TITLE : THE MAKING OF ECONOMIC POLICY IN RUSSIA: CHANGIN GRELATIONS BETWEEN PRESIDENCY AND GOVERNMEN T
AUTHOR : EUGENE HUSKEY, Stetson Universit y
THE NATIONAL COUNCI LFOR SOVIET AND EAST EUROPEAN RESEARC H
TITLE VIII PROGRA M
1755 Massachusetts Avenue, N .W .Washington, D .C. 20036
PROJECT INFORMATION : 1
CONTRACTOR :
Stetson Universit y
PRINCIPAL INVESTIGATOR :
Eugene Huskey
COUNCIL CONTRACT NUMBER :
810-2 8
DATE :
December 6, 199 5
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Individual researchers retain the copyright on work products derived from research funded b yCouncil Contract . The Council and the U.S. Government have the right to duplicate written reportsand other materials submitted under Council Contract and to distribute such copies within th eCouncil and U.S. Government for their own use, and to draw upon such reports and materials fo rtheir own studies; but the Council and U.S. Government do not have the right to distribute, o rmake such reports and materials available, outside the Council or U.S. Government without th ewritten consent of the authors, except as may be required under the provisions of the Freedom o fInformation Act 5 U .S.C. 552, or other applicable law.
The work leading to this report was supported in part by contract funds provided by the Nationa lCouncil for Soviet and East European Research, made available by the U. S. Department of State under TitleVIII (the Soviet-Eastern European Research and Training Act of 1983, as amended) . The analysis andinterpretations contained in the report are those of the author(s) .
SUMMARY 1
A strong presidency has sought to buttress a weak Russian state by reducin g
departmentalism in economic policymaking . An important part of this strategy has been the
formation of presidential structures that could, like their counterparts in the old Centra l
Committee, monitor and influence the Government's management of the economy . But such a
policy requires a high level of discipline and cohesiveness in the presidency itself . This unity
of purpose and tactics is lacking in the Russian presidency . The problems lie both in Yeltsin' s
mercurial character and in the shapelessness of the presidential apparatus .
Like all chief executives, Yeltsin receives advice on the economy from a wide range o f
officials, many of whom are not professional economists . But the Russian presidency i s
unusual in its lack of a collective body to weigh and synthesize this advice . This structural
problem has become all the more acute with the recent addition of economic expertise an d
authority in the presidency . The president seems to act on the basis of purely "bilateral "
relations with associates in government and commerce and with leading officials in the
presidency such as Livshits, Sergei Filatov, the head of the Executive Office of the President ,
Victor Iliushin, the senior counsellor to the president, and Oleg Lobov, the head of th e
presidential Security Council . Yeltsin does occasionally chair the plenary sessions of th e
Council of Ministers, but these are highly formalized meetings with little, if any, debate .
Without an economic cabinet in the presidency or some other institutionalized mechanism fo r
communication and decisionmaking in economic affairs, any leader would find it difficult to
sustain a coherent economic policy amid the torrent of contradictory information and advice .
Another distinctive feature of the Russian presidency is the absence, or opaqueness, o f
jurisdictional boundaries between officials . This lack of respect for the Weberian idea o f
"offices" is most pronounced at the upper level of the presidential apparatus . Like officials i n
all organizations, the president's lieutenants continually maneuver to expand their staffs and
jurisdiction . But in Russia there are few cultural or institutional constraints to such empire -
building . Irrespective of job title or formal responsibilities, Yeltsin 's lieutenants seek t o
influence policymaking in all areas . Suspicious of the information and expertise provided b y
other departments in the presidency, each lieutenant insists on maintaining his own broad-base d
analytical center . The result is self-destructive competition over power and policy within th e
presidency and between the presidency and government . In December 1994, in a celebrate d
letter to the prime minister, a high-ranking official in the presidency advised the Governmen t
`Taken from Conclusions of the Report by NCSEER Staff .
on the use of oil pipelines . The author of the letter was Yeltsin's former bodyguard and no w
head of the Kremlin's security service, General Alexander Korzhakov .
In economic affairs, as in other areas of policy, Russia lacks a well-develope d
"technology of power ." In a biting critique of the presidency's role in economi c
decisionmaking, Vladimir San'ko observed that when the strategy of reform is determined i n
the presidential apparatus by secretive analytical centers and bureaus, whose formation depends
on palace intrigue, one cannot expect any other outcome . . . ." Even those closest to th e
president, such as Georgii Satarov, admit that there is not "a normal system of preparing and
adopting decisions ." Anders Aslund writes that "after appointing his young reform minister s
[in 1991-19921, [Yeltsin] kept them at a distance and gave them no direct access to him . . .Even
Gaidar had little access to Yeltsin . "
Russian's economic travails, then, are not merely the product of the sudden breakup of a
command economy or an explosion of sectoral demands . They also result from a fundamenta l
weakness in the institutions of state, a weakness with its roots in the political architecture o f
semi-presidentialism, in Russia's nihilistic legal culture, and in the failed personal leadership of
Boris Yeltsin. For all his successes in moments of high political drama, the Russian presiden t
has been unable to carry out--or effectively delegate--the more mundane, but no less essential ,
tasks of state administration . Despite, or perhaps because of, the more vigorous role of th e
presidency in economic affairs, the Russian state has not yet developed the capacity to adop t
and implement a national economic policy . Until this political problem is resolved, the course
of Russian economic reform will remain erratic at best . As Michael McFaul has argued :
An autonomous and effective state is a necessary condition for carrying ou t
revolutionary economic transformation . Paradoxically, therefore, even if the goa l
of economic transformation is to stimulate market forces and eliminate stat e
planning, a strong state is still needed to extract the state from the economy.
And to build a strong state, one must establish effective institutions at its core .
THE MAKING OF ECONOMIC POLICY IN RUSSIA :CHANGING RELATIONS BETWEEN PRESIDENCY AND GOVERNMEN T
Eugene Huske yDepartment of Political Science
Stetson UniversityDeLand. Florida 32720
Assessing Russia's political and economic transition . Mancur Olson lamented the absence
of an essential ingredient of the postwar economic miracles in Germany and Japan : the
destruction of entrenched lobbies and cartels .' Where foreign occupation swept awa y
institutional barriers to economic reform in Germany and Japan, the collapse of communism ha d
the opposite effect in Russia . It gave new life to sectoral and regional structures that had bee n
tamed by the oversight, socialization . and patronage policies of the Communist Party . Further
contributing to the rise of sectoral and regional fiefdoms were the policies of the Russian
leadership in the critical first months of the post-Soviet era . Egor Gaidar's faith in
macroeconomic, rather than institutional, solutions to Russia's problems allowed the old interest
networks--temporarily disoriented by the August coup and its aftermath--to consolidate thei r
forces . In Gaidar's own words, "at the first sign of weaker authority, the appointed governo r
starts to behave like an independent prince ."' Without a strong coordinating center, the politica l
economy of Russia began to assume a neofeudal face .
Since Gaidar's replacement at the end of 1992, the central theme of Russian politics ha s
been the struggle of a weak state to reassert its control over the country's diverse "estates" and
territories . Yeltsin's desire to regather power and rationalize authority inspired the attack on th e
parliament in September-October 1993, the introduction of a presidentialist constitution in
December 1993, and the war in Chechnia in December 1994 . But these events are only the mos t
dramatic moments in a broad-based and permanent campaign to shore up a political center agains t
autonomy-and rent-seeking domains. In an attempt to overcome what Peter Stavrakis has called
"ministerial feudalism" in economic affairs,' Yeltsin has recently begun to claim for the
presidency a larger and more direct role in economic decisionmaking . Apparently frustrated by
Prime Minister Chernomyrdin's inability, or unwillingness, to bring a degree of collectiv e
responsibility to the Government, the Russian president has sanctioned the formation of
presidential structures designed to articulate and defend a national economic policy against
sectoral lobbies, which have deep roots in the ministries . These and related measures are
reshaping the institutional framework for economic decisionmaking in Russia .
