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. Last Updated: 07/27/2016

Auto Edict Fine Politics, Poor Policy

Even if it comes to nothing, the Russian government's decision to ban ministers and bureaucrats from using foreign cars as their official vehicles is first and foremost a great stroke of politics.


The idea was first proposed by new First Deputy Prime Minister Boris Nemtsov, a regional governor with a great feel for grassroots sentiment. Russians can only be appalled at the extravagance of the expensive foreign cars that convey top officials from meeting to dacha to meeting. Anything that cuts the cost of the official car fleet is to be applauded.


But the question of whether the cars should be local or foreign is completely separate.


While it might appeal to Russian nationalism to criticize the use of foreign cars in favor of domestic models, that does not make it good policy. It smacks of a worrying attitude of protectionism, which is the antithesis of the free competition that the new Cabinet seems to be advocating in other areas.


Many have been quick to point out that the GAZ factory, Russia's main producer of official cars, is one of the biggest employers in Nemtsov's hometown of Nizhny Novgorod. The value of GAZ stock has jumped dramatically since Nemtsov floated the foreign car ban.


Nemtsov rejects any charges of protectionism or self-interest, arguing that his sole rationale is that Russian cars are cheaper to buy and cheaper to maintain.


It is true that Russian cars are cheaper, mostly because of the high taxes on imported cars, but that does not mean they are a better value.


The Volga sedan, the basic car produced by the GAZ factory for officials, shares the poor reputation of most Russian cars. One Kremlin official confessed recently that of 700 Russian cars bought for the president's staff every year, 200 break down immediately and 300 need repairs within weeks.


The government may well find that maintaining a Volga is a heavy burden. Moreover, the price may not be much lower than foreign models because most bureaucrats will require hybrid Volgas with pricey imported engines and parts.


Thus, while it might not make economic sense to buy a top-of-the-line BMW over a basic Volga, it might make sense to buy a basic Czech or Korean car.


Maybe this is taking the whole thing too seriously. It is, after all, just politics, and in general the Cabinet appears to be in favor of freer trade. But protectionism is not the answer to Russia's economic problems, and foreign cars should compete on equal terms with Russian autos in state procurement.