A Normal Country

Andrei Shleifer and Daniel Treisman

From Foreign Affairs, March/April 2004

Summary:  Conventional wisdom in the West says that post-Cold War Russia has been a disastrous failure. The facts say otherwise. Aspects of Russia's performance over the last decade may have been disappointing, but the notion that the country has gone through an economic cataclysm and political relapse is wrong--more a comment on overblown expectations than on Russia's actual experience. Compared to other countries at a similar level of economic and political development, Russia looks more the norm than the exception.

Andrei Shleifer is Whipple V.N. Jones Professor of Economics at Harvard University. Daniel Treisman is Associate Professor of Political Science at the University of California, Los Angeles. For full references and data sources see http://papers.nber.org/papers/w10057.

These developments, along with the shortcomings of the December 2003 parliamentary election, have caused panic in the West. Safire, for example, lamented the return of "one-party rule" and "resurgent autocracy." The sole expression of democracy in the election, according to Safire, was the public protest implicit in "the low voter turnout." In reality, the 2003 election was not exceptional. Official pressures on the media, biased coverage, and harassment of rival campaigns certainly occurred, but at rates comparable to those witnessed in previous Russian elections and in other middle-income democracies. The argument that such pressures swayed the voters more than in previous elections is also dubious: the official vote share for the United Russia Party -- 37.6 percent -- was almost exactly the total won in 1999 by the two blocs -- Unity and Fatherland-All Russia -- that subsequently formed United Russia.

Although ballot stuffing in some regions may have altered the vote by a few percentage points, perhaps pushing the liberal Yabloko and Union of Right Forces parties below the five percent threshold for Duma seats, the official results were close to those predicted by independent exit polls. Nor should the high vote for United Russia be taken as prima facie evidence of foul play. Given that the population's real income has grown by an average of 10 percent a year since Putin took over (with a massive 17 percent jump between October 2002 and October 2003), it would be surprising if pro-Putin parties were not popular. As for the turnout, even the lowest estimate of 53 to 54 percent is higher than the average for recent U.S. elections.

Although these developments push Russia toward the illiberal end of the spectrum, they do not move it beyond the customary range of politics in middle-income countries. Conflicts between local journalists and regional mayors or governors occur frequently in countries such as Argentina, Brazil, and Mexico, where thugs periodically assault or murder reporters who criticize local politicians. From Malaysia to Venezuela, political rivals of incumbent politicians have ended up in jail in recent years, the victims of dubious prosecutions. In Mexico, some rivals have been assassinated. In disputed territories from Mexico's Chiapas to eastern Turkey and the Philippines' Mindanao, elections have been held under the alert watch of the military. Russia's record, although unenviable, is not unusual.

MARCH TO THE MIDDLE

As Russian voters go to the polls in March 2004 to elect a president for the fourth time, they will do so in a country that none of them could have envisioned 20 years ago. Russia's economy is no longer the shortage-ridden, militarized, collapsing bureaucracy of 1990. It has metamorphosed into a marketplace of mostly private firms, producing goods and services to please consumers instead of planners. A few business magnates control much of the country's immense reserves of raw materials and troubled banking system, and they lobby hard for favored policies. Small businesses are burdened by corruption and regulation. Still, the economy continues to grow at an impressive pace.

The country's political order, too, has changed beyond recognition. The dictatorship of the party has given way to electoral democracy. Russia's once-powerful Communists no longer control all aspects of social life or sentence dissidents to labor camps. Instead, they campaign for seats in parliament. The press, although struggling against heavy-handed political interventions, is still far more professional and independent than the stilted propaganda machine of the mid-1980s. In slightly more than a decade, Russia has become a typical middle-income capitalist democracy.

So why the dark, at times almost paranoid, view? Why the hyperbole about kleptocracy, economic cataclysm, and KGB takeovers? A number of factors -- psychological, ideological, and overtly political -- led to the dyspeptic consensus among Russia-watchers in the West. Many Western observers simply reacted in a generous, if unreflective, way to the visible suffering of Russians dislocated by the transition. Beside the excesses of the new super-rich, the plight of impoverished pensioners seemed doubly shocking. But there were also some less pure motivations for focusing on the darker side of Russian life. First, there is sensationalism. Newspaper editors and television producers knew they could make money exploiting the anxieties of Western publics with chilling exposes of the Russian mafiya. Second, the intellectual left adopted Russia as the poster child for its crusade against globalization. With Russia's leaders embracing market rhetoric and reforms, the country's initial hardships could be portrayed as proof of the dangers of excessive liberalization. Third, Russia became a football in American politics during the late 1990s. With President Bill Clinton committed to supporting Yeltsin and Vice President Al Gore deeply involved in steering U.S.-Russia relations, bashing Moscow became a way for Republicans to score points in the 2000 election.

Exaggerated despair over Russia was also fueled by a fundamental and widespread misconception. Many Western observers thought of Russia in the early 1990s as a highly developed, if not wealthy, country. With its brilliant physicists and chess players, its space program, and its global military influence, Russia did not look like an Argentina or a South Korea. Believing that Russia started off from a highly developed base, these people saw the country's convergence to the norm for middle-income countries as a disastrous aberration. The same misconception informed some academic analyses. A recent paper by Nobel laureate Joseph Stiglitz and Karla Hoff makes the remarkable observation that, when it comes to legal institutions, "between Russia and most other developed, capitalist societies there was a qualitative difference [in the 1990s]." There was indeed a qualitative difference: Russia was never a "developed, capitalist society."

What does the future hold for Russia? Some see the sudden spurt of growth over the last four years as an indicator of more improvements to come, and they expect Russia soon to leave the ranks of middle-income countries to join those of Hungary and Poland as a poor developed one. They emphasize the country's advanced human capital, its reformed tax system, and its mostly open economy. Others see bureaucratic regulations and politicized interventions (so vividly exemplified by the Yukos case) as serious barriers that will stymie Russia's growth. In politics, optimists anticipate increased democratic competition and the emergence of a more vigorous civil society. Pessimists predict an accelerating slide toward an authoritarian regime that will be managed by security-service professionals under the fig leaf of formal democratic procedures.