Political Elites in the New Russia (Basees Curzon Series on Russian & East European Studies)

R E C T O RU N N I N G H E A D

Political Elites and the New Russia

Political Elites and the New Russia convincingly argues that although reforms in Russia have been initiated by those close to the President, in fact local and national elites have been the crucial strategic actors in reshaping Russia’s economy, democratising its political system and decentralising its administration. This book analyses the political culture of elites under Yeltsin and Putin, discussing the extent to which they form coherent political orientations, and how far this culture has been in step with, or at odds with, the reform policies of the Kremlin leadership and consequences for state stability. Anton Steen is Professor of Political Science at the University of Oslo. He has written on elites and democratisation in the Baltic States and is currently working on a project looking at elites and state-transformation in Russia.

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BASEES/RoutledgeCurzon Series on Russian and East European Studies Series editor Richard Sakwa Department of Politics and International Relations, University of Kent

Editorial committee George Blazyca Centre for Contemporary European Studies, University of Paisley Terry Cox Department of Government, University of Strathclyde Rosalind Marsh Department of European Studies and Modern Languages, University of Bath David Moon Department of History, University of Strathclyde Hilary Pilkington Centre for Russian and East European Studies, University of Birmingham Stephen White Department of Politics, University of Glasgow This series is published on behalf of BASEES (the British Association for Slavonic and East European Studies). The series comprises original, highquality, research-level work by both new and established scholars on all aspects of Russian, Soviet, post-Soviet and East European Studies in humanities and social science subjects. 1 Ukraine’s Foreign and Security Policy, 1991–2000 Roman Wolczuk 2 Political Parties in the Russian Regions Derek S. Hutcheson 3 Local Communities and Post-Communist Transformation Edited by Simon Smith 4 Repression and Resistance in Communist Europe J. C. Sharman 5 Political Elites and the New Russia Anton Steen 6 Dostoevsky and the Idea of Russianness Sarah Hudspith

Chapter Title

Political Elites and the New Russia The power basis of Yeltsin’s and Putin’s regimes

Anton Steen

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First published 2003 by RoutledgeCurzon 11 New Fetter Lane, London EC4P 4EE Simultaneously published in the USA and Canada by RoutledgeCurzon 29 West 35th Street, New York, NY 10001 This edition published in the Taylor & Francis e-Library, 2004. RoutledgeCurzon is an imprint of the Taylor & Francis Group © 2003 Anton Steen All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data Steen, Anton, 1949– Political elites and the new Russia: the power basis of Yeltsin’s and Putin’s regimes / Anton Steen. p. cm. – (BASEES/RoutledgeCurzon series on Russian and East European studies; 5) Simultaneously published in the USA and Canada. Includes bibliographical references (p. ) and index. 1. Elite (Social sciences)–Russia (Federation). 2. Political culture–Russia (Federation). 3. Democracy–Russia (Federation). 4. Post-communism– Russia (Federation). 5. Russia (Federation)–Politics and government–1991–. I. Title. II. Series. HN530.2.Z9E488 2003 305.5´2´0947–dc21 ISBN 0-203-18048-8 Master e-book ISBN

ISBN 0-203-34462-6 (Adobe eReader Format) ISBN 0–415–30903–4 (Print Edition)

2003041584

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Contents

List of illustrations Preface Acknowledgements 1 Russian elites and the triple transformation

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2 Defining and surveying elites

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3 Regime-legitimacy and political stability

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4 Democracy Russian style

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5 Between the state and the market

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6 Integration in a decentralised federation

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7 What matters for the elite’s orientations?

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8 Decision-making cultures

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9 The network state

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10 The elites and the emerging Russian state Appendix: additional tables Notes References Index

167 182 190 196 207

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Illustrations

Figure A7.1 Shaping of elite orientations

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Tables A3.1 A3.2 A3.3 A4.1 A4.2 A4.3 A5.1 A5.2 A5.3 A5.4 A6.1 A6.2 A6.3 A6.4 A6.5 A7.1 A8.1 A8.2 A8.3 A8.4

Confidence in institutions, total elite Confidence in institutions, by elite group Inter-elite distrust Elites who support equal influence, strong leadership and a multi-party competition Attitudes to Presidential and government powers Attitudes to economic system and democracy. Pearson’s correlations Individualism and collectivism Attitudes to form of ownership in various sectors The state and the market as instruments for solving various problems: total elite Perceptions of future economic development Perceptions of power of various levels of government Perceptions of future power distribution How economic transfers and taxation influence equality between regions Responsibility for providing public services The opinions of various regional elites on special agreements and federal law, 1998 New institutions, old legacies and post-communist experiences influencing the elite’s orientations Elites saying decision-making is ‘closed’ in various sectors The importance of ‘the law’ and ‘personal contacts’ The importance of the ‘law’ and ‘bargaining’ (barg.) in various sectors as perceived by the elite Strong mafia influence in various sectors

