THE NEWEST FRANKENSTEIN’S MONSTER

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The national projects are starting to turn against their creators

Exactly a year ago, on September 5, 2005, President Vladimir Putin announced the launch of the “national projects.” They have stalled. The federal government ought to wind up the uncontrollable national projects as quickly as possible, and stop reminding the public of them.


Exactly a year ago, on September 5, 2005, President Vladimir Putin announced the launch of the “national projects.” Observers concluded immediately that the real purpose of the national projects was to convince the people that the authorities have a “social orientation,” and to create favorable conditions for implementing the greatest national project of all: Successor 2008. It was no coincidence that the first of the potential successors, First Deputy Prime Minister Dmitri Medvedev, was placed in charge of the national projects, becoming the de facto leader of the National Projects Implementation Council.

A year later, it is clear to most observers – even Kremlin-loyalist observers – that the national projects have hopelessly stalled. They’re not producing the expected results – either in reality or in the realms of public relations. According to polls done by the All-Russian Public Opinion Research Center (VTsIOM), 57% of respondents don’t believe the national projects will have any substantial impact on their lives; 43% believe that funding will be spent ineffectively; 31% believe that funding will simply be stolen; and only 13% believe that national project funding will be spent successfully.

The successor candidate doesn’t seem too confident either. At meetings of the National Projects Implementation Council over recent months, Dmitri Medvedev has frequently attempted to bang his fist on the table and blame bureaucrats for sabotaging the national projects. Moreover, national project deadlines are being shifted. Medvedev has already said that “a number of areas should be continued after 2007,” and the government needs to take a “detailed look” at the financial plan for 2008-09, taking the national projects into account. This means there is no longer any hope of presenting the people with results that win their confidence before the next elections.

Medvedev’s opponents within the bureaucracy, unofficialy led by presidential aide Igor Sechin, are already anticipating a localized victory. Successor Candidate No. 1 has failed at a task that seemed so simple and rewarding!

But Medvedev, whatever may be said of his political or management abilities, isn’t the chief person to blame here. The fundamental error lies in the very concept of the national projects, which fully reflects the basic reasoning used by the Putin administration: instead of making system-wide changes and really treating the disease, it substituted pin-point measures (mostly self-promotional) that alleviate the pain temporarily. The philosophy behind the national projects (Alexander Voloshin was the first theorist) is based on two consideration reflecting that reasoning. First: in order to avoid having to solve the problem as a whole, it is necessary to corrupt (bribe) part of the social stratum responsible for the public’s perceptions of the problem. Second: each state program ought to be commercial – that is, it should enable some part of the bureaucracy to enrich itself – otherwise it’s pointless.

Mechanisms of injustice

But the national project planners ignored some important specifics in the national psychology of the Russian people. They failed to take this into account: any actions by the authorities that exacerbate social inequality will be unpopular, even among the people who benefit materially from those actions. For Russians, fairness and social justice are more important than success or profits. Consequently, the four national projects were doomed from the start to a difficult battle between the Kremlin’s abovementioned reasoning and real life. Let’s take a look at this battle, with regard to each national project.

The goal of the Affordable Housing national project was to secure the support of the middle class for the successor. Thus, ordinary commercial mortgages were given high national-state status. But the Kremlin’s planners failed to foresee that expanding mortgage availability without taking any radical measures to increase the supply of housing would cause prices to rise. As a result, housing prices in Russia rose by an average of 35-40% in the first half of 2006, and construction costs rose by 205. The price of a one-bedroom apartment reached $120-140,000 in Moscow and $55-75,000 in Yekaterinburg. The average member of the middle class earns $650 per month; so if today’s 25-year-olds set aside a third of their income to purchase housing, they can expect to own a one-bedroom apartment in Moscow by the time they turn 70.

Another insurmountable obstacle is that there aren’t enough plots of land with the necessary residential infrastructure. Little has been invested in infrastructure since the late 1980s; and plots of land with good communcations are controlled by regional or local government officials – or rather, by the construction and realtor companies connected to those officials. This is the regional-municipal sabotage that Medvedev the successor candidate has complained about. But Medvedev’s zeal isn’t enough to wrest this morsel from the throat of the “land mafia.”

It’s hard to imagine that a state which spends just over 2% of GDP on healthcare can really solve the national health problem. The World Health Organization recommends 5%, and spending in the G7 nations ranges from 7% to 15%. But the Healthcare national project wasn’t designed to address that, anyway. Its real goal was to bribe general practitioners to tell their patients how great the Kremlin’s successor is. Hence the decision in favor of salary increases for primary care personnel – those who have direct contact with the maximum number of patients. Salary increases have been received by only 67,000 out of almost 700,000 state-sector doctors, and only 75,000 out of 1.5 million nurses and paramedics. Skilled specialists – the elite of the medical world – have been bypassed. This has caused resentment among medical professionals.

The Education national project planned to provide targeted one-off encouragement bonuses for specific schools and teachers (teachers have substantial influence during election campaigns, especially in the provinces). The bonuses have gone to 4.5% of all schools and 0.66% of teachers. It isn’t hard to guess what the education community as a whole thinks of this.

Many generations of our country’s leaders have had their fingers burned by attempts at improving agriculture. In implementing the Agriculture national project, the Agriculture Ministry took a purely free-market kind of responsible approach. For example, it set out to import 100,000 head of elite breeding cattle, buying the stock at market prices. This quantity of stock exceeded ready supply worldwide; as a result, the launch of Russia’s Agriculture project drove up prices for breeding cattle by 22%. There’s no sign here of any attempts to solve the agricultural sector’s systemic problems – or even any coherent attempt to improve the hypothetical successor’s credibility.

A new Frankenstein’s monster

The conclusion is fairly obvious. The national projects are becoming a monster that will turn (is already turning) on the Kremlin which produced it. The federal authorities ought to wind up the uncontrollable national projects (capable of swallowing billions of dollars with no visible results) as quickly as possible, and stop reminding the public of them. To all appearances, a different public relations strategy will be required to lead the successor triumphantly into the Kremlin. Another small victorious war won’t work this time; it’s no longer 1999. Besides, Kremlin officials also seek to legalize themselves in the “international community,” which means they have to be at least somewhat scrupulous in selecting ideas and methods.

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