13.05.2007
Bureaucracy on the Rise
№2 2007 April/June
Alexey Arbatov

Full Member of the Russian Academy of Sciences; Director of the International Security Center at the Institute of World Economy and International Relations; a member of the Russian delegation to the START I negotiations (1990); and Deputy Chairman of the Defense Committee of the State Duma (1994-2003).

In the Soviet
era, major statements by state leaders instantly became a subject
of tedious Party and trade union meetings, with the servile
“endorse and support” reaction. Compare this to modern Russia. Just
a couple days after President Vladimir Putin’s news conference on
February 1, the media and public quickly switched their attention
to other events. This fact points to the great changes that have
occurred in Russia’s political system, but personally I wish the
president’s replies to the reporters’ questions had been more
thoroughly discussed. Considering that most of the answers were
extempore, they better revealed the leadership’s political
approaches as opposed to carefully vetted official speeches.
Putin’s statements provided much food for thought on various
aspects of the country’s domestic and foreign
policy. 

As for his
general form, Vladimir Putin should be given his due. He
demonstrated a good knowledge of various pressing problems, quick
response, and a sense of humor – characteristics that would be
envied by any one of the current G8 leaders. Putin’s position on
many of the issues that were raised was quite convincing. His
comments fully conformed with PC standards, specifically on issues
such as Operation Successor, energy security, market-based
relations with neighboring states, the formation of a Union state
with Belarus, NATO expansion, Iran’s nuclear program, deployment of
U.S. missile-defense installations in Poland and the Czech
Republic, etc.

It is another
matter, however, how the state machine – with its “vertical chain
of command” – implements such pragmatic considerations and
approaches. Today, a poorly controlled conglomerate of agencies has
merged with big business clans in order to develop their own
financial/bureaucratic interests. As Putin said sarcastically, “The
depths of the government are as deep as the oil and gas reserves of
the Russian Federation, and it is certainly true that things
sometimes vanish there.”

Indeed, strong
legislative or judiciary branches, local government, independent
media or public organizations do not counterbalance the mammoth
bureaucracy on the federal level. Bureaucracy, which in the Soviet
Union was at least to some extent controlled by the Party
apparatus, in modern Russia has become a self-sufficient force in
its own right. It easily and imperceptibly substitutes its own
objectives and interests for national objectives and
interests.

Putin can with
the stroke of a pen fire any government official or the Cabinet as
a whole, dissolve the State Duma or a local legislature, or put the
squeeze on an oligarch. However, the president is powerless to get
rid of a whole class of the Russian post-Communist nomenklatura, or
compel them to act contrary to their corporate interests.
Meanwhile, other state and civil society institutions, which could
give the head of state more room to maneuver, have been seriously
weakened in the past few years both on the legislative and
political level. They now find themselves in a rather dependent
position.

This is Russia’s
fundamental national problem today, and it creates serious
difficulties for the country’s development, preventing effective
resolution of many other outstanding problems.
Consider, for example, the definition of ‘national development
priorities.’ In real market economies and democracies (as opposed
to “sovereign democracies”), mainstream political parties with
their think tanks and media outlets formulate national objectives.
Subject to electoral approval, their programs enable these parties
to win representation and control the bureaucratic apparatus. Of
course, this system is not fault-free: it is enough to consider the
problems that now confront the United States, for example. However,
it provides good feedback about policy failures, thereby helping to
correct mistakes without destructive consequences.

In Russia,
however, the opposite type of system prevails: top bureaucratic
structures create political “parties of power” and use their
administrative resources to ensure them the majority in
legislatures on all levels across the country, while executive
officials – both on the federal and local level – jump on their
bandwagon. Needless to say, such parties do not have independent
political programs or a chance to control the executive. On the
contrary, bureaucracy uses these “parties of power” to control the
legislative branch. These parties cannot represent the interests of
society as a whole. Even if some competent and honest deputies wish
to act otherwise, the system is so organized that the wellbeing of
the “parties of power” depends not on the electorate but on federal
or local authorities. Therefore, their positions change in
accordance with the positions of the executive (consider the
citizenship law, and the infamous Law 122, which replaces
healthcare, transportation and other benefits for low-income groups
with cash payments).