30 34 38 52 55 62 74 78 81 87 100 102 106 109 114 123 130 132 133 137

viii Illustrations A9.1 The elite’s contacts with leaders of other institutions. Percentage of contacts occurring monthly or more often A9.2 Members of the elite with family and relatives in leading positions in private firms and state enterprises A9.3 Importance of Soviet connections in present decision-making A9.4 Political capital and elite contacts A3.1 The elite’s image of the masses’ trust in leaders of institutions A3.2 Mass public and the elite with no or little confidence in institutions A5.1 Selected economic and social indicators for the Russian Federation, 1990–1998 A5.2 Individualism and collectivism among regional elites, in 1998 A6.1 Elite attitudes to controlling tax incomes A6.2 Elite support for special agreements and federal law A9.1 Length of membership in the CPSU A9.2 Former status in the CPSU A9.3 Elected as a deputy of a Soviet legislative body

147 151 157 160 182 183 184 185 186 187 188 188 189

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Preface

Seminal events, like major wars, the demise of empires and the fall of powerful regimes shape new historical epochs. The fall of communism represents such a change of epoch that not only affects those who were directly involved in the previous Soviet dominated area but have universal significance. We have now just started to envisage the consequences of restructuring the world political sphere from ideological confrontations to the politics of handling uncertainties in which weakened post-communist state power is seeking new forms of legitimacy. In this continuously more pluralised world the ruling elites need a political foundation that goes deeper than formal institutions and power instruments. Only internalised values among the broader leadership provide the basis for a minimum level of political integration and joint actions, and this is what this book is about. Using Russia as a case, the purpose is to analyse the emerging postcommunist political culture among the elites, and I will also discuss its causes, how it is forged by past legacies and new policy visions, and what consequences elite orientations have for the emerging Russian state. During 1989–90 I became involved in a wave of events following the breakdown of the Soviet Union. My first interest and concern was the struggle for independence of the three Baltic states that had been occupied by the Soviet Union a generation before. The regained independence and the reorientation of these states towards democracy and market economy spurred a still ongoing project on Baltic elites. While these small states feel close, the most nearby resident is the Russian Federation with whom Norway shares a common border in the north. During the long period of the ‘iron curtain’ this border was completely closed but has in the new epoch of post-communist Russia become a door for mutual exchange between our societies. Although relations in the North are important for coping with common regional problems the main objective of this study is broader and hopefully provides a better understanding of what goes on among Russian national and regional elites more generally and what policy trajectories the elites may stimulate or obstruct. Obviously, their orientations and behaviour, their ‘political culture’, have consequences for Norwegian–Russian relations and

x Preface provides one justification for this book. However, the main reason is my fascination for how political culture relates to policy reforms. The reforms initiated by the top rulers and how they confronted the national and regional elite’s orientations I argue became decisive to the political, economic and federal compromises following the collapse of communism. The Kremlin leadership had to cope with unprecedented pluralised elites whose political culture and behaviour is crucial to an understanding of the viability and future of democratic, economic and federal reforms. The orientations and behaviour of Russian elites reflects not only the past but also the experiences and uncertainties arising from the shock-like reforms and weak formal state institutions of the last decade. This ‘contradictory’ elite culture may be interpreted as an anomaly. However, as this study argues, the Russian elites ‘link’ values of centralisation and decentralisation that made the new epoch possible and will have a major imprint on the coming decades not only on Russia but also on an increasingly interrelated political and economic world. Yeltsin’s decade in power was a time of elite fragmentation. I argue that Putin’s centralising policies were a response to a widespread desire among frustrated elites. The challenge of the Russian leaders is to strike the delicate balance between functional pluralism and beneficial centralisation furthering co-ordinated leadership. Responsible elites and the tremendous natural resources of the country are the main factors for developing a democratic state, not necessarily of a Western type, a prosperous economy and a prominent role in the world. I hope this book may contribute to a better understanding of Russia’s potential as a state. Anton Steen Oslo, March 2003

