Revelations of the "second term": a "period of catastrophic discovery of reality" in Russia

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The phrase used in the headline, a “period of catastrophic discovery of reality,” belongs to Gleb Pavlovsky. It is quoted by the Izvestia newspaper in an article about a seminar held at the Supreme School of Economics: “The state of the political media in 2004-08.”

Gleb Pavlovsky, head of the Effective Policy Foundation, declared at the seminar that political journalism in Russia is deeply in crisis. In Pavlovsky’s view, rather than offering systematic analysis, the press is producing “isolated pieces of data from which it is very difficult to reconstruct the whole picture.” Even worse, these pieces of data “are presented as if any given phenonmenon has only just arisen, while in fact it is rooted in the past.”

Pavlovsky says this lack of analysis, and the overall crisis in the political media, is due to journalists accepting money to write in a certain way. In his view, a substantial proportion of media items are essentially nothing other than covert (or overt) advertisements for the views of particular political forces. This is why Pavlovsky predicts that Russian society will face an inevitable and unpleasant period of enlightenment – in other words, becoming aware of all the unattractive peculiarities of what is going on.

Actually, the process may already be under way: after some confusion immediately after the elections, the press is now making unrelenting efforts (with varying degrees of success) to find some orientation points in the new political landscape.

A debate about liberalism continues in the media, although lacking its initial vigor. This debate was launched by the publication of Mikhail Khodorkovsky’s article in the Vedomosti newspaper.

The same newspaper recently published another article about threats to liberalism in Russia – this one by Konstantin Simonov, general director of the Political Environment Center.

Simonov categorically disagrees with many Russian liberals on one key point: the evaluation of current political trends.

In Simonov’s view, Russia’s democrats are seeing illusions of danger, in the wrong place entirely. The real danger lies elsewhere. For example, it seems strange to view the main threat to liberal reforms as emanating from the policies of President Putin, who is constantly stating that these reforms are essential.

Clearly, says Simonov, Putin is currently “trying to lay his bets on economic modernization.” So why are Russian right-wingers so reluctant to see Putin as an ally, when even during his election campaign he declared his intention to implement liberal economic policies? In irony, Simonov asks: is it only because “Irina Khakamada didn’t get much television coverage during the election campaign?”

In Simonov’s view, Mikhail Khodorkovsky’s notorious letter is an honest admission of the fact that “in reality, democracy faces a much greater threat from the presence of very large corporations in Russia than it does from the hierarchy of governance.”

In fact, says Simonov, natural resources corporations have no need at all for civil society – especially “in those regions where economic and political power has long been held by industrial conglomerates, and uncontrolled activity by the citizenry would only cause unnecessary problems.”

Actually, according to Simonov, it is probably impossible for an impoverished country to be a fully-fledged democracy. That is precisely why most citizens are currently more interested in economic prospects than in political rights: “But our liberals categorically refuse to admit that democracy is for those who are not hungry.”

Unlike Russian liberals, who are largely concerned about the loss of political liberties, Simonov expresses doubt that economic reforms would be possible at all if there was “a complete triumph of Russian-style democracy.”

There is also the fact that most citizens continue to think “that they were born in a great country, and therefore they can get by without working and still make a decent income.”

In Simonov’s view, if dictatorship is established, it will not be due to the Kremlin’s policies; it will be due to another crisis in the economy. And such a crisis is inevitable as soon as global oil prices fall, if the present structure of the economy remains unchanged.

Therefore, according to Simonov, the primary objective of the liberals should be to help the president implement his economic modernization program.

“That is what the new right-wing party should do: it should keep watch to see that the state’s economic policies correspond to liberal promises.” But an old-style democratic party is only capable of “continuing to beat the drums, gathering the people to fight dictatorship” – and such a party is doomed to lose.

So what should Russia’s democrats do to regain the voter confidence they have lost? Yevgeny Kiselev, chief editor of Moskovskie Novosti, offers some specific prescriptions in his article entitled “An Agenda for the Liberals.”

Kiselev paints a vivid picture of the kind of person whose approval the liberals need to win: “Tired of politics, disillusioned with the state (but not with the president!), frequently in agreement with nationalist or authoritarian views, slightly better off due to economic growth, but passionately hungry for more – stability, calm, and prosperity.” In short, “the ordinary Russian citizen, in the best sense of the term.”

How is it possible to find a common language with such people, to persuade them that “liberalism is not necessarily equivalent to the lifestyle and conditions of the 1990s, which are so repugnant to them?”

Kiselev says this will require slogans that are “simple, very easy to understand, and in harmony with the problems, fears, and hopes of ordinary citizens.”

