russia’s leaders should try to do the same, and it can start by cutting every Strategy 2020 goal in half. This probably should have been done before the crisis, but it is even more compelling now. Surprisingly, even the notoriously pessimistic Finance Minister Alexei Kudrin, who has repeatedly warned about a long and difficult recovery from the crisis, has not called for Strategy 2020 to be reviewed.

In addition, a new crucial goal to Strategy 2020 should be added: to improve Russia’s corruption ranking to 100 from 147. To be sure, this would be no easy task. No Russian tsar, general secretary or president has been able to significantly curb corruption, but perhaps Medvedev’s anti-corruption program has the teeth to at least improve the country’s global corruption ranking.

Although Russians often say that it doesn’t hurt to dream, feeding people myths is just as dangerous now as it was during the Soviet period. It is hard to believe that after 73 years of Soviet utopian slogans, superheroic five- and 10-year plans and empty promises, the Kremlin has essentially returned to spinning the same fairy tales again. The Kremlin should remind itself that the ridiculous Soviet myths and unfulfilled promises, which made Soviet leaders the laughing stock of the world, did more to discredit, undermine and ultimately bury the Communist Party and the Soviet Union than a million dissidents (or even the CIA) could ever do.

When Shuvalov was a young teenager in the late Brezhnev years, he, like every other Soviet citizen, listened to the Communist patriotic song about heroic Soviet achievements — “Мы рождены, чтоб сказку сделать былью” (“We were born to turn fairy tales into reality”). It was a national favorite on radio airwaves and sung at summer camps and during holidays. Although that was 30 years ago, I have a secret suspicion that Shuvalov is still humming this tune on his way to work.

Fairy tales are wonderful, but they should be read to children. They have no place in Strategy 2020.

15 responses to “Russia’s Rulers are Tripping

  1. Frankly, I don’t believe in “2020” either.
    However, I also didn’t belive in “doubling GDP in 10 years”, so God knows what might happen…


    What “might happen” is that Russia collapses just like the USSR did because clueless Russians like you allow the goverment to make policy after smoking a crack pipe.

    • Why do you have to be so aggressive, dear?

      After all, your POV is not widely considered to be the “one and only”. Also, do note that I didn’t do anything to undermine it.


      Why do you have to try to tell us how to run our blog, dear? Are you a descendent of Stalin?

  2. He’s just trying the exact opposite of Churchill’s offer of “only blood, sweat and tears” during WWII – a “not fairy tale” to pacify the proles as the country’s economy goes down.

  3. And one wonders h0w long before Mr. Bohm is “disappeared” by Putin’s gang.

  4. (compiled from Yulia Latynina)

    Funny, how Russian news is always “in the future tense”. For example, Russian battleship took off for Somali to save hostages from pirates. Or, Russian foreign minister proposed to mediate Middle East crisis. Or, President Medvedev proposed Russian assistance in changing European security framework.

    Same here – First Deputy Prime Minister offered his vision for 2020. Isn’t that nice!

    In the meantime, in 2009, in a special country called Russia, there are three economic pillars. One is solid – something that can’t be moved: oil, gas, lumber. Solid pillar is given to loyal oligarchs. They pay tribute to Kremlin in money, and even more important, in loyalty. Others are called Berezovsky and Khodorkovsky.

    The second pillar is liquid – trade and commerce. Note, that popular Russian brands are all in commerce; not in manufacturing. This is given as spoils of war to generals and majors. Retail, food, and reseller chains make deals with all kind of inspectors, and inspectors prefer taxes to full-blown raiding. Again, there are exceptions – Chichvarkin got into conflict with generals and they captured his entire inventory.

    Last pillar is gas – human brains. The common belief is that science departments of American universities is a place where Russian Jewish professors are teaching Chinese and Indian students. Whether it’s true or not – the perception tells more about Russia than about American universities. There is a huge Soviet-size Red billboard all across Russia: if you had brains, you wouldn’t be here!

