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. Last Updated: 07/27/2016

A Novgorod Model




Those who complain about the vagueness of acting President Vladimir Putin's political program are missing some rather obvious clues. Just after he was appointed prime minister in 1999, Vladimir Putin made his first official visit, to the Novgorod Oblast. When asked why he had chosen Novgorod, Putin replied that this trip had been planned by his predecessor, but then added, "I think that every prime minister would like to see Mikhail Prusak in his Cabinet, but as far as I know, he does not plan to leave Novgorod." Even without leaving Novgorod, however, the young governor of this resource-poor region has had a visible impact on Putin's agenda.


Take the issue of land ownership, a key source of political and economic stability. While the notion may be alien to most of Russia, in Novgorod it dates back to the Middle Ages and is closely interwoven with local commerce and self-government. These traditions of "northern self-government" resurfaced after 1991, bringing the issue of local property rights back to center stage.


For many local activists, the problems facing Novgorod today seem similar to those it faced in the past. Then, as now, the city must expand trade to survive, introduce local self-government and keep a safe distance from Moscow to preserve its freedom. These are precisely the issues that Novgorodians had to grapple with in the 12th to 15th centuries.


The solution, embraced by the local elite and the governor alike, has been to make self-government meaningful where it counts: at the grassroots level. Local historians like to point out that republican Novgorod had a far more decentralized federal structure than the current Russian Federation, with local assemblies that extended down to the street level. Governor Prusak, who has long advocated this kind of grassroots federalism, contrasts "the starkly centralized model [of] Muscovite Rus [to] the Novgorod model characterized by greater openness and democracy" in his latest book "Reform in the Provinces" (1999).


In 1997, Novgorod city officials passed innovative legislation on neighborhood associations in a conscious imitation of the property-based democracy of their ancestors. The idea, according to Novgorod city councilman Sergei Bessonov, was to show that "everybody can be a property owner because the city is giving each tenant his or her apartment, so they will have a vote in the neighborhood self-government councils that are being set up."


Since becoming prime minister, Putin has focused special attention on the need for regulating land and property relations. Without clear rules in this realm, he argues, the country cannot expect to achieve better economic results, or attract major foreign investors.


Last November, he announced that property owners must be protected from "the tyranny of officials, racketeering and protektsiya." In January, the Security Council's Interdepartmental Commission of Economic Security argued that greater supervision of property management was needed to restore public confidence in market reforms and democracy. Then, last month Putin made international headlines by calling for a referendum on private ownership of land. "Farmers," he said, "should not have any fears that someone could take away their land.''


Again, the coincidences with Novgorod are striking. Instead of waiting for approval of the federal land code, Novgorod modified its own legislation to allow for investors, including foreigners, to own the land on which they build production facilities. But changes in land ownership have not just affected large-scale enterprises; 95 percent of agricultural land has been transferred to the mutual funds of agricultural enterprises, leading to nearly 40,000 newly recorded land deals.


Putin's publicly thanking Prusak for "his conscientious work and consistent pursuit of economic reform" fueled speculation that Prusak may now be ready to make that move to Moscow. The appearance in Nezavisimaya Gazeta of a reform platform authored by Prusak and two other governors has only encouraged such speculation.


Prusak's approach has done wonders for Novgorod. In the Asian Wall Street Journal on Nov. 5, 1999, William Lewis, director of the McKinsey Global Institute, wrote that Novgorod's gross domestic product per capita increased 3.8 percent per year from 1995 to 1998, while in the rest of Russia GDP per capita declined by 2.7 percent annually. Moreover, Prusak has stabilized the economic situation without sacrificing the needy or suppressing political opposition. The secret to his success: massive amounts of foreign direct investment in local industry. With a population of just over 750,000, the region attracts about five times as much foreign direct investment per capita as does the rest of Russia. Doing the same for the rest of Russia, by the way, is a central part of Putin's agenda.


In short, those looking to fill Putin's agenda with substantive content need look no further than Novgorod.


Of course, we shall have to await the outcome of the presidential elections to see whether the Putin-Prusak model will be implemented for Russia as a whole, but there is historical precedent for it. Investment, agricultural reform, protectionism and foreign investment were the watchwords of Count Sergei Witte, the most successful prime minister during the reign of Tsar Nicholas II, and Mikhail Prusak's favorite statesman. Since the dramatic economic success of the "Asian Tigers," it has been known as the Asian model, but, as Duke University political scientist Jerry Hough points out, it was first the Russian model.


Theodore W. Karasik is editor of the journal Russia and Eurasia Armed Forces Review Annual. Nicolai N. Petro teaches political science atthe University of Rhode Island and is completing a book about the Novgorod region. They contributed this comment to The Moscow Times.