For example, aren’t these the very same people who suffer most of all from the bureaucracy’s abuse of power? For example, they are very well aware of how many hassles, queues, and bribes are required for ordinary citizens to do something as simple as renovate their own apartments, “to take down the barrier between the dining room and the kitchen, for instance.” Kiselev argues that any political movement which promises to put an end to such bureaucratic abuses “will attract voters.”

Another example: a problem familiar to any “humble car owner” – road police demanding bribes. It is necessary to make use of this: “Tell Russian drivers that elsewhere in the world, things are different. Tell them that it’s possible to drive across half of Europe, or from one coast of America to the other, without being stopped by the road police even once.” And Western countries don’t have an equivalent of Russia’s GAI road police checkpoints. “Tell them that this is liberalism too, in one of its manifestations. Promise them that things will be the same in Russia – and you’ll get even more votes.”

And Kiselev believes that “ordinary Russian citizens” should also be told that the “imperialist foreign policy” they tend to prefer only serves to delay the day when they will be received as welcome guests, rather than former “occupiers,” in other post-Soviet countries. Not to mention the prospect of visa-free travel to Europe.

In short, judging by these recommendations, Russia’s right-wing parties are indeed terribly alienated from the people – so much so that even if they do make all the promises mentioned by Kiselev, they still risk failing in their quest for popularity.

Some entirely different prescriptions are proposed in an article for Itogi magazine by Andrei Konchalovsky, prominent cinema director and public figure.

In Konchalovsky’s view, the greatest and most common error made by Russian politicians lies in their incessant attempts to plant Western-style liberalism in the soil of Russia, which isn’t ready for it.

Moreover, Konchalovsky believes that many people in Russia, and even in the West, have long since realized that the liberal “illusions of the last century” are flawed; but “the fear of being relegated to the camp of reactionaries, anti-humanists, or even neo-fascists leads them to avoid well-argued opposition, in embarrassment.”

Konchalovsky goes on to make a point-by-point list of “the most widespread delusions” of Russia’s pro-Western politicians. There are ten points.

1. The main goal of every individual is freedom.

2. Free elections are the only acceptable source of legitimate political authority.

3. Democracy is the sole guarantee of an effective economy.

4. Human rights, everyone being equal before the law, the value of human life – these are universal concepts.

5. The government ought to look after the people.

6. Corruption can be eliminated: it is only necessary to appoint honest people to key posts.

7. Liberal reforms are incompatible with stricter state oversight.

8. Freedom of information and market globalization are paving the way to an opan global society with universal values.

9. Reviving the repressive apparatus is the path to reviving the communist system.

10. The KGB (the Interior Ministry, the FSB, and so on) is the enemy of humanity.

Konchalovsky considers these postulates to be “dubious, if not erroneous” – at least for Russia, “since Russian civilization has always been based on foundations alien to the Protestant spirit and the ideals of the French Revolution – those two cornerstones of Western liberalism.”

Therefore, no matter how hard “our liberals” strive to implant these ideas and values in Russia, the effect will still be zero at best, “or more likely, a distinctly negative effect, as seen in the experience of the past 10-15 years.”

In support of this argument, Konchalovsky quotes some lines written ten years ago by historian Alexander Senin: “Contemporary Western society – currently being presented as a model of a ‘bright future’ – actually has no prospects. The abundance in the store windows of the ‘consumer society’ is actually a dead-end path of development.”

At the same time, the “Western values” being disseminated in Russia prevent politicians from “seeing realistic goals and ways of achieving them, and prevent the intelligentsia from shaping public opinion, which influences politicians.”

Konchalovsky notes that over the centuries, many leaders – from “Peter the Great to Chairman Mao” – have made unsuccessful attempts to change the world-view or “cultural code” of an entire people. Each of them naively believed that his “correct policy” would change a system of national values.

In Konchalovsky’s view, this is really the greatest delusion of Russia’s liberals: the belief that “politics shapes culture.”

Konchalovsky proposes to finally reject this damaging practice. “Why don’t we try understanding the value system of the Russian people, and stop measuring ourselves by the liberal philosophy of th West? Isn’t it better to rely on our own philosophy, not borrowed from elsewhere, which is in keeping with the spirit and mentality of the people, their history, their philosophy of life, and the realities of their lives?” Konchalovsky proposes calling this philosophy “realistic conservatism.”

Meanwhile, the Moskovskie Novosti weekly – taking part in Russia’s first “large-scale ideological debate” in recent years – has published yet another article on the same topic.

The author is Sergei Khaitun, senior research fellow at the Natural Science and Technology Institute of the Russian Academy of Science. Khaitun argues that Russia still hasn’t experienced true liberalism. All we have seen to date is only “wild capitalism, with employers beating the maximal profits out of their hired labor force” while artificially keeping wages extremely low.