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Acknowledgements

This book is the product of a long period of work and I am indebted to several persons for their assistance and help during the process. I am thankful to Arne Kommisrud who in the very early phase contributed to putting this project on track and to John Higley whose advice encouraged me to publish the results in a book and has also contributed with valuable comments and suggestions for improvements. My gratitude goes to the following who commented on the whole or parts of the manuscript: Helge Blakkisrud, Vladimir Gel’man, Jørn Holm-Hansen, Paal Kolstoe and David Lane. Knut Andreas Christophersen and Kersti Heloe helped with computer running and technical assistance, and Thomas Devold was my assistant during the initial part of the project. Melanie Nickel was always prepared to copy-edit various versions of the chapters. This project would not have been possible without the professional expertise of ROMIR (The Russian Public Opinion and Market Research Company) who carried out the interviews with national and regional Russian elites. The assistance of all these scholars and experts was indispensable for improving the various versions of earlier drafts, however, the responsibility for the final result remains totally mine. The project was originally named ‘Governance and economic development in Russia: the role of the elites’ and I hope the results reported provide a better understanding of the elite’s role in shaping new governing and economic institutions. Another report from the project is an anthology with contributors from Russia, USA, UK and Norway which I co-edited with Vladimir Gel’man called ‘Elites and Democratic Development in Russia’. Many thanks to the ‘Cooperation Programme with Central and Eastern Europe’, conducted by the Norwegian Research Council, for the grant without which the project and books would not have been possible and to my own institution, the Department of Political Science at the University of Oslo, which as usual provided excellent working conditions.

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R E C T O RU N N I N G H E A D

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Russian elites and the triple transformation

Introduction After the fall of communism widespread optimism among the new leaders flowed from a belief that instituting a pluralist democracy, a market economy, and a decentralised government would quickly bring major benefits. However, effecting this triple transformation meant dismantling an all-encompassing state while at the same time implementing sweeping procedural and policy reforms that would maintain the support of broader national and regional elites. It was no surprise that such an unprecedented undertaking soon came into conflict with the elites’ traditional beliefs and behaviour and therefore ran into major difficulties – often as a result of the lingering legacy of the past regime. At the same time, the main aims of the reform programme itself – democratisation, privatisation and the decentralisation of power – eroded the necessary state instruments for successful reforms. While both the historical perspective and the state’s capacity to rule are certainly important, the main purpose of this study is to analyse the contemporary political culture of the post-communist Russian elites, arguing that their orientations account for the trajectories of political and economic transformation and the prospects for the newly emerging Russian regime. More specifically, the questions of this book are first: What characterises the political culture of the national and regional elites? To what extent did or do the elites form a coherent political culture under the regimes of Boris Yeltsin and Vladimir Putin? And to what extent is this culture congruent with the policy visions of the Kremlin leaders? Second, does the post-communist political culture ensue from the legacy of the past, from new institutions or from post-communist learning? Third, I discuss some implications of political culture on the new Russian state, a state that is still in the process of transformation.

The void of post-communism Basically this book is about how political culture relates to institutions, be they historical or new. Nettl (1967) maintains that two distinct types of

2 Russian elites and the triple transformation ‘culture’ serve as the basis for political systems: a constitutional or formal norm culture and an elitist culture in which social interaction takes precedence over institutional structures and where political authority derives from political elites. One implication, as Nettl (1968) argues, is that politics may be defined as ‘an area of normlessness’ (p. 588) where a political vacuum is filled by contending norms that elites argue are legitimate for society as a whole. Certainly, ‘normlessness’ would seem to be an apt description of the political culture that has filled the void left by dismantled communist institutions. Linz and Stepan (1996) maintain that the quandary in which Russia finds itself today is due to a persisting distinctly post-Soviet mentality, which helps to explain the lack of elite commitment to democratic rule. I argue, on the other hand, that the elites’ attitudes and behaviour have emerged mainly from the transformation itself. Thus, the extent of elite integration or conflict is determined by confrontations, alliances, uncertainties, and opportunities generated by the simultaneous transformations of the governing system and the economy. The concept of ‘political culture’ may be used in various ways. Here I intend to map attitudes to governance and the economy and the behaviour of the elites and argue that this culture forms the basis of the emerging postcommunist Russian state. Accordingly, although reforms were initiated by the central executive leadership around the President, in fact the national and regional elites have been the crucial strategic actors in reshaping Russia’s economy, democratising its political system and decentralising its administration. As a result, conflict has ensued mainly from discrepancies between the attitudes of national and regional elites and the policy objectives of the Kremlin leaders. As elaborated in the next chapter, the actors studied comprise those who directly or indirectly influence policy-making. National elites include deputies in the State Duma and Federation Council and the leaders of ministries, state enterprises, private business companies and cultural organisations, while regional elites include political and administrative leaders in the regions. The distinction between the Kremlin leadership and other leaders in parliamentary bodies, the bureaucracy and regional leaders was also important during periods of authoritarian rule in Russia and the Soviet Union. Even then the reform programmes of the national leadership to a large extent depended on support from lower level elites, and with democratisation and decentralisation the significance of this buttressing has increased tremendously. As Przeworski (1991) argues, post-communist reform policies are based on a strategy of control from above that does not envisage broad participation or, consensus among all affected interests or compromises. Yet at the same time the policy leadership needs political support that will moderate – or if lacking – undermine the reforms. In the following I argue that an examination of the content and extent of uniformity of the attitudes of the national and regional elites goes far toward explaining the emergence of a

