Russia’s list of achievements in the past five years must include its stopping the degeneration of the state, together with its associated institutions, thus allowing the country to build up considerable resources for a potential breakthrough in the future.

More importantly, Russia stopped the seemingly unavoidable rise of an oligarchic dictatorship disguised as liberal democracy. This dictatorship was a potential liquidation committee set out to destroy the great project captioned “Russia.” Omens that the oligarchy may regain its power, which slipped from its grip in a miraculous way, will hang in the air until we decide whether Russia has a future and what kind of future that is.

STARTING POINTS

Collapse. Unexpectedly for many people, the collapse of the Soviet Union turned into a collapse of the state and its institutions. It was a systemic crisis manifesting itself in the inability of the Communist system to react adequately to challenges of the time.
The disintegration process was a betrayal of the country by its political leadership that used slogans like “new mentality” and “common human values” to conceal an actual squandering of values – both tangible and intangible values alike.
A new post-collapse Russian elite came into being as a coalition of werewolves from the top Soviet ranks. They also included businessmen from amongst the New Russians flocking in and around the Kremlin, and former dissidents turned reformers.

The collapse of Russian society in the 1990s was peculiar in that society did not truly sense it. That very society, or rather, the profusely pro-democratic and pro-Western Soviet intellectuals which made up that society, recognized the catastrophe only after they had been displaced and turned into the “recipients of budget money,” to cite the terminology of Russia’s financial and statistic agencies. By that time, they had largely abandoned their democratic pro-Western stance and ceased being a society.

Society’s new offshoots could only imitate the popularly known civic and political institutions of the West, and the only institution fully accepted was that of the President, elected through a universal vote. The presence of this institution helped Russia to avert final collapse.

The division of property. An evaluation of former Soviet assets provides a realistic picture of the extent of that catastrophe. Not only did the country’s Gross Domestic Product shrink by 50 percent during the reforms (in fact, it might be considered as a natural consequence of the decay of the inefficient Soviet industries). McKinsey’s data indicates that labor productivity in basic industries fell by a factor of three, and the aggregate value of assets as such plummeted more than 97.5 percent. Construction of the capitalist system devalued the whole country.

Despite a diversity of the forms of privatization, the division of former Soviet assets boiled down to fragmenting the long chains and amalgamations of industries. Any elements that could not be sold fast were forced to degrade and die out. This was not the way to create real owners who understand the real value of the assets they acquired or the knowledge of its proper use.

It is noteworthy that state institutions were commercialized at much the same time and along much the same principles as the former Soviet economy. Quite naturally, the government dissociated itself from any responsibility for economic performance and focused entirely on its market function, namely, on selling its own services. It became acceptable then to brand this policy as “liberal.”

Debts. Nonetheless, a new class of owners came into being that was comprised of two quite unequal groups. The first group includes big property owners, above all those controlling natural resources – Russia’s only highly marketable commodity. These are the so-called ‘oligarchs’ who acceded to the top positions upon special arrangement with the authorities, or by grabbing up property indiscriminately. 

The second group is rather populous and includes the owners of medium-sized, small and very small businesses who have survived a terrible battle against various government agencies, competitors and gangsters.

These two groups, however different, share a common characteristic: they believe they are totally free from any obligations to their society, to say nothing of the state.

Privatization in Russia was remarkable by its almost complete appropriation of assets that was not, however, accompanied by an appropriate compensation of the relevant costs. While the government parted with property virtually for free, it retained many debts to its citizens, and the absence of the necessary assets made paying off those debts all but impossible.

When the nation came to realize how catastrophic the situation was becoming in the country, it raised claims against the state – very mild claims in the form of vague electoral and political expectations.

The nation realized its need of government, embodied in legitimate power (in the direct meaning of the word) and legitimate ownership. Legitimacy can have only one ground in Russia, and this is justice, and no legislative or juridical procedures can substitute for it.

Legitimacy. The legitimacy of presidential power relies on general elections. Representatives of the post-collapse political elite demanded that the new President, Vladimir Putin, ensure their proprietary legitimacy – they needed guarantees. In 2000, there was endless talk about guarantees, against a revision of privatization, about taxes and capital amnesties, and so on. Yet no one can explain the justice as to how Russia’s huge government property was distributed. The President does not have a mandate for such confirmations. A president who affirms the unacceptable results of privatization immediately loses legitimacy and becomes simply redundant, which is exactly what Mikhail Khodorkovsky dreamt about before his arrest.

