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Nomenklatura has little interest in Russia’s WTO accession.

Posted by democratist on April 12, 2011

12th April 2011,

At the beginning of the year, Democratist commented on Russia’s chances of joining the WTO, following an agreement with the EU in December 2010 which had supposedly brought accession closer to reality.

At the time we said,

“…there remains a great deal of protectionist sentiment domestically within Russia. This is best exemplified by Putin’s own attempts last year to modernize domestic industry through a renewed emphasis on industrial policy (to be funded by raw materials rents). A lack of cash seems to have put paid to that strategy for the time being, but Democratist maintains that a rise in raw materials prices beyond a certain point will likely prompt a shift back towards protectionism.”

And lo and behold! With oil heading up towards the $125 per barrel mark, yesterday’s Vedmosti reports  on a recent spot of petulance from Vladimir Putin with regard to WTO (at a conference in Saint Petersburg last Friday). Apparently, “Russia is not going to meet the demands extended to WTO members before becoming a member itself…We are not going to observe anything of the sort as long as we are not members. Period.”

But as the paper ruefully notes, in relation to Russia’s (frequently diverted) path towards possible WTO membership over the last decade; “the government of Russia and Putin himself bear at least part of the blame for the state of affairs where Russia cannot make use of any WTO advantages. As happened on several occasions already, the moment Russia approached the coveted membership, Putin pulled off something unexpected that caused a delay or detour…All speculations on how Russia is kept out of the WTO are really a smoke-screen designed to conceal the lack of genuine interest in the membership. Russian businesses keep seeing the WTO as a threat. The Russian leadership has but a dim awareness of the advantages that go with the membership but know that at the very least it will require transparency of the kind Russia is not accustomed to. There is no powerful group of interests in Russia interested in the WTO membership.”

WTO membership, and the huge boost it would imply for liberalization, is not an option unless the nomenklatura decides it is serious about economic reform. But as long as the oil price remains high there is no incentive. Why risk “instability”, when you can just divvy up the spoils with your old chums from the KGB – with enough left over to keep the proles in line, until the next crisis?

It is this old guard whose opinions count, and which will still count after the Presidential elections, regardless of whether Putin or Medvedev “wins.”

Posted in Autocracy and Innovation, Elections, International Political Economy, Liberalism, Russia & the WTO, Russian Liberalization | Leave a Comment »

The Arab Spring and “Structural Power.”

Posted by democratist on March 31, 2011

March 31st 2011,

A few days ago we noted Michael Cox’s recent restatement of the argument that, despite the current debate about it’s supposed decline, the US has managed to retain a great deal of “structural power.” However we did not explain this concept in any detail.

The notion of structural power was first put forward by the British academic Susan Strange in the 1970′s. In her classic States and Markets (1988) she defined it is as;

“the power to shape and determine the structures of the global political economy within which other states, their political institutions, their economic enterprises and (not least) their scientists and other professional people have to operate…Structural power in short confers the power to decide how things shall be done, the power to shape frameworks within which states relate to each other, relate to people, or relate to corporate enterprises.”

Essentially in Strange’s view, “structural power” is the power of a state to shape various kinds of international frameworks: For her, the advantages for the US of the dollar as the key post-War currency for international trade was the central example of structural power at work, because it allowed the US to run large deficits at reduced cost (a feature of the International Monetary System which continues to this day).

However, it has occurred to Democratist that beyond the realm of economics, the “Arab Spring” we are now witnessing may well represent the strengthening and maturing of a new and potentially far more important form of structural power, one that may well confer considerable advantages for the US, and the wider West over the coming years.

As Halliday argues in Revolutions and World Politics (1999), in addition to expressing the tensions that occur within societies in transition, revolutions are also a result of the pressures placed on traditional societies by international factors.

And over the last 20 years the international trend towards democratization - which therefore increases pressure on others to democratize - has strengthened markedly; the end of Communism, the enlargement of the EU, the continued democratization of Turkey,  the revolutions in Serbia, Georgia, Ukraine, Lebanon - and now Tunisia, Egypt and (possibly) Libya.  These will all add to the already considerable domestic problems faced by developing autocratic states as an additional, and now heightened structural pressure for domestic reform, if revolution is to be avoided.

