The battle for political power is once again heating up in Russia. The old oligarchs who got their property through shady privatizations are fighting the new oligarchs, the siloviki who came to power under President Vladimir Putin.
The old oligarchs replaced politics with intrigues and gerrymandering, spreading corruption to every branch of the government and eventually bringing Putin to power. They are now pretending to be "democrats." The new oligarchs are pursuing precisely the same policies, but to the benefit of different individuals. They call themselves the state. Both groups have their professional liberals -- whether politicians hired for a princely sum by the old oligarchs or appointed to highly visible posts by the new oligarchs.
Neither group has come up with socially significant goals for Russia"s development. They have no concept of its place in the world or of the values that would encourage Russia to discover its identity at last. Thus, it is time to return to the subject of economic and political reform and come up with a real plan of action.
Reform has become a catchword in Russian political life over the last 20 years. But change does not equal reform. Reform is a conscious and targeted transformation of society according to a particular plan. Reform requires a clear vision of the final goal.
Even if change is conscious, it still is not necessarily reform. To be reform, change must lead to the modernization of society by encouraging its complexity and the pursuit of certain positive, time-honored ideals. Otherwise, what happened under Hitler or Pol Pot could also be called reform.
Based on this definition, there are no reforms in Russia today.
But what should the goal of reform be? The way things stand, the country"s lack of a clear and consistent notion of the future is being compensated for by abstract slogans of "greatness" and by an amorphous centrism. We have to define what values to cultivate in Russia, a country with a contradictory past and a contradictory present. We need to know what position we want to occupy in the world.
I.
For Russia, there are only two possible paths. We can become part of the core of the world capitalist economy --the European path -- or we can look for a spot on the periphery. There is no third, special Russian way. Understandably, some fear the European path will mean a loss of sovereignty. Yet the only alternative is the sidelines and other limits on sovereignty, limits that would be informal but significant.
Certain basic human and civic values separate the core countries from the periphery: property rights, personal liberty and notions of social justice. Modernization without a human face will unavoidably land us among the poor and disenfranchised nations and will lead to precisely the opposite of modernization.
Thus, the first step toward real modernization and effective reform is adopting human rights and individual liberty as our basic values. We need to respect a person"s right to property while simultaneously striving for social justice. We need to set the institution of rights above notions of political expediency and the subjective understanding of certain powerful individuals. The concept of a state based on civil rights and liberties and social justice should become a compass on the road map to Russian reform.
First, we need to address the question of power. The current authorities in Russia, meaning both the president and the entire system of state power, are the product of a decade and a half of major political upheaval. These years saw the repeated disruption of political continuity. The authorities frequently lied and shirked their responsibilities. This naturally affected the government"s legitimacy in the eyes of the public. While this never took the form of direct and open contention, Russians have become cynical and skeptical about every move state institutions make.
There is one huge and almost insurmountable obstacle to reforming this system. For reformers to have a chance at success, the people would have to have significantly more faith in state institutions, the authority of the law and government decisions than they do today. The state needs the additional legitimacy that comes from allowing a wider range of social and political groups access to power. In return, these new participants would pledge to uphold the constitutional order and respect the way the system functions.
In addition, the government should adopt a set of laws as a compromise that would limit the political influence of big business. Oligarchs could be kept at bay by increasing the transparency of economically important decision-making and by establishing clear, unambiguous ground rules for overturning government decisions that reflect the interests of particular groups or individuals and that did not follow the proper legislative channels.
Second, we need to address the issue of property and the concentration of assets that resulted from the privatization of Soviet state property. Today, the legitimacy of this property is in doubt, and this prevents big business from participating actively in modernizing reforms. There is no clear-cut way to legitimize privatization because the goal of protecting property rights conflicts with the aim of social justice, a necessary part of gaining consensus and guaranteeing the success of reform. Russia needs several new laws to address this problem.
The first set of laws should declare all privatization deals legitimate, except those that involved violent crimes, while instituting a new windfall tax to compensate society. The second set of laws should consist of functioning anti-monopoly laws and laws to limit capital concentration. The third set of laws would include legislation to guarantee that political donations and lobbying in the State Duma, government agencies and state media are transparent.
Like power, the problem of property must be solved via compromise. This means guaranteeing the inalienable rights of law-abiding owners while creating rules for using assets that were attained as the result of bureaucratic privatizations and through other non-market procedures. These rules could take different forms, but they need to minimize distortions of owners" motivations in using their assets efficiently while simultaneously ensuring that assets are used in a way that conforms to society"s goals.
This same principle could be applied to property acquired in other ways besides privatization. Guarantees of rights to property attained in ways that did not violate criminal law but involved tax evasion could be granted in exchange for certain limits on this property"s use, such as a temporary requirement that money be held in Russian banks, or post factum payment of income tax in return for an official amnesty of tax violations.
Finally, recent events in Ukraine have led to talk of "deprivatization." Even if Ukraine"s review of privatization deals proves successful, it will not work in Russia. Yet Russia does need a law on deprivatization to reclaim state property privatized by means of a serious crime.
Third, we need to consider how to make legal arbitration into an independent institution. Just as a complicated sports match cannot work without a neutral referee, economic and political systems cannot function without neutral arbitrators. This role must be played by civil and arbitration courts that should only be influenced by the letter of the law.
The Russian courts as they currently exist are the product of social conditions radically different from today"s. They are staffed by people accustomed to paying more attention to political and economic interests than to the law. It would wrong to ignore this while planning reform, yet it would be politically and technically impossible to fire every single judge and official. For this reason, we need to let bygones be bygones while firmly increasing professionals" responsibility for any future deviation from the law. This kind of amnesty would mean, for instance, avoiding punishment of judges for past, unjust verdicts. At the same time, we need to establish a way to review questionable verdicts: The numerous victims of these verdicts continue to languish behind bars or remain deprived of their rights.
