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Elena Volkova. Interview with Grigory Yavlinsky

No One is Responsible for the Nation

Vremya Novostei, January 30, 2002

The leader of the Yabloko faction of the State Duma Grigory Yavlinsky shares his opinion with our readers on ten years of reforms in Russia.

Question: Grigory Alexeevich, how would you assess 10 years later the reforms conducted by Yegor Gaidar's government at the beginning of the 1990s?

YAVLINSKY: History does not include a subjunctive tense: what is done is done. The results of the reforms are reflected in the economic indices, such as the world rating of Russia's economic development and volume of investments in its economy. Qualitatively the results of the reforms were partially reflected in the crisis of 1998, based on the fact that we still don't have a financial market and a banking system.

You do not have to draw up some results, you merely need to look around you. Look at the recent indices of the Russian Trading System, read how the leaders of the Sibur company live, read about the present relations between the "liberals" and the "KGB", recollect how many young talented people have left the country. These are the results of the reforms.

Q: Can't you name any positive results?

YAVLINSKY: The most visible result of 1992-1993 is a saturation of the commodity market. In 1980s it was possible to buy virtually everything at the Chernyomushki market in Moscow, but all these products, were in economic terms sold at prohibitive prices. It was possible to buy anything, but very few could afford this pleasure. First Moscow, and then the whole country, was transformed into such a market.

Q: You are the author of the well-known programme "500 Days". How would you have conducted reforms then?

YAVLINSKY: Once again I must repeat: what is done is done, history does not know the subjunctive tense. As an economist I can only assess what has actually happened. It would be idle talk for an economist to start speaking today about how all this could have been done differently. At the same time my views are well-known: at the time I expressed them in the "500 Days" programme.

The initial point of the programme is as follows. At the beginning of the 1990s population held considerable amounts of cash. At the same time the country experienced huge shortages of commodities. To balance supply and demand - and it was important to do this to create incentives for economic development - the programme proposed sales to the population of state property at symbolic prices to reflect the population's solvency rather than market relationships. On the very first day of the launch of these reforms, the government would have been forced to announce that the state with all its institutions would protect private property.

The sale of state property had to serve as the basis for the creation of private property and a market. It involved at the start the sale to the population of small shops, hairdressers', small-scale community services enterprises, lorries and then plots of land, dachas and flats. This would be accompanied simultaneously by a liberalisation of prices.

It had to involve an initial accumulation of capital through a thousand-fold increase in the number of cooperatives. Then we could switch to privatisation of big enterprises This should have happened over 18 months.

Question: Do you really believe that it was possible to transfer within 500 days from a planned economy to a market economy?

YAVLINSKY: The programme envisaged only a plan of actions for the first 18 months rather than the creation of a market economy. Of course, this plan would have needed a second stage, that would have been adjusted, based on the results of the first stage of the reforms. It is difficult to guess now how many years the reforms would have taken.

Question: Today do you think that at that period the programme was the only possible variant of transformations?

YAVLINSKY: Certainly, there would have been a lot of problems. But I am sure that we would not have witnessed 2,600% inflation.

Question: Was it possible to conduct reforms with a lesser social shock?

YAVLINSKY: Over the years the government did not even assume such a task. They thought simply: "Nothing will happen to the people. And if something happens, this serves them right. The goal is to build capitalism and a market." And this goal justified all the means.

Vouchers (Ed. privatisation cheques were called vouchers in Russia) were introduced to ensure equal distribution of property. And the fact that later some people profited at other peoples' expense meant that they got what they deserved and would smarter from then on. The strongest would survive and nobody would be responsible for everybody else.

Question: Reforms are also being conducted in Russia today. Do these reforms represent the transformations required by the country or has the government opted for the wrong path again?

YAVLINSKY: I don't even know what the government means by 'reforms' now. Do they mean that the reform is represented by a 35% increase in railroad tariffs? Is disconnection of electricity supplies also a reform? Is it a reform to make people pay 100% for their? This is a sign that there are simply no reforms.

We live owing to high oil prices and the consequences of the default. Devaluation of the rouble allows us to get by for some more time to come. Today a considerable number of the largest monopolies are interested in a weak rouble, as in this case exports become extremely profitable. Any appreciation of the rouble will force them to compete intensely with each other not only on price, but also on quality. That is why we still have a weak rouble. That is why our country in general gets poorer and some monopolists get richer.

See also:
"500 Days" programme

Vremya Novostei, January 30, 2002

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