This trend has in turn been encouraged by a developments in IT and globalization;  Al Jazeera, Twitter, Wikileaks, Wikipedia and Facebook are all a part of this process.

But while the US has consciously (and sometimes counterproductively) sought to export democracy for much of the last century, a great deal of the attraction of democracy - its equation with modernity for increasing numbers of people throughout the world - has been partly independent of the United States’ actions. Rather the desire for freedom and egalitarianism which informed the French and American revolutions has taken on something of a life of its own – regardless of (for example) the US invasion of Iraq, or support for Hosni Mubarak.

Nonetheless, since democratization represents the development of an international framework within which states relate to each other, and one which seems likely to disproportionately favour the democratic West (no two democratic states have ever gone to war with each other), whilst placing an additional pressure on authoritarian competitors, this democratization has to be seen as a burgeoning form of Western structural power.

Posted in Democratization, Egyptian Revolution, Historical Materialism, International Political Economy, Jasmine Revolution, Libyan Revolution, Orange Revolution, Revolutions, Russia 2012 Elections, wikileaks | 4 Comments »

Policy and innovation: A more detailed view.

Posted by democratist on March 14, 2011

March 14th 2011,

So far in our “Democracy and Innovation” series, Democratist has outlined the liberal case that innovation generally requires the development of a creative and competitive culture, which must in turn be based on democratic government and the rule of law; we have briefly explored Niall Ferguson’s argument that the command economy led to Soviet economic stagnation in the 1980′s which, combined with an unsustainable levels of defense spending in order for it to be able to compete with the (more innovative and competitive) West, drew it inexorably towards collapse;  and we’ve looked at Kolesnikov’s argument that Medvedev’s Skolkovo project will not solve Russia’s underlying problems in relation to innovation, because it does not include an element of political, or systemic economic reform.

Now let’s take a closer look at Russian government policy and its relationship to the most important internationally competitive sectors of the wider Russian economy, so as to establish a more detailed picture ofthe key problems facing these sectors, and how they have been affected by the way the country is governed.

A good starting point here is Crane and Usanov’s article “Role of High Technology Industries,” in Aslund, Guriev & Kuchins’ (Eds.) Russia After The Global Economic Crisis. (CSIS, 2010).

Crane and Usanov begin by noting that both Putin and Medvedev have envisioned increased output from high-technology industries as driving Russia’s future economic growth, and (thanks to the massive and unsustainable funding highlighted by Ferguson) that the USSR passed on to Russia a large cadre of well-trained scientists and engineers, and a highly developed system of national laboratories and research institutes, capable of building sophisticated machinery, such as the world’s first satellite (Sputnik), nuclear weapons, advanced fighter aircraft and intercontinental ballistic missiles.

However, the number of active research laboratories has fallen sharply since the Soviet period, and the aging Soviet-era industrial base still forms the core of Russia’s current high-tech industry: Software is the only substantial high-tech sector to have emerged in Russia since 1991.

Crane and Usanov’s article explores the current state of Russia’s software, nanotechnology, nuclear, aerospace and armaments industries in turn;

Software

Software has been a post Soviet success story, but is still operating on a small-scale (gross revenues of about $5.5 billion in 2008 compared with $60 billion in India). It benefits from its young workforce, low entry costs, absence of legacy assets and small size (as the government has not yet bothered to regulate it).

However, “…the greatest barrier to the development of the industry is thuggery and corruption that Russian entrepreneurs face from the police and other government officials. Bribing inspectors, tax collection agents, and the police places a substantial burden on companies…. This climate of intimidation and fear discourages entrepreneurs from expanding their businesses and puts a premium on moving assets outside of Russia.”

Nanotechnology

This field is considered a key technological priority by the government, and several well-funded programmes have been set up by the state to support it.  Russian scientists have been relatively productive in theoretical research, but performance has not been as strong at the commercialization stage of the innovation process. Russia has only produced 0.2% of the total of global patents related to nanotechnology (2008).

