By George H. Wittman on 11.28.07 @ 12:07AM
Once again, Russia thinks state control of the economy is essential to its becoming a great power.
It is clearly a retrogressive, though not entirely unexpected,
path that Vladimir Putin appears to be carving out for the Russian
political economy. The major infrastructure giants of the natural
gas monopoly, the principal pipeline developer, and the oil cartel
have been returned primarily to state control. And this is only
part of the story.
From Putin's standpoint -- and that of his fellow intelligence
and security compatriots -- regaining control of key basic
industries from private hands was essentially a patriotic act of
law and order. From the philosophic position of political economics
it was strictly a move toward socialism and away from capitalism
and free enterprise. Kremlin apologists correctly note that
something had to be done to wrest control from the criminal
oligarchs of the 1990s Yeltsin period, but the problem had existed
long before.
Russian domestic life had come to accept everyday criminality
within the old Soviet Communist system going back decades. The
preferential treatment of Communist Party members had become built
into Soviet life. Nepotism ruled all aspects of political life and
that was accompanied by a structure of black market operations and
general economic corruption from the top to bottom throughout the
Soviet Union.
A large and powerful class of traditional criminality had grown
by the 1970-'80s throughout Russian business. The big operators of
this illegal system were the first ones to benefit by the breakdown
of Soviet state ownership after Gorbachev. They had the money and
connections to win the auctions of state property and so became the
arbiters of Russian business life -- the oligarchs -- after the
fall of the Soviet Union. An initial honeymoon followed Yeltsin's
departure, but the millionaire crooks soon became a target of Putin
and his ex- KGB/military reformers -- the siloviki.
The old line Russian intelligence and security officers value
state ownership as the primary instrument of a socially and
politically viable society. The state owns, the state, governs, the
state regulates and protects. The ordinary citizen and his
enterprises must remain subsidiary to the general welfare as
defined and controlled by the state.
Such an attitude is the essence of the modern Russian national
personality increasingly defined by Vladimir Putin's leadership.
It's democracy in name only just as was Lenin's interpretation of
Marx. Russia is on the slippery slope of returning to a
state-managed industrial economy justified by the need to have
strong central leadership in order to avoid a reoccurrence of the
chaotic Yeltsin period. And Putin has an over-70% approval rating
among his countrymen!
Putin and his team have the riches of Russia's oil and gas on
which to build their new quasi-socialist state. This is potentially
as dangerous an adversary as the Soviet Union ever was. Driven by
the same sense of xenophobia and paranoia that affected Russia of
the earlier years, Putin's Russia falsely equates the U.S. plans
for a modest anti-missile base in Poland with Russia's own efforts
to justify the resurrection of medium range missiles aimed at
Western Europe. A concomitant question now is how far will the
Russian leadership go to expand their conventional and missile arms
industry supposedly justified by the United States' minuscule ten
interceptor base in Poland?
Investment by the Russian government is not simply targeted at
basic industry. The high technology aspect of Russian manufacturing
has received considerable attention. Scores of billions of dollars
are being poured into projects as diverse as nanotechnology,
pharmaceuticals, the chemical industry and aerospace. Any
industrial area that requires large injections of capital are now
current and potential recipients of state financial aid and
accompanying management influence and eventual control.
There is no doubt that state intervention with money and talent
is one of the ways to jump start an emerging economy. Nonetheless
it has been pointed out that in spite of its overall size, Russia's
GDP per capita is still only about 40% of Portugal's, even though
Moscow has stated that it wishes its nation to be one of the
world's top five economies by 2020.
Some analysts have calculated that to make this possible will
require an investment of a trillion dollars in the next ten years.
Russian bankers have stated they see a considerable potential for
private investment, foreign and domestic, in these ambitious plans.
State intervention and control does not encourage such
expectations.
The recent experience of Royal Dutch Shell in being pressured
out of a key oil and gas project it had pioneered in Sakhalin has
had a dampening effect on foreign investment in other energy
infrastructure projects and akin areas essential to broad scale
development. This has not deterred the Kremlin's drive to press
forward. It retains its objective to be competitive with the rest
of the industrialized world while returning to a centralized
economic power structure of state control of basic industries and
research.
One would have thought all those bright thinkers in the Kremlin
would have learned a bit more from their past economic lesson.
topics:
Vladimir Putin, Economics, Business, Law, Military, Russia, Socialism, Energy, Oil