Of course, any
party is free to call itself anything it likes – social democratic,
liberal, national patriotic, whatever it sees fit. But its real
identity and role in the country’s political discourse is defined
not by the ruling establishment but by the electorate, whose
interests it represents and defends – if need be – against the
establishment. In this respect, the president’s reply to the
question about the status and differences between United Russia and
Just Russia was not very convincing: as a matter of fact, he was
obviously ill at ease at handling that question.

The contrived
two-party system looks good, is loyal to the establishment, but
utterly dysfunctional. It creates the illusion of broad
representation, stability and cooperation between the different
branches of government, but is in reality divorced from
socio-political life. As a result, public dissatisfaction, fueled
by endemic corruption, crime and ethnic problems, vents itself
through spontaneous street protests, which immediately become an
object of manipulation by political extremists. Meanwhile, the
ruling establishment plays on the public’s mood in a bid to win
over this “electoral resource” to its side. Apart from a handful of
large parties vying for a “pro-presidential” status, other parties
have either been pushed out of parliament by restrictive electoral
laws and administrative regulations, or call upon society to move
“back to the Soviet future,” or even “farther back to the
imperialist Great Russia’s future.” 

Thus, in
practice, Russia’s national priorities are formulated as an
aggregate of bureaucratic interests at all levels – from the
federal to the local. The president inadvertently confirmed this
when he described the decision-making procedure for a priority
national project: “While we were drafting the demographic program,
we held 15 or so meetings,” he said. “Almost all positions were
harmonized, but there were a few loose ends to be tied up, and then
they said to me: ‘We cannot come to terms on these three issues.
We’ve got to see you.’ I so said, ‘Okay, let’s have another
meeting.’”

Meanwhile,
experience shows that whatever compromise solutions may be reached
between different state and government agencies, they are at best a
common denominator for bureaucratic interests and have nothing in
common with the real needs of society. Thus, “harmonization” as
such rejects all innovative, progressive ideas that may be crucial
for resolving the country’s pressing problems, but fail to respond
to the interests of narrow-minded departmental, bureaucratic
interests.

History shows
that bureaucracy has never produced any breakthroughs or original
solutions. The only exceptions may be found perhaps in the realm of
foreign policy due to the specifics of this sphere. Otherwise,
innovative ideas have always been forwarded by “outsiders” –
political pundits, independent experts, public figures, etc., and
successfully pursued only when such people were granted broad
executive powers, always working hard to overcome bureaucratic
resistance.

For example, who
would object to the four great national priority projects that were
entrusted to First Deputy Prime Minister Dmitry Medvedev
(healthcare, education, housing and agriculture)? But what was the
underlying principle in defining the volumes of funding that would
be required and the mechanism of the projects’ implementation on
the departmental and local levels? In theory, these and other
related functions should be performed by the legislative branch,
public organizations and, if necessary, the judiciary. But in
reality, from every indication, their role is close to zero. The
same applies to Russia’s three national priorities that Medvedev
formulated at Davos: economic diversification, a modern economic
infrastructure, and investment in human capital. This is a fine
concept, but it is not reflected in the 2007 federal budget or in
the three-year budget plan. The main big-ticket items for
government spending remain national defense and internal
security.
The term “executive branch of government” presupposes the execution
or implementation of decisions and programs adopted by other
branches, but not the formulation of national priorities. If the
executive office is bloated beyond all reason, suppressing
everything around it, then the top political leadership becomes
hostage, not the master of events. Only the ruthless terror,
typical of a Stalin or Hitler type of regime, can keep such
bureaucracy in check. But then the entire country becomes hostage
to the arbitrary rule of a single individual and his timeserving,
bootlicking favorites, which can eventually lead to a national
catastrophe.

