RIA Novosti: Russia still far behind

RIA Novosti July 14, 2007

Official reports confirm Russia remains far behind the developed world

President Putin has frequently complained that international reporting on Russia is biased and unfair, that the media focus on the bad news rather than on positive developments. There is certainly some truth in this – Western reporting on the Soviet Union and on Yeltsin and Putin’s Russia has varied between brilliant and insightful and downright incompetent. Nevertheless, Putin’s comments display a profound failure to understand what drives the 24/7 international news agenda.

And as new reports by the World Bank and the Swedish Defense Research Agency make clear, it is hard to put a good spin on bad policies.

The Sochi Olympics

This week, Russia started getting down to the serious business of organizing the 2014 Winter Olympics after Sochi’s successful bid to host the Games.

President Putin’s injunctions to the prime minister, ministers, government officials and the Prosecutor General were symptomatic of Russia’s current stage of development.

In televised remarks, Putin told officials to set up a special working group at the Prosecutor General’s Office to ensure that the billions of dollars the state will spend on building the necessary sport facilities and transport infrastructure will be used rationally and as intended.

He also told ministers and Yuri Chaika, the Prosecutor General, that the working group should prevent the money from being siphoned off and embezzled and should include people from other law enforcement agencies to beef up monitoring.

The Russian media highlighted Putin’s call for the working group, but Dmitry Chernyshenko, the head of the Sochi bidding committee, argued that the fears of fraud were exaggerated and rightly pointed out that in the last 15 years, Russia has made great progress in democracy, openness and transparency.

But it is hard to imagine that a western head of state would feel the need to set up an audit body with such a specific brief: the legal regimes and control mechanisms in developed countries are by no means perfect and cannot prevent corruption, but they are far superior to similar institutions in Russia.

Putin’s orders reflect his recognition of rampant corruption, but Transparency International claims that since 2001, graft in Russia has in fact jumped sevenfold.

Russia’s Governance Indicators far behind G7 and OECD

This week, the World Bank Institute published its sixth annual Worldwide Governance Indicators.

The Bank summarizes six aggregate indicators to arrive at an assessment of how well countries are governed: i) Voice & Accountability, ii) Political Stability and Lack of Violence/Terrorism, iii) Government Effectiveness, iv) Regulatory Quality v) Rule of Law and vi) Control of Corruption.

Needless to say, the G7 and the OECD continue to boast the high values which indicate better governance – in other words, these are the advanced first-world countries, or those aspiring to become developed.

But no matter how you slice and dice the data, Russia almost invariably appears far below the advanced countries and falls in the ranks of the lower percentiles, which indicate the percentage of countries worldwide that rate below the selected country.

Even more worrying to Moscow ought to be Russia’s poor performance in the much-vaunted BRIC group, with Russia often far behind Brazil and India, although China more often brings up the rear with a big lag.

Indeed, Russia doesn’t even perform particularly well among the group of countries from the former Soviet Union.

All this, however, is no surprise – I have often pointed out in this column that despite its demands to be treated as an equal, Russia is still a long way off achieving anywhere near the levels of the developed West and Japan – and also of OECD members such as Mexico.

Moreover, the World Bank study shows that Russia’s relative performance vis-à-vis other countries had improved from about 2000-2001, with the percentiles of its Governance Indicators on the whole increasing.

But since about 2002-2004, Russia’s Governance Indicators have generally been flat or declining – the notable exception is Political Stability.

The World Bank is keen to point out that these Governance Indicators are subjective, rightly arguing that the areas it examines cannot be measured by objective scientific methods.

Nevertheless, this general impression of Russia’s development under Putin is probably shared by most domestic and international observers – despite claims by the president of biased reporting in the western media.

Further deterioration of UK-Russian relations?

This week, Mikhail Kamynin, the Russian Foreign Ministry’s official spokesman, stated that Russia did not understand why London was making such an issue of the Lugovoi-Litvinenko affair when bilateral and multilateral relations were progressing so well and were so important to both countries.

Is this true, or is Moscow merely being disingenuous?

Whatever the truth, Russia has caused unnecessary problems for itself – it certainly should have foreseen the negative effects its policies would cause in bringing about its own isolation.

This week, the Swedish Defense Research Agency published a report sponsored by the Swedish Ministry of Defense and entitled “Russian Leverage on the CIS and Baltic States.”