Institutional Design, Sectoral Interests, and Economic Policymaking
One of the most vexing problems for semi-presidential systems is how to divid e
responsibilities between the two executive leaders--the president and prime minister . The
institutional design of semi-presidentialism suggests that the prime minister should serve as a n
intermediary between the president and the ministries, which conduct the daily affairs of state . '
But as the experience of France, the Soviet Union, and now Russia illustrates, the president i s
not always content to rule through the prime minister . On some issues, most notably national
security, the president displaces the prime minister as the immediate supervisor of key ministries .
Like the Communist Party Central Committee before it, the presidency governs directly in certain
reserved domains . '
If the portfolios of defense, foreign affairs, internal affairs, and security have been, i n
Gaidar's phrase, "presidential ministries" in Russia, ' the economic ministries have formed par t
of the prime minister's jurisdiction . This division of labor is grounded in Russian tradition and
3
in Yeltsin's and Gorbachev's lack of interest and sophistication in economic affairs . Russian
leaders, whether tsars . general secretaries, or presidents, have distanced themselves from th e
management of the economy as a way of ensuring the majesty of their office . Assigning the
prime minister direct responsibility for the economy does not, however, grant him full autonomy
in the field . Through the selection of key Government personnel, the issuance of decrees, and
the setting of national priorities, the president intervenes decisively at times in the economy .
Although it is tempting to accept the formula advanced by Vladimir Kostikov, Yeltsin' s
former press secretary, "The President sets the (economic] course and the Government carrie s
it out," the reality has been far less tidy . In economic affairs, as in other areas of policy, th e
interplay between president and prime minister depends on a complex calculus that reflects the
sources and depth of support for the two leaders, the state of the economy and society, th e
personal relations between president and prime minister, and even the proximity of the
presidential election . During the premierships 9 of Gaidar and Chernomyrdin, the politics of the
dual executive assumed markedly different forms . As a young economist who lacked experienc e
and an institutional base, Gaidar operated in Yeltsin's political shadow . Chernomyrdin, i n
contrast, brought to office an independent political base in the natural gas industry and
organizational skills honed in the Soviet bureaucracy . Even before the recent hostage crisis i n
Budennovsk, Chernomyrdin had begun to exhibit a capacity to function as a competitor, as wel l
as a colleague, to the president . According to Izvestiia correspondent Irina Savvateeva, by the
end of 1993 Chernomyrdin ceased being merely a "backroom politician" [kuluarnyi politik].10
Taken together with the parliament's desire to divide the executive, the political stature o f
Chernomyrdin has contributed to the growing independence of the Government from th e
4
presidency .11
As the midwife of a new Russian economic system, however, Gaidar enjoyed severa l
personal and contextual advantages over his successor . He possessed a replacement ideology that
served both as a guide to action and, at least initially, as a source of legitimacy for a new
economic policy . Unlike the Chernomyrdin Government, the Government of Gaidar had fewe r
philosophical divisions12 as well as fewer ties to what the economist V .A . Mau call s
"production-economic groups ."' Thus, where Egor Gaidar was a strategist committed to a
particular vision of Russia's economic future, Victor Chernomyrdin has been a tacticia n
maneuvering between competing political and economic interests . 4
Gaidar was also able to launch radical economic reform while the popularity of hi s
patron, Boris Yeltsin, was near its zenith and the cohesiveness and confidence of the oppositio n
was at its nadir . 15 This window of opportunity began to close, however, in the spring of 1992 ,
when the painful consequences of price liberalization accelerated the regrouping of conservativ e
forces and undermined Yeltsin's own shaky confidence in liberal economics .16 The deterioratin g
political climate for reform led Gaidar into numerous concessions to the conservatives in his fina l
months in office .
By the time Chernomyrdin assumed the premiership in December 1992, the opponent s
of radical reform had seized the offensive . Although no friend of liberal economics, the new
prime minister nonetheless found himself under immediate attack from two sides . A clear
majority in parliament challenged not only the policies but the powers of the Government in th e
economy . According to one official, the speaker, Ruslan Khasbulatov, was intent on creating
"a parallel center of executive power in the parliament ." ' Furthermore, the prime minister had
5
to endure intense pressure from within his own Government . Unlike Western executives, with
their traditions of partv discipline and collective responsibility, the Russian Government was a n
unwieldy coalition of ministers defending their own institutional interests . In their efforts t o
claim resources from the prime minister, the ministers rallied to their cause economic elites ,
regional leaders, and deputies . Even the deputy prime ministers were guilty of this
"departmentalism" [vedomstvennost '] . Overseeing a bureaucracy of some 20 branch departments
and 800 officials that stand between the prime minister's office and the individual ministries, th e
deputy prime ministers often exhibit less loyalty to the premier than to the ministries that the y
oversee .- Commenting on the increase in the number of deputy prime ministers to eight in th e
November 1994 Government reshuffle, the former Minister of Finance . Boris Fedorov, warned
that "the more deputy premiers, the fewer reforms."'
What makes the ministries such potent actors in Russian politics? Put simply, th e
synergism of bureaucratic and sectoral interests . The interests of the ministries are often
identical with the interests of broad sectors of Russian economv and society . Thus, the ministries
not only govern Russia, they represent it--or at least its most powerful interests . Gaidar
complained that "our ministries consider themselves first representatives of their own sphere o f
activity in the highest leadership of the countrv, and the interests of these spheres is verv sharply
divided ."' Whereas in democratic countries political parties are the primary mediatin g
institutions between the state and society, ministries perform that function in Russia . The sources
of ministerial legitimacy, therefore, are not limited to the formal rules of state . As extensions
of powerful social and economic interests, the ministries have been able to flaunt Wester n
conventions of collective responsibility, which would impose discipline on a fractious Russia n
6
executive .
The social bases of the branch economic ministries lie in diverse interest networks, amon g
the most influential of which are the Agro-Industrial Complex (APK), the Military-Industria l
Complex (VPK), the Fuel and Energy Complex (TEK), and the banking lobby and variou s
industrial lobbies . Each lobby has its own agenda and source of political strength . Much like
the lobbies from unprofitable regions, such as the Far North, the APK uses the threat of a social
catastrophe in the countryside to extract large subsidies from the state.21 Its most prominent
spokesmen in the Government are currently the Minister of Agriculture, Alexander Grigorievic h
Nazarchuk, and the deputy prime minister for rural affairs, Alexander Kharlampievic h
Zaveriukha . According to Zaveriukha, a shameless lobbyist for the rural sector, "The natio n
should feed its peasants ."22 With Prime Minister Chernomyrdin as its patron, the TEK is the
country's most profitable and best-connected sector . The TEK generally seeks minimal state
involvement in its affairs, though individual officials in this sector have benefitted from specia l
licenses and the state-maintained margin between domestic and international energy prices .
Between the extremes of APK and TEK is a host of economic lobbies, which pressure the stat e
for goods ranging from subsidies (which made up 22 percent of Russian GNP in the summer of
199') and licensing privileges to tax relief and price and property reform .
The interaction between sectors and the state produces political relations akin to what
Jerry Hough in the 1970s called institutional pluralism . Each policy issue gives rise to a distinc t
set of ministerial and sectoral coalitions ." Most of the sectors are united, however, by a desire
to compete in the arena of bureaucratic politics--whether of the communist or transition variety--
rather than in the market . In this respect, Russian political economy has more in common with
7
18th century England than 20th century America .
To this point, the emphasis has been on branch ministries, whose interests are tied to a singl e
sector of the economy . But there are numerous portfolios in the Government that embrace the
economy at large . These include the Ministrv of Finance, the Ministry of Economics, and th e
State Committee on Property . It is these offices that have been politically closest to th e
president . Indeed, at times they assume the role of "presidential ministries ." The office of
acting prime minister under Gaidar, the Ministry of Finance under Boris Fedorov, the Ministry
of Economics under Lobov and Yasin, and the State Committee on Property under Chubais--the
leadership of all these institutions has been tied intimately to the president or his staff.' Thus ,
where some ministers exhibit loyalty to a sector, others look directly to the president . Upon
assuming his ministerial portfolio in 1994, Yasin explained that his "duty of course is to suppor t
my prime minister, but I will do so with some reservations ."' Such divided loyalties obviously
undermine the authority of a prime minister like Chernomyrdin, who has maintained his political
distance from the president .
