POLICY-MAKING FOR RUSSIAN INDUSTRY
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1 POLICY-MAKING FOR RUSSIAN INDUSTRY
2 STUDIES IN RUSSIAN AND EAST EUROPEAN HISTORY AND SOCIETY General Editors: R. W Davies, Emeritus Professor of Soviet Economic Studies, and E. A. Rees, Senior Lecturer in Soviet History, both at the Centre for Russian and East European Studies, University of Birmingham Studies in Russian and East European History and Society Series Standing Order ISBN (outside North America only) You can receive future titles in this series as they are published by placing a standing order. Please contact your bookseller or, in case of difficulty. write to us at the address below with your name and address, the title of the series and the ISBN quoted above. Customer Services Department, Macmillan Distribution Ltd Houndmills, Basingstoke, Hampshire RG21 6XS, England
3 Policy-Making for Russian Industry Stephen Fortescue Senior Lecturer and Head of School School of Political Science University of New South Wales Sydney, Australia in association with Palgrave Macmillan
4 First published in Great Britain 1997 by MACMILLAN PRESS LTD Houndmills, Basingstoke, Hampshire RG21 6XS and London Companies and representatives throughout the world A catalogue record for this book is available from the British Library. ISBN ISBN (ebook) DOI / First published in the United States of America 1997 by ST. MARTIN'S PRESS, INC., Scholarly and Reference Division, 175 Fifth Avenue, New York, N.Y ISBN Library of Congress Cataloging-in-Publication Data Fortescue, Stephen. Policy-making for Russian industry / Stephen Fortescue. p. cm. Includes bibliographical references (p. ) and index. ISBN (cloth) 1. Industrial policy-russia (Federation) I. Title. HD3616.R92F dc Stephen Fortescue 1997 Softcover reprint of the hardcover 1st edition 1997 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London W1P 9HE. Any person who does any unauthorised act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The author has asserted his right to be identified as the author of this work in accordance with the Copyright, Designs and Patents Act This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources CIP
5 Contents Preface and Acknowledgements vii Glossary of Abbreviations and Russian Tenns Used in the Text x 1 Introduction 1 2 Industry Policy - Issues and Arguments 18 3 Central State Agencies 36 4 Sectoral Agencies 77 5 Representative Associations The Production Level Conclusion 165 Notes Bibliography Index v
6 Preface and Acknowledgements Michael Gershaft has stated: Russia has now achieved Lenin's 'dream' of state capitalism, where the owners profit, but the state decides which ones will and how much. 1 Sergei Chugaev has put it thus: A relatively smooth and solid politico-economic system has come into being in which each element has occupied its strictly defined place... That is, the road to the transition to the market has been taken under the complete control of the state. 2 Sergei Filatov, formerly President Yeltsin's Chief of Staff, described toplevel Russian administration in the following terms: It remains the sphere of the most brutal struggle of the interests of various political forces and the back-room activities and lobbying of every possible wielder of influence. 3 Anders Aslund is of the opinion: Russia has already become a market economy, but one in the midst of a long-overdue and massive restructuring. 4 The purpose of this book is to make some sense of these various, largely contradictory views of the contemporary Russian economy. Four specific models of the economy distilled by the author from the descriptions just quoted and many others are described in the Introduction, the intention being to choose by the end of the book one of them as best fitting the current state of Russian affairs. Given the author's disciplinary specialization as a political scientist, the emphasis is on institutions and procedures. Although a familiarity with the pros and cons of various economic policies and forms of economic management by state and private institutions is an essential part of the analysis, it is not the author's concern to pass judgement on such issues (although it is not denied that his own prejudices might show through). Certainly, due attention is paid to general economic issues and the broad economic debate. The terms of that debate are set out in Chapter 2. An important part of the book is devoted to setting the sectoral context, that is setting out the different policy positions and political and institutional capacities of the major economic sectors. As will become clear, the boundaries vii
7 viii Preface and Acknowledgements between sectors are not always clear and the divisions within sectors are no less important than those between sectors. Nevertheless the following loose classification of sectors is adopted: agriculture, energy, industry (including the defence industry), finance, commerce and trade. The emphasis, in terms of empirical detail, is on industry. Such an emphasis is partly a reflection of the author's previous research interests. However, when a choice has to be made - and to keep the project manageable here a choice has had to be made - it is not hard to justify a concentration on industry. In the Russian case the industrial sector is particularly important for two reasons. Firstly, there is the overwhelming importance that the industrial sector had in the Soviet economy. The 'classic' Soviet model involved as a fundamental the