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. Last Updated: 07/27/2016

INSIDE RUSSIA: System Rules Out Financial Restructuring




Last week, the president shrewdly said "we have no crisis." Thus, on orders from above, the package of bills that Prime Minister Sergei Kiriyenko submitted to the State Duma on July 1 changed its name from an anti-crisis to a stabilization plan.


For the first time in several years, the government proposed to the lower house of parliament a complete program to cure the two basic illnesses afflicting the Russian budget: bloated spending and dystrophic revenues. The deputies also did their best to come up with ideas for getting out of the financial crisis: to freeze treasury-bill payments, to invest Central Bank profits into industry and to demand 520 billion Deutsche marks from the Federal Republic of Germany as compensation for lives lost in World War II (they paid the Jews, so why should we keep silent?). The award for most original suggestion goes to Vladimir Lisichkin of the extremist Liberal Democratic Party, who proposed solving Russia's financial problems by filing a $900 billion lawsuit against the International Monetary Fund for damages the country suffered during economic reforms.


The regime's "policies correspond perfectly to the plans of Adolf Hitler," Communist Party leader Gennady Zyuganov said. Yabloko leader Grigory Yavlinsky showed consistent thinking by devoting the greater part of his speech to exposing the anti-people measures of increasing the tax burden. "Increase tax collection by 2 percent. This will demonstrate your effectiveness," he said, addressing the government.


The LDPR's explosive leader, Vladimir Zhirinovsky, said nothing about the program. Instead, he said all democratic processes should be frozen and that ties with Iraq should be strengthened. The Agrarian Party leader Nikolai Kharitonov said the government program was worthless and called on Russia to follow in the path of postwar Germany, expressing the opinion that "everything was nationalized" in Germany in 1949.


When the parliament began voting on the actual anti-crisis package itself, it became clear that the Duma had no intention of abiding by the government's main condition that the measures be adopted across the board. Without waiting for July 15, I can say with confidence that the bills aimed at lowering taxes will triumph in all three readings. Anything that threatens the pocketbooks of the deputies or their sponsors will be sent to the trash bin.


The Duma's predictable reaction to the anti-crisis program raises the question of whether existing state mechanisms are adequate to implement the measures, considered too harsh by demagogues and insufficient by economists.


For six years, the Russian state has been living beyond its means. The budget has been torn between the regime's oligarchic essence and its democratic form. Just as in medieval Florence, the oligarchs have been paying regressive taxes while, as in modern-day Sweden, the people have been demanding social spending from the government.


It is obvious that a true restructuring of Russia's finances will require that one of the system's components disappear: either the oligarchs in the form of such companies as Gazprom and Yukos, or democracy in the form of miners on the railroads and Zhirinovskys in parliament.


Yulia Latynina is a staff writer for Expert magazine.