On the eve of a new business season it makes sense to assess our starting positions. That was precisely what economic officials of diverse caliber were doing last week. Perhaps Alexander Zhukov outperformed everybody in reporting the progress made and the brilliant prospects ahead to the president. He presented an infinite number of figures, including the target date for the doubled GDP, income per capita, and the future capitalization of the Russian market (this, during the current three-ring circus the market is experiencing in connection with the YUKOS affair). “In as soon as one year, we’ll become on a par with Spain, Greece, and dear old Portugal!” officials rejoiced. Only German Gref, who seemed to remember the spring offence when the president publicly scolded him for setting his sights too low, took a dissident stance. He submitted a host of calculations indicating that not all is well with the Russian economy. And in general, he was right.
Kasyanov’s cabinet was dissolved with cries of “Down with the comprador bourgeoisie! Turn Russia into a high-tech superpower!” Yet if anyone in Russian politics were consistent, he would now be crying for the resignation of Fradkov. It’s right now, and not under Kasyanov, that Russia is returning to its old dependence on raw materials, on one hand, and on Western investments, on the other. This trend is evolving under the surface, and not because of somebody’s evil will. It is simply because both the former and the present cabinet are unable to or refuse to set up ways of turning money into capital. The cabinet is only able to think in cash categories. Why does the state need to strengthen control over the oil industry? Because it needs cash! They don’t know what a stabilization fund surplus would be spent on if one emerges; their analysts are unable to figure out what to do with the federal budget surplus. They are afraid of honestly spending public funds to purchase YUKOS assets, and they are proud to inform the whole world that back taxes from YUKOS will be transferred to Russia’s poor regions.
A year or even half a year ago, all moderate analysts, both domestic and Western, were talking quite calmly about strengthening of the state’s role in the economy. Such a state might even be forgiven YUKOS provided that some strategy was behind the affair. However, there is no strategy whatsoever. There is nothing but a unique chaos and incompetence that are opening up great opportunities for redistribution of ownership. And this process is already under way. In some cases, it relies on administrative and power resources. In other cases, it relies on Western finances, which are unlimited by our yardstick. By regarding compatriot entrepreneurs as rivals in the struggle for power and reducing them to tribute-paying subjects, Russian officials are opening the door wide to foreigners and closing their eyes tight to their own colleagues’ impudence.  These signs – openly official business plus promotion of foreign business – are the main features of a colonial economy dependent on raw materials. This is the economy emerging in Russia now, although no one wants it.
Can Russia slip to a colonial state once and for all? No, it cannot. It is too big for that. Russia would simply collapse. But even the breakdown of such a big country is a lengthy process. As Russia’s most recent experience – the 1998 default – demonstrates, at the moment of crisis, there is always a chance to gain wisdom and will and retrace one’s steps.
The conservatism the present authorities seemingly represent rests on the conviction that everything that has happened in Russia makes sense. In the early 1990s, Russia took the road of radical capitalism. The liberalization and privatization of the 1990s gave vent to great energy and creative activity. This couldn’t be crushed without substantial losses. If freedom is to be imported along with capital, it has to be possible for freedom to show its worth. As Braudel put it beautifully, it is necessary to have some neutrality, weakness, or even indulgence on the part of a state. Regrettably, Russia will most likely obtain such indulgence only by going through yet another serious crisis.        

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