The study analyzes Russia’s use of foreign policy levers, such as energy and culture, and concludes that Russia’s actions during the “oil and gas wars” and the recent crisis with Estonia have caused a backlash and go against Russia’s stated aim of joining the WTO and better relations with Europe and the EU.

But the report also rightly points out that in fact Russia has few levers – and this accounts for its increasingly bellicose statements as it understands more and more that its power is not increasing in line with its wealth.

Moscow should now be deeply concerned that its main allies continue to be in Central Asia (and Armenia), while in Europe and the West it has mere partners – many of whom are now deeply worried about Russia.

The British government, for example, made it clear this week that it was reconsidering cooperation on all fronts with Russia following Moscow’s refusal to extradite Lugovoi to face trial in the United Kingdom, although opinion in the British House of Commons seems mixed.

Some MPs say it is now time to stand up to Mr. Putin, an argument long advocated  by respected publications such as The Economist and the Financial Times, while others say Russia is too important to antagonize since it is an emerging power with huge energy reserves and can help solve international problems.

Moscow, however, would be unwise to push its “divide-and-rule” policy too far since it runs the strong risk of overplaying its hand and causing yet more negative sentiment – and that could lead to actions not in Russia’s interest, as the UK government has already implied.

So it remains to be seen whether Moscow has learned from its “Olympic Victory” and can use soft power more – and more wisely – in the future.

Putin and the West

Putin often makes comparisons between Russia and the West, explaining away developments in Russia by pointing to apparently similar trends in Europe or America.

This is true up to a point – the West has no ready answer to a raft of problems such as AIDs, drug abuse and crime and racial discrimination and attacks.

Nor is democracy particularly healthy, with sometimes low turnouts and voter apathy.

But the crucial difference between Russia and, say, the United States or the United Kingdom, is that despite the mess in Afghanistan and Iraq, their values and their wealth remain immensely attractive globally – and this is a function of their high governance indicators and political stability.

As a result, their soft power remains colossal, while as the Defense Research Agency points out, Russia’s levers are mostly negative.

Moscow sees itself as a major power due to its energy resources, without acknowledging that this is largely just a function of supplying raw materials to much more advanced and developed countries in Western Europe.

Yes, Russia is building pipelines to export more oil and gas to China and the rest of Asia, and Russian oil companies are expanding their refining capacity to move up the value chain.

But Russia will still remain an exporter heavily dependent on energy.

Alexei Kudrin, Minister of Finance, says that over the next several years, this dependency will fall as investment in other areas increases.

The way forward?

Rising commodity prices and a young dynamic president after Yeltsin have brought greater wealth and stability to Russia.

Equally important, but far less remarked, is that Putin, like many other leaders, found it relatively easy to fix the “big” problems in his first term, but is now finding it harder to achieve change in his second term.

Finding policy solutions to reduce corruption – and then to implement them – will be immensely difficult.

Moreover, political risk will increase over the next nine months or so due to the State Duma elections in December 2007 and the presidential elections in spring 2008.

It will be up to Putin’s as yet unknown successor to grapple with these problems – if he wants to.

 

Ian Pryde is CEO, Eurasia Strategy & Communications, Moscow.
Moscow. Ian Pryde for RIA Novosti 14.7.2007.

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  1. Russia Skeptical About World Bank Study Of Worldwide Governance Indicators

    MOSCOW. July 13 (Interfax) – The Russian Foreign Ministry has expressed doubts about the impartiality of the World Bank study “The Decade of Measuring the Quality of Governance” evaluating the standard of governance in over 200 countries around the world.

    “Fundamental as this study is the neutrality and political impartiality of its authors arouse doubts,” a statement posted on the ministry website on Friday says.

    “In particular we are bewildered by several evaluations of the state of affairs in Russia. For instance, in terms of recognizing public opinion and the accountability of the authorities the Russian Federation ranks lower than several absolute monarchies,” the commentary says.

    It also says that the index of political stability in Russia in 2004-2006 was much lower than in countries that experienced acute political crises.

    Information concerning several other countries also seems doubtful, the Foreign Ministry believes. “Such oddities give reasons to skeptically regard the results of the work of World Bank experts and use the data from the study with care,” the commentary says.

    The World Bank study was published on July 10. It is based on sociological surveys conducted by several international organizations over the past 10 years on such key parameters as political stability, the effectiveness of governance, resistance to corruption etc.

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