Install

Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Reforms That Corrupted Russia

To Our Readers

Has something you've read here startled you? Are you angry, excited, puzzled or pleased? Do you have ideas to improve our coverage?
Then please write to us.
All we ask is that you include your full name, the name of the city from which you are writing and a contact telephone number in case we need to get in touch.
We look forward to hearing from you.

Email the Opinion Page Editor



The judicial assault against Yukos has raised widespread international concern about the arbitrary power of the Russian state. But this apparently new confrontation between business and the state is only one in a much wider range of problems rooted in the reforms of the mid-1990s.

In those years two Marxist dogmas, albeit disguised in liberal phraseology, still shaped economic policy. The first was that the primary accumulation of capital is always a crime. The second was that the structure of property ownership and the market automatically creates adequate political superstructures. The prevailing conviction among the reformers was that it was unimportant how and to whom property was distributed, as long as it passed from the state into private hands. The market would readjust everything. They were wrong: The institutions necessary for the development of an effective market economy do not evolve by themselves.

Russia lacks an independent judicial system. It has neither an independent parliament nor independent national mass media. Electoral procedures and results are heavily influenced by the government machine. The secret services and law enforcement agencies are exempt from public control.

United Russia, the party at the center of the Kremlin-engineered majority coalition in parliament, is not a political party in the true sense of the word. Rather than existing to further a particular set of values, it was established simply as an instrument for carrying out the Kremlin's orders. The mid-1990s reforms also produced one of the other peculiarities of Russian public life: the coalescence of business and government. Cynicism, selfishness and mistakes made by the authors of the reforms led to the formation of a semicriminal oligarchic capitalist system, which has poisoned business and political life. If a businessman tries to become independent or proclaim his own political ambitions, the authorities use an obedient law enforcement system to fish for wrongdoings related to the 1990s privatizations.

It is high time to tackle this problem. Dismantling the oligarchic system is essential. But there are limits to how this should be done. Government-imposed revision of the results of privatization is out of the question. That way, only the owners' names would change, not the system of relations between business and government. Besides the oligarchs and the state, there is a "third force" of people who enjoyed influence in the power structures of Soviet days and believe they were deprived of their share in the 1990s. They are trying to influence President Vladimir Putin to redistribute property by administrative fiat. Such a move would lead to a clash with the present proprietors and undermine confidence in property rights in Russia. Dismantling the current system must not destroy confidence in Putin's reforms and deter international investors.

I suggest a three-part legislative package. First, there should be an amnesty for offenses linked to the privatization process, with the exception of murder and other violent crimes. Second, Russia must adopt regulations to separate business and politics. Financing of political parties is far from transparent. Companies spare no effort to secure parliamentary support through blatant corruption. We need laws on transparent party financing and lobbying.

As a corollary, Russia needs an independent public national television network, to liberate the mass media from oligarch pressure. It might also be useful to limit the rights of those who played a leading role in the mid-1990s privatizations -- both businessmen and politicians -- to participate in political life. A period of, say, 10 years from the enactment of the law might suffice.

Last, Russia needs antimonopoly regulations if its economy is to flourish. Implementing these will require a strong and independent government.

None of this will be easy. But some such legislation is the only alternative to an endless round of Yukos-style scandals, or even more serious power struggles that risk political and economical instability. To preserve a system in which there is no division of power, civil liberties are restricted and property rights are not guaranteed is to prevent Russia ever becoming a fully fledged European nation.

Grigory Yavlinsky is leader of the Yabloko party. He contributed this comment to the Financial Times.