Russian elites and the triple transformation 3 specifically Russian type of democracy, why many economic reforms took other paths than those expected by Yeltsin’s advisers and why the Russian Federation has wavered between a decentralised and a re-centralised structure. Discovering the attitudes of the elites and how homogeneous they are helps us to understand their political psychology better and provides some clues about why the liberal policies of the Yeltsin reformers proved to be such a volatile experiment, while Putin’s administration has apparently been more successful in putting in place a rather unique Russian regime which has developed from an unprecedented mixture of the three reform projects. Putnam (1973), in his study of parliamentary deputies in Britain and Italy, maintains that the elites’ beliefs constitute important elements of the political culture of a country, guide political action and form the basis of the political system.1 One may argue that in post-communist Russia long traditions of elite rule were simply continued (though not necessarily by ‘old’ elites) in the context of new and weak institutions, thus creating legal and institutional uncertainties. As Baylis (1998) argues, in such circumstances elite personalities are apt to play an unusually prominent role in politics. It is widely argued that the elites who held power in Russia after 1991 inherited both a specifically Soviet political culture and institutions and notions dating back to the pre-Soviet period. The reforms thus collided with the legacy of Russia’s past and this inheritance was the context in which the triple transition in economics, politics and the federal governing structure unfolded. In other words, old collectivist orientations clashed with opportunity structures emanating from the radical top-down initiated reform projects. At the same time, new organs of political representation, the privatisation of state property and the newly decentralised governmental structures institutionalised uncertainties and provided favourable circumstances for elites to reorganise, formally and informally, in ways that made co-ordinated governance and policy implementation hazardous and unpredictable. The focus of this study is mainly on patterns of elite orientations and behaviour, but also on how they are shaped and their consequences for political stability and the rebuilding of the state. I argue that the impact of the legacy of the past may be overestimated. First of all reforms and new institutions created massive uncertainties and unintended consequences in the exercise of power, in the policy trajectories and their implementation that have been formative for the elites’ reorientations and hence on the process of state-building in Russia. After the turbulent Yeltsin years, where a dramatic split emerged between ambitious Kremlin leaders and confused elites, Putin’s main achievement has been to soothe the political process by bringing reforms, political structure and the elite’s political culture into closer correspondence. Certainly, post-communist Russia is a fascinating laboratory to study Nettl’s (1968) thesis of how elite preferences and interaction takes precedence over institutional structures, therby filling a political vacuum where state authority derives from elites.

4 Russian elites and the triple transformation

Transformations and the elite’s responses Just before the demise of the Soviet regime a series of reform ideas was presented in the ‘500 days programme’, elaborated during 1990 by a group of liberal economists in Michael Gorbachev’s administration. The programme made explicit the close connection between economic reform, democratisation and decentralisation of power, arguing that Economic reform is impossible to implement with orders from the Centre. . . . People no longer want to tolerate a situation in which key decisions that shape their lives are made without participation. The central role in the transformation is given to the governments of the republics and to local authorities. (Aron 2001: 402) While Gorbachev hesitated to go ahead with the programme because of opposition from the conservative establishment, Yeltsin argued that the moment should be seized without delay, and shortly after he was elected President he returned to the programme with strong determination. However, since the programme was presented within the framework of the USSR, Yeltsin was soon confronted with the dilemma of first dismantling the state before the programme could be implemented. Although each task in the programme was in itself an enormous challenge, Boris Yeltsin and his team argued that since all the problems were interrelated the project needed to be tackled as a whole. If the old political institutions were not dismantled and power decentralised to the regions, they reasoned, privatisation of state property and market institutions would not be possible. As Elster et al. (1998) underline more generally for Eastern Europe, the historically unique simultaneity of the transition to democratic rule, reorganisation of the economy and the consolidation of national territory meant that no existing model for their implementation could be relied upon. In the article ‘Capitalism by democratic design?’ Offe (1991) argues that the very simultaneity of the three transformations ‘generates decision loads of unprecedented magnitude’ (p. 871). The reforms would not only obstruct one another but also constituted an open invitation for opportunism. In other words, the power elites were in a position to construct political and economic institutions to their own advantage. What is more, Yeltsin’s decision to give priority to economic restructuring over political reforms, Linz and Stepan (1996) argue, weakened the state, the democracy and the economy. Because the reforms were highly interconnected and had widely different time horizons they produced unexpected interaction effects and outcomes. In this extremely uncertain environment elites had to recast their mental horizons and create a ‘political psychology’ suitable for tackling unprecedented problems. The purpose here is to analyse how the elites responded to these uncertainties.

