Russia: Progress and Prospect

Ditchley’s programme placed our conference conveniently between the elections to Russia’s Duma and those, next June, for the Presidency; and diagnosis of the former partnered prognosis for the latter in launching  our discussions.

The high voter turn-out for the Duma elections had given lie to the conjectures of public apathy; but the outcome was not easy to read clearly. Party structures were fluid, even inchoate, and ideological classification was uncertain. There had undoubtedly been in some sense a shift to the left, even if the Communist Party’s success might owe less to ideology than to its efficacy as the one coherent structure; the reformers were mostly fragmented and ill-coordinated. The new 5% threshold for securing representation should progressively encourage coherence, as indeed should the Presidential election, but much learning - for example about the meaning and conduct of effective campaigning - remained to be done. Interpretation of results was complicated also by the fact that the Duma’s comparative impotence gave the elections the character more of a protest vote (amid, for many people, still-falling standards of living) than of a choice of government We observed that this impotence - reflecting a constitutional imbalance compounded by continuing scepticism about the legitimacy of the referendum which had established it - might well become a major political issue during the next Presidency.

The Communist vote had apparently been based in large measure upon the elderly (or, said another view, upon those still dependent on public budgets). It might also be exploiting an anti-Western Slavic strand in popular attitudes, as well as a general hankering after the order of a rosily-remembered past. The key questionfor the more-important Presidential election might be whether allegiance resting on such a blend of attitudescould manage to recruit enough “floating” electors and majority trust to lift the vote for (presumably) Mr . Zhuganov from 25-30 percent to the necessary 50 percent; many participants thought not, and believed that for all the present political inadequacies of the reformers the future, in the wake of the Soviet Union’s implosion, had to lie now with them.

Despite the doubts about Mr Yeltsin’s health, it seemed certain that he would stand in June; and we found it hard not to see the ultimate contest then as between him and Mr Zhuganov - other candidates looked unelectable against either. We heard some conjecture that a Yeltsin campaign might seize an aggressively anti-Communist theme; whether that was so or not, there was unease that electioneering might prompt promises of largesse - for example to the public sector – sitting very uncomfortably with sound economic advice. The latest Yeltsin administration seemed based, in its new personalities, upon tough pragmatism rather than any special policy theme; but questions might persist - given the Presidency’s power - about whether Mr Yeltsin was consistently well briefed, and whether his impulsive style could avoid further damage to systematic government and officialdom’s confidence.              

Few of us shared fears that postponement of the election might be contrived; and we saw its successful and fair completion and follow-up as key interests of both Russia and its friends even if - perhaps especially if - the electorate’s choice involved a transfer of authority; maintaining legitimacy of political process was essential whether or not it brought to power an incumbent carrying a label unwelcome to many. We were moreover exhorted not to rush to unfavourable judgement or uncooperative action, whether politically or in economic fields like investment or IMF and EBRD support, about a hypothetical President Zhuganov. Reform - especially economic reform - was now irreversible, and a Communist-labelled leadership, for all that it might have been carried to power by popular backlash against the pains of change seen as unsuited to Russia, would face the same realities as President Yeltsin - the need to reassure essential foreign investors, for example, and the incompatibility of massive subsidy with free-market pricing.

While we recognised that the economy could not revisit the past, we did see the possibility of attempts to pause, or to adjust orientation towards more “directed” patterns, seeking in some manner special to Russia to control the pace or character of de-control. Privatisation had been of colossal scale - far bigger, in proportionate terms, than in Thatcherite Britain - and its management had been hugely difficult; this aside, we heard a vigorous argument that the control of inflation, entailing very severe interest rates and difficult borrowing, had been assigned too high a priority at the expense of growth. Whatever the path chosen, foreign investors - public or private - should recognise widespread continuing opportunity in the long run; and that prospect might be enhanced if Russia’s condition as an economy in transition was accepted as justifying some sectoral protection rather than (as some participants perceived matters) confronted in global markets by measures of hostile protectionist effect under anti-dumping guise.

It was not to be expected that so large an economy should present a uniform picture amid near­ revolution. Energy and telecommunications both crucially needed foreign investment, and at least the former showed encouraging signs (though amid world over-capacity the nuclear industry’s prospects were problematic). The most dismal sector however was agriculture - of high political and social as well as economic importance, but beset still by attitudes that held it back more than did lack of investment. There had been little privatisation, credit was difficult, the Mafia loomed and the absence of a good land code (partly for reasons of historic psychology over any market in land, partly because the subject was a particular victim of legislative paralysis in the Duma) was a grave handicap. Despite patches of improvement, and though no-one starved, food distribution mostly remained grossly inefficient, with huge losses in transit

Solid economic advance and efficient trade still needed a more effective rule of law; we heard gloomy commentary on the continued general lack of true political independence among the judiciary and - once more - the weakness of legislative underpinning for the struggle against pervasive corruption fostered by a malign combination of a private-enterprise break-out lacking a stable culture and an officialdom often little steeped in a sense of public interest; too generally, corruption was still simply the way to get things done. Extortion and other violent crime (often with an ancestry within the Soviet state apparatus) moreover flourished on a near­ endemic scale which, beyond resource waste, threatened both the people’s trust in public order and the confidence of foreign residents, visitors and investors.