It is a measure of the ambiguities of Yeltsin's own economic outlook and leadership tha t
ministers with close ties to the president have had markedly different views on economic reform .
In general, the "presidential ministers" who have expert backgrounds and second-level patron s
in the presidency--patrons such as Gennadii Eduardovich Burbulis or Sergei Alexandrovic h
Filatov--have been far more market-oriented than those with industrial/political backgrounds an d
personal ties to Yeltsin . Such distinctions serve as reminders that, in explaining the behavior of
state officials, whom one knows and where one has been may be more important than where one
sits .
8
Government officials with broad economic portfolios have sought, with varying degree s
of energy and success, to develop a national economic policy in the face of diverse sectoral
claims . Like its counterparts in the West, and against the wishes of many branch ministries, th e
Ministry of Finance has advocated conservative fiscal and monetary policy as well as stric t
control over the disbursement of funds through a centralized treasury . Under Oleg Lobov, the
Ministry of Economics sought to impose discipline on branch ministries by controlling scarc e
supplies, a la Gosplan . The current Minister of Economics, Evgenii Yasin, has favored financia l
means to achieve thi s end.27
Another potent adversary of traditionally-minded branch ministries is the West, whethe r
it works through the IMF or through bilateral arrangements with the Russian Government . The
promise of credits has encouraged Government officials, in the first instance Prime Minister
Chernomyrdin, to adopt policies that are painful to many branch ministries and often to th e
population at large . Whereas Egor Gaidar resisted sectoral pressure out of conviction ,
Chernomyrdin has done so in large part out of concern for Russia's standing with internationa l
financial institutions .
That the current prime minister still finds it difficult to say no to powerful specia l
interests is indicated by his method of handling requests from sectoral lobbies . According to
Evgenii Yasin, in the first 20 days of January 1995, the prime minister forwarded requests fo r
7 .3 trillion rubles in off-budget funding to the Ministry of Economics, whose yearly investmen t
budget is only 9 .5 trillion . When the Ministry of Economics objected to this deluge ,
Chernomyrdin replied : "But I didn't call you about a single one of the documents . There will
be many resolutions . And the supplicants will be many . But one has to hold out ."28
9
The Failures in Government Economic Polic y
Assessing the full economic record of the Chernomyrdin Government is beyond the scope
of this paper.' Without doubt, there have been notable successes.30 With the assistance of
new leadership in the State Bank and the policies of Boris Fedorov at Finance, the Governmen t
reduced the growth in the money supply and hence the rate of inflation . By the middle of 1995 ,
the monthly inflation rate had dropped to 7% from approximately 25% a year earlier--a n
impressive achievement for a prime minister who came to office deeply suspicious o f
monetarism . After a crisis of state revenues in the early 1990s, Chernomyrdin reported to
parliament in the summer of 1995 that state receipts were slightly above the budget amount fo r
the first half of the year .' But the economy is still hostage to powerful political forces tha t
extract subsidies, privileges, and protection from the state on a grand scale .
During the past year . a major source of hemorrhaging from the treasury has attracted the
attention of policymakers and the public . It is the tax and customs privileges granted to firms
and organizations with close ties to the political leadership . Seemingly minor relief fro m
customs duties at times has produced enormous losses to the state . A case in point was the
removal of customs duties on items imported by the Russian Sports Committee . which i s
responsible for preparing Russian athletes for the upcoming Olympic games . Besides sports
equipment, the Committee imported alcohol--millions of bottles of it . The state thereby lost th e
lucrative tax on imported spirits as well as revenues from the consumption of domestic alcohol ,
whose sales were undercut by duty-free foreign liquor . Even the presidential apparatus has take n
advantage of such privileges . Yeltsin approved a special petroleum export license for his ow n
1 0
business office upravlenie delami] ] and a permit to breed wild game for the Security Service o f
Mikhail Barsukov.32
An even more serious threat to the integrity of Government economic policy is posed b y
extrabudgetary funding [vnebiudzhetnye fondy] . Whether through legislation or their own
initiative, many state institutions have created sources of funding that are independent of th e
treasury . Locating a supplemental source of revenue is for some state organizations a matter of
survival . For example, the Institute of Linguistics in Moscow lets its basement to a Chinese
restaurant, for which it receives not only highly subsidized meals for its members but also ren t
payments that cover the salaries of scholars and staff . At this level, of course, greater
independence from the treasury may be beneficial for all concerned . But when revenues are
generated through business ventures, some of which are highly speculative, state agencies distor t
the market, divert energies from their primary tasks, and risk eroding further the state's abilit y
to direct its own institutions. Most ministries and agencies--and even many individual bureaus- -
have established extrabudgetary funds to enhance their revenues and therefore their independence
from bureaucratic superiors .
Whereas the branch funds above are controlled by individual agencies of the executive ,
huge social funds based on mandatory citizen contributions are at the disposal of the parliament .
Revenues of the Pension Fund, the Employment Fund, and other social funds are now equal t o
63% of state budget receipts . These funds offer deputies the promise of jobs in the vast fun d
apparatuses for their proteges, income from illicit movement of money in fund accounts, and a
golden parachute [zapasnoi aerodrom] at the end of their political careers ." If unchecked, suc h
funds will further weaken the Russian state and deepen the conflict between executive and
1 1
legislative branches .34
The Rise of the Presidency in Economic Policymakin g
Disillusioned with the Government's leadership in the economy and with Chernomyrdin' s
rising political profile, the presidency began to exercise a more intrusive role in economic
policymaking following the adoption of a new constitution m December 1993 . Yeltsin backe d
away, therefore . from his earlier pledge to allow the Government "to carry out economi c
reform," a policy that had "avoid[ed] conflicts with his own Presidential administration ."35
Amid a flurry of ambitious economic decrees issued by Yeltsin in May 1994 were new rules o n
relations between president and Government and on state economic policymaking . In the word s
of Victor Ivanov, "These documents complete the formation of a rather orderly bureaucrati c
system for the state regulation of the economy, headed by the President himself . "36
Further evidence of the shifting relations between president and prime minister wa s
Yeltsin's firing of Chernomyrdin's longtime chief of staff, Vladimir Petrovich Kvasov, i n
November 1994." Violating the rules of protocol, the president rather than the prime ministe r
signed the order dismissing Kvasov, who endured weeks of public condemnation by the president
before his dismissal . Under Kvasov, according to one source, the Government apparatu s
"pursued a course towards 'independence' from the Executive Office of the Presidency . " 38 At
the same time, Yeltsin appointed Evgenii Grigor'evich Yasin, the reform-oriented economist, t o
head the Ministry of Economics, and Vladimir Panskov, another doctor of economics, to lea d
the Ministry of Finance . Both men moved from positions in the presidential apparatus . Yasin
1 2
had served as head of the Analytical Service and Panskov as deputy head of the Finance-Budge t
Administration .
Besides these legal and personnel changes, Yeltsin created new structures in th e
presidency to oversee the Government's handling of the economy, thus expanding an apparatu s
that, with approximately 5000 officials, already dwarfed the bureaucracy of th e Government.39
These new structures included the Finance-Budget Administration and the office of specia l
counsellor to the president for economic affairs . According to one observer, these measure s
removed from the Government the "creative initiative" on economic policy .40 Another
commentator noted that, in light of these organizational changes, "the Government's role i s
gradually being reduced to making purely economic decisions devoid of strategic perspective . " '
To what extent political rather than economic concerns led to these reforms is difficul t
to assess . Certainly, the results of the December 1993 election weakened Yeltsin's ability to
control the Government through the traditional instrument of personnel policy . The poor
showing of the unofficial presidential party, Russia's Choice, led to the departure from th e
Government of radical reformers such as Boris Fedorov and Egor Gaidar, the latter havin g
returned to Government in September 1993, in the wake of Yeltsin's dissolution of parliament ,
to serve as deputy prime minister and minister of economics . One may conclude that, at the
beginning of 1994, Chernomyrdin was for the first time in charge of his own Government .
