Democracy. Russia. CIS.

The Strategy 2020 Review: A Dangerous Display of Independent Thought and Common Sense.

Posted by democratist on March 2, 2011

2nd March 2011,

Last September, Democratist wrote that we believed Russian President Medvedev’s attempts to introduce an“innovation scenario” (in accordance with the Ministry of Economic Development and Trade’s 2020 Strategy) was beginning to show signs that it was encountering increased resistance from within the elite.

As we said at the time; 

The reason for this emerging impasse is that many in the nomenklatura, grown rich under Putin on the proceeds of  corruption, are implacably opposed both to reform itself (which threatens their privileged position) and even more so to the implied political reforms which would be the backbone of an innovative economy, and which Medvedev tentatively began to promulgate over the summer…we consider Putin’s hints at the Valdai club meeting in Sochi on September 6th that he intends to make a return to the Presidency in 2012 as indicative of a broader reassertion of power by these interests, and an indication that the nomenklatura remains eager to avoid the potentially “destabilizing” effects of the political reform required to both attract increased western investment, and achieve the “innovation” scenario. Instead, the elite appears to be hoping that a recovery in hydrocarbon prices over the next few years will allow them to return to a greater emphasis on the second, ”energy and raw materials” development path, with its promise of a (still robust) 5.3% average annual growth. This does not necessarily imply that the “innovation” scenario or its rhetoric is to be abandoned wholesale, or that Russia will instantly return to an openly confrontational and anti-Western foreign policy stance, but rather it seems more plausible that, over the next few years, where the needs of meaningful innovation come into conflict with intrenched elite interests (including in relation to  encouraging foreign investment), innovation will have to give way.”

As we draw to towards the next round of parliamentary and presidential elections (due to begin in December), it appears that the contradiction between the need for the political and economic reform needed to allow Russia to benefit from the opportunities presented by globalization and develop its S&T base on the one hand, and elite rent-seeking on the other, is becoming ever more apparent and public. 

An Editorial in Nezavisimaya Gazeta yesterday, entitled “Strategy 2020 Writers Turn into Mutineers: Government’s Economists: Success of economic modernization requires political reforms,” describes the current situation as follows;

“[The] Strategy’ 2020 revision initiated by the government might spring some nasty surprises on the powers-that-be. Premier Vladimir Putin’s first meeting with experts took place in mid-February. Economists then advised the government to cut social expenses and concentrate on reduction of the budget deficit. Soon afterwards, however, the economists got down to criticism of the very fundamental principles of the economic and political model functioning in Russia…Strategy 2020 writers drew a direct connection between success of economic modernization and political reforms in Russia. These latter ought to introduce free and fair elections, political competition, and genuine rather than declaratory division of powers. The economists said that no modernization was possible and that there was no way to tackle the strategic tasks the county was facing without all of that. It is fair to add that it was not renegades or mavericks like Nemtsov, Kasparov, or Limonov who made the list of the necessary reforms. The list was made by the economists who could never be suspected of any disloyalty – Vladimir Mau of the Russian Academy of Economy and Civil Service, Yevsei Gurvich of the Economic Expert Group, Yevgeny Yasin of the Supreme School of Economics, etc. The economists in question cannot help knowing that any reform on the list they made will essentially dismantle the model established in Russia and functioning since circa 2000. And yet, degradation of [the] economy is the only alternative to the reforms, and this unpalatable truth compelled scientists to call a spade a spade. Without the radical reforms, the gap between Russia on the one hand and the advanced countries and emerging markets on the other will keep broadening. The Russian economy will develop at a slower rate than in 2010 at least until 2050. There is no way to keep up the development rate at more than 4% a year without modernization which in its turn requires dramatic reforms.”

It will be interesting to see how Putin reacts to this dangerous display of independent thought and common sense.

One Response to “The Strategy 2020 Review: A Dangerous Display of Independent Thought and Common Sense.”

  1. […] who are. Normally I avoid the subject altogether, but I had to dig into it a little as a result of this piece, by The Democratist. Some of you might recall The Democratist getting a shellacking recently on Leos Tomicek’s […]

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