Russian elites and the triple transformation 5 The basic premise of this study is that the attitudes of the Russian elite reflect a specifically post-communist political psychology, emanating both from the new opportunities offered by liberal policies and institutions and from a more ingrained cultural legacy. Thus, the orientations of the elites are the critical filter of the tripartite reform programme ordered by the Kremlin leaders. Because the Kremlin policy elite are vastly dependent on the lowerlevel elite’s support and loyalty, the latter’s attitudes have been crucial for the country’s recent economic reforms, the type of democracy that has emerged and the capacity of the federal administration to govern. I argue that from the early 1990s onwards the elites were subjected to strong cross-pressures that emanated from impatient Kremlin policy leaders and their political allies, from popular discontent, and from clever and vigorous business and other sectoral elites who took advantage of a weakened state to enrich themselves. These cross-pressures fragmented the elite and resulted in many unexpected coalitions and policy outcomes. To this extent, popularly elected, administrative, business, regional and other decision-makers became ‘strategic elites’ who controlled the levers that determined whether reforms would be realised. Obviously, elite games during the 1990s were harsh and ruthless but does this necessarily mean that their basic orientations were at odds? I argue that the vertical clashes of preferences between the reforming Kremlin leadership and other elites, in particular the State Duma during the Yeltsin era, should be distinguished from horizontal conflicts among national and regional elites. To what extent these elites’ orientations diverge and in which areas are empirical questions and the topic of this study. I argue that both the turbulent Yeltsin period and the more orderly Putin era may be explained by the rather homogeneous and traditional orientations among a broad segment of national and regional elites. While the elites express preferences for certain political institutions and policy solutions, they also ‘construct realities’ about what their decisionmaking environments should look like. This canvas of interests and cognitive predispositions forms the background for political action. The purpose here is also to investigate the Russian decision-making culture, asking whether the elite perceive decision-making to be taking place in a legal-rationalist or clientelistic culture and to what extent they take part in networks. Thus, the intention is not to investigate actual decision-making. The link between attitudes and actions is in any case extremely difficult to determine, particularly when elites other than the strictly ‘political’ are included. The aim is rather to illuminate a certain post-communist elite belief system. I want to investigate the level of regime support and orientations toward democracy and authoritarianism, market and state, decentralisation and centralisation, clientelism and legalism and network behaviour and how these patterns relate to the various Kremlin leaders’ efforts to organise the polity and implement economic reform policies. The basic questions, then, are how legitimate and stable is the postcommunist Russian regime? What type of democracy is taking root? What is

6 Russian elites and the triple transformation the link between democracy and the market economy now that the central economic planning system has been dismantled? What will be the role of the state and the market? What model of territorial integration and sharing of responsibility between governing levels is to be followed in the future? And what type of decision-making characterises elite thinking and behaviour? The elites’ values, perceptions of realities and reported behaviour presumably will provide some clues and, I argue, taken as a whole will illuminate the political basis of the emerging Russian state.

