Окт
31
2016

Structural Reforms in Russia not proper Time to Start. Some Options do exist

(# 1 in the series of articles «The Anatomy of Reforms in Russia») Because of the rapid changing modern world the Russian Federation needs everyday process of reforming its regulation due to the fact of great control over society and business. In order to prevent social conflicts authorities should monitor system’s bugs and update “programming”.

Just to be clear let me show an example of downloading digital application (at App Store or Google Play Market). How often do Software developers fix bugs, add new features trying to stay up-to-date? They use to call reforms as a release and updates. My smartphone downloads and installs Apps often, very often. It’s ok. Businesses try to provide me with a safe product of good quality. We can apply the same logic to State’s regulation.

Reforms can be various being dependent on their scope, structure and sphere of activity to regulate. Today about the necessity of structural deep reforms in Russia speak many experts and development institutions, including state-owned. In October 2016 Ministry of Economic Development of the Russian Federation announced long-term Forecasts of socio-economic development that in the next 20 years the Russian economy will stagnate (grow at an average rate of 2% per year).
That’s an argument to conduct structural reforms. I suppose ordinary people and business feel the same necessity of positive changes.

We have spoken about reforms in a projection of people’s “need”. Further ingredients of achieving success in governance reforms are “passion” and “possibility”.

Does Vladimir Putin have an interest in running reforms? Are Elites passionate for positive changes in society? Few days ago ex-Finance Minister which is now considered to be future Prime-Minister Alexei Kudrin have stated that Russia probably will manage and implement structural reforms right after Presidential Elections in 2018. To hear that from such an acknowledged person may confirm the hypothesis that Russian Elites don’t want to risk and make reforms in a hurry. Russian people are afraid of State changing its rules after commonly thought unsuccessful “Perestroyka” and “Shock therapy” reforms in 1980-90th. That’s why reforms can make no good political credits to authorities.

The downturn of reforming processes was determined by World Bank. According to 2017 Doing Business report Russian Federation have implemented one reform and have taken 4 steps backward in ranking after long-term progress (transfer from 36th  to 40th position of 190). For example in 2015 there was information about five successfully implemented reforms (read more).

Next thing to discuss is “possibility” of Russian authorities to succeed in reforms.
As from my own experience Moscow faces problems with effective management and implementing reforms. Reform process is a chain of events consisted of highly intellectual system analytics and legal work in case of willing to maintain a long-term effectiveness of regulation. Easy to say, hard to do.

Two major problems can determine here:
№ 1 Problem. Ministry of Economic Development of the Russian Federation combined with pro-governmental Agency for Strategic Initiatives are not the best option for Russian people’s future considering Law reforms. More logical would be a chain consisted of Ministry of Economic Development of the Russian Federation – Ministry of Justice – “Centre for Legal Reform” (does not exist yet).

Russia needs one more powerful and wisely independent from Government body Mr.Kudrin has talked about this year. To trigger competition inside bureaucracy by creating parallel structures is a special trick and feature of so-called Russian style management (read more about “Russian model of managing” by Alexander Prohorov from Yaroslavl University). I would name it “Agency for Real Reforms and Policy”.

№ 2 Problem. Lack of qualified Workforce and Mistakes made by Management
Actually the problem is about employees who obliged to do work with no necessary qualification and education. Hard to imagine such a situation in the private sector but for the civil service it can be real. Also management is of a poor quality. It can be ok for routine operations but not for highly intellectual work as reform process is. Quite simple logic: lawyers should draft law and by-law acts; economists should make forecast, calculations and other relative stuff.

Regarding severe unwritten rules and ethics of Russian bureaucracy reformers need protection, special powers, social guarantees and compensations. Nothing like that is suggested now. I suppose that status of a reformer should be determined by legislation (law, not by-law act) and provide him/her necessary powers to be honest, thoughtful and independent in decision making. Reformers by the nature of their work are in conflict with bureaucracy and specific civil servant who tend not to change routine and traditions. That idea and a set of powers are considered to be discussed in Russia within all 3 branches of power.

Speaking about lack of the workforce – Russia suffers from an absence of qualified strong and resistant lawyers to protect society and business from authorities. I can’t figure out a precise number, but taking into account strong Russian bureaucracy we should speak about hundreds of thousands lawyers and human rights protectors. Reforms seek people of special kind of thinking, brave and honest working for the people.

I believe that if society and business hope to see real positive changes of their live standing we all need to accept the idea of sending thousands of patriotic people outside Russia to study in best worldwide universities. And we should start acting immediate – beginning from 2017.

As a conclusion I want to emphasize that a special feature of successfully implemented and accepted by business and society governance reform (not “shock therapy” as in 90th) is a long-term run. It’s much harder to create then to destroy.

As I have already mentioned above Russian authority unlikely to start structural reforms till 2018-19. But what Russia can do is to prepare basis for long-term reform process for the next 5 years (2018-2023*). Russians should establish an alternative Centre for Policy as a political institute as Mr.Kudrin has suggested, as well as Centre for Legal Reforms connected with Ministry of Justice. And should send abroad at start 1 000 lawyer to get JD and PhD (S.J.D) by prolonging time effect and extending priority sphere to jurisprudence for State’s supported Global Education Program (now it’s designed for engineers, economists, medical care workers).

* Curiously to know that Russians traditionally call a 5 year period of time with ambitious aims to achieve as “Pyatiletka” in an inexplicable sense of nostalgia for soviet time period.

Venn Diagram Reform

P.S. Let me share with you last-minute slogan “After one step backward, it’s two steps forward to a free market, prosper society and peace”.

Dear readers, what slogan do you suggest to use as a message for Russian Reformers? Past, Present or Future?

(c) The author of the text is Vadim Cherdantsev
(c) The author of the Venn Diagram «A Reform» is Vadim Cherdantsev
Moscow, October 2016

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