Gref and Kudrin Condemn Russian Government’s National Projects as Ineffective or Worse

Paul Goble

            Staunton, September 17 – Soviet leaders preferred to spend money on gigantic national projects rather than meeting more pedestrian but compelling needs for both ideological and propagandistic methods, seeing them as exemplars of the state’s ability to transform the environment and evidence of the success of the Soviet system.

            The Putin regime has done the same for similar reasons, underfunding basic programs and lavishing funds on national projects in the belief that this will lead to a breakthrough to Russian economic growth and also because such projects justify the growth of the bureaucracy and the transfer of public funds into private hands than are ordinary spending programs.

            But as in Soviet times, such “national projects” seldom attract much criticism because they are an integral part of the thinking of the top man in the Kremlin.  But now, somewhat unexpectedly, two prominent Russian liberal economic thinkers have attacked such efforts as ineffective or even counter-productive.

            In a commentary for Snob, Georgy Bovt outlines why Sberbank head German Gref and Accounting Chamber head Aleksey Kudrin each say that the national projects won’t have the impact on economic growth that the Kremlin promises but will have unfortunate consequences involving further bureaucratization of the economy and corruption (snob.ru/entry/182734/).

            Gref says bluntly: “National projects will not give the result sought because of shortcomings in the way they are structured.  Moreover, it is a myth that there are such giant resources available to spend.” He adds that “the chief problem of the Russian economy remains ineffective management,” a direct attack on the state bureaucracy which controls much of it. 

            Kudrin for his part says there are sufficient resources available but that they aren’t being deployed in a consistent or useful way, thus reducing the positive impact of the national projects while allowing for funds to be diverted away from the main tasks and quite likely in ways that add nothing to the economy.

            Moreover, he points out, “many goals bear an abstract character,” an arrangement that will allow politicians to declare victory even if there isn’t one and that means the results will be falsified to cover their tracks. In short, these projects will not have the impact on economic culture that their authors claim.

            These projects, for example, will do little or nothing to promote competition. “Theoretically,” as Bovt notes, “it is possible to build a successful economic model without political competition (see for example the model of China) but then there must be harshly imposed principles of meritocracy.”

            In Russia, he continues, “a different principle governs: ‘To our friends, everything; to everyone else, there is the law.” If nothing is done about that, the much-ballyhooed national projects not only won’t produce a new burst of economic growth; they will reinforce the existing economic and political system with all its shortcomings.

            The points that Gref, Kudrin and Bovt make are hardly original. Less prominent Russian and Western analysts have made all of them. What is striking is that they are being raised at a higher level, a possible indication of regime weakness and a certain one of the fundamental problems of the Putin system.