Nuclear

In 2007 the civilian and military sides of the industry were integrated into the State Atomic Energy Corporation (Rosatom – $11.7 billon of sales in 2008). Rosatom’s subsidiary Atomenergoprom is one of the world’s largest nuclear companies, and Russia has a  strong competitive position in the nuclear fuel cycle. The Russian state has continued to invest in R&D, funded construction of new plants domestically, and provided strong political support for projects abroad. Nuclear power and related industries are one of the few high-tech sectors in which Russia has a serious R&D base and can compete on the world market.

Aerospace

Russia remains a world leader in the production of space launchers, and now the US Shuttle has been retired, Russia’s Proton rocket remains the only well-tested rocket capable of ferrying people and heavy payloads into space. By contrast, Russian communications satellites have not been competitive internationally. Wider use of GLONASS, is hindered by inferior quality and the higher cost of receivers. Other satellites tend to be for military use only. Soviet aircraft were never competitive internationally, and there has been little improvement since the Soviet period (although a number of recent foreign partnerships may change this).

Armaments

During the 2000′s exports grew rapidly, especially to India and China (which accounted for about 70% of total sales). The Putin administration made a concerted effort to consolidate the industry by creating large holding companies. This trend has continued under Medvedev, and has had the negative consequence that prices have risen domestically, as a single seller makes it more difficult for the government to negotiate lower prices.

Conclusions 

One of the main conclusions of this study is that Russian government policy to encourage growth in high-tech industries through the creation of large state controlled agglomerates – especially in armaments, the nuclear industry and aerospace – has not been very effective, and such industries continued to account for only about 3% of GDP by 2008.

This is fully in line with what the liberal model of innovation would predict; while the Russian state is making a concerted attempt to drive innovation in many of these fields through increased funding and R&D programes, the evident lack of competition stemming from the creation of agglomerates, problems relating to corruption, the rule of law and government accountability, have had a demonstrable impact on the ability of many firms within Russia’s high-tech sector to innovate, commercialize their ideas, expand, and reach their full potential. This is having a gradual impact on the ability of many of these firms to compete internationally.

Crane and Usanov believe that those companies or sectors that are most integrated with, and open to the global economy have the most favourable outlooks; software, scanning probe microscopes and uranium enrichment. They suggest,  “The record of the past two decades indicates that future success in these sectors will depend on increased integration into the global, especially European economy. In aerospace, sales of rockets, aircraft components, aircraft design services, and the new Sukhoi Superjet have depended on collaborating with foreign manufacturers. Prospects for Russia’s armaments companies are dimmer because they remain much more insular than firms in other sectors.”

Posted in Autocracy and Innovation, Democratization, International Political Economy, Russian Corruption, Russian Economy, Russian Liberalization, Russian Military, Russian Science, Soviet Economy, Soviet Union | 9 Comments »

Democracy and Innovation: Mevedev’s Skolkovo Illusion.

Posted by democratist on March 10, 2011

 

10th March 2011,

In our last article, Democratist looked at Niall Ferguson’s insightful analysis of the impact of autocratic government and the command economy on the Soviet Union, and the effect this had on the USSR’s ability to compete with the United States, and its eventual collapse.

But the Soviet Union has been history for almost twenty years. The more skeptical among our readers will doubtless be thinking, “The Command economy may be finished, but surely the Chinese example shows that authoritarian capitalism can come up with the goods just as well as democracy, if not better. Why shouldn’t Russia follow an authoritarian capitalist model?”

One obvious answer to this question is that the Russian elite has been following their own interpretation of just such a model since 2000, and that the results in terms of Russian economic diversity, industry and technological capability have been poor at best. 

While economic growth was indeed strong for much of the last decade (and is returning) this has been largely a result of Russia’s vast natural resource endowments, which account for around 70% of exports, and which played an important role in attracting the financial flows that boosted other sectors such as construction and the retail trade: Given easy access to money from hydrocarbons after 2002, and an ingrained fear of the social dislocation that would arise from the introduction of a genuine market economy, with a couple of notable exceptions at the start of Putin’s first term in office, the nomenklatura came to largely ignore the need for economic reform between 2000 and 2008.