This suggests that elementary substitution of notions is in the basis of the discussion about the crisis of liberalism in Russia.

As is widely known, availability of numerous middle class in the country is the indispensable condition for stability. In Western states, says the author, its size reaches some 70-80%; the problem of poverty has been settled there, “the strain of class battles” has been reduced to zero. This happened after the business community realized the unprofitability of low wages for employees: if the major part of the population is poor, the consumer demand is low, which halts the economic progress.

In its time (1930s) “the wild market” had already taken the Western economy into a deadlock, from which it escaped thanks to the Keynesian economics (a derivative from the name of John Keynes, a British economist), i.e. concern for solvency of the majority of population.

However, there’s the reverse of the medal: if the Keynesian efforts become exorbitant (the U.S. crisis of the 1970s), monetarism helps, defending the employer as opposed to Keynesianism. For post-industrial countries, Keynesianism and monetarism have become the two tools of state regulation in the market.

As always, writes Moskovskiye Novosti, Russia has its own way.

The situation in Russia now is identical to the situation which shaped in the USA in 1929, when Theodore Roosevelt declared a “new course,” which consisted in a necessity of raising the consumer demand of 50% of the population. This was the moment of the West’s transition to the Keynesian economics.

Our country, says Moskovskiye Novosti, has had no Roosevelt of ours. Monetarism was declared in Russia for a start, which is quite strange, since it is designed to protect an employer from the Keynesian programs.

In reality, however, everything proved to be even worse: “We have more than extraordinary form of state regulation in the market, which borrowed pressure on the employer from Keynesianism and pressure on an employee from monetarism.”

As a result, the economy is unable to be developing independently, “the oil and gas reviving apparatus, the operation of which to a great extent depends on the success or failure of the U.S. policy in a particular region, maintaining its life.”

Under similar circumstances, the declared battle against poverty acquires a specific shape: the sway of bureaucracy allows to ensure withdrawal of money from “oligarchs” and other businessmen,” which cannot be regarded otherwise but a complete illegality.

In author’s opinion, nowadays Russia has been late with the Keynesian reforms for at least four years. This is sad: “the countries which haven’t treaded on the Keynesian path are living much worse than the “Golden Billion.” Besides, we shouldn’t forget the threat posed by the growth of the social disintegration of Russians.

Mikhail Delyagin, head of the Institute for Globalization Problems, says in the Novye Izvestia newspaper that polls show about 60% of Russian citizens are living below the poverty line. However – as is typical of Russia! – most of them are working intensely. A considerable part of those who could be described as the poor have been in similar state for a decade in the least.

Meanwhile, reminds Delyagin, a real stream of oil dollars has been flowing into Russia since mid-1999. However, this doesn’t alter the situation: the gap in the income of 10% of most and worst well-to-do population has grown from 1280% in 2000 to 1340% in 2003.

“This is the maximal indicator since 1993. Retention of these tendencies will eliminate Russia,” writes Mikhail Delyagin.

In the meantime, reports Vremya Novostei, in late March the government officially defined the poverty threshold of 2,137 rubles. However, some experts regard this figure as the beggary criterion, rather than the poverty threshold.

On the other hand, which is of wonder, opinions of citizens factually coincide with the government’s position in assessing the poverty threshold, a study done by the Public Opinion Foundation proves. Almost 75% of respondents said that the income of 3,000 rubles cold suffice not to feel poor. As of now, 36% of this category have the income of 1,000 rubles and think that a twofold rise in this amount would save them from poverty.

Forty-six percent of respondents reside the rural districts; overall in Russia, official figures says, about 15 million people live through subsistence farming.

Twenty-nine percent of respondents point the income of a well-to-do person at 3,000-5,000 rubles a month, whereas 31% of respondents raised the poverty threshold to 5,000-8,000 rubles.

Meanwhile, says Vremya Novostei, official governmental statistics say that 30 million people in Russia live below the poverty threshold (20% of the country’s population).

Experts of Vedomosti newspaper account for the discrepancy between official statistics and sociological findings, the latter based on “inner senses of Russians,” with existence of a specific Russian “coefficient of feigning poor.”

Indeed, notes the newspaper, in the majority of countries the poor have no fixed income. In addition to having jobs and education, the poor in Russia quite often have assets, which yield them some dividends.

A habitual situation: “The nation is still assessing itself as poor based on the official pays. At the same time, a person may leave out the fact that he may have two apartments and rents them for $500-600 each.” However, this is only possible in major cities.

In general, the topic of combating poverty has become the constant of not the discussion about the crisis of liberalism, launched at the initiative of Mikhail Khodorkovsky, but also the subject of constant discussion in the government and business community.