As for the criticisms of the Government's economic performance, those in the prime
minister's camp will argue, with much justification, that the economic problems described abov e
had their roots in presidential as well as Government policies . The premier and the ministries ,
for example, were not the only ones targeted by interest networks . Yeltsin himself succumbed
1 3
on numerous occasions to the special pleading of individuals and enterprises that sough t
protection or privileges from the state . Indeed, Yeltsin personally signed the decree that grante d
special customs status to the Committee on Sport ." Whatever the precise mix of political and
economic motivations behind Yeltsin's initiatives, the result was a strengthening of th e
presidency's ability to monitor and influence economic affairs .
Economic Specialists in the Presidential Apparatu s
Prior to the adoption of a new Russian constitution in December 1994, the presidency' s
institutional resources in economic affairs were limited to the Interagency Commission o n
Economic Security of the Security Council" and a small Analytical Center for Socio-Economi c
Policy, established in February 1993 and later integrated into a more broad-based Analytica l
Service." In late February 1994, the Financial-Budget Administration, a subdivision of Serge i
Filatov's Executive Office of the President [Administratsiia Prezidenta][, began work with a staff
of 30 officials under the leadership of Igor' Dmitrievich Moskovskii . Moskovskii moved to the
presidency from the Government apparatus, where he had served as head of a similar bureau ,
the Department of Finance, Budget . and Monetary Circulation.45
With access to the full range of state information on the economy, the Financial-Budge t
Administration advises the president on "financial and budgetary matters, tax policy, insurance,
price formation, credit relations and monetary circulation .:" Besides offering general
recommendations for policy in these fields, the Administration also assists in the preparation an d
review of laws and decrees on economic affairs . Assessing the significance of the formation o f
1 4
the Financial-Budget Administration, Vladimir Berezovskii noted in mid-1994 that :
Yeltsin's entourage has taken a number of steps to create structures capable o f
limiting the influence of Chernomyrdin on the adoption of strategically importan t
decisions and of legalizing presidential supervision over him . In particular, we
have in mind the formation in the Executive Office of the President of the
Financial-Budget Administration .
With responsibility for developing the
fundamental planks of financial policy, [this office' will in one way or another
determine the strategy and tactics of the economic policy of the Government .47
If Moskovskii's office has thus far played a less influential role in economic policymakin g
than these remarks suggest, it is in no small part because of the establishment of contendin g
centers of expertise and advice in the presidency, notably the office of economic counsellor t o
the president, occupied since November 1994 by Alexander Livshits . Although Livshits' has a
smaller staff than Moskovskii, he has more direct access to the president by virtue of hi s
location--his office is in the Kremlin rather than Old Square--and of his position as one of onl y
ten policy assistants [ pomoshchniki ] to the president . Some observers regard him as the
"presidential commissar" to the Council of Ministers . 48 Whereas Gaidar was Yeltsin's primar y
advisor on economic affairs in the first year of the post-Soviet era, Livshits had assumed that rol e
by the end of 1994 .
An academic economist by background, Livshits is best known in scholarly circles for hi s
publications in the late Soviet era on capitalist economies .' Formerly a faculty member in the
Economic Theory Department of the Moscow Institute of Machine Tool and Instrument Building ,
he moved to the presidential administration in April 1992, working as deputy leader of th e
1 5
Center for General Policy and then as head of the Group of Experts . 50 Among Livshits' closest
associates in the presidency are Yeltsin's advisors on politics, Georgii Satarov, and security, Yur i
Baturin. While the Russian Government has shed most of its young, progressive intellectuals ,
the group Rutskoi referred to disparagingly as "the boys in pink shorts," the presidentia l
apparatus has become a haven for "experts" such as Livshits, Satarov, Baturin, and the
president's new legal advisor, Mikhail Krasnov . 5 1
One of the ironies of recent Russian economic policymaking is the extent to whic h
Chernomyrdin and other reluctant reformists in the Government have committed themselves to
strict monetary policy, apparently in response to international pressure . For his part, Livshits
also does not favor a return to the unbridled monetary emission of the Gerashchenko era, but h e
remains suspicious of attempts to reduce the inflation rate too quickly, fearing the social and
political consequences ." "The main point," he argues, "is to ensure that the price of market
transformation is not too great for society :" It is on fiscal policy that Livshits is unbending- -
he is committed to a budget deficit of no more than four percent of GNP .54
Livshits' views on Russian political economy defy simply characterization. While
accepting much Western economic science, Livshits retains some of the views of a Russian statist
[gosudarstvennik] . He speaks favorably of international financial institutions, such as the IMF ,
but is highly critical of foreigners "who seek to grab our export-oriented sectors" and to contro l
the consumer market with imported goods . In mid-1994, he estimated that, without protectionist
measures, the 55% foreign control of the consumer market would rise to 70% by 1996 . 55 He
has also sought to prevent deep cuts in the military, arguing that by the end of the decad e
Russian economic success will depend on three sectors : the military-industrial complex ,
1 6
metallurgy, and oil and gas.56 And he insists that before privatization can occur in som e
enterprises, the state may need to renationalize them and "begin to act like an owner :"57 He
is particularly critical of enterprise directors who have used privatization to create "economi c
mutants," which are neither capitalist nor socialist . "
Livshits appears most passionate, however, about the destructive power of lobbies in the
transition from a command economy . A central task of the presidency, he argues, is to uphol d
a national economic policy against the special pleading of "forces in the Dum a
and . . . representives of certain sector[al] blocs."59 Along with several other members of the
presidential apparatus . Livshits was a forceful advocate for the presidential decrees of May 199 4
and March 1995, which annulled scores of earlier directives that granted special privileges i n
foreign trade to organizations and regions.60 These directives had cost the state treasury an
estimated 15 trillion rubles in lost revenues . For Livshits, the political and cultural significance
of these decrees exceed their financial import . Such acts, he argued, "break traditions and
stereotypes of thinking" about exchange relations between the center, on the one hand, an d
sectors and regions on the other . "Even if we can prevent large-scale leaks in the budget for jus t
2-3 months, we will succeed in inculcating order in the nation" [priuchit' narod k poriadku] . 61
The storm of lobbying following these decrees was so intense that one Kremlin visito r
commented to Livshits : "I'm surprised to find you alive ."' On 1 June 1994 . only a week after
issuing the first decree, the president granted an exemption from the decree to the energy sector ,
which had received the vast majority of special licenses and quotas. The climbdown reportedly
followed vigorous pressure by the Government, 63 whose leader is bound to the TEK by "old boy
gas industry friendship" [muzhkaia gazpromovskaia druzhba].64 Such "friendship" doesn't jus t
1 7
distort the economy, it corrupts it . Even one of the most sanguine foreign students of the Russia n
economy, Anders Aslund, warned that "corruption in Russia's energy sector is so deep that ,
without action, it can threaten democracy and stability ."'
Among the regions seeking relief from the 1995 decree was Kaliningrad, which protested
that the president's action, annulling a 10-year exemption on customs duties signed in 1993 ,
would cost the territory 300 billion rubles . Kaliningrad was one of eleven economic or
administrative regions to have received favored status in foreign trade relations .66 Again, the
president and key ministers began to bend under the political pressure . In April 1995, Deputy
Prime Minister Chubais promised Kaliningrad officials that the center would make good on their
losses . Heightening the pressure from Kaliningrad was an alarming shift in the political loyaltie s
of the local citizens . Whereas Russia's Choice--the unofficial party of the president--received
a majority of the vote in the region in the 1993 parliamentary elections, the Communists and th e
Liberal Democrats of Vladimir Zhirinovskii now enjoy the greatest popular support i n
Kaliningrad ."