dominance of industry. Among the keenest debates in contemporary Russia is whether that dominance should or inevitably will move away from industry, most controversially in favour of the energy sector. The second reason is the degree of transformation called for within the industrial sector. The stated goal of the transition is to move from a command economy to some form of market economy, a move which requires radical transformation in every aspect of industrial administration and management. The bulk of the book is structured according to the categories of actors involved in industry-oriented economic policy-making. A chapter on the central economic agencies of the state, which includes a more general discussion of the role of the state in transition economies, is followed by a chapter on sectorally specialized agencies. Chapter 5 examines the role of industrial associations, including those which present themselves as 'peak' bodies and those with sectoral specializations. This chapter also includes a brief exposition of the role of parliament in the policy-making process. The final empirical chapter deals with the enterprise level, and in doing so introduces discussion of financial-industrial integration and briefly the place of regional structures. The last chapter sums up the analysis contained in the previous chapters and attempts to justify a final choice of model. The author then undertakes some predictions of future developments. Given that the book is being completed in L'le middle of the campaign for the June 1996 presidential election, the author well understands the threat to his credibility contained in such an exercise. I wish to acknowledge the support provided by my colleagues in the School of Political Science and Faculty of Arts and Social Sciences at the University of New South Wales, for grants and research leave and the even more important friendship and intellectual stimulation. Grants have also been provided by the Australian Research Council and the Royal Institute of Public Administration Australia/University of Canberra Research
8 Preface and Acknowledgements lx Trust Fund. I am grateful to a large number of institutions and associations that have provided a forum for the presentation of papers that have gone into this book: the Centre for Russian and Euro-Asian Studies at the University of Melbourne, the Centre for Slavonic Studies and the Centre for Chinese Political Economy at Macquarie University, the Swedish National Defence Research Establishment, the Moscow office of the Carnegie Foundation for International Peace, the Australasian Political Studies Association, the Australasian Association for Communist and Post-Communist Studies, and the International Council for Central and East European Studies. A large number of people have contributed in large and small ways to the research that has gone into this book and I will not attempt to list them by name. I will make one exception and offer special thanks to Aleksei Zudin for his friendship and generosity. Stephen Fortescue Kensington
9 Glossary of Abbreviations and Russian Terms Used in the Text AO (aktsionemoe obshchestvo - joint-stock company). The designation for a privatized or newly formed private enterprise. ASM-holding (avtosel'khozmash-kholding - automobile and agricultural machinery holding company). A sectoral corporation based on the Soviet Ministry of Automobiles and Agricultural Machinery. FTR (Federatsiia tovaroproizvoditelei Rossii- Federation of Commodity Producers of Russia). An industrial representative association. FUDN (Federal'noe upravlenie po delam nesostoiatel'nosti - Federal Administration for Non-Viability Affairs). The state bankruptcy agency. GKAP (Gosudarstvennyi komitet po antimonopol'noi politike i podderzhke novykh ekonomicheskikh struktur - State Committee for Anti Monopoly Policy and Support for New Economic Structures). The state anti-monopoly and competition agency. GKI (Gosudarstvennyi komitet po upravleniiu gosudarstvennogo imushchestva, Goskomimushchestvo - State Committee for the Management of State Assets). The state agency responsible for promoting and supervising privatization. glavk (glavnoe upravlenie - chief administration). A major structural unit of a sectoral ministry or administrative committee, usually responsible for a subsector. KSBR (Kruglyi stol biznesa Rossii- The Russian Business Round Table). A business representative association. NDR ('Nash dom- Rossia'- 'Our Home is Russia'). A political party headed by prime minister Viktor Chemomyrdin. X
10 Glossary of Abbreviations and Russian Terms Used in the Text xi PRES (Partiia rossiiskogo edinstva i soglasiia - Party of Russian Unity and Consensus). A political party inaugurated by former Deputy Prime Minister Shakhrai. RFFI (Rossiiskiifondfederal'nogo imushchestva- Russian Federal Property Fund). The state agency responsible for holding state assets. RSPP (Rossiiskii soiuz promyshkennikov i predprinimatelei- Russian Union of Industrialists and Entrepreneurs). A major industrial representative association. soglasovanie The bureaucratic process of circulation and 'signing off of documents. TPP (Torgovo-promyshlennaia palata- Chamber of Trade and Industry). The Russian Chamber of Commerce. zavlab (zaveduiushchii laboratoriei - laboratory head). A research institute position used in the transition period to describe, often in derogatory terms, recruits to politics and state service from research institutes.
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