On the other hand, a radical revision of privatization means ruining an entire existing system of economic relations. It implies yet another revolution, which post-disaster Russia could not survive. More importantly, the current condition of government institutions and the composition of the elite dooms any revolution ordered from above.

At the same time, it is equally impossible to create effective economic and political institutions without a real nationwide process of legitimization. Nor is it possible to defend elementary proprietary rights. That is why a step-by-step transformation of the relationship with the largest owners is the only possible method of achieving success. Property as such must transform in step with the rehabilitation of basic government institutions. This requires the gradual transformation of the elite through the removal of the most odious and treacherous elements within it.

Oligarchy and democracy. The so-called YUKOS affair, wich actually meant the removal of the oligarchs from the commanding heights in politics and the economy, was unachievable under the former media-dominated, corrupt liberal procedures. The Russian state did not have levers to act either way given the conditions it had found itself.

Regardless of the time or place, a liberal democracy always implies a mechanism for the domination of the elite with attendant instruments in the form of political parties, elections of various colors, together with their elaborate financing, as well as control over the ostensibly independent mass media – the very ones who belong to different groups of the elite (mediacracy). Generally speaking, there is nothing disastrous in such a system per se, as it has been functioning successfully in many countries.

And yet there is a vital condition to such a system: the elite must be loyal to its homeland. In Russia’s case, that condition is more than simply neglected (according to Khodorkovsky, “this country looks like a good place for game hunting”). The new Russian elite seeks guarantees of its status and security abroad rather than at home.

Thus, a system called ‘controllable democracy’ – that is, the partial restoration of government control over the largest mass media outlets, as well as the legitimization of those political entities that used to represent the interests of different groups of post-Soviet elite – removed those members of the oligarchy who relied heavily on the mediacracy. The development that demagogues called “the wrapping up of democracy and freedom of speech in Russia” meant, in fact, actions to keep the state united (as an institution and as a territory).

While some quarters make attempts today to decry the restoration of vertical power as one more method of curtailing the democratic system, it is worthwhile recalling that by the end of the 1990s the regional elites and leaders had begun to make outright claims for dominance over Russia’s sovereignty, or for multiple sovereignties, which would spell the automatic loss of Russia’s national sovereignty. The need to void the regional leaderships of general political functions made the elimination of direct elections of governors the only feasible move. Importantly, the political procedures of parliamentary and presidential elections remain in place and cannot be ‘wrapped up.’ Those elections represent the groundwork for the legitimacy of the acting Russian government.

Challenges. The huge drop in Russia’s combined economic and political power did not merely accompany the process of post-reform transformation – it coincided with the plans of individuals who had ordered it from abroad and the ones who executed it inside the country.

There was no primordial, or specifically anti-Russian scheming behind those moves. Every nation has a normal political objective to rule out the emergence of an outside force that is capable of overpowering it.

However, there is another matter of more importance, and that is for the first time in centuries Russia had become an object of history making, as opposed to an active subject.

All the problems which existed in relations between contemporary Russia and its Western partner – and in essence there is only one partner – pertain to Russia’s claims to re-impose itself as an active participant in world politics, i.e. make claims to genuine sovereignty. In other words, so long as Russia did not exhibit any particular ambitions about becoming active, it did not feel any special hostility on the part of others.

Terror. As long as Russia was collapsing through its own initiative and inertia, real terror against the Russian state was rather restricted and could be described as subversive separatist movements and political operations; however, after the authorities stopped the process of disintegration, its character changed radically. We are now witnessing an unprecedented type of terror that aims to break up the very institution of the state and deny the legitimacy of government.

Presently, the state is being subjected to a form of public torture, including a type of persecution by the mass media, that must eventually either make it assume full responsibility for the death of innocent people, or disband of its own will in the face of the terrorists’ ultimatum. The intensity of that torture is growing – terror is working in close affiliation with separatist groups, religious extremists, political oppositionists of every imaginable color, and the ‘fifth column’ in the business community and government agencies. The process receives powerful overseas support that is not limited to only the media. No separatism agenda can provide material backing, coordination and specification of goals of such magnitude.

The overt hostility of the majority of Western mass media toward Russia is caused by the mere fact that this country has openly stated its ambitions for becoming an active player in the vital neighboring zones of the post-Soviet space, that is, in Ukraine and Georgia. And if the restoration of Russia’s might becomes a reality, the reaction will be close to hysterical; this is something we must be prepared for. This fact, however, should not discourage Russia from rebuilding its political and economic power.

GROUNDS FOR BEING OPTIMISTIC

Nonetheless, Russia retains the military, economic, moral, and political grounds for rebuilding its might.

