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Russia and its Growth Administration

With Russia’s presidential election campaign in the background, Presidential Commissioner for Entrepreneurs’ Rights and leader of the Party of Growth Boris Titov came up with a new initiative. Since all government agencies are overburdened with their routine work, Russia should set up a new special organization, the so called Growth Administration, or Development Agency, focused on implementing reforms and raising Russia’s economy to a qualitatively new level. This appears to be still another attempt to create a reforms headquarters within the Russian government.

© RIAN / Ramil Sitdikov

New arrangements

The agency is to be subordinated to both the Prime Minister and the President, and to be headed by a Deputy Prime Minister. As envisaged, a supervisory board composed of representatives of the respective agencies (at the deputy ministers’ level) will be set to discuss concepts of strategic documents. In case the board members fail to reach an agreement, the ultimate decision is to be made by the head of the organization.

The primary function of the suggested agency should be drafting strategic documents: policies, forecasts, and programs. Most importantly though, the Growth Administration should produce draft laws which will be later submitted by the President to the Parliament. The new agency will be additionally charged with coordination of  Development Institutes functioning, and will monitor reforms-oriented decisions implementation by other agencies.

Leaving aside the question of career and financial advantages the people who come to head this Ministry of Reforms may get, it should nevertheless be asked if such a special agency is capable of being a transformations true engine.

New agencies

It is, the initiators of the idea insist. To support their opinion, they refer to the data collected by Victor Polterovich, a well known Russian researcher of economic reforms abroad. He claims that all nations which successfully implemented economic reforms, had some similar nonsystemic entities. Such entities developed plans of reforms independently of regular government agencies. Academician Polterovich believes that successfully reformed economies are characterized by multifaceted planning and project-based approach to management.

International practices are certainly important. Still, Russia’s reforms experience shows, that if it is the issue of substantial transformations, the organizational matter is secondary compared to the two other matters of the political will to accomplish reforms, and of the administrative and political power readily available to the leaders of a reformist party. If at the top there is a will and if the reformists have sufficient political and bureaucratic potential, then, according to the historic experience of the pre-revolutionary, Soviet and present day Russia, the rest of the bureaucratic machine will ultimately, with all its moans and groans, follow the transformations policy. But if the conditions are not ripe, any decisions produced by the reformist headquarters will be either rejected, or seemingly accepted but actually watered down, or just sabotaged. As a matter of fact, there already exist some reform centers in Russia. Agency for Strategic Initiatives was supposed to be one of them. It succeeded in advancing some relatively small-scale but possibly quite useful projects such as adopting standards on regional cooperation with investors.

When addressing the Council of Federation (Russian parliament’s upper chamber) in 2015, Herman Gref, CEO of the Savings Bank of Russia, said that there should be some special Project Offices charged with implementing reforms. The speech did not go in vain. The discussion of the need for such an office lasted for a year, and in October 2016 the agency of reforms seemed to be established by the executive authorities. A special executive order set the Council for Strategic Development and Priority Projects headed by the Prime Minister. The administrative functions were performed by the Federal Projects Office represented by the Russian Government’s project activities department. It appears the respective agency was therefore set, but nobody charged it with any rigorous tasks.

Whenever real substantial reforms were taking place is Russia, they were always initiated from the very top of the state power pyramid.

New downward initiatives

When reforms were started under the Emperor Alexander II, it was the Emperor who initiated the process. The reforms were drafted by committees and commissions appointed and supervised by the Emperor. The reforms of the early 20th century were initiated by Pyotr Stolypin who was Chairman of the Cabinet of Ministers and the Minister of the Interior. Those days, the Ministry of the Interior was the key ministry since it managed both the security agencies and the regional governors. The new economic policy (NEP) of the early Soviet Russia was initiated by Vladimir Lenin who headed the ruling party and the government. Alexei Kosyguin, a USSR prime minister (or chairman of the council of ministers), launched his reforms in the 1960-s.

Finally, in the early 2000-s the so called Gref Program was being implemented by the then Minister of Economic Development and Trade, Herman Gref. Several factors coincided at that moment. Herman Gref was charismatic and energetic, but he had a serious bureaucratic weight as well, since for quite some while he enjoyed support of both the President and the then Prime Minister, Mikhail Kasianov. The ministry he headed was granted a broad mandate.

Boris Titov claims that currently regular government agencies including the Ministry of Economic Development are too busy with the daily routine to deal with strategic planning. Still, the performance of the Ministry of Economic Development and Trade under Herman Gref shows that once the government agencies are adequately tasked, they can shift their priorities. In the early 2000-s the Ministry of Economic Development and Trade could put aside the routine activities and deeply engage in reforms. For that to happen, the minister was to see himself the head of the reforms headquarters. Those days, the Ministry of Economic Development and Trade suspended its reformist activities long before Herman Gref left his ministerial position. It appears the symbolic end to the Gref Program coincided with appointment of Mikhail Fradkov Prime Minister to replace Mikhail Kasianov. The Ministry of Economic Development and Trade remained a superagency, but it returned to focus all its activities on routine work only.

Small potatoes

It seems Boris Titov is attempting to deceive the inert government machine. He believes the bureaucracy will be more energetic once a reforms department is set within it. It is quite likely though, a bureaucratic system can not be cheated, as there will always be actors who can stall too dramatic transformations, especially since those actors can include not just authorities at all levels but the executives of major government owned corporations. A good example of that is the difficulty in implementing privatization program in Russia in the recent years, even though the program seems to be fully supported at the governmental level. Not long ago, a round table took place at the Analytics Center of the Russian Government. There, Andrey Klimenko, Director of the Institute for Public Administration and Governance under the Higher School of Economics, opposed the ideas of Boris Titov and Victor Polterovich. He said that in fact the strategic planning does exist in Russia. According to the Higher School of Economics’ data, authorities at various levels spend RUR 30 billion ($ 520 million) per annum on developing all sorts of policies and programs – apart from routine paperwork. Russia’s management system is documents-centered, therefore within its framework no new agency is capable of effecting any visible changes.

After all, the issue of establishing an agency is minor and insignificant. Setting up such an agency may turn up to be a good solution, if far reaching reforms are perceived at the very top as a core of the national policies. Otherwise, the agency will merely become still one more “Agency for Strategic Initiatives”, i.e. it will, at the very best, succeed in pushing through some relatively useful bylaws. That will certainly contribute to the national evolution, but the overall advancement will be very slow and coupled with a concurrent problems accumulation.

Nevertheless, there is nothing to be criticized in the initiatives put forward by Boris Titov, as such. If there are people in the government with access to the top leadership, who regularly voice up the need for the reforms, that will certainly be to the benefit of the nation.

By Konstantin Frumkin

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