In February 1995, Livshits contributed to another presidential decree designed to enhanc e
economic discipline . This decree is noteworthy for its attempt to institutionalize cooperation
between president and prime minister, a rarity in Russian political development . Decree no. 226
requires president and prime minister to agree formally on any executive order that raise s
expenditures or lowers revenues . Where all such Government-sponsored "favors" must be issued
by the president in the form a decree [ukaz], the president's own largesse must first be approve d
in draft form by the Government [predstavliaiutsia na podpisanie iskliuchitel'no postanovieniiami
Pravitel'stva].68 In a joint Kremlin press conference, Livshits and Deputy Prime Minister
1 8
Chubais explained that the decree would protect the budget from attacks by branch interests . '
A month after the issuance of the decree, the president had succumbed to only two requests fo r
funding above budgetary limits : one for the celebrations of the 50th anniversary of World War
II and the other for the reconstruction of the Cathedral of Christ the Savior in Moscow . As
Livshits notes, however, a number of avenues designed to circumvent [obvodnye kanaly] the
decree are already takin g shape.70
Of all the levers of influence on economic policy available to Livshits, the most importan t
may be his contributions to the president's budget message [poslanie], the first of which appeared
in the spring of 1995 . 71 According to the president's economic advisor, this public document- -
prepared by Livshits, Satarov, and Baturin"--is "a political assignment to the Governmen t
concerning the preparation of the budget ." It is, he went on, "the birth of a political tradition ,
designed to fill a gap in the power functions of the president."73 To borrow the language of the
old regime, with this budgetary message Livshits and the presidential apparatus are attemptin g
to establish a "general line" on the economy as a means of enhancing the president's powers i n
economic decisionmaking .
Government institutions have bristled, however, at such attempts by the presidency t o
direct economic policy . After the issuance of the president's budget message, an official in th e
Ministry of Finance criticized the "theoreticians from the presidential apparatus,'' whose view s
"may not correspond to the realities of the budget process ." It is the Minister of Finance, they
reminded their colleagues in the presidency, who will have to answer for these policies.74 At
present, it is unclear whether the budget messages will become a guide for Government actio n
or merely "wishful thinking," to use the term of its critics .
1 9
Livshits' duties also include vetting economic decrees that require the president' s
signature, whatever their provenance ." To relax one's vigilance in this role even for a momen t
is to invite the issuance of decrees that violate the president's public commitment to reform.
Whether out of ignorance or "friendship," Yeltsin at times signs decrees that undermine the
presidential program .76 In many instances, the president accedes to the wishes o f supplicants
with the basest motives. Economics Minister Yasin complained that "the president has hi s
favorite directors who can open any doors."77 Unfortunately, in Livshits' words, Yeltsin
"doesn't know a lot 'about the economy] and tries to help everyone . . . .but some people need to
be imprisoned rather than helped . "
Conclusions
A strong presidency has sought to buttress a weak Russian state by reducin g
departmentalism in economic policymaking . An important part of this strategy has been th e
formation of presidential structures that could, like their counterparts in the old Centra l
Committee, monitor and influence the Government's management of the economy. But such a
policy requires a high level of discipline and cohesiveness in the presidency itself . This unity
of purpose and tactics is lacking in the Russian presidency. The problems lie both in Yeltsin' s
mercurial character, revealed above,79 and in the shapelessness of the presidential apparatus . 80
Like all chief executives, Yeltsin receives advice on the economy from a wide range o f
officials, many of whom are not professional economists . But the Russian presidency is unusual
in its lack of a collective body to weigh and synthesize this advice . This structural problem has
20
become all the more acute with the recent addition of economic expertise and authority in th e
presidency . The president appears to act on the basis of purely "bilateral" relations wit h
associates in Government and commerce and with leading officials in the presidency, such as
Livshits . Sergei Filatov, the head of the Executive Office of the President . Victor Iliushin, the
senior counsellor to the president . and Oleg Lobov, the head of the presidential Security Council .
Yeltsin does occasionally chair the plenary sessions of the Council of Ministers, but these ar e
highly formalized meetings with little . if any, debate. Without an economic cabinet in the
presidency or some other institutionalized mechanism for communication and decisionmaking i n
economic affairs, any leader would find it difficult to sustain a coherent economy policy amid
the torrent of contradictory information and advice .
Another distinctive feature of the Russian presidency is the absence, or opaqueness, o f
jurisdictional boundaries between officials . This lack of respect for the Weberian idea of
"offices" is most pronounced at the upper level of the presidential apparatus . Like officials i n
all organizations . the president's lieutenants continually maneuver to expand their staffs and
jurisdiction. But in Russia there are few cultural or institutional constraints to such empire -
building . Irrespective of job title or formal responsibilities, Yeltsin's lieutenants seek t o
influence policymaking in all areas . Suspicious of the information and expertise provided by
other departments in the presidencv, each lieutenant insists on maintaining his own broad-base d
analytical center .81 The result is self-destructive competition over power and policy within th e
presidencv and between the presidency and Government . In December 1994, in a celebrate d
letter to the prime minister, a high-ranking official in the presidency advised the Government o n
the use of oil pipelines . The author of the letter was Yeltsin's former bodyguard and now head
2 1
of the Kremlin's security service, General Alexande r Korzhakov.82
In economic affairs, as in other areas of policy, Russia lacks a well-develope d
"technology of power ." In a biting critique of the presidency's role in economic decisionmaking ,
Vladimir San'ko observed that when the strategy of reform is determined in the presidentia l
apparatus by secretive analytical centers and bureaus [upravleniia], whose formation depends on
palace intrigue, one cannot expect any other outcome . . . . "83 Even those closest to the president ,
such as Georgii Satarov, admit that there is not "a normal system of preparing and adoptin g
decisions ."84 Anders Aslund writes that "[a]fter appointing his young reform ministers [in 1991 -
1992], [Yeltsin] kept them at a distance and gave them no direct access to him . . .Even Gaidar
had little access to Yeltsin . "85
Russia's economic travails, then, are not merely the product of the sudden breakup of a
command economy or an explosion of sectoral demands . They also result from a fundamenta l
weakness in the institutions of state, a weakness with its roots in the political architecture o f
semi-presidentialism, in Russia's nihilist legal culture, and in the failed personal leadership of
Boris Yeltsin . For all his successes in moments of high political drama, the Russian president
has been unable to carry out--or effectively delegate—the more mundane, but no less essential ,
tasks of state administration . Despite. or perhaps because of, the more vigorous role of the
presidency in economic affairs, the Russian state has not yet developed the capacity to adopt an d
implement a national economic policy . Until this political problem is resolved, the course o f
Russian economic reform will remain erratic at best . As Michael McFaul has argued :
An autonomous and effective state is a necessary condition for carrying out
revolutionary economic transformation . Paradoxically, therefore, even if the goa l
22
of economic transformation is to stimulate market forces and eliminate stat e
planning, a strong state is still needed to extract the state from the economy .'
And to build a strong state, one must establish effective institutions at it s core.87
23
ENDNOTES
1 . "Nash lobbizm - samyi ot'iavlennyi v mire," Rossiiskie vesti, 14 April 1995 . p . 3 .
See Peter J . Stavrakis, State-Building in Post-Soviet Russia : The Chicago Boys and theDecline of Administrative Capacity, Occasional Papers # 254, Kennan Institute for Advance dRussian Studies (Washington, DC, October 1993), p . 4 . Stavrakis argues persuasively that thegranting of extraordinary economic powers to Yeltsin in December 1991 "eliminated anyincentive to develop stable policy-making structures ." Ibid., p . 23 . See also Andrei Illarionov ,"Uroki rossiiskikh reform," Znamia, no. 3 (1995), pp . 180-183 .
