“Modernization” appears to be the most important catchword in Moscow these days – similar to glasnost and perestroika twenty five years back. However, the mixed – if not outright confusing – signals concerning Russia’s societal transformation coming from the country’s top echelons of power suggest that the prospects of Russian reform are dim.
There seems to be a consensus among analysts that the Kremlin started making noises about the need of a thorough modernization of Russia’s economic system having been seriously alarmed by the impact of the global crisis. No wonder – as the world-wide economic downturn has hit Russia particularly hard: by the end of 2008 Russia looked more like a fragile and unstable petro-state rather than a mighty energy superpower as its rulers chose to cast it during the pre-crisis “fat years” of the sky-rocketing fuel prices.
It was these new drastic economic circumstances that prompted some forward-looking economists and liberal minded members of Russian political class to ponder the best possible ways out of the crisis situation – whereby the ad hoc anti-crisis measures would be combined with the comprehensive modernization strategy. Out of that intellectual milieu came President Dmitry Medvedev’s now famous essay “Go, Russia!” which some commentators labeled as Russia’s “modernization manifesto.”
Remarkably, though, Medvedev’s piece clearly reflected – in both what it did say about the Russian situation and what it ignored – the formidable obstacles that any thorough transformation of Russia’s socio-economic system is likely to be faced with.
Analyzing the current state of Russia’s economy, Medvedev did admit in no uncertain terms that the “emperor has no clothes” – Russia’s outdated resource-based economic model, he said, is unsustainable and should be replaced by the modern knowledge-based innovative economic system. Missing from his analysis, however, are two key aspects – 1) the discussion of how the resource based economy feeds the rent-based social system and authoritarian political regime and 2) the idea that there is a vital link between successful economic modernization and the reform of key state institutions.
I would argue that it is precisely the so-called “resource curse” that makes Russia a country that is particularly difficult to “modernize.”
As some perceptive analysts have long argued, already since the 1970s, that is, even before the collapse of the Soviet Union, a new and troubling trend has been on the rise whereby the country came to be increasingly dependent on the export of natural resources. The proceeds from the trade in commodities have in no way been connected with either the labor productivity or the country’s general economic development. This trend appears to have reached its pinnacle during the so-called “Putin decade” which was blessed with the super-high prices for hydrocarbons – a fact that is reflected in the Kremlin’s pet concept of “Russia as an energy superpower.”
This same “Putin decade,” however, has clearly demonstrated that the political risks of the resource-based economy are too high as one of its most debilitating results is the degradation of most social institutions. Russia’s current political regime – the proverbial vertical of power – with its rubber-stamp parliament, phony party system, subservient judiciary and controlled media is intimately interconnected with Russia’s economic resource-based model resting, as it is, on three main foundations: rentseeking, corruption, and monopoly.
Symptomatically, the global crisis seems to have made the resource-based nature of the Russian economy even more pronounced. As some commentators note, most measures adopted by the Russian government in 2009 led to the aggravation of the “resource curse” – Russia’s extracting industries have found themselves in even more privileged situation than they were in prior to the global slump.
So we appear to be witnessing the classic case of a vicious circle: the abundance of “cheap money” originating in the oil and gas sector spawns corruption, rent redistribution and patronage networks eventually leading to the degeneration of social institutions – which are vital to the progressive development of other (non-resource-based) industries.
Now, the big question of course is this: are there within Russia’s political class the forces which are capable to act as the agents of change? So far, the answer to this question is unclear. There are two reasons why Russian elite seems reluctant to initiate a comprehensive transformation of the country’s socio-economic system.
First, Russia’s current leaders belong to the generation who lived through the collapse of the Soviet Union. Although they might be ignorant of Alexis de Tocqueville’s famous dictum that the “worst times for a bad regime come when it makes attempt to improve itself,” but the experience of the erratic reforms of the late 1980s that led to the disintegration of the great state undoubtedly left an indelible mark in their psyche. Second, the Russian rulers presiding over the current authoritarian regime are perfectly aware that any modernization that would encompass the wholesale reform of the state will eventually bring about their own redundancy – like other authoritarian modernizers before them they will have to leave the political stage.
On the other hand, though, the most perceptive members of Russia’s political class seem to understand that the only alternative to the country’s modernization is its further degradation and geopolitical marginalization.
The mixed signals coming from the Kremlin appear to reflect the confusion of Russia’s leaders about the tough choices they are currently facing.