1. Strategic nuclear arsenals. This is the only area where Russia has a semblance of parity with the world’s only domineering superpower. Russia can maintain such an arsenal that will be sufficient for a modernization breakthrough, at the very least. Rehabilitation of the nation’s nuclear deterrence may lay the foundation for the real maintenance of Russia’s sovereignty.

2. Over the past five years, we managed to stop the collapse of our major government institutions. The institution of the presidential office is functioning, and there is little doubt that it is functioning of its own accord. The government is diversified yet controllable; the administrative reform, although not fully assimilated, has been launched. Today, it is technically possible for the government to perform the tasks that are essential for an economic breakthrough.

3. Russia, in one way or another, has built for itself the foundation for a self-regulating market economy that is adapted to normal market standards. If the conditions are created for fair and tough internal competition, without the government meddling in business matters it has nothing to do with, then a free economy will ensure the powerful support necessary for an economic breakthrough.

4. Russia has preserved its natural resources and maintains them under state control. These resources are the world’s largest and not only make Russia a crucial element of the world economy, but also furnish this country with a sufficient degree of economic security even in the most unfavorable economic conditions.

5. Russia has accumulated huge (some experts say ‘excessive’) financial resources over the period of stabilization. If that money is not squandered, we will be able to apply it to a rapid modernization, including in the military sphere, and Russia’s power will exponentially increase then.

6. This country maintains a leading position among the neighboring former Soviet republics, since virtually all of them are experiencing a civilizational degeneration. Only Russia has retained its scientific, educational and technological potential, although not without a loss.

7. Last but not least, the post-reform trauma did not shatter Russia’s psychological health. The initial mess following the collapse of the Soviet Union has largely given way to strong expectations that must be met. Public consciousness is yearning for its historic revenge, and whether this desire takes a productive or destructive form will depend on the adequacy and efficiency of the government’s policy.

TASKS

The re-establishment of the sense and objectives of Russia’s existence as a state, society and civilization, together with the restoration of its strength and power for implementing those objectives, are the main tasks for our government.

Justice. Justice is a fundamental value for our society, for nothing can be built anew without remedying injustices.

As political analyst Vitaly Naishul noted, “while the first revolution in the early 1990s promulgated the slogan of freedom, the next revolution will wave the banner of justice.”

One can add that the implementation of freedom produced a severe shortage of justice, and we must find ways of meeting the demand for that basic value unless we want to stir up more social revolution. Today’s government is trying to identify ways of reconciling with society without rupturing the existing ownership relations. Thus far, the results are rather unimpressive. This is due not only to the insufficiency of the resource base, but also to the impression of injustice and the real humiliation that the reconciliatory approaches evoke (recall the notorious replacement of benefits with monetary compensations). It is important to pursue the general principle of ‘social reforms as popular reforms,’ meaning that everyone understands who benefits, how big the benefits are, and on what grounds they are offered.

The problem of income distribution, social security and the distribution of property is, to a great degree, connected with the government’s debts to the population. Those on government payrolls are entrusted to a state that had handed out for free the sources of the funds for paying off debts. One of those sources should have been found through the tax base.

Yet the taxes, which are enough to guarantee the normal functioning of the economy, are not enough to pay back government debts to the people. The current level of taxes cannot cover such debts as the compensation for Soviet-era bank deposits that were razed to zero by rampant inflation in the early 1990s (these are acknowledged debts), as well as payments of back wages to public sector workers and back pensions. The resources for paying back these debts lie in the property that has been taken away from the government.

An issue tightly linked to the debt issue is the legitimization of the largest property holdings, which cannot occur given the current amounts of foreign debt that must be repaid. The only way for these owners to make that property legitimate is to engage in the repayment of debts. An investment company servicing securities issued against debts to the population must be insured by the assets of the largest companies, above all the producers of mineral resources. This scheme may become the basis for signing a New Social Contract between society and the largest businesses.

Big economic growth, along with a much steeper rise in the value of assets, could offer a tangible prerequisite for the Social Contract. This is the only way of peacefully building the institutions that will distribute national wealth in the manner that the people will deem acceptable. This implies a mutual engagement toward an economic breakthrough, not the expropriation of property. Society can be reconciled with the results of privatization only through a wide-ranging contract.

