A Turn to the Left and the Authorities’ Good Intentions

As passed through his lawyers
September 2, 2005

Reports circulating in the media claim that one of these days President Putin is going to address the public on television, announcing a “turn to the left” – a substantial upgrading of social policies, involving in particular an additional allotment of 115 billion rubles for a number of different welfare projects.

It is a pleasure to see the country’s leader occasionally subscribing to civil society’s recommendations and those of some of its members whom he sent to prison. But I must emphasize that the President’s leftist effort is limited by the incompetence of the bureaucracy, and the hierarchy that cannot provide for effective use of oil wealth, let alone high growth rates.

The amount of 115 billion rubles equals a little bit more than $3.5 billion. A little bit less than $25 per capita. The “royal” gift comes to “the dear Russians” in times when the government is essentially eliminating free secondary and higher education, limiting infrastructure and research investment, maintaining a low level of pension and welfare, and cutting back on free medical care. In other words, it is slashing its obligations by 300-400 billion rubles (corrected for inflation) every year. What does a one-off gift of 115 billion mean against this background?

This is done in times of historical peaks in oil prices (over $70 per barrel), when the Central Bank’s reserves exceed $150 billion (4.5 trillion rubles), and the stabilization fund has accumulated over one trillion rubles. Why? Is this measure an admission of the bureaucracy’s inability or unwillingness to transform and change their development policies?

There are no reasons to doubt Vladimir Putin’s good intentions. But is his bureaucracy capable of translating them into reality?