According to the statement of Arkady Volsky, president of the Russian Union of Industrialists and Entrepreneurs (RUIE) for Kommersant-Vlast magazine, many of the men supported this part of Khodorkovsky’s letter: “He says that one must share and that impoverishment must be fought. I’m telling you right here and now that it has dawned on very many businessmen now.”

Kommersant-Vlast gives an example of this “suggestion:” as became known, Oleg Deripaska, head of Russian Aluminum, came out with a proposal: “everybody who bought a company back in the 1990’s when the legislation had very many loopholes should pay 75% of the income tax to recompense the state for what he did not pay it in the 1990’s when he bought the company.”

Volsky stresses that this could be regarded as a return to the state of what is owed it: “We cannot jail everybody. Some sort of a compromise is needed.”

Thus, the moment has come of a “collective discernment:” ” There are some oligarchs who throw money left and right, probably in an attempt not to find themselves on the list of the 5-7 men the president spoke about. Some businessmen are scared.”

As for Khodorkovsky’s letter, Volsky is not surprised that it failed to impress the authorities in the proper manner: “I think it would have been better to write the article before his imprisonment.”

However, the lesson of Khodorkovsky has been to the advantage: “Others are writing, too, and will keep writing.”

On the whole, notes Versiya weekly, it appears as though “Clouds are Thickening above Oligarchs” (the title of an article published in Versiya).

Faultfinding with the oligarchs on the part of the state has come into the habit, writes the weekly, but these attacks are appearing of suite unexpected source of late.

For instance, last week Alexander Shokhin, member of the RUIE board and chairman of the supervisory board with Renaissance Capital investment company, all of sudden announced a necessity of introducing adjustment procedures with the state structures for large bargains with privatized assets – in particular, their sale to foreigners.

Shokhin’s initiative staggered the business circles. As reported by Versiya, it was to induce Oleg Deripaska announce his notorious statement that “the dialog of the business with the authorities within the framework of the RUIE is finished” on the eve of the meeting with Mikhail Fradkov.

However, during the “parade of oligarchs at the RUIE headquarters in the Old Square, whereto the prime minister arrived to urge members of the “trade union of oligarchs to think of the state first and then about their business,” as Kommersant said, Deripaska took a different stance.

At the meeting, Mikhail Fradkov proceeded with his idea of the “business-authorities-society” triangle and proposed the oligarchs to take the corresponding place in it on terms of “justice in all.” “The moment of truth has set in now. We must perform a breakthrough. You have the money and it needs to be used,” the prime minister said (cited from Gazeta).

Exactly Oleg Deripaska became the first to back the prime minister. “We are prepared morally once we are living here,” he said.

No wonder: as reported by Versiya, even the IBRD expressed high doubts that existence of oligarchs could be “advantageous.”

The bank’s statement, says the weekly, contains a conclusion that they perform no better than smaller, private domestic owners.

In general, noted Vremya Novostei, “under conditions when the attitude of Russian authorities towards the oligarchs is close to public hatred, and Russia’s wealthiest person is in jail, an academic statement by the IBRD looks as a scientific substantiation for the actions of the Russian Prosecutor General’s Office and the Basmanny Court.”

Anyhow, observers assume, the authorities may resort to both Shokhin’s initiative and assessments of the IBRD to justify their pressure on the oligarchs.

This is more likely since, as reported by independent observers, “a sharp drop of the status of oligarchic values” has occurred in Russia.

Kommersant-Dengi magazine, which is compiling quarterly ratings of most important events in the country – from the view of impact on the business, politics and public opinion, attested that.

Experts of the magazine say that the case of Mikhail Khodorkovsky and prosecution of YUKOS ranked on top in the fourth quarter of 2003.

It appears now that the fate of the disgraced oligarch is a concern for few people: “Moreover, the observers seem to be slightly concerned in the new curves in the relations between YUKOS and Sibneft – even in the short-term rating, the intrigue surrounding the failed Russian company YukosSibneft was only placed to modest 8th position. In view of the long-term perspectives and public response, the interaction of oil tycoons proved to be outside top 10.”

“Why has this happened? Perhaps our experts have a short memory, but not as short as to drop the status of the main event of the pervious quarter that quickly,” says the magazine.

In the opinion of the magazine, only the “global replacement of the scale of values,” by which the country is guided may alone account for a similar change in the moods: the public “now starts regarding the oligarchs as boys against the backdrop of men sitting in the government and deciding everything.”

In other words, at the start of Vladimir Putin’s second term in office, in the clash between the bureaucracy and oligarchs, the former evidently has the advantage.

What does the mean from the standpoint of continuing liberal reforms?

Everybody who is concerned about this problem will easily find an answer independently.

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