Bureaucracy on the Rise

13 may 2007

Alexei Arbatov is 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).

Resume: 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.

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.

Last updated 13 may 2007, 17:14

} Page 1 of 5