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. Last Updated: 07/27/2016

Forward Toward True Reform

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A road map for Russian reform needs first and foremost to establish the institutional infrastructure required by a developed country.

As with the problem of basic values, the question of what comes first -- a high level of economic development or the institutions that accompany it -- has no simple, straightforward answer. They should evolve simultaneously. It makes no sense to attempt to build progressive institutions and expect them to function efficiently in a poor and stagnating society. Yet it would be just as pointless to insist that economic growth will automatically lead to a more effective and less corrupt state administration, to an independent and qualified judiciary, to armed forces worthy of a developed nation, or to a modern education system. Moreover, there is no reason to believe growth will lead to better institutions for executing economic policy, better oversight agencies in the banking and financial sectors or fair and efficient social service agencies.

For this reason, the very first item on the agenda must be institutional reforms, which will be the precondition for, and not the product of, doubling GDP and the government's other ambitious economic goals. Institutional reform, however, does not mean yet another round of ministry mergers and personnel shake-ups. Instead, reform should target civil service and radically change the motivations of those working for the state. Civil service should be made more attractive to talented, creative and energetic people, while dramatically raising requirements for skills and honesty. This reform would mean not only significantly higher pay scales, but would also establish a system for evaluating past performance. Moreover, civil servants need to have lawful incentives to pursue their careers, and those who violate clearly stated rules and ethics should be subject to penalties. The activities of state agencies should be painstakingly regulated to increase transparency and give the public and parliament access to information.

The next area that demands our attention is the courts. Once past legal decisions are amnestied, individuals working in the legal system should be held accountable for groundless rulings to a far greater extent than they are today. Moreover, anyone, including officials in the executive branch, who tries to exert pressure on the courts should be held responsible. The tough and inevitable punishment of any unlawful court decisions should outweigh their potential benefits. Oversight of the court system should keep any one group of interests or political forces from dominating the others. At the same time, judges must be granted fair and effective immunity. Finally, a review system to re-examine past unlawful verdicts should be established.

Undoubtedly, to make the courts work, we need to pass and, most importantly, enforce laws aimed at preventing corruption and combatting organized crime. The usual universal methods for dealing with these evils will not work. Instead, we must establish special agencies with sufficient authority that are armed with the proper tools and legal expertise, yet wholly accountable for their activities. The ideas and practical experience are out there, and other countries have solved these problems. All we need to start the process is the political will.

Another crucial institutional reform involves protecting the freedom of information. We desperately need to come up with unambiguous criteria for when information access and distribution should be limited, as well as rules for punishing those who violate these norms and professional ethics. Otherwise, society will never break out of the vicious cycle of information blackout, when the media are used almost exclusively as economic and political weapons. This cycle ensures that even the best efforts to reform politics and the economy are doomed to fail.

Two other areas that have long cried out for reform are the natural resource monopolies and the housing and utilities sector, areas that are currently being restructured in a misguided and misleading way. We are afflicted with endless discussions of reorganization, of mergers and regroupings. Whatever their result, they will not increase the transparency of the financial flows circulating in these crucial sectors.

Finally, the last but not least part of institutional reform is restructuring the basis of the modern social state: the social assistance and pension system, as well as labor relations. Such reform cannot be dismissed by saying that Russians have low incomes and the state has limited financial resources. A strong social state is not the product of economic development but rather the precondition of development. Workers without any safety net who live in fear of random firings, money-sapping illness or an impoverished old age cannot be fully fledged actors in a postindustrial, 21st-century economy.

While instituting reforms, we should pursue a second direction in our road map. We need to stimulate long-term investment and complex, cutting-edge economic activity. Of course, too much state intervention is bad for society and the economy and leads to inefficiency and abuse, encouraging irrational economic behavior and a substantial reduction in growth. However, it is just as clear that to jump-start the new economy and increase competitiveness, the state needs to get involved in attracting resources and entrepreneurs to particular technologically complex sectors that demand long-term planning and come with higher risks. For this reason, these sectors are inevitably dependent on goodwill from the government. Getting rid of incompetent bureaucratic meddling is a necessary precondition for Russia to join the ranks of the developed, postindustrial economies.

Another, related precondition is a large and ethical business community that is willing to work with the government. The state and business should cooperate when business' competitiveness in the global economy directly depends on the government's competitiveness, on its ability to reduce long-term risks and protect the nation's business from negative nonmarket factors. Creating efficient private-public partnerships and creating effective incentives for both parties to adapt to the quickly changing global economy is a crucial direction in the process of forced modernization.

As the third direction for reforms, the areas that can and must provide resources for future economic and social development should undergo substantial changes: education and scientific research, which will provide intellectual resources, and the national financial sector, which will provide capital. People have long discussed the need to reform these sectors and have come up with dozens of programs. Yet the limited quantity and quality of actual measures that have been successfully implemented is extremely disappointing. As a result, these critical areas will never be able to provide solutions to the major problems we face, and their underdevelopment is already slowing economic growth. These sectors cannot function without state policy, and they are at the heart of any modernizing reform.

Naturally, the areas that demand reform in Russia extend beyond the few sectors discussed above. There is a pressing need to reform politics and modernize security, foreign policy and health care. But the widely proclaimed belief that the biggest reforms are already behind us is an outright falsehood. Reforms in the true sense of the word have yet to begin. To start them rolling, to start the long and difficult journey, we need to take a long, hard look at reality and show unwavering political will.

Grigory Yavlinsky is the head of the Yabloko party. He contributed this comment, the second in a two-part series, to The Moscow Times. The first comment appeared June 17.