One of the results of this has been that the Russian industrial and technological base has stagnated; while Soviet science and technology were inefficient and generally lacking in innovation, they at least had the advantage of being seen as strategically important and prestigious: Under the current system a mixture of cynicism and deep corruption, misjudged industrial policy and protectionism have set in, and while recently the government has again come to see science and technology as strategically critical, they face the problem that (following the nomenklatura’s own example) many of their brightest young people seem more interested in milking the state than serving the nation as scientists. Subsequently, the old Soviet engineering culture is slowly starting to die out.

But, as Andrey Kolesnikov, a columnist for Novaya Gazeta wrote in an excellent article for Open Democracy last July, even since 2008 President Medvedev has felt obliged to restrict his plans for Russian innovation within the confines of the “ghetto” of the Skolkovo project, and in a manner heavily reliant on foreign investment, as opposed to domestic innovation.

According to Kolesnilov, Medvedev is attempting, just like Peter the Great, Stalin, Khrushchev and Brezhnev before him, to import technological know-how into Russia from the West, lest the reforms necessary for the development of an innovative culture at home threaten Russia’s social order, and the existing power structure.

But as we saw in our piece about the roots of innovation, genuine innovation (as opposed to re-engineering the ideas of others) can only come from the kind of flexible, creative and inventive culture that emerges from a competitive market economy, backed up by democracy and the rule of law.

Kolesnikov states that the results of this are that;

 “…currently just over 9% of Russian enterprises invest in innovative technology. A comparison: in Germany, the number is eight times that. Fundamentally new Russian products account for just over 70 billion roubles (£1.5 billion). This was 0.4% of the total volume of industrial production in 2007 (in Finland, the figure was 16%). The percentage of innovative production in the total volume of sales in Russian industry is around 5%. Put another way, Russia is backward. 98.5% of patentable innovations are created by 15% of the world’s population, and Russians do not number among them (we are talking in the main about OECD countries)…And this technological gap can only get worse, since the speed of progress is increasing with each year: if in earlier times, moving from one technological generation to another was a matter of 10 or 15 years, now we see that, in aviation at least, this is happening every five years (my source of data are the four 2009 editions of Moscow’s Higher School of Economics Foresight magazine).”

In the first article we posted to Democratist in May last year, we quoted Dimitry Trenin as saying, “The Kremlin …[has been]… forced to come to terms with the fact that Russia cannot modernize on its own and that it needs Western investment and strong business partnerships with the West.”

But upon reflection, even if that partnership were to bear fruit in Skolkovo this still would not really resolve the broader problem of the stagnation of Russian science and technology: That kind of change implies a deeper political and cultural shift.

 

Posted in Autocracy and Innovation, FDI, International Political Economy, Liberalism, Russia - US Relations, Russian Corruption, Russian Economy, US - Russia | 3 Comments »

Wikileaks and the broader foreign policy context.

Posted by democratist on February 22, 2011

22nd February 2011,

Democratist has been thinking a bit more about the implications of last year’s various Wikileaks disclosures, and Western information integrity more broadly.

What Assange has helped create is basically a form of journalistic sourcing, albeit enabled by the internet and therefore on the grand scale. He himself comes across as eccentric, but this is far bigger than one man; the technology exists, and Wikileaks seems fairly uncontrollable under existing media laws in most democratic countries. 
 
Freedom of the press is a critical check on government and a sine qua non of an open society. But leaked documents can be used to betray human sources, or techniques which provide information that may be used by governments to bolster the cause of democracy and their national interests. Once the information is out, you can’t put the genie back in the bottle; journalists may edit it to remove names, but sophisticated hostile governments can (presumably) eventually hack into the journalists’ computers to discover the information they did not make publicly available.

Democratist believes that in reacting to Wikileaks (and similar future imitators), Western governments have to put the principle of freedom of the press above that of their own information integrity. It is the job of governments to safeguard their information, but if they are unable to do this they will have to live with the consequences. Once the information is released into the public domain, there are clearly legal limitations to the actions governments can take, and the imposition of additional restraints on the press are unlikely to serve the cause of liberty. It is better to concentrate on protecting those who may have been exposed, and the introduction of additional safety measures for the most sensitive information, rather than going off on legally questionable witch-hunts (although in clear-cut cases where it can be proved that existing laws have been broken, prosecutions should follow). 