The Russian elites: fragmented or integrated? Russia’s central leadership and its national and regional elites have by no means constituted a unitary formation since 1991. Controversial reforms and new decision-making structures have split the elites both horizontally and vertically, a fragmentation manifested in numerous deep, and sometimes quite brutal, conflicts and power struggles (Higley and Lengyel 2000). As David Lane (2000) indicates, there were no clear-cut alliances or basic cleavages between elite groups. Elite divisions may rather be characterised as constantly changing and are as unpredictable as pragmatic interests dictate. Nevertheless, the widely differing recruitment paths and conflicts do not necessarily imply a fragmented elite when it comes to basic orientations. I argue that the broadly coinciding elite beliefs about institutions and policies found in this study in fact suggest a rather integrated elite, though not one united by consensus. A consensual elite, like those in most Western countries, places boundaries on destructive games, owing to its internalised norms of mutual trust and legitimate institutions. In Russia, consensual elite relations stem not from a common feeling of agreement about the codes for political competition but from loyalty to the national sovereign – the President. Under communism loyalty could be controlled by the use of force or economic incentives. When such mechanisms are weak or absent, the Kremlin leadership either has to confront the national and regional elites or moderate its policies. While elite conflicts over the market economy, democratic functioning and federalism have inhibited Russia’s progress greatly since 1991, elite behaviour has also changed. During Boris Yeltsin’s presidency, intense conflicts between the presidential entourage and the Supreme Council and later with the State Duma were a key feature of the elite configuration. Why, then, did elite relations become generally more harmonious after Vladimir Putin took office? A commonly held view is that Putin’s authoritarian ruling style simply inhibits opposition. Alternatively, one may view Putin’s regime as a response to a widespread wish among the national and regional elites for less radical policies and more resolute leadership. Vladimir Gel’man (2003) characterises the peaceful elite relations under Putin as ‘imposed consensus’, a major tool for re-integrating the elites. As the editor of the Russian daily

Russian elites and the triple transformation 7 Izvestia explains: ‘Traditionally, Russia wants to see a leader with a strong hand . . . but at the same time, it wants this person to have some democratic convictions’ (Newsweek, 19 November 2001). Putin was ideally suited for the paradoxical combination of authoritarian and democratic values in Russian society. Thus, the widely held picture of conflicting national and regional elites is challenged in this study. I argue that although behaviour may be antagonistic and there may be voracious competition for positions and resources, the main issue is to what extent the elite agrees on basic values related to the political regime (type of democracy and federation) and distributional regime (the balance between state and market). Their support for informal political and administrative practices (clientelism and personal networks) is an alternative to government by ‘dictatorship of the law’ or Western-style ‘rule of law’. Such institutions function merely as a façade for informal practices (Gel’man 2003), but their consequences may be not only arbitrary rule from the centre but also more elite autonomy. Obviously, there existed major conflicts between the executive and other elites during Yeltsin’s period as president. However, these conflicts between reformers and other elites do not necessarily imply antagonism among elites in legislatures, administration and business. Of special interest is what the data reveal about the restored political hierarchy and recentralised government that Vladimir Putin has sought to institute since assuming high political office in 1999 and 2000. I argue that while the elites’ support for Putin’s regime is based on their desire for a firmer political hand, it does not constitute servile submission to Kremlin rulers. New formal democratic institutions and informal practices shelter their powers, and because they constitute the political basis of Putin’s regime the national and regional elites continue to be primarily an independent force shaping the future of Russia.

Reforms and counter-reforms in Russian history Waves of upheavals and counter-reactions oscillating between more or less authoritarian regimes are not a new phenomenon in Russia. In a book written in the late Soviet period Alexander Yanov (1987) maintains that Russian history through the centuries can be described in terms of frequently occurring cycles of stagnation, reforms and counter-reforms, where the outcomes depend on the Kremlin’s relations with national and regional leaders. He illustrates how various ‘regime crises’ have often provided the impetus for such cycles, citing as examples the political and economic reforms of Petr Stolypin under Tsar Nikolai II in 1905 and Gorbachev’s reform policies following the stagnation period under Leonid Brezhnev. He argues that while a ‘systemic crisis’ like the one of 1917 binds the leadership in certain very structured ways, regime crises nevertheless allow the leadership various choices. Thus, the Russian leadership chose to counter the stagnation of the

