Medvedevĺs Usual Patter in Sochi
Published: October 2, 2013 (Issue # 1780)
Theá12th Sochi International Investment Forum brought together numerous senior officials andádozens ofáregional governors. This particular forum stands out among theámany held ináthe regions as being second inástature only toáthe annual St. Petersburg International Economic Forum andáone that traditionally attracts attention fromátop leaders. Andáso it was that Prime MinisteráDmitry Medvedevánot only spoke atáthis forum, but also published aálengthy article ináVedomosti titled ôThe Time foráSimple Solutions Has Passedö toácoincide with theáevent.
Ofácourse, theáarticle starts with theáclaim that Medvedevĺs government accomplished all ofáthe main tasks that it set out toáaccomplish during its first year. Mevedev did not express particular concern that while his government was ôintensifying reformsö andáôlaunching mechanisms,ö economic growth continued toáslow andáôthe rate ofágrowth ofágross domestic product this year probably will not exceed 2 percent.ö Second, theáarticle addressed tasks that theágovernment will have toátackle ináthe future. He blamed theálow investment ináthe countryĺs economy onátwo factors: theáôirrational fearsö that investors have about working ôin anáincomprehensible andáunpredictable Russiaö andátheir rational distrust ofápublic institutions, including theájudiciary andálaw enforcement. He rightly points out that Russia inágeneral, andáthe economy ináparticular, is overly centralized andásuffers fromáan inefficient state system.
He offers aánew approach foráthe economic development ofáthe region, proposing toáôidentify areas with potential growth andáprovide them with targeted support.ö How is this connected with decentralization andáweaning theáregions fromástate subsidies? Fromáthe prime ministerĺs point ofáview, theámain factor ináregional development inárecent years has not been natural resources, but ôthe ability ofáregional leaders andáthe local elite toápromote their territories.ö Theáproposed solution is aánew governmental structure: theáRussian Agency foráPromoting Investment ináthe Regions.
Medvedev also proposed letting regional andálocal authorities give tax breaks forásome new small businesses. That good intention is especially pertinent given theásoaring deficits that almost all regional andálocal budgets are amassing due toáfalling revenues andáincreased social spending.
It is difficult toáimagine that theáprime ministerĺs team really believes that theáproblem they correctly identify as Russiaĺs lack ofáappeal toáinvestors can be solved with bells andáwhistles bringing cosmetic improvements toáRussiaĺs image, rather than serious institutional reforms. Like any savvy technocrat, Medvedev is adept atádiagnosing theádisease but unable toáprescribe anáeffective treatment.
Given theáannounced spending cuts toáthe state budget, it would be better if theácountryĺs leaders andátheir large entourage ofáofficials would come toáthe forums ináSt. Petersburg, Sochi andáKrasnoyarsk carrying specific andáwell-prepared proposals rather than vague declarations andácalls foráimprovement. That would be their contribution toward achieving Medvedevĺs goal ofáshifting toáa more compact andáeffective system ofágovernment.
I happened across some material fromálast yearĺs forum andánoticed that it was practically identical toáthis yearĺs: With fiery language, Medvedev called foráRussia toábecome more competitive, proposed numerous regional investment projects andáso on. I can only hope that next year theáfeeling ofádeja vu will not be so strong.
Nikolai Petrov is aáprofessor ofápolitical science atáthe MoscowáHigher School ofáEconomics.