3. Egor Gaidar, Gosudarstvo i evoliutsiia (Moscow : Evraziia, 1995), p . 15 .
4. Peter J . Stavrakis, State-Building in Post-Soviet Russia, p . 18 .
5. In democratic countries . this assumes that the president and the parliament are political allies .For an introduction to semi-presidentialism and the politics of the dual executive, see MauriceDuverger, "A New Political System Model : Semi-Presidential Government ." European Journalof Political Research, no . 2 , vol . 8 (1980), pp . 165-187 .
6. In this sense, the old shibboleth that "the party rules but does not govern" was alway smisleading . On questions such as press and culture and relations with other Communist states ,the party governed as well as ruled .
7. Dmitrii L'vov, "Kto zhe stanet teper' teoretikom reform?" Rossiiskie vesti, 17 December1992 . p . 1 .
8. "S kem Prezident khodit v baniu?" Komsomolskaia pravda, 24 February 1994, p. 3 .
9. Formally, Yeltsin was the prime minister until June 1992, when Gaidar became acting prim eminister . However, because Gaidar was in charge of economic affairs in the Government fro mthe end of 1991, we consider the Gaidar "premiership" to have begun then .
10. Irina Savvateeva, "Chto sulit usilenie Chernomyrdina, " Izvestiia, 27 June 1995, p. 4 .
24
11. See the argument in Pavel Reshetnikov, "Reforma ispolnitel'noi vlasti : chto za nei?" Dialog ,no. 1 (1994), pp . 19-21 .
12. In the Chernomyrdin Government, the socialist ideas of Oleg Lobov in the Ministry o fEconomics contrasted with the liberal views of Boris Fedorov in the Ministry of Finance.Andrei Kolesnikov . "Igra bez pravil : bor'ba v Pravitel'stve mezhdu sotsial-etatistami i liberaliam iobostriaetsia," Rossiiskie vest,, 14 September 1993, p . l .
13. V .A. Mau, Ekonomika i vlast ' . politicheskaia istoriia ekonomicheskoi reformy v Rossii, 1985 -1994 (Moscow : Delo Ltd, 1995), p . 46 .
14. Of course, Gaidar's Government also labored under disadvantages, some of its ow nmaking . By continually referring to itself as a kamikadze Government, "officials and stat eenterprise managers treated the Gaidar team as a temporary phenomenon and consequentlyrefused to adjust." Anders Aslund . How Russia Became a Market Economy (Washington, DC :The Brookings Institution, 1995), p . 88 .
15 . And while Yeltsin enjoyed broad decree-making powers on the economy, granted to th epresident by parliament .
16 . According to Anders Aslund, "The issuance of large volumes of subsidized credits fro mJune 1992 unified the state enterprise managers in their resistance against the government's las tremaining attempts at stabilization ." Anders Aslund, How Russia Became a Market Economy(Washington, DC : The Brookings Institutions, 1995), p . 97 .
17. "Nikolai Fedorov : Parlament dopuskaet antikonstitutsionnye deistviia ." Rossiiskie vesti, 1 3March 1993, p . 2 .
18. "Gosapparat zhdet mini-reforma, a chinovnikov - sokrashchenie, " Rossiiskie vesti, 2 1December 1994, p . 2 . This figure does not include the 600 technical staff and other supportpersonnel . Ibid.
19. Fred Hiatt, "Yeltsin's New Cabinet : Reformers In - and Out - And Ideology Unclear, "Washington Post . 20 November 1994 . p. A37 .
20. "U nas net bolee vazhnoi problemy, nezheli dogovorit'sia o pravilakh igry," Posev, no . 5(1993), pp . 7-17 . This is an interview with Gaidar .
21. The Ministry of Agriculture warned in February 1995 that without new subsidies, the rura lsector would suffer "a complete and final collapse this year ." Chrystia Freeland, "New DecreeThreatens Russian Farm Reform," Financial Times, 21 February 1995 . Under pressure fro mthe agricultural lobby, the Prime Minister signed a decree on 1 February that placed almos tinsurmountable barriers in the path of the privatization of collective farm land by individualmembers of the collective .
22. Aleksandr Bekker, "Tsentr tiazhesti, " Segodnia, 28 March 1995, p . 3 .
25
23. Michael McFaul, "State Power, Institutional Change, and the Politics of Privatization i nRussia ." World Politics, no . I (1995), p . 210 .
24. For example, on the conflict between the interests of APK and TEK, see Aleksandr Bekker ,"Iurii Shafranik : tol'ko shokom ." Segodnia, 21 March 1995, p . 3 .
25 . As Anders Aslund points out, however, the permanent staff of old ministries, like Financeand Economics, were decidedly anti-reformist . The Ministry of Economics had inherited the staffof Gosplan . How Russia Became a Market Economy, pp. 62, 89 . 91 .
26. "Interview with New Minister of Economy," Moscow NTV 1800 GMT, 13 November 1994 ,as translated in Foreign Broadcast Information Service, 14 November 1994, p . 22 .
27. For a portrait of Yasin, who worked with Grigorii Yavlinskii and Stanislav Shatalin at th eend of the Soviet era, see "Esli vy trezvo myslite, to stanovites ; radikalom, " Rossiiskie vesti, 1 3May 1994, p . 2 .
28. Aleksandr Bekker, "V pokhod za l'gotami," Segodnia, 23 March 1995, p . l .
29. For an analysis of economic policy and performance in 1994, see Peter Rutland, "A Twiste dPath toward a Market Economy," Transitions (The Year in Review: Part II), pp . 12-18 .
30. For the most powerful statement of these successes, see Antler Aslund, "Russia's SuccessStory," Foreign Affairs, no . 5 (1994), pp . 58-71 .
31. Ol'ga Burkaleva, "Prem'er smotrit v budushchee s optimizmom," Rossiiskie vesti, 20 July1995, p . l .
32. Mikhail Berger, "Denezhnye appetity kremlevskikh spetskhozsluzhb konkuriruiut s voennym iraskhodami," Izvestiia, 8 February 1995, pp . l,4 . The presidential business office also makesmoney by letting hotel rooms and dachas, among other enterprises . See Andrei Uglanov ,"Ministry prikhodiat i ukhodiat, apparat ostaetsia," Argumenty i fakty, no. 20 (May 1994), p .3 .
33. Sergei Chugayev, "A Crash Program of Constructing 'Alternate Airfields' Is Under Way I nThe State Duma," Izvestiia, 6 June 1995, pp . l,4, as translated in Current Digest of the Post -Soviet Press, no . 23 (1995), pp . 5-6 . "In 1994 about 40% of the Employment Fund's money wasdeposited in commercial banks. and the income was used 'for purposes other than those forwhich it was intended .' The salaries of employees of social funds were two to three times thesalaries of employees of federal administrative agencies." Boris Boiko, "Meeting of the StateDuma : Deputies Do Not Turn Over The Funds To The Finance Ministry," Kommersant-Daily ,8 June 1995, p . 3, as translated in Current Digest of the Post-Soviet Press, no . 23 (1995), p . 6 .
34. Amid intense lobbying, the Duma rejected a law in June 1995 that would have regulated suchfunds . For an outline of the proposed law, see Natal'ia Olenich, "Vnebuidzhetnye fondy riskuiutpopast' pod gosudarstvennyi kontrol'," Segodnia, 7 June 1995, p . 2 .
26
3 5 . Anders Aslund, How Russia Became a Market Economy, p . 62 .
36. Viktor Ivanov, "The President's Economic Policy : The President Decides to Overcome theCrisis with the Help of Bureaucracy," Kommersant-Daily, 16 June 1994, p . 3, in ForeignBroadcast Information Service, no . 24 (1994), p . 9. The new procedures required theGovernment to clear with the presidency their drafts laws destined for parliament as well as theirown draft resolutions . See "Ob obespechenii vzaimodeistviia Prezidenta RF i Pravitel'stva RF, "Sobranie zakonodatel'stva, no. 7 (1994), st . 697 . [no . 1185, 10 June 1994]
37. "Otstavka Kvasova sozdaet novyi pretsedent," Rossiiskie vesti, 15 November 1994, p . l .Shortly before his dismissal, Kvasov noted that the presidency cannot interfere in th eGovernment's management of financial and economic issues, in part because "there are n oanalogous structures [of economic management] in the presidency ." Vladimir Kvasov, "Konflikt amezhdu pravitel'stvom i Prezidentom ne budet," Rossiiskaia federatsiia, no . 6 (1994), pp . 7-8 .For a revealing look at the internal politics of the Government apparatus, see Irina Savvateeva ,"Komanda Chernomyrdina v politicheskom inter'ere," Izvestiia, 14 April 1994, p. 4 .