This scourge
provoked many of Russia’s most outstanding and pressing problems.
This includes a one-sided economy that remains dependent on the
export of raw materials. Meanwhile, society struggles against
social stratification, high crime, ongoing terrorism in the North
Caucasus, demographic decline, and ethnic conflicts. There are also
critical problems involving the housing and utilities sector, the
educational system, technological backwardness, stagnation of the
defense industry, and so on. All of this is exacerbated by massive
corruption. This problem has almost become a way of life, which
erodes society and the state, and distorts and perverts good laws,
projects and initiatives.

Deep-rooted,
pervasive corruption is an inherent element of the prevailing
system. It is a byproduct of an immature market economy
(furthermore, one that is awash in petrodollars) and an
over-centralized model of power.

Soviet
bureaucracy was confined to a non-cash command economy: there were
few financial incentives but significant perks (however modest by
present standards). By contrast, Russian bureaucracy today is
sponging off the privatized/over-monopolized economy with its
astronomical profits. 

With no checks
and balances, modern bureaucracy is bursting at the seams,
consolidating its hold on society and expanding its turf by
churning out convoluted laws and regulations, thus making the life
of all other citizens – from oligarch to pensioner – simply
unbearable. However, any and all difficulties can be smoothly
negotiated with the help of bribes, kickoffs, payoffs, etc.
Thus power at all levels is converted into money, while money plus
corporate loyalty is converted into even more power, and so on.
Institutionalizing harsher punishments, or increasing the number of
supervisory, oversight and controlling agencies, cannot defeat this
system. Worse, these agencies, including the law enforcement and
judiciary bodies, are in their turn also affected by corruption.
Therefore, they are unable to fight corruption or crime on their
own.

Putin’s comments
about the need to strengthen the administrative structure, the
continuity of power, and the fight against corruption (remember his
much touted concept of “separating power from business”) gave the
listener the feeling that too much was left unsaid.

First, what
exactly is meant by the need for more intense “consolidation of
power” (during his February 1 news conference, the president
referred to such a need on three occasions)? If this is about
stopping the fight between different clans within the presidential
staff and the Cabinet, which indeed may be intensifying as the next
presidential election draws near, then “consolidation” is indeed
necessary. But this objective can only be attained when a new party
comes to power as a result of electoral victory with an action
program and a team to replace at least the top 100 positions. Then
the executive works more or less efficiently and effectively as a
single unit, especially if it is consolidated by pressure from the
independent legislative branch, strong opposition and free
media.

In any country,
there are contradictions between different groups in administrative
structures, but this struggle does not affect fundamental issues of
development or even statehood. If the executive is formed on the
basis of compromise between different interest groups within the
state-monopoly elite, fierce struggles between bureaucratic clans
are inevitable. This is especially the case when very big money is
at stake and lobby groups do not petition their demands before a
weak and servile parliament, but appear before the government
ministries and agencies where decisions are made.

But could more
intensive “consolidation” mean the further subjugation of all
branches of government to the executive, not excluding the system
of Siamese-twin parties of power? This is inconceivable. This
behemoth could possibly slip out of control, thus leading to
serious upheavals. The main objective today is not to strengthen
the “vertical chain of command,” but to establish effective control
over it, making it more governable, and restoring feedback
mechanisms between society and the state. Administrative
reshuffles, personnel changes, or “public assemblies” established
from above (e.g., the State Council or the Public Council) can
achieve these objectives no more than Baron Munchhausen was able to
lift himself out of a swamp by pulling himself up by his own
hair.

