Friday, December 22, 2006. Issue 3567. Page 8.
Big Costs and Little Security
By Vladislav Inozemtsev
When the Soviet Union collapsed, there was much talk about the "peace dividend" the end of the Cold War would bring. It was all about turning swords into ploughshares. But 15 years later, the new Russia brings to mind more than ever the communist empire of the past.
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True, there is a new ruling elite, the old ideology is gone, and the country has adopted a market economy that is open to the world. Under closer scrutiny, however, it turns out the foundation of the Soviet-era economic system remains: Just as it did before, Russia lives off of the income from its natural resources, which have been redistributed for the benefit of its "strong-arm oligarchy."
Russia lost the ruinous arms race with the United States at the end of the 1980s. According to estimates, the country expended about 17 percent of its GNP sustaining the armed forces and military parity with the United States. In a country with a population of 270 million, four million adult men were under arms. This was partially justified by the standoff between NATO and the Warsaw Pact, and the presence of U.S. military bases near Russia's borders, as well as the unsettled situation in Eastern Europe. But whatever logic the leadership used, the results we see now speak for themselves.
Today, those in power focus their concern more on domestic than international issues. And although the Russian economy has yet to regain the size it had attained in 1990, it is nevertheless burdened with a crushing weight of managers and "controllers." The number of state employees has reached 1.45 million people, topping the number of bureaucrats who served during the Soviet era.
And even though reductions have been made, there were still 1.2 million soldiers serving in the armed forces in 2005, with an additional 900,000 civilians in support roles. There are 820,000 people serving in the Interior Ministry, with another140,000 employed as support personnel. We don't even have a ballpark figure for the numbers in the Federal Security Service, but it is probably no less than 200,000. Including the Prosecutor General's Office, the Federal Guard Service and the Federal Migration Service adds another 200,000 people to the rolls.
This means that a civil service of almost 5 million people has been created, in which more than 15 percent of the male adult workforce is directly engaged in serving the government in one manner or another.
You would think that with this massive apparatus at the state's disposal it would be possible to ensure strict observance of the law and provide people with effective protection of their lives and property. But statistics indicate that this is not the case at all. Crime rates are actually increasing: For the first five years of this decade, the murder rate was 10.6 percent higher than the average for 1992 to 1999. Robberies, meanwhile, were up by 38.2 percent and drug-related crimes by 71.7 percent.
As a result, people who can afford to pay for their own protection are doing so in greater numbers than ever: There are more than 3,000 security firms currently registered in Russia, and almost 10,000 companies maintain private security staffs. The real cost of the 380,000 people working for the private security firms and the 300,000 security personnel at the corporations isn't immediately apparent.
Russia has now become something of a security economy that is only able to extract raw materials from the earth and guard the system created for their distribution. It's hard, actually, to see how it could be otherwise, given that, according to one study, 78 percent of the country's senior officials have worked at one time or another in the KGB, FSB or Interior Ministries of the Soviet Union or Russia.
And yet, this "strong-arm oligarchy" does not contribute to the economy in any significant way, as it is unable to protect people's lives or property effectively, cannot improve the efficiency of the judicial system and has been unable to eradicate corruption and arbitrary rule. Maintaining this apparatus has, meanwhile, become increasingly costly: The funding for all of these services and personnel are growing at a rate of 20 percent to 25 percent per year, and now account for 40 percent of the federal budget and 7.9 percent of gross domestic product.
Can the Russian economy bear such a burden over the long term? This question is difficult to answer, but one thing is clear: The general economic structure that has been created and which is being developed further is abnormal, especially in the absence of the kind of threats to the country's internal stability and external security that the Soviet Union faced.
Vladislav Inozemtsev is a professor of economics, director of the Moscow-based Center for Post-Industrial Studies and editor of the Russian edition of Le Monde Diplomatique.
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