Democratist does not consider the Wikileaks cables to have been a major cause of the recent uprisings in MENA (although they may have been a contributory factor), but the Wikileaks saga does appear to be symptomatic of a broader international technologically driven shift in power in terms of availability of information and organization away from the state towards the press and people. Democracies have less power in relation to their populations than autocrats, so autocrats have far more to lose from this trend (and probably have a higher proportion of disgruntled potential “leakers”); and since no one can afford to shut off the internet for too long if they wish to run a successful modern economy, their room for manoeuvre may be limited (they are unlikely to be able to block information as effectively, or for as long as they wish).

While much of the leaked information has so far come from the US, Democratist suspects there will be plenty more from countries that lack democratic legitimacy, and are therefore less stable, so the impact of future leaks will be much larger for these countries than the West. Ensuring and respecting freedom of the press at home will therefore also have positive foreign policy implications, because hostile autocracies will not be able to accuse the West of hypocrisy when the focus falls on them, and their attempts at media and internet crackdowns will further delegitimize them in the eyes of their people.

Posted in Autocracy and Innovation, Democratization, Egyptian Revolution, International Political Economy, Jasmine Revolution, Western Foreign Policy, wikileaks | 1 Comment »

Russian “Re-Sovietization” versus global capitalism: Who’s going to blink first?

Posted by democratist on October 20, 2010

20th October 2010,

Today, Democratist has been listening to a podcast of a lecture given by Professor Niall Ferguson (Philippe Roman Chair in History and International Affairs at the LSE) on “The Political Economy of the Cold War.”

It explores the competition that existed between the US and Soviet economic systems during the Cold War, and how far the outcome of the Cold War was economically pre-determined.

Among other things, Ferguson demonstrated in detail that, from the high hopes of the 1950′s, the Soviet economy stagnated, and from 1975 negative productivity growth was a clear sign it was on the critical list;

  • Growth rates declined dramatically after Khrushchev, and total factor productivity plummeted to the point that Soviet factories eventually became value subtracting.
  • The planned economy did not work, because in the absence of market signals, resources were misallocated.
  • Corruption was endemic to the planned economic system because incentives were completely misaligned.
  • The only thing that kept the Soviet show on the road after 1969 was the subsequent rise of the oil price on international markets.
  • The Chernobyl disaster demonstrated the USSR’s inadequate allowance for depreciation of the capital stock.
  • By the end of the Cold War Soviet GDP was 36% of US GDP. In order to match the US, the Soviets had to spend a significantly larger portion of GNP on the military: 14% by 1991.
  • Life expectancy rates flatlined from the 1960′s (followed by a collapse after 1990).

From Democratist’s perspective, what is most interesting about this analysis is the opportunity it presents to examine the continuities from the Soviet period, and the trend of “partial re-Sovietization” of Russia since 2000;

  • Whereas the command economy is long gone, corruption has had a considerable continuing influence on the misallocation of resources/lack of diversification.
  • But, from the late 1990′s until 2008, high raw materials prices (accounting for 70% of exports) again came to act as a mask to cover deeper structural problems.
  • Inadequate allowance for depreciation of the capital stock has continued, noticeably in relation to Russia’s military (and broader military-industrial complex), and also resulted a number of disasters linked to antiquated infrastructure.
  • National resurgence remains a key aspect of official ideology, and the government is currently planning to embark on a new round of defence spending.
  • Life expectancy crashed in the 1990′s, partly as a result of social dislocation, but also as a result of inheritance of Soviet social trends (alcoholism, smoking). Demographic decline is set to remain a problem.

But, as we have argued repeatedly, despite the fall in hydrocarbon prices over the past three years, there has been little indication the regime has any serious intention of changing course: What we have seen so far remains essentially a superficial invocation of the need for change through the offices of the “liberal” President, designed to drum up additional investment from the West, while the regime waits for a resurgence in commodity prices.

But there is currently little indication that the oil price will revert to 2007 levels any time soon, and foreign investors appear to be getting wise to the Kremlin’s game (why invest in Russia, when there are so many more attractive options?).

