Wed, Nov 20, 2013 - Page 9 News List

Russia is open about regime’s economic woes

The Russian government’s campaign pledges for economic growth are almost certain to fail. However, the admission of this failure could help in the future

By Sergei Guriev

Russia’s political elite understands that the economy is capable of 5 percent to 6 percent annual growth. The problem is that the reforms needed to achieve such growth — fighting corruption, protecting property rights, privatization, and integration into the global economy — directly threaten the elite’s ability to hold on to power and extract rents. For those in power, a big piece of a shrinking pie is preferable to no piece of a growing one, which is what most of the current elite would receive under a fair legal system with clear rules and predictable enforcement.

Seen against this background, this month’s release of the ministry’s grim forecast for growth is surprising and welcome. At the very least, the authorities deserve praise for frankly admitting that Putin’s promises are impossible to fulfill, rather than continuing to ignore, sugar-coat, or divert attention from the evidence.

The growing realism of the government’s internal — and public — discourse is no small matter. It is finally leading to the much-needed discussion of budget cuts. What this new candor means for Putin’s political future remains to be seen.

Sergei Guriev, a visiting professor of economics at Sciences Po, is a professor of economics and former rector at the New Economic School in Moscow.

Copyright: Project Syndicate

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