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. Last Updated: 07/27/2016

Golden Parachutes in the War on Terror

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If the era of Mikhail Gorbachev will be remembered for anti-alcohol campaigns and perestroika, and Boris Yeltsin's administration for elections and privatization, then perhaps President Vladimir Putin's regime will be remembered mostly for its war on terror. Putin was appointed prime minister in 1999 as apartment buildings exploded in Moscow, followed by Dubrovka, Beslan and suicide bombings.

The initiatives aimed directly at combating terror -- the second Chechen war, the so-called peace process in Chechnya and putting metal detectors in public places -- have not been sufficient to stop the rising tide of terrorism.

At the same time, the processes unfolding behind the slogans of the war on terror could have serious consequences for Russia's economic and political development. First and foremost, they include the siloviki's stronger role in the state, limitations on freedom of speech, the undermining of democratic institutions and, finally, the slowdown in military reforms.

It is no surprise that a country that is at war and confronting the threat of terrorism is increasing its military spending. In the United States, defense spending has increased by several times in recent years. However, we should not forget that a rapid increase in spending can have a negative impact on the economy. For example, expanding the Israeli military budget from 9 percent of GDP in 1968-72 to 16 percent in 1973-91 made a significant contribution to the country's rising inflation. Of course, Russia's defense spending is substantially lower, and for the time being we do not have to worry about skyrocketing inflation. Yet if spending continues to grow at the current rate, it is very possible that it could become a serious factor affecting inflation. The state will only be able to balance out this influence by reducing other types of government spending. The federal budget for 2005 already cuts social spending while giving more funding to the military. But there is no guarantee that more money will reduce the threat of terrorism, as there is absolutely no public monitoring of how these funds are spent and the military is riddled with corruption.

Along with more defense funding, military agencies and officials have also gained more and more political influence. The change in Russia's leadership allowed powerful new figures to redistribute property to their own advantage. Stalled gas industry reforms, the Yukos affair and stronger state control over the oil industry all reflect this general tendency. Whether this is part of a long-term plan on the part of the siloviki or whether it is happening spontaneously is up for debate. Yet one thing is clear: The process will continue. It is not surprising at all that we sometimes hear talk of disgraced oligarchs' ties to Chechen terrorists. If you get creative enough with terms like "terrorism" and "the war on terror," you can justify almost anything in Russia today.

Many observers have already noted that eliminating gubernatorial elections, limiting the freedom of the press and making the State Duma subservient to the Kremlin will not help us fight terrorists. Yet setting limitations on democratic freedoms and strengthening autocracy are typical reactions in countries confronting terrorism and separatism. Even in a country like France, Algerian independence proved a serious trial for democracy. The Kurdish independence movement has slowed the process of Turkey's democratization, even though the country wants to become part of the European Union. Many violations of democratic freedoms in the world's poorest democracies, such as India and Sri Lanka, are also associated to a large extent with separatist movements.

It is more than likely that if terrorist attacks continue, the Russian authorities will be forced to turn to extreme measures, and the presidential initiatives of Sept. 13, 2004, will become just one of many steps toward dismantling democratic institutions in the country.

The inability to protect the public, not to mention the difficulty of waging a war against one's own people, can play cruel tricks on people like the siloviki in democratic states. As the Abu Ghraib prison scandal proves, violating human rights -- even those of terrorists from other countries -- is perceived extremely negatively in developed liberal democracies. Thus, in their attempt to avoid responsibility for their actions, the siloviki are instinctively trying to limit the powers of democratic institutions.

The slowdown in military reforms has become one of the most important consequences of the terrorist attacks in Russia. The main argument in favor of postponing reforms is their cost. Yet at the same time, officials want to do away with deferrals in order to draft students, which will likely lead to increased costs in supporting the army. All the concerns about the cost of reforms recall the old Russian saying that "the stingy pay twice." Other arguments can be heard behind the economic worries, namely that it would not be a good idea to move to a new way of recruiting and supplying the army when the country faces the threat of terrorism and armed conflicts.

The costs of the universal draft system are huge, and they will not fall with time. They include the notorious artificial demand for education, widespread corruption helping draft dodgers, and finally the damage to the health of those who do wind up in the army. Despite the high costs, doubts remain as to whether the military is capable of protecting the public should war break out. In a certain sense, this is not the Russian military's main goal. It emerged in its current form during the relatively peaceful era of the Cold War, when victory was not decided on the battlefield but by counting weapons. This is why the entire military system needs to be reformed in order to counter the threat of terrorism.

The term "golden parachute" is often used in business: A company's CEO who shareholders believe is threatening the future of the company is sent into retirement with a fat pension package. In other words, shareholders pay the CEO to leave. This is exactly what Spain did with its generals when it became a democracy.

In Russia, it seems that the time has come to put out to pasture the most passionate opponents of military reform by giving them a golden parachute. The salaries and monetary benefits for high-ranking military officials have increased rapidly, and if we add the profits they make from controlling the various resources that move through their agencies, it turns out that they are already costing the country a significant amount. As a reasonable and well-conducted reform of the military should reduce the irrational use of funds, paying top brass to leave would not put too much of a strain on the federal budget.

Civilian experts need to be involved in planning and implementing reforms, and military organizations themselves need to be placed under strict public control. We need reform in order to improve the military's readiness to combat terror. However, terrorism is forcing the country to move in a completely different direction.

Ksenia Yudayeva is a member of the expert council at the Carnegie Moscow Center and director of applied programs at the Center for Economic and Financial Research in Moscow. She contributed this comment to Vedomosti, where it originally appeared.