After these preliminary amnesties and laws, Russia will be ready for real reform, ready to become a modern, rights-based society.
II.
A road map for Russian reform needs first and foremost to establish the institutional infrastructure required by a developed country.
As with the problem of basic values, the question of what comes first -- a high level of economic development or the institutions that accompany it -- has no simple, straightforward answer. They should evolve simultaneously. It makes no sense to attempt to build progressive institutions and expect them to function efficiently in a poor and stagnating society. Yet it would be just as pointless to insist that economic growth will automatically lead to a more effective and less corrupt state administration, to an independent and qualified judiciary, to armed forces worthy of a developed nation, or to a modern education system. Moreover, there is no reason to believe growth will lead to better institutions for executing economic policy, better oversight agencies in the banking and financial sectors or fair and efficient social service agencies.
For this reason, the very first item on the agenda must be institutional reforms, which will be the precondition for, and not the product of, doubling GDP and the government"s other ambitious economic goals. Institutional reform, however, does not mean yet another round of ministry mergers and personnel shake-ups. Instead, reform should target civil service and radically change the motivations of those working for the state. Civil service should be made more attractive to talented, creative and energetic people, while dramatically raising requirements for skills and honesty. This reform would mean not only significantly higher pay scales, but would also establish a system for evaluating past performance. Moreover, civil servants need to have lawful incentives to pursue their careers, and those who violate clearly stated rules and ethics should be subject to penalties. The activities of state agencies should be painstakingly regulated to increase transparency and give the public and parliament access to information.
The next area that demands our attention is the courts. Once past legal decisions are amnestied, individuals working in the legal system should be held accountable for groundless rulings to a far greater extent than they are today. Moreover, anyone, including officials in the executive branch, who tries to exert pressure on the courts should be held responsible. The tough and inevitable punishment of any unlawful court decisions should outweigh their potential benefits. Oversight of the court system should keep any one group of interests or political forces from dominating the others. At the same time, judges must be granted fair and effective immunity. Finally, a review system to re-examine past unlawful verdicts should be established.
Undoubtedly, to make the courts work, we need to pass and, most importantly, enforce laws aimed at preventing corruption and combatting organized crime. The usual universal methods for dealing with these evils will not work. Instead, we must establish special agencies with sufficient authority that are armed with the proper tools and legal expertise, yet wholly accountable for their activities. The ideas and practical experience are out there, and other countries have solved these problems. All we need to start the process is the political will.
Another crucial institutional reform involves protecting the freedom of information. We desperately need to come up with unambiguous criteria for when information access and distribution should be limited, as well as rules for punishing those who violate these norms and professional ethics. Otherwise, society will never break out of the vicious cycle of information blackout, when the media are used almost exclusively as economic and political weapons. This cycle ensures that even the best efforts to reform politics and the economy are doomed to fail.
Two other areas that have long cried out for reform are the natural resource monopolies and the housing and utilities sector, areas that are currently being restructured in a misguided and misleading way. We are afflicted with endless discussions of reorganization, of mergers and regroupings. Whatever their result, they will not increase the transparency of the financial flows circulating in these crucial sectors.
Finally, the last but not least part of institutional reform is restructuring the basis of the modern social state: the social assistance and pension system, as well as labor relations. Such reform cannot be dismissed by saying that Russians have low incomes and the state has limited financial resources. A strong social state is not the product of economic development but rather the precondition of development. Workers without any safety net who live in fear of random firings, money-sapping illness or an impoverished old age cannot be fully fledged actors in a postindustrial, 21st-century economy.
While instituting reforms, we should pursue a second direction in our road map. We need to stimulate long-term investment and complex, cutting-edge economic activity. Of course, too much state intervention is bad for society and the economy and leads to inefficiency and abuse, encouraging irrational economic behavior and a substantial reduction in growth. However, it is just as clear that to jump-start the new economy and increase competitiveness, the state needs to get involved in attracting resources and entrepreneurs to particular technologically complex sectors that demand long-term planning and come with higher risks. For this reason, these sectors are inevitably dependent on goodwill from the government. Getting rid of incompetent bureaucratic meddling is a necessary precondition for Russia to join the ranks of the developed, postindustrial economies.
Another, related precondition is a large and ethical business community that is willing to work with the government. The state and business should cooperate when business" competitiveness in the global economy directly depends on the government"s competitiveness, on its ability to reduce long-term risks and protect the nation"s business from negative nonmarket factors. Creating efficient private-public partnerships and creating effective incentives for both parties to adapt to the quickly changing global economy is a crucial direction in the process of forced modernization.
As the third direction for reforms, the areas that can and must provide resources for future economic and social development should undergo substantial changes: education and scientific research, which will provide intellectual resources, and the national financial sector, which will provide capital. People have long discussed the need to reform these sectors and have come up with dozens of programs. Yet the limited quantity and quality of actual measures that have been successfully implemented is extremely disappointing. As a result, these critical areas will never be able to provide solutions to the major problems we face, and their underdevelopment is already slowing economic growth. These sectors cannot function without state policy, and they are at the heart of any modernizing reform.
Naturally, the areas that demand reform in Russia extend beyond the few sectors discussed above. There is a pressing need to reform politics and modernize security, foreign policy and health care. But the widely proclaimed belief that the biggest reforms are already behind us is an outright falsehood. Reforms in the true sense of the word have yet to begin. To start them rolling, to start the long and difficult journey, we need to take a long, hard look at reality and show unwavering political will.
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Grigory Yavlinsky is the head of the Yabloko party. He contributed this comment, in a two-part series to The Moscow Times, June 17-24.