Public reconciliation. Russia has not solved the problem of social reconciliation either on the historic plane – between the supporters and adversaries of Bolshevism and Communism – or on the social plane (between the rich and the poor). The Civil War of 1918 to 1921 continues, in fact. The incumbent government is trying in earnest to develop a unified history of Russia and a united Russian statehood. But the Day of Concord and Reconciliation, a former national holiday, has been abolished. Since we cannot come to terms with one another regarding the past, the only possibility for us is to come to terms on the future of a Great Russia. The Restoration of Russia’s future is the essence of Russian policy at present, and our authorities must design the image of that future and guide the country to that end.

National might. Any policy that aims at increasing the power of the nation, will also work toward sustaining freedom. The degree of might determines the ability of any politician, political group or state to make and implement sovereign decisions. No kind of sovereignty or law can rely on legislative acts, contracts, coalitions, guarantees or promises if it does not rely on power as well. In the end, the might of a country is the only basis for its sovereignty.
A strong economy is a crucial element of a powerful state, however, military might, as well as political and diplomatic weight, are the most important and sometimes most decisive part of economic strength. America’s economic might rests to a great extent on the number of its aircraft carrier groups and their combat capability. One can easily surmise that the value of the U.S. economy would drop by a factor of three if its military power shrank to that of Japan.
Capital strength and political power are the two interrelated components of freedom and independence of any country. If either part sustains a setback, then encroachments on freedom and a loss of independence are pending. These factors mean that Russia must choose its criterion for attaining power on its own, not from the norms and rules dictated by “civilized” mentors.

Sensible goals and guarantees. Russia’s main resource is found in the propensity of the Russian people for having clearly identified goals. The people find sense in government if they have a goal and a momentous and detailed task. Then the people develop energy – the very machinery of economic growth – the efficiency of which can be judged by specific criteria inherent in the goal. The presence of a goal sets conditions for building state and economic institutions. A country’s long-term goals and, consequently, long-term money enables businesses to engage in long-term development projects. These projects stimulate making money through development rather than on corruption or other methods that tear the country apart.

The government has a major goal in its relationship with the business community, and that goal is to provide tough guarantees for the immunity of property, as well as guarantees for legitimate deals. For large property holdings, the issue of guarantee rests on legitimization. As regards the bulk of medium-sized and small businesses, the main problem of proprietary guarantees boils down to protective measures from state agencies, that is, institutions acting on behalf of the government.

Thus, the government’s major task in a market economy is to launch institutional reform, or to create the institutions whose basic task with regard to market relations is to defend proprietary rights.

There is also a crucial task of ensuring maximum free competition, above all domestic competition. If Russia wants to develop a car-making industry, for instance, the government must also provide for competition through the introduction of two – or better, three – national manufacturers with comparable capabilities. To make this possible, one or two modern car factories of foreign origin might be built in Russia.

To set the scene for tough and equitable competition, we must defend our domestic market. Its defense should be an absolute priority in two cases. First, the protection of those industries, manufacturing facilities or technologies, the loss of which might mean an impending threat to national security.

Understandably, this suggestion refers primarily to defense industries, financial institutions and vital infrastructures. Second, we must control strategic resources. Selective protectionism is imminent in those areas where an open market would bring about the expulsion and/or destruction of national manufacturers. Only then will the government be able to open its doors to a tough and efficient competition of manufacturers within the domestic market.

National projects. Apart from market-oriented institutional reforms, the government has a strategic goal in specifying long-term priorities and making them known to the business community.

The government also shoulders responsibility for organizing the investment process. This is essential, unless we want to be witness to a situation where the invisible hand of the market brings structural degradation to the Russian economy to the point where the Russian state becomes all but redundant. This brings up the issue of an advanced industrial and growth-oriented policy. Let our government finally get down to the business of adjusting economic mechanisms inside separate industries and groups of industries that would stimulate growth and development.

The government should focus on strategic national projects, which private companies are unable to implement independently or cannot due to the current situation in Russia. These projects pertain to our national security and the development of our intellectual potential, not to mention high technologies (since the state has an indisputable duty of keeping up the industries and research schools where Russia enjoys world leadership). Russia must promote the growth of projects that are the engines of economic growth, or help at facilitating a sizable expansion of the domestic market.

One such engine involves the fundamental modernization of the Russian Armed Forces that can ensure economic growth and protect research and technology potential. Unlike in the U.S. where this lever is broadly used to stimulate the economy, Russia really needs an amassed modernization of its military hardware to ensure a minimum level of security. An impressive increase of defense spending for the re-equipment of the Armed Forces appears to be essential from both the political and moral point of view.