8 Russian elites and the triple transformation Brezhnev era with a programme of restructuring and political modernisation, but Russia could equally well at that point have entered into a phase of increased despotism and a more closed system, as happened in 1929 and under various Tsars. ‘Systemic crises’ are rare in Russia, but when they occur they are followed by major and ultimately irreversible changes, like those brought about by the October Revolution of 1917, which ensued from the February reforms. If we accept Yanov’s premise, how should we then interpret the 1991 demise of communist rule, Yeltsin’s erratic reform policies and Putin’s swing back to a more authoritarian political style and state-oriented economic policies? Whether the regime change of 1991 was a systemic change of the same kind as that of 1917 is a matter for debate. The ‘success’ of communist ideology was largely dependent on the ruthless use of state violence and indoctrination that destroyed the Russian middle-class and profoundly changed basic ways of thinking among the people. Yeltsin’s problem was to reform Russia in a liberal context. Carrying out painful reforms while at the same time dismantling the state increased the power of the national and regional elites enormously so that little could be achieved without entering into co-operation and compromises with these groups. As Yanov says, the liberal economic reforms in the late Soviet period consisted largely of rhetoric without any serious political strategy for their implementation. This made the top leadership dependent on the national and regional elites, who controlled the institutions and mechanisms for putting its policies into effect. In Russia major segments of the previous elite were transplanted wholesale into the new regime so that, compared with other post-communist regimes, there has been a remarkable degree of continuity in the Russian elite. Although the political and economic system changed substantially and younger, reform-oriented people were recruited into some of the command positions, the cast of actors and operators from the previous system remained more or less intact and simply circulated from one position to another. Therefore, Yeltsin’s bold plan for a triple transition was hampered from the outset, because the national and regional elites who were supposed to implement the reforms did not have a proper understanding of liberal ideas of democracy and economy, thus constraining the government from implementing its self-proclaimed liberal ideology. The reformists, with their all-too-idealistic image of the Western model, claimed that a reduction in state responsibility and intervention would automatically nurture new attitudes and behaviour among both the elites and the population. When these positive effects failed to materialise Yeltsin’s response was to sack leading members of the central leadership, in particular those in the cabinet, who seldom remained in office for longer periods. Representative institutions, capitalism and decentralisation made the elites more difficult to control. However, the centre tried to compensate for this by

Russian elites and the triple transformation 9 negotiating deals with the governors and cultivating the support of the financial oligarchs. Nevertheless, the economic disaster, the fragmenting tendencies of the Russian Federation and the weak presidency could not continue indefinitely, and as the 1990s drew to a close pressure for political change was building up. Tim McDaniel (1996) regards Yeltsin’s top-down reforms as a strange combination of traditionalism and modernisation that has a number of precedents in Russian history. The superior ability of the ruler fused with technocratic ideas of social engineering creates a type of ‘surgeon state’. A contradiction arises when this type of state deprives itself of the instruments to govern, thereby undermining both democracy and capitalism. Yeltsin not only broke with the idea of the omnipotent state,2 he also departed from the more traditional images of the state held by the national and regional elites. McDaniel argues that Yeltsin could have broken with the classical logic of failure of reform in Russia if he had presented a vision of the future that linked reforms with adjusted notions of state responsibility for equality and welfare, thereby connecting reforms and traditions. What type of political system might emerge from such a double strategy is quite open. As Richard Sakwa (1998) argues, a wholesale transformation from the past that still takes account of historic traditions is conducive neither to liberal democracy nor authoritarian rule but is something quite unprecedented. Yeltsin burnt his bridges to the past by entering into a massive confrontation with both the elites and the general population. Putin’s achievement has been to use the state to rebuild confidence among the elites. Combining traditional Russian ideas of strong leadership with state responsibility for law and order and people’s welfare created a political atmosphere of stability without undermining the elite’s newly won political and economic opportunities. If the Russian experience of democracy, decentralisation and a market economy was so discouraging, why did a full-fledged ‘systemic change’ not occur, for example in the form of a military take-over supported by broad sections of the elite, the population and the Communist Party? Putin’s accession as President in March 2000 represents a counter-force, but within the context of pluralist power-sharing as formulated in the Russian Constitution. In fact Putin’s take-over as President was orchestrated by Yeltsin. As a political realist he saw that while liberalism could not work in Russia without the support of the elites, neither was it possible to return to Soviet-type centralisation. Putin was authorised to use the power of the Presidency to find a ‘third way’ of political and economic development. The reaction is quite understandable because it is in tune with the Russian idea of a strong ruler responsible for order and economic redistribution who also respects the wish for some degree of independence by the elites and the need to decentralise power to the regions.

