Wednesday, January 12, 2005
Russian "plane" turns around
On January 1, Russians will awaken to a new reality. Changes have been happening gradually over the past year, and it is easier to see them all at year-end. Most of them were not at all expected. Putinâs victory in presidential elections, resignation of Kasyanovâs government, failure of administrative reforms, the banking crisis, the triumph of "state capitalism", weakening of the opposition, rise of radical sentiment, series of terrorist attacks, Russia turning into a unitary state, Moscowâs foreign policy failures and chilly relations with the West⦠Russians feel as if they were passengers on a plane making a U-turn, just as Russian foreign minister Yevgeny Primakov turned his plane around over the Atlantic in 1999.
Putinâs victory in the March 2004 presidential elections was followed by radical changes in the government. Reshuffles were in the same style as in the winter of 2003. People capable of playing an independent role, were replaced by âproject managers' loyal to the Kremlin. It seems bright ideas also left the administration, giving way to corporate interests of the bureaucracy. The result was quick. Though the new government was formed under the banner of administrative reforms, its structure doesn't correspond to the declared principles. Finally, administrative reforms were "beheaded" after their inspirer Dmitry Kozak was appointed presidential envoy to the problematic Southern Federal District.
As a result, much time was spent on government reshuffles and division of powers. There were also foreign policy failures. Moscow's habit of putting all eggs in one basket and betting on relations with ruling governments led to conflicts with Georgia and Ukraine. Moscow's rhetoric on the West increasingly resembles the Cold War times. Again, the country is surrounded by enemies seeking to disintegrate Russia and weaken its position in the world. Such ideas were expressed by Russian President Vladimir Putin and other top officials. Political reforms were in line with Moscow's new thinking. A series of terrorist attacks that shocked Russia and the whole world, was used as an argument for canceling gubernatorial elections and switching over from the federal model to a de-facto unitary state.
There were economic problems, too. Irresponsible statements by financial monitoring officials triggered a banking crisis, leading to higher than planned inflation and economic slowdown. Corporate interests of the bureaucracy came to the foreground, and the government gained control of Yuganskneftegaz, the main production unit of the embattled oil company YUKOS. Perhaps, the government also plans to claim other "tasty morsels". In late December, tax authorities demanded unpaid taxes from two leading telecommunications companies " VimpelCom and MegaFon. Attacks against companies not associated with the scandalous privatizations of the 1990s, angered liberal officials in the administration.
It is unclear who will win " liberals or law enforcement forces. In fact, the fate of Russian economy is at stake: either it becomes a liberal market economy or an economy with government control over key sectors. It seems the final choice in favor of state capitalism has not been made yet. The Audit Chamber has not yet published its report on the result of privatizations, which could shake Russiaâs corporate sector. And there are still liberal officials in the government and the presidential administration. So, Russia's "plane" is hovering in a steep turn.
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