The list of other high-priority national projects may include:
– rehabilitation of commercial aircraft manufacturing;
– a national space project (contrary to the current trap of the International Space Station);
– transport projects of intercontinental strategic importance;
– a system of widely accessible mortgage loans (unlike the dismal undertakings of the Ministry for Economic Development and Trade, Russia needs a project with a fairly limited initial government financing that could produce a real construction boom and get millions of people, not a few dozens of thousands, engaged in housing construction.) Mortgage loan programs have an important advantage: they can be substituted for by imports by a small degree, boost the domestic market and have a quick and obvious social effect.

Such national projects have an important result and by-product, that is, a new national elite within the business community and state machinery. This will be a creative elite that will replace the post-collapse collaborationist elite. In a nutshell, the enactment of national projects will serve economic goals and also help to solve the dramatic task of replacing the elites. This, in turn, will open up the sole opportunity for Russia’s development along the path of democracy.
Even a small part of our excessive reserves will suffice to set these national programs in motion. At any rate, it will not exceed the funds that will vanish in plugging numerous budget failures that are bound to happen should the present economic policy continue.

Russia is bound to have no less than $200 billion at its disposal by the end of this year, even by official estimates. Those funds are being used with utter inefficiency, while losing their value by inflation or an unfavorable exchange rate. Transferring them into the currency or securities of the potential enemy is not only unprofitable; it makes those assets highly vulnerable.

Finally, Russia must design a sovereign monetary policy instead of the “currency control” patterns that presuppose printing certain amounts of rubles depending on the arrival of hard currency revenues. Let us decide for ourselves on whether a fully convertible ruble might be more lucrative for us. If it is, let us sell our natural resources abroad for rubles.

Another option is to renounce the ruble’s internal convertibility (like in the Chinese model) and to turn monetary policy into an efficient instrument of stimulating the economy. However, given the structure of our exports and the cost of the workforce, renunciation of the internally convertible ruble will hardly bring us benefits similar to the ones China is getting. But we must make the choice immediately since continuation of the current policy line would mean mocking common sense.

And of course, the state has an obligation to make social investment (not to be confused with social obligations). Social investment in education, public health, science and culture is always efficacious, and the beneficiary is the whole national economy, not just a separate corporation.

Civilization-state. The essence of Russia’s existence as a state and nation is preserving and developing the Russian civilization as a unique way of life, culture and system of values that, although being different from all other civilizations, incorporates many of their features and serves as a foundation for state and public institutions. Individual material successes and money grabbing, for instance, will never be a dominant attribute in the Russian system of values, nor define a person’s social status.

Many talk now about the decay of the nation-state and national sovereignty, not to mention the collapse of empires. All of that refers to globalization. The problem is that globalization presumes the survival and swelling of one global empire against the background of dissolution or fragmentation of former nation-states within global entities of some kind reporting to the empire.

On the other hand, there are liberals and Russian fascists who try to spellbind the public with the chimera of an “ethnic state” with the underlying suggestion “Why don’t we drop off all those people from the Caucasus, Tatars and elsewhere?” No single state can structure itself on these idea, as they pave the road to carnage and, as a consequence, to the fragmentation of and tribal feuds on the entire post-Soviet space. Ironically, it is precisely this path that some former Soviet republics have taken after they made a ‘European choice.’ Some have already sensed the phenomenon, while others are yet to sense the energies of national conscience that suddenly burst forth from the peoples inhabiting multiethnic territories; and the energies do burst despite the stringent “humanitarian guardianship” of the global arbiter.

Russia has always existed as an empire. It can exist only as an empire in the modern sense of the word, which stresses a harmony of all the constituent elements and cultures and their synthesis, as opposed to a system of power and a form of external expansion. Russia is a civilization-state where the ethnic Russians are a cornerstone people that cannot exist outside the multicultural environment of other peoples making up and filling that civilization. The imperial mentality is a profound foundation of our anti-fascism. Any chauvinist who calls for the repression of non-Russians and non-Christians is a foe of the empire and a menace to its existence.

The future world should be seen as a multifaceted amalgamation of civilization-states, each having an identical tradition, lifestyle and hierarchy of values. This country has the goal of reserving a place for Russian civilization and state among other civilization-states.

We must convince those peoples who are close to us in spirit, history and culture about the importance of building a state together unless we want to be turned into objects of manipulation, with the nation being partitioned amidst competition for our resources and their transportation routes. In essence, this is the basis for post-Soviet integration. A modern centralized democratic civilization-state can alone maintain its might and ensure justice on its territory that is bound by a common civilization. The latter must be durable, as well as hospitable. It must be comfortable for its friends and invulnerable to its foes.