It must surely be slowly be dawning on at least some in the nomenklatura that just “going through the motions” isn’t going to be enough.

In the contest between Re-Sovietization and global capitalism then, the question is therefore increasingly, “Who’s going to blink first?”

Posted in Historical Materialism, Historical Sociology of International Relations (HSIR), International Political Economy, Russian Economy | 1 Comment »

Encouraging Liberalization in Russia.

Posted by democratist on July 27, 2010

27th July 2010

Democratist has been reading  Samuel Charap’s article in the Washington Post (“U.S. needs to carefully plot engagement with Russia” – 23rd July 2010) with interest.

Charap suggests a number of potential benefits that might stem from enhancing US foreign policy engagement, as part of a gradualist strategy aimed at fostering the development of a more open political system in Russia, while also counteracting more regressive political forces. He sees three main benefits of improved ties;
.
  • They increase the chances that the US can express concerns about what is happening in Russia without the discussion devolving into a “shouting match.”
  • Such engagement deprives the Kremlin of the specter used to justify its turn away from open politics (the “West as the enemy at the gates”) and the removal of this should improve the position of western-backed NGO’s and increase Russian citizens’ exposure to the US and its political system.
  • Successful governmental engagement will, over time, raise the cost to the Kremlin of actions that would undermine ties.

Democratist is broadly in agreement with the notion of enhanced engagement with Russia, but remains sceptical of the likelihood of success in terms of fostering a more open Russian political system (sections of the nomenklatura have little interest in reform, and remain all to happy to return to a “shouting match” at the earliest opportunity).  We therefore offer the following suggested analysis and approach;

Democratist sees contemporary Russia as suffering from two relevant, and related problems driving the country towards some degree of liberalization; one minor and probably of only medium term relevance, and the second more significant and deeper, but both of which have the same common fundamental cause;

The first problem is the  sharp reduction in world market price for hydrocarbons since 2008 (e.g from around $100 per barrel, to about $75 now). The Russian economy suffers from a lack of diversification and is therefore remains reliant on oil, gas and minerals for 70% of exports. The recent fall in prices for these as a result of the financial crisis has resulted in some additional fiscal pressure, which will have some impact on spending over the next few years. However, this problem should be at least superficially alleviated as hydrocarbon prices recover.

The more significant longer-term problem is a pronounced and increasing national inability in the sphere of technological innovation: Russia is falling behind in terms of its industrial, technological and scientific capabilities. This has serious implications for her continued status as even a regional political, economic and military player, and has manifested itself (for example) in an inability to produce and deploy an effective  reconnaissance UAV (as demonstrated during the August 2008 war with Georgia). Genetics, space, IT, energy, and telecommunications are all other areas of concern.

It is apparently this second problem (especially in relation to the loss of military prowess) which is of greater concern for the nomenklatura, and which therefore provides greater impetus for the current reform drive.

Democratist believes that both of these problems; lack of economic diversification and technological innovation have the same fundamental cause; Russia’s truly extraordinary levels of corruption (worse than many sub-saharan African countries according to Transparency International) which extends throughout all sections of society, but which stem from the top –  because the distribution of rents on the basis of loyalty has been a central component of how the Russian government has done business, especially since 2000, as part of a corporatist economic model.

So, as we have argued, while until recently the government may have been initially hoping to resolve Russia’s lack of diversification and innovation simply by encouraging investment from the West through tax breaks and technology parks, this tactic is unlikely to have any significant effect on its own in as far as it refuses to countenance the kind of deep political reforms required to seriously address Russia’s “hypercorruption”, and thereby make the country a place where innovative Western firms would actually want to invest, and where Russia might develop its own innovative companies.

However, evidence is starting to emerge that for Medvedev at least, this stance may be changing; as George Bovt from the EU-Russia center notes; in a speech given to the Russian diplomatic corps last week, the President stated that the foreign ministry should engage in three tasks as part of his modernization agenda; the fight against organised crime, modernising the economy and most significantly, strengthening the institutions of Russian democracy and civil society.

But even if Medvedev is personally committed, the obstacles to meaningful reform remain enormous and include most prominently an authoritarian concept of the State that flourished precisely as a reaction to the supposed shortcomings of the liberalization of the 1990′s.

