Putting the Cart Before The Horse, Russian Style

by Stefan Spath | Nov 9, 2000 | POLITICS

Back in the late 1980s, nations of the west were delighted and pleased when Gorbachev introduced the political policies of Glasnost and Perastroika. Mild political reforms in a moribund communist behemoth were the antecedents to the eventual collapse of the Soviet State, as domestic demands for further economic reform soon intensified. But to the Russian […]

Back in the late 1980s, nations of the west were delighted and pleased when Gorbachev introduced the political policies of Glasnost and Perastroika. Mild political reforms in a moribund communist behemoth were the antecedents to the eventual collapse of the Soviet State, as domestic demands for further economic reform soon intensified.

But to the Russian people’s dismay (and the rest of the world for that matter) the dreams of an improved quality of life stemming from a new system didn’t bear fruit for the multitudes. On the contrary, a small oligarchy arose, from the well connected old regime, and prospered while the plight of the average Russian got worse.

I don’t want to confuse the reader by suggesting that free-market capitalism failed in Russia. As a matter of fact the Russians haven’t even tried Capitalism yet. The economic quagmire Russia finds itself in is a result of the political failure in the years after the fall of the Soviet Union. Corruption, cronyism and a befuddled populace not fully weaned off of Marxist ideology were the culprits.

So it seems interesting to me that amidst all the economic turmoil in Russia today, multilateral organizations like the IMF and the World Bank are emphasizing the need for economic reform without properly identifying the source of the bad economy. Russia’s political infrastructure needs to be overhauled before legitimate economic changes can be made. As we watch the drama of a recalcitrant Vladimir Putin botch economic reform and seriously mishandle the crisis in Chechnya this reality becomes all to clear. Russian political experts have described the situation as dire and say we’re witnessing the degradation of the authority of the state.

If the Russian political elite can establish a credible political framework that ensures property rights, adequate transparency in both the public and private sector, reforms the judiciary and takes steps to correct the problems of corruption and organized crime, investors will come.

Political reform is an essential prerequisite before an economy can flourish.

Stefan Spath

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