38. "Otstavka Kvasova sozdaet novyi pretsedent," Rossiiskie vesti, 15 November 1994, p. l .
39. For an analysis of the development of the Russian presidential apparatus, see E . Huskey,"The State-Legal Administration and the Politics of Redundancy," Post-Soviet Affairs, no. 2(1995), pp . 115-143 . The term Government [pravitel'stvo] refers here to the offices of the prim eminister, the deputy prime ministers, and the subordinate departments . It does not include theindividual ministries .
40. Vladimir Berezovskii, "Dva politicheskikh lageria federal'noi elity Rossii," Svobodnaiamysl', no . 9 (1994), p . 84 .
41. Ilya Bulavinov, "Parliament on Confidence in Government . Power Returns to Starai aPloshchad," Kommersant-Daily, 27 October 1994, pp. l,3, as translated in Foreign BroadcastInformation Service, 28 October 1994 . p . 8 .
42 . For an interpretation of the validity of this decree and Government directives on the sport scommittee, see the "official explanation" issued by the president's State-Legal Administration .Sobranie zakonodatel 'stva, no . 9 (1995), at 1483-4 .
43. Polozhenie ob Analiticheskom tsentre Administratsii Prezidenta Rossiiskoi Federatsii p osotial'no-ekonomicheskoi politike, " Sobranie aktov Prezidenta i Pravitel'stva . no. 9 (1993), st .735 : O sovershenstvovanii deiatel'nosti mezhvedomstvennykh komissii Soveta bezopasnost iRossiiskoi Federatsii, Sobranie aktov Prezidenta i Pravitel'stva, no . 43 (1993), st . 4085 .
44. In April 1995 the Analytical Service in the presidency was upgraded to the Analytica lAdministration, one of a dozen-odd subdivisions of Filatov's Executive Office of the President .For the statute [polozhenie] on this structure, see "Ob Analiticheskom upravlenii Prezidenta RF, "Sobranie zakonodatel'stva, no. 17 (1995), st . 1513 .
27
45. "Sozdano Finansovo-biudzhetnoe upravlenie Prezidenta, " Rossiiskie vesti, 2 March 1994, p .l . It was in this post that he reportedly came into conflict with Kvasov . Vladimir Berezovskii ,"Dva politicheskikh lageria federal'noi elity Rossii," Svobodnaia mysl', no . 9 (1994), p . 81 .
46. Polozhenie o Finansovo-biudzhetnom upravlenii Prezidenta Rossiiskoi Federatsii, Sobranieaktov Prezidenta i Pravitel'stva, no . 10 (1994), st . 774 .
47. Vladimir Berezovskii, "Dva politicheskikh lageria federal'noi elity Rossii," Svobodnaiamysl', no . 9 (1994), p. 81 .
48. "Livshits Comments on Appointment as Presidential Aide," Moscow RTN, 1725 GMT 9November 94, as translated in Foreign Broadcast Information Service, 10 November 1994, p .
11 .
49. His books include Sovremennye burzhauznye teorii ekonomichsekoi politiki (Moscow, 1980) ,Monetarizm, kontseptsiia ekonomicheskoi politiki (Moscow, 1980), and most recently ,Ekonomicheskaia reforma v Rossii i ee tsen (Moscow, 1994) .
50. As an expert, Livshits was responsible, inter alia, for providing two-month forecasts formacroindicators, such as prices, unemployment, and industrial production. "Plat'e iz zaplat, "Moskovskii komsomolets, 30 June 1994, p . 2 .
51. Also in this group of "liberal doves" [golubi-liberaly] in the presidential apparatus are MarkUrnov and Boris Kyzyk, the latter an advisor to the president on foreign technical cooperatio nin military affairs. Veronika Kutsyllo, "Striapchie gosudareva prikaza, " Kommersant Daily, 8June 1995, p . 4 . Both Krasnov and Livshits had worked earlier for Baturin in the presidentialapparatus .
52. "Ekspert prezidenta soglasen zamedlit' reformy," Smena, 3 August 1994, p . 5 . "There arecertain things more important than [monetary] reform," Livshits argued . "Aleksandr Livshits :Nizkaia infliatsiia tozhe opasna," Literaturnaia gazeta, 13 July 1994, p. 10 [no . 28] .
53. "Aleksandr Livshits: Price of Reform Must Be Reduced," Trud, 4 March 1994, p . 1, astranslated in Foreign Broadcast Information Service . 10 March 1994. p . 16 .
54. Aleksandr Bekker, "Prezident napravit pravitel'stvu biudzhetnoe poslanie, " Segodnia, 4 May1995, p . l . Speaking in the spring of 1995, Livshits warned that "the Government of Russiawill soon have to decide which laws to implement : either the law on the budget of 1995 or thosethat increasingly depart from the budget." Aleksandr Bekker, "Pravitel'stvo boretsia siskusheniem i lobbistami," Segodnia, 21 April 1995, p. 2 . He had nothing but contempt forbudget-breaking parliamentary measures, such as the law to restore savings lost by citizens i nthe 1993 devaluation . Like a good central banker, he feared that the upcoming elections wouldencourage deputies to pass "good" laws that will be bad financially . Viktor Khamraev, "Sovetnikprezidenta o trekh istochnikakh ugrozy stabilizatsii," Segodnia, 11 April 1995, p. 2 .
2 8
55. "Sobstvennost' i vlast' uzhe podeleny, " Argumenty i fakty, no . 37 (1994), p . 3
56. "Ekspert prezidenta soglasen zamedlit' reformy ." Smena. 3 August 1994, p . 5 .
57. Ivan Zasurskii, "Vtorogo paketa ukazov zhdet' ostalos' 'neskol'ko mesiatsev'," Nezavisimaiagazeta, 2 June 1994, p. 4 . See also "Na illiuziiakh ekonomiku ne postroish' ." Pravda, 4 June1994. p . 2 .
58. Viktor Khamtaev . "Sovetnik prezidenta o trekh istochnikakh ugrozy stabilizatsii," Segodnia ,11 April 1995. p . 2 .
59. Aleksey Portanskiy , "Reform From Above Not Being carried Out in Russia, Aleksand rLivshits, Leader of the Russian Federation Presidenti's Group of Experts, Claims," Izvestiia, 20April 1994, as translated in Foreign Broadcast Information Service, 22 April 1994, p . 29 .
60. "O priznanii utrativshimi silu i ob otmene reshenii Prezidenta RF v chasti predostavlenii atamozhennykh l'got, " Sobranie zakonodatel 'stva, no . 11 (1995), st . 967 ; Nikolai Gorlov, "Kakgotoviatsia Ukazy Prezidenta,'' Rossiiskie vesti, 27 May 1994, p . l : and Irina Savvateeva ,"Prezident pokonchil s privelegiiami, " Izvestiia, 10 March 1995, p. l . On the same clay thatYeltsin signed the 1995 "anti-privilege" decree, he issued another decree granting a refrigerato rfactory a special exception from rules on hard currency receipts . "Ob osvobozhdenii zavodakholodil'nikov 'Stinol' aktsionernogo obshchestva 'Novolipetskii metallurgicheskii kombinat ' ot
obiazatel'noi prodazhi chasti valiutnoi vyruchki, " Sobranie zakonodatel 'stva, no. 11 (1995), st .964.