So, what can Western countries do to encourage potential liberalization?

We have two initial suggestions:

Firstly, Democratist urges a little restraint. We should begin by highlighting what we can’t do. Preaching at the Russians is likely to be counterproductive given the mindset of many in the nomenklatura. However, in relation to foreign investment, the main position to take is to reinforce the point that, whereas Russia may currently have a corporatist system with a high degree of political control and support for ostensibly private firms, this is generally far less the case in the West, and therefore while the tax breaks, techo-hubs and other initiatives we have seen so far are to be welcomed, it is essentially up to the Russians themselves to make their country a place where innovative Western firms will want to invest.

Secondly, if the Russians do show signs that they are starting to take such an approach seriously, the US and EU might also quietly suggest that, as an initial step they could do far worse than ensuring that the OSCE ODIHR is allowed to observe the forthcoming parliamentary and presidential elections in late 2011/ early 2012. These polls could potentially provide Russia with the opportunity to  demonstrate how things are beginning to change (especially in contrast to the polls in 2007/8 where the Russians deliberately sabotaged the OSCE missions). It would be easy enough to allow some limited media liberalization and reform of the electoral law, and thereby potentially allow some genuine opposition voices into the Duma, while either Medvedev or Putin would almost certainly win the presidency without need for too much recourse to the abuse of “administrative resources” or other forms of fraud. Indeed, this line of thinking may already beginning to emerge; the issue of “winning without the use of administrative clout” was mooted at a special meeting of the United Russia general council (Kommersant, 16th June 2010). However, it will take clear guidance from the top to ensure that such aspirations are observed in practice – and at the moment Democratist still fully anticipates widespread fraud in the local elections due this October (as was the case last year).

If Russia really wants to move from its current position as a raw materials supplier at the periphery of the world economy towards becoming the sort of diverse economy where innovation flourishes, it will have to develop the institutional structures required to make this a reality, and these imply democratic reform because, as Russia is now discovering, accountable institutions provide the sine qua non that supports technological innovation.

Posted in International Political Economy, OSCE, Russian Economy, Russian Liberalization, UK Foreign Policy, US - Russia | 1 Comment »

“Modern Russia.”

Posted by democratist on July 23, 2010

23rd July 2010

Democratist has been fascinated to hear that the Russian government yesterday launched a new website - run by US PR firm Ketchum - (www.modernrussia.com), aimed at informing foreigners about Russian domestic politics, the investment climate, and economic opportunities.

This is especially curious since, as regular readers will be aware, Russia already has a very well-funded (if not especially popular)  international TV channel in Russia Today (broadcasting in English, Spanish and Arabic) as well as a fairly extensive supporting website.

Could it be that the creation of Modern Russia marks the beginning of a tactical shift away from RT’s coarse anti-American propaganda, on-demand faux-pacificism, and penchant for obscurantist conspiracy theory, towards something more sensible, focused around a modernizing agenda?

And if so, who is behind it? Democratist’s initial suspicion is that the new website is a product of President Medvedev’s reform-minded Kremlin, and as such represents a potential rival for RT, which was set up under Vladimir Putin in 2005, and has so far shown little sign of any willingness to change its typically-rabid tone. 

If this is indeed the case then it seems symptomatic of Medvedev’s ongoing circumscribed  power in relation to his Prime Minister that, while the siloviki apparently retain influence over the multi-channel Russia Today, the President has been reduced to hiring a foreign PR firm to creating his own, far more modest web-based affair. 

Nevertheless, Rossiya 24 reports that the site’s creators hope that it will become a “club for discussing problems of modernization” and hope that “visitors’ active participation in internet discussions will help the government to find new ways to resolve various problems and tasks”.

And, according to Matt Stearns, Ketchum vice president, the site is meant to invite participation for people to offer commentary and solutions, which will all be posted if they aren’t angry or profane.

Democratist certainly looks forward to making a contribution. Perhaps if Mr Stearns means what he says, he will post, or link to this, and the following article?

Posted in International Political Economy, Russia Propaganda, Russian Economy | Leave a Comment »

 
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