    And last gem from Latynina: Why does First Deputy Prime Minister talks about ambitious goals for 2020? Do they really think that people care? No, but newspapers will publish them and people will discuss them, instead of discussing what is happening today.

    (Note from me) I think Russian government needs to import Al Gore. He can charm Russian population into discussing global warming for the next 500 years!

  5. Maybe that “future tense” in the Russian news explains why they can claim “the war in Chechnya is over” meanwhile two days ago 3 Russian occupiers are killed by the (according to Russia, non existant) Chechen rebels only 40km from Grozny.

    • Chechnya’s territory is so small, that for some it’s “only 40km from Grozny” (which is roughly the centre of Chechnya), and for other it’s “near the Ingushetian border”.

      The fighters fired from one ruined building in the village. Bamut was completely destroyed in the first war, when the Russians besieged and pounded it between 1994 and 1996 (and not in the “siege of Sarajevo” meaning, but rather in the “siege of Grozny” meaning).


      With Bamut under Russian control, announced Gen Kulikov, 80 per cent of Chechen territory and 90 per cent of the population “have been liberated from unlawful armed formations.”
      Claiming that the “absolute majority of the republic’s population” supports the decision of President Boris Yeltsin to wage war in Chechnya, he said the “task of restoring constitutional law and order has been fulfilled in the main”.
      But while Gen Kulikov was in Moscow describing the conquest of Bamut, Russia’s stand-in commander for the Chechen campaign, Colonel-General Mikhail Yegorov, was telling Interfax news agency that Russian forces had just pulled out of Bamut because of heavy shelling from nearby hills.

      And so the battle for Bamut continued for… over a year more (check also “the withdrawal of forces” back then):

      • True Robert.
        Chechnya is small, so is Georgia.
        There are Russian tanks in Akhalgori only 30 minutes drive away (about 40km by road) from where I am right now and its not very far at all.
        What I was pointing out is that the Russians claim to have pacified all but a small area, and that this is false.
        Most of Chechnya is not under federal control at all.

        • The siege of Bamut was epic. One of the villages first attacked by the Russians in 1994, it continued until… 3 months before the end of the first war.

          And it fell beautifully, like the last night of the struggle for Iwo Jima on the Airfield 2 – except the Japanese didn’t break through out from the island (also because they even had no such option):

          96/05/23: On May 23, the Jamestown Foundation’s Monitor reported that the Russian command for the North Caucasus had acknowledged on May 22 that 40 Russian soldiers had been killed and 48 wounded in a counterattack staged by Chechen fighters defending the stronghold of Bamut.

          But it’s now largely forgotten.

          And it’s really on the border:

  6. Andrew, thanks for nice words! I wish we could have a glass of good Georgian wine together. I was in Tbilisi only once, in 1998 when the rest of the USSR had Prohibition. I was shocked that Tbilisi stores had wine without any lines!

    Latynina calls it a day when Kadyrov won a decisive victory over Russia. Siloviki were against ending CTO (counter-terrorism operations) status for Chechnya because CTO gives them 3 days for every days served. Kadyrov wants to end CTO, because it will allow Grozny airport to be international with all the money that can be taxed from the customs.

    That by itself wouldn’t be a problem. Rather then sending danegeld to Chechnya, Kremlin might as well give Kadyrov a piece of the border altogether. But the incident that you are describing would embarrass everybody involved. So, FSB just buried the soldiers quietly, without any military honors. And it hardly made any news. That shows Russian surrender more than anything else.

    In the meantime delusional Medvedev offers unsolicited advise to reform European security system. That, along with Eurovision is the news!

  7. The “three pillars” of roosha – very interesting.

    I think Islam has seven pillars.

    News in the future tense – seems to me that in the sovok union, everything was in the future – the “next Five Year Plan” would bring paradise.

    The “next Five Year Plan” was repeated for 90 years, until the whole thing fell apart, and paradise never came.


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