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His may not have been the day's sunniest speech, but the critique
of the economy Yabloko's Grigory Yavlinsky laid out at a conference
for foreign investors Thursday certainly provoked passions.
Yavlinsky made his speech - a skeptical analysis of the existing
economic situation and a measured attack on the economic policies
of Prime Minister Viktor Chernomyrdin's government - and then,
after fielding some questions, filed out of the Grand Hotel Europe's
Krysha ballroom with his audience. He was met at the back of the
hall by local journalists - some of whom were openly upset that
Yavlinsky had not better used the forum to promote Russia as a
good place to invest.
"Aren't you afraid you will scare off the foreign investors?"
asked one radio journalist. A reporter from Kommersant Daily allowed
that he agreed completely with Yavlinsky's ideas, but thought
the Yabloko critique inappropriate for the ears of those attending
the Business Week Russia Summit.
Yavlinsky, of course, was invited specifically to give such a
critique. Other prominent speakers at the three-day summit, which
ends Friday, were on the whole more upbeat about the investment
climate. (See stories, page 4).
"One must speak openly and honestly with investors,"
Yavlinsky said in an interview with The St. Petersburg Times later
in the day, reflecting on the disgruntled news reporters. "I
dream of the day when the quality of Russian journalists reaches
the point where they feel a good speech given before investors
is one in which much of what's said is true."
"Moreover, when several years have gone by and things are
better, and I come and say [to investors], 'Come on in, things
have changed,' then they'll believe me. And I'm very much counting
on speaking with them someday on behalf of the Russian Federation."
As such comments underscore, Yavlinsky is an ambitious politician.
His Yabloko party, though it holds less than a fifth of the Duma
and few national government posts, is particularly strong in St.
Petersburg.
In the late 1980s and in 1990, Yavlinsky was Russia's best-respected
free-market economist. A plan he helped author to transform the
command economy to a market economy in 500 days was approved 213:1
by the Russian parliament in 1990, and attracted the attention
of Soviet President Mikhail Gorbachev (who ultimately rejected
it).
But a year later, when President Boris Yeltsin cast about for
the best and brightest young economists to form his first government,
he passed Yavlinsky over, in part because Yavlinsky was still
working with Gorbachev's government. Yeltsin chose economist Yegor
Gaidar as his top economic official, and Yavlinsky has never held
center stage again.
In Yavlinsky's opinion, the Russian economy is at the moment
headed for "stagnation." He said he expected 1997 would
wind down with a 2 percent drop in GDP, a 4 percent drop in industrial
production and a 5 percent drop in agricultural production.
Government policy makers predict GDP will hold level for 1997,
and rise 2 percent in 1998 for the first time in years.
Yavlinsky said real unemployment is 18 percent and small business,
which he emphasized was key to the development of a healthy democracy
and economy in Russia, moribund.
Small business employs just 10 percent of the workforce and accounts
for just 12 percent of Russia's GDP, he said. He said small business
was held back by an unfriendly tax system, by centralized bureaucracy
"and by the mafia, which puts pressure on these businesses."
Yavlinsky had strong, if bookish, words for the corruption that
plagues Russia's national and local governments at the highest
levels.
"This relationship ... between commercial activity and politics
is leading to a very dangerous, very alarming situation in Russia,
what is usually described as the criminalization of the Russian
state.
"If the rules of the game are not changed, if the questions
of property and of creating a competitive environment are not
resolved in the next few years, then I have no doubt Russia will
become a criminal-oligarchic system. And it will be very difficult
for our children and grandchildren to change that."
That corruption is reflected in a mass privatization program
that has left all but one-fifth of large enterprises under the
same Soviet-era management, and fed by hazily defined property
rights, which create a role for criminals to mediate property
disputes.
"On the one hand privatization is completed. But on the
other hand there is an absence of incoming capital, an absence
of investment and a continuing industrial decline," Yavlinsky
said.
The Russian economy also remains dominated by monopolies, Yavlinsky
said, arguing that the top 100 companies account for 50 percent
of GDP activity yet employ just 3 percent of the workers.
Yavlinsky said the existence of both the monopolies and of corruption
had led to the government's most dramatic failure: the inability
to foster healthy business competition.
"The revenues of most enterprise managers, in Moscow and
in the regions, have been almost completely dependent on their
relationship with local or central authorities," Yavlinsky
said. "The main source of income for those in power or for
those in control of firms is basically rents [or government subsidies]
- rents sought by this rent-seeking society."
Yavlinsky said that he considered himself a supporter of First
Deputy Prime Minister Boris Nemtsov, an old-time Yabloko ally
who recently joined Chernomyrdin's government, promising to clean
up corruption and launch pro-growth economic reforms.
"Unfortunately he [Nemtsov] is alone there, and more and
more the government is dragging him down rather than him dragging
the government up," he said.
See the original at
http://www.sptimesrussia.com/secur/296-297/skeptical.html
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