Speaking at the St. Petersburg Economic Forum today, President Dmitry Medvedev said Russia risks stagnation if it does not move quickly to reform and modernize its economy and decentralize political power from the Kremlin:
"We should not delay bidding farewell to many harmful habits. It would be a mistake for us to aim for only calm and steady growth," Medvedev said. "It is in our power to dramatically change the situation over the next few years. Another stagnation may be hiding behind stability."
Reiterating comments he made in a widely discussed interview with China's CCTV in April, Medvedev said it was time to move beyond the state capitalist model that has been prevalent in Russia for the past decade and open up the economy:
I want to announce very clearly -- we are not building state capitalism. This is not my choice. My choice is different. The Russian economy should be dominated by private enterprise and private investors. The state should protect property and the choice of those who knowingly risk their money and reputation....
Yes, we had a stage of development that is associated with an increased state role in the economy. It was important to stabilize the situation after the chaos of the 1990s. But now the potential of this path has been exhausted.... Such an economic model is dangerous for the country's future.
And just as state capitalism has outlived its usefulness in Russia, so has its highly centralized and Kremlin-dominated political system.
"One cannot govern a country today from one spot. If everything begins to work or moves according to a signal from the Kremlin -- and we've seen that before -- then this system is not viable," Medvedev said. "This is bad, this means the system should be changed."
It is easy to read Medvedev's speech as a not-so-veiled attack on Prime Minister Vladimir Putin. It was Putin, after all, who centralized Russia's economy and political system after coming to power in 2000 -- Russia Inc. and the Power Vertical were, after all, his creations.
But this assumes two things: that Putin and Medvedev are in competition with each other (I do not believe that they are); and that Putin thinks the political and economic system are just fine as they are (I do not believe that he does).
As I have blogged before on numerous occasions, Putin has learned the lessons of perestroika well: that unmanaged economic and political reform can easily spin out of the Kremlin's control. But he also understands the lessons of the Brezhnev period -- that a stagnant economy and moribund political system can sink a superpower.
My assumption as Russia enters what should prove to be a very interesting -- and very consequential -- political season is that he and Medvedev are working together to try to square a complicated circle: reforming the economy and slowly opening up the political system without losing control over the process.
Medvedev's role is to be out front pushing for reform. Putin's is to call for caution and to keep the process from spinning out of control. But despite appearances to the contrary, they are working in tandem.
-- Brian Whitmore