Both internally and - very plainly - in its external interfaces the course of Russia’s evolution reflected a continuing uncertainty about identity, even within the “political” class : was Russia to be a nation state at ease with a market economy functioning in a global environment, or the wounded, aggrieved remnant of an authoritarian empire? Foreign-policy stances - especially at the level of rhetoric, though the substance of action was mostly steadier - often appeared to swing widely between these divergent self-perceptions and foci for patriotism. Russia seemed not yet to have settled to a consistent and coherent view of its interests and priorities in foreign policy. The real locus of policy-making, amid fragmented structures, was not clear to other countries, who found it difficult accordingly to base their own dealings upon sure calculation; hope was expressed that Mr Primakov’s arrival as Foreign Minister might bring improvement at least in this regard.

We had not time to touch on more than a few particular aspects of foreign policy. Some participants looked for a more positive interest eastward towards Asian neighbours (and others adduced evidence of its emergence). Our look at NATO expansion could do little more than note sympathetically its high sensitivity for Moscow, with voices however urging that the issue should be seen primarily as an aspect of European development rather than just through a Russian prism. Overall, though, the West should recognise with satisfaction - and seek to reinforce for the future - the fact that, amid an unfamiliar process of opening and complex new issues, Russia (inescapably a great power despite temporary weakness) had for five years generally demonstrated a desire to be part of, rather than to disrupt, the international order.

The role of Russia in relation to the newly-independent states around it caught our particular attention. Russia’s size inevitably gave it a degree of economic dominance (a fact which warned against facile analogies with the European Union) and past history created among neighbours a suspicious wariness unlikely to fade fast, with apprehension that Russia might be more concerned to extend influence than to buttress stability. But we were reminded that the Russian record in neighbour-relations so far had not borne out the deeper fears. Russia, we heard, fully realised the diversity of the NIS, and sought only to work with the willing in developing the genuinely-shared benefits of consistent market reform and integration, as exemplified by the achievement of a useful customs union : the attitudes of COMECON belonged to the past. Western efforts in the NIS (hitherto at best uneven) should seek to complement, not counterbalance or compete with, Russian activity; and should recognise the reality that several of the NIS still had shallow roots, with governments slow to come to grips with the reality that their independence must be built on their own efforts, not subsidy. The wary view about Russia nevertheless surfaced recurrently in concerns expressed about “bloc” aspirations, and about a poor implementation record of economic agreements that looked well on paper.

That view was to be heard also in our discussion of Russia’s attitude to its diaspora - the twenty-five million Russian-speakers not living within Russia’s own borders. Unease was voiced about the concept of dual citizenship for these, as dividing allegiance; and Russian military intervention around its borders - mostly unrelated to that diaspora - had caused disquiet In that regard, however, a vigorous defence noted that Russia had nowhere moved precipitately, and that the United Nations had regularly shown itself sluggish and reluctant in situations where some stabilising action had been imperative.

Discussion of intervention brought us to the conflict in Chechnya - seemingly a massive blunder, at least in its execution. It remained to be seen, some thought, whether this proved to be an exception (springing from weakness) carrying powerful lessons for Russia itself, or an ominous portent for Russia’s neighbours. On any view, it brought home the current shortcomings of the armed forces. Russia was under no credible external military threat at present, despite the propensity among its military leadership to perceive danger, and it scarcely posed any menace of its own, externally or internally. The army was deeply divided, with morale and efficiency at very low ebb and attitudes perhaps ill-suited to Russia’s real situation; it was not capable either of undertaking large forays beyond Russian borders or of enforcing radical new dispensations within them in support of any changed political leadership.

We touched only briefly on other Russian institutions - with approval, on a press notably free and mostly confident so far; and on the Orthodox Church, where we meditated inconclusively about the possible weight of political influence and the direction in which it might be exercised. And we knew that our debate did less than justice to the mostly-healthy significance of the regional awareness and energy that was providing (while posing no real risk of the Federation’s break-up) a growing albeit variable counterweight to Moscow centralism.

Our terms of reference had sought to invite particular focus upon what the West and the global community should do to support Russia’s constructive evolution. Russian success was a major long-term interest for the world community, but we had to acknowledge that the proportionate leverage available was modest, though we were urged not to underrate its value, especially during 1996 when key political and economic directions might be set. The positive involvement of Russia - and as a voice to be seriously listened to, not just an ear to be lectured - in structures like the G7/8 would reinforce Russia’s anchorage and stake in world order. We were reminded however that in current domestic political conditions United States leadership, crises apart, was unlikely to be either vigorous or resource-rich.

As we peered into the future we speculated about the chances and the character of potential surprise - some big non-linear event (a terrorist or natural calamity? hyperinflation? the dramatic emergence of a charismatic political figure?) that might provide a new defining moment for Russia’s direction. Such a possibility could be neither discounted nor assumed, we knew. But meanwhile we were minded towards an up­beat general appraisal. Much in Russia, in the past five years, had gone better than previous conferences had foreseen. Economic change - if not yet its political counterpart, though in the long run free politics and free markets were not reliably separable - was by now irreversible. We could all still discern the strands in Russia’s complex web that might support less agreeable developments (the near-absence of a middle class, some suggested, or a special concern for order above democracy) and it was clear that though the structures for the successful Russia we hoped to see were being increasingly institutionalised they were not yet establishing accepted legitimacy at the same pace. All this said, we came away mostly heartened by our dialogue. Two years ago our conference looked for “at best, some special Russian version of muddling through”. This time, amid all due recognition of uncertainty, our long-term optimism was a degree or two stronger.

This report reflects the Director’s personal impressions of the conference. No participant is in any way committed to its content or expression.

Chairman : Sir Brian Fall, GCVO, KCMG