There is only one
way of solving the problem within an open market economy and a
non-totalitarian political system; it was not devised by Russia nor
is there any need to reinvent the wheel (through “sovereign
democracy,” for example). It involves the reasonable and balanced
separation of powers with an independent judiciary, arbitration and
electoral commissions; fair elections, ensuring that legislative
institutions, despite their constitutionally limited powers,
adequately reflect public interests and check and control
bureaucracy; regular replacement of all top state and government
officials without exception; and free media and law-abiding public
organizations (NGOs).

Needless to say,
we are living in a world that is far from ideal. Moreover, we are
not starting from scratch, but with the hard legacy of the 1990s,
as well as the upheavals of the preceding decades of Soviet power –
not to mention the legacy of our more distant past. So the
development and expansion of civil and political institutions
cannot be allowed to drift; there can be no freewheeling here,
which may threaten social stability. This process should be gradual
and based on a steady improvement in living standards, acceptance
of the norms of political tolerance, responsibility and respect for
law and human dignity. The vector of social development, however,
is of crucial importance here. Thus, the thesis about a “further
consolidation of power” raises more questions than
answers.

All of the above
is also crucial for curbing corruption. Media campaigns, new
oversight agencies and tougher penalties (something that the
president spoke about at his news conference on February 1) alone
cannot do this. The reason: the dominance and omnipotence of state
monopoly in the economic and political system.

The cure involves
economic diversification and a transition from a one-sided model,
which is based on the export of raw materials, to an innovative
path of development. Only through such a change can Russia assume a
stable position in the world, independent from oil and gas prices –
a position as an equal among the great powers and centers of force.
Administrative reshuffles and personnel changes alone cannot turn
around the economy. Nor can the military-industrial complex, which
is oriented not toward the end user in a free market economy, but
toward state orders and the over-politicized system of the
international arms trade.

A real reform of
the Russian economy is impossible without reforming legislation,
specifically establishing clear and immutable property rights
which, in turn, can only be guaranteed by a clear separation of
powers, an independent judiciary, arbitration rules, and effective
law enforcement; transparent and well-defined relations between
power and business, including antitrust law; modern and transparent
banking, insurance, and mortgage infrastructure (rightly defined as
a national priority); and viable civil organizations protecting the
interests of employers, employees, and consumers alike.

Without the
creation of these basic needs, it will be impossible to attract
major domestic or foreign investment into the high-tech sectors of
the economy, which is key to long-term economic growth.
Furthermore, state direct investment, which is something in demand
by the Communists, will be partly appropriated and partly used to
build giant enterprises producing expensive, yet low-quality and
uncompetitive goods. The export of raw materials, in cooperation
with the banking sector, will remain the engine of the Russian
economy for some time. However, an energy superpower is a lot like
“hot ice”: they are unknown in history, and it is highly doubtful
that one will exist in the future. What does exist, however, are
raw-material appendages to industrial and technological powers and
coalitions such as the United States, the EU, and Japan, as well as
China, India, and Brazil, the ASEAN countries, and East Asia’s
‘little tigers.’ None of these countries built their power on the
export of raw materials, nor should we hold out hope for a “unique
Russian path.”

While taking
rightful pride in the economic upturn of the past few years, we
must not forget that Russia’s GDP is thus far only double the
budget of the U.S. military (whereas Russia’s own defense budget is
25 times less than that of the U.S.). At the same time, doubling
Russian GDP – the ambitious task set by the president – must not
come at just any price. If this is achieved by further bloating the
raw materials sectors of the economy, the consequences will only be
comparable to those of the 1970s-1980s, when the Soviet economy,
saddled with an unbearable military burden, collapsed under its own
weight.

Unsurprisingly,
the president noted with regret that the positive changes in the
real sector of the economy “are far more modest” (a growth rate of
about 4 percent a year). Meanwhile, only those high-tech sectors,
including small- and medium-sized businesses, can ensure effective
employment, close the gap between the rich and poor, drive
technological advancement, ensure modern and credible defense,
stimulate the export of high value added products, and free Russia
from the bondage of world commodity prices.