61. Aleksandr Bekker, "V pokhod za l'gotami ." Segodnia, 23 March 1995, p . 1 .
62. Ibid.
63. This accusation was made by Andrei Illarionov, the former economic advisor to theChernomyrdin Government. Andrei Illarionov, "Uroki rossiiskikh reform," Znamia, no. 3(1995), p . 174. The willingness of Yeltsin to accede to Chernomyrdin on questions of energypolicy appears to have been confirmed in a 1 April 1995 decree on the oil sector . "Opervoocherednykh merakh po sovershenstvovaniiu deiatel'nosti neftianykh kompanii ." Sobrani ezakonodatel 'stva, no . 15 (1995) . st . 1284 .
64. "Gosapparat zhdet mini-reforma, a chinovnikov - sokrashchenie," Rossiiskie vesti, 2 1December 1994, pp . 1-2 .
65. Anders Aslund, "Russia's Sleaze Sector," New York Times, 11 July 1995, p . Al l .
66. Except for Murmansk and the Volga region, the other areas were non-Russian republic s(Chuvashia, Udmurtia, Komi, Karelia, Buriatia, Dagestan, Adegei, Sakha) . See "O priznani iutrativshimi silu i ob otmene reshenii Prezidenta RF v chasti predostavleniia tamozhennykhl'got," Sobranie zakonodatel'stva, no . 11 (1995), st . 967 .
2 9
67 . "Hearings on Kaliningrad Province : The Amber Enclave is not being allowed to become aGold Mine," Kommersant-Daily, 8 June 1995 . p . 2 . as translated in Current Digest of the Post -Soviet Press, no . 23 (1995), p . 4 .
68 . "O merakh po ukrepleniiu finansovoi distsipliny pri ispolnenii federal'nogo biudzheta, "Sobranie zakonodatel'stva . no . 10 (1995), st . 859 .
69. Igor Karpenko, "El'tsin pytaetsia ogradit' biudzhet ot pokushenii, " Izvestiia, 3 March 1995 ,p . 1
70. Natalia Olenich, "Aleksandr Livshits : Put' biudzhetnykh ssud slishkom neiasen," Segodnia ,7 June 1995, p . l .
71. Andrei Kolesnikov, "Tsennik dlia reformy," Rossiiskie vesti, 7 September 1994, p . 2 .
72. Vasilii Kononenko, "Vozmozhny otstavki Egorova, Gracheva . Stepashina i dr . PoslanieEl'tsina parlamentu budet reformatorskim, " Izvestiia, 2 February 1995 . p . l .
73. Aleksandr Bekker . "Prezident napravit pravitel'stvu biudzhetnoe poslanie ." Segodnia, 4 May1995, p . 1 .
74. Tat'iana Ukliuchina, "Minfin 'perevarivaet' biudzhetnoe poslanie Borisa El'tsina," Segodnia ,29 June 1995, p . 2 .
75. One should note that a large portion of draft decrees ] ukazy] originate outside the presidency ,in the Government apparatus or the ministries . Although some reach Yeltsin's desk throug hstealth, most pass through a review by several officials in the presidential apparatus .
76. While visiting the prime minister in Sochi in the fall of 1994, Yeltsin signed a Government -prepared document that froze wages in state and private enterprises . Aghast at this retreat fro mthe president's declared policies, Livshits and other members of the presidential staff succeede din halting the decree before it could be registered and published by the Kremlin . Vasili iKononenko, "Prezidentskaia komanda blokiruet oprometchivyi ukaz," Izvestiia, 21 September1994, p . 1 . For an introduction to the politics of decree-making, see Nikolai Gorlov, "Kakgotoviatsia Ukazy Prezidenta," Rossiiskie vesti, 27 May 1994, p . l . and Veronika Kutsyllo ,"Striapchie gosudareva prikaza, " Kommersant Daily, 8 June 1995, p. 4 .
77. Elena Tregubova . "Evgenii lasin: zakonodateli opiat' 'podstavili prezidenta'," Segodnia, 1 4February 1995, p . 2 .
78. When the journalist who conducted this interview turned off the tape recorder, Livshit sdiscussed the massive theft that was plaguing economic development . He also alluded to th eweaknesses in Yeltsin's ability to understand economics, though suggested that this topic shoul dbe taken up only "when all present players are in retirement ." "Aleksandr Livshits : Nizkaiainfliatsiia tozhe opasna, " Literaturnaia gazeta, 13 July 1994, p . 10 [no . 281 .
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79. Juan Linz has warned that under presidentialism the personality and ability of the leader ar efar more important than in a parliamentary system . See Linz, "Presidential or ParliamentaryDemocracy : Does It Make a Difference?" in Juan J . Linz and Arturo Valenzuela (eds .), TheFailure of Presidential Democracy (Comparative Perspectives, volume 1) (Baltimore: JohnsHopkins University Press, 1994), pp . 52-53 .
There are some who regard Yeltsin's zigzags as part of a well thought out system designed tokeep his adversaries off balance . Other analysts, whose views I share, "do not believe thatYeltsin is cunning enough to play such a game ." "Yeltsin's 'Roller-Coaster' Method of Rul eEyed," Kommersant-Daily, 15 April 1995, p . 3, as translated in Foreign Broadcast InformationService . 18 April 1995, p . 22 .
80. The idea of bureaucratic "shapelessness" was developed by Charles Fairbanks, Jr . in"Jurisdictional Conflict and Coordination in Soviet and American Bureaucracy," Studies inComparative Communism, no . 2 (1988), pp . 153-174, and "Bureaucratic Politics in the SovietUnion and the Ottoman Empire ." Comparative Strategy, no . 3 (1987), pp . 333-362 .
81. The most remarkable example of the mania for analytical centers was the creation of a think-tank of from 60-100 specialists in the 1500-person security service of Alexander Korzhakov . Fora portrait of the head of this center, General Georgii Rogozin, see Sergei Parkhomenko ,"Modern Day Rasputin," Moscow News, no. 16 (1995), pp. l,6.
82. Otto Latsis, "General Korzhakov upravliaet stranoi kak riadovoi grazhdanin," Izvestiia, 28December 1994, p . 2 .
83. Vladimir San'ko, "Rubl' rukhnul v proval ekonomicheskoi politiki," Nezavisimaia gazeta ,18 October 1994, p . 4 .
84. "Georgii Satarov : Prezidentu nado chashche ob'iasniat' svoiu pozitsiiu," Argumenty i fakty ,no. 33 (1994), p . 3 . According to Alexander Livshits, new ideas for economic policy emerg efrom 10-15 persons in Government and presidential structures, often in chance meetings on thestreet or in the staff dining hall . Ideas generated in this way may then get written up at stormingsessions in state dachas outside the capital . Only at this point do they seek the president' sblessing . "If it weren't for the President . nothing would happen," Livshits observed, as if i nmocking tribute to a leader who becomes involved only to place his authority behind favorit eprojects . "Aleksandr Livshits : Nizkaia infliatsiia tozhe opasna," Literaturnaia gazeta, 13 July1994, p . 10 [no . 28) .
85. Anders Aslund, How Russia Became a Market Economy, p. 86 .
86. Michael McFaul, "State Power, Institutional Change, and the Politics of Privatization i nRussia," World Politics, no . 1 (1995), pp . 213-214 .
87. In the view of Fedor Burlatskii, an early advocate of a presidency for Russia : "Never mindthose pipe dreams about building a legal state or a social state . We need to revive a
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Government ." F . Burlatskii. "Vozrodit' pravitel'stvo Rossii ." Nezavisimaia gazeta, 12 Februar y1993, p . 2 .
Robert Putnam, among others, has argued that developing a Government or any effectiv epolitical institution depends less on political architecture or the context of decisionmaking thanon socio-cultural resources. such as trust, which cement relations among elites . Robert Putnam ,Making Democracy Work . Civic Traditions in Modern Italy (Princeton : Princeton UniversityPress, 1993) . Set against this view, which holds out little hope for an early resolution of Russia' spolitical problems, are the ideas of Mancur Olson, with whom we began this paper . For Olson,culture imposes only minor barriers to successful collective action . Even Olson, however,recognizes that powerful interests stand in the way of democratic development in Russia .
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