10 Russian elites and the triple transformation

Elites, power and regime If elites are regarded as crucial actors in political and economic developments, it is essential to be clear about their characteristics and the reasons for their importance. The social science literature dealing with elites addresses three main questions: Who are they and how unified are they? How important are they for democratisation and policy outcomes? And what forces shape the elites? The question of what constitutes an ‘elite’ has been answered differently by what might be conveniently labelled the ‘power school’ and the ‘pluralists’. Building on the classic works of Mosca, Pareto, and C. Wright Mills, the ‘power school’ asserts the existence of an integrated governing or power elite that controls any modern country’s political regime and makes all main policy decisions. While there are other and contesting elite groups, these manage to influence only secondary aspects of government policy. This thesis of a core elite has been challenged sharply by scholars who depict elites in modern democratic systems as much more pluralistic (Dahl 1961, 1971). In their view, there is no dominant or integrated elite but rather constantly shifting constellations and coalitions of more or less equally powerful and organisationally distinct elite groups. Elite configurations vary and co-operation is determined not by common ‘elite interests’ but by the type of government policy that influences the interests of various elite groups. While the pluralist model of elite behaviour is rooted in societal interests and is posited on long-term experience with Western democracies, the conditions for post-communist elites are quite different. Because Russian democracy is new and its elites cannot clearly be classified along socio-economic cleavages, the question of elite differentiation remains an open one to be explored through empirical research. One major purpose of this study is to provide a more informed answer to the question of the extent to which elite pluralism is developing in Russia. Higley and his collaborators have sought to combine these opposing perspectives by arguing that political elites in stable democracies are, in fact, both strongly integrated and widely differentiated or pluralistic (Higley and Burton 1989; Higley et al. 1991; Higley and Pakulski 1995). They contend that such ‘consensually integrated’ elites are a stable democracy’s sine qua non. In several of their most recent writings (e.g. Higley and Lengyel 2000), they have depicted Russian elites as falling well short of consensual integration during the 1990s, although they base this assertion on the scattered observations of numerous specialists on Russian politics and not on any concrete data that actually measure how near or far the elites are from consensual integration. There exist numerous theoretical and empirical studies about elite pacts and regime change, but few solid conclusions have so far been drawn about the elite’s political culture and its long-term consequences for democratisation in Russia.3

Russian elites and the triple transformation 11 While the elite theories maintain that elites are the decisive force for regime change and democratic development, others argue that the elite is but one of several major variables shaping political and policy outcomes. In Samuel P. Huntington’s well-known formulation, elites may be the most proximate variable, but other variables – such as the level of economic development, institutional configurations, a population’s cultural homogeneity or heterogeneity, etc. – must also be taken into account (Huntington 1991: 37). In particular, scholars who adopt a neo-institutionalist approach regard political outcomes and economic policies as the products of formal rules and internalised norms that leave relatively little room for elite choices. In this view, the behaviour and orientations of the elites reflect bonds of loyalty to organisations and institutions erected by the policy leadership. In the Russian context, the new organisational-institutional matrix that has followed the 1991 transition will gradually produce new modes of elite behaviour and orientations. But if this is so, why have reforms been impeded more often than not? A third, socially deterministic school in elite studies portrays elites as mirrors of societal and economic conditions. The Marxist wing of this school regards the social composition, actions and orientations of elites as mirroring the unequal power balance between the ruling and the oppressed social classes. Another wing takes a less rigid and simplistic view, portraying elites not so much as mirroring social class relations but as being shaped by pathdependent historical and cultural trajectories. This theory of the significance of past legacies and institutions has gained widespread popularity among scholars analysing ‘the failure’ of the Russian economic experiment (Hedlund 1999). Others who prefer a softer variant of this hypothesis argue that elements of the legacy of the past may merge with new opportunities to create beneficial economic exchange networks that are different from both the market economy and state control (Stark and Bruszt 1998).

Elite renewal One of democracy’s defining characteristics is that elites do not constitute a monolithic, ideologically united group but instead are pluralistic and partly autonomous from one another and are prepared to compete peacefully for political power. In democracies the behaviour and orientations of the elite are tied quite closely to their positions in the political hierarchy, their institutional affiliations and the categories of supporters they seek to mobilise. From this perspective, the demise of the conspicuously undemocratic Soviet regime presumably involved the replacement of an ideologically united and sharply hierarchical set of elites with a plurality of elites located inside and outside the state sector who competed peacefully with each other for dominance in a democratic ‘game’. This, at least, is what theories of democratic transition lead us to expect in the Russian case. Certainly since 1991 Russian

12 Russian elites and the triple transformation elites have not displayed the marked outward unity that was characteristic of the Soviet period until at least the mid-1980s. But neither have their post1991 behaviour and orientations coincided with the kind of ‘game-rule consensus’ that is thought to be characteristic of elites in stable democratic political systems. Some scholars have analysed the extent of elite change between the Soviet and post-Soviet periods in terms of continuity and renewal, that is, whether the old Soviet elites were replaced by entirely or largely new elites. One wellknown finding is that elites who headed the old nomenklatura structure mainly rotated their positions before and after 1991, so that in this area at least evidence of wholesale elite renewal is mostly absent (Kryshtanovskaya and White 1996; Mawdsley and White 2000). Another well-known finding is, however, that in the uppermost political positions there was, in fact, some renewal, with younger and better-educated reformers displacing the top echelons of the procrustean Soviet elite (Lane and Ross 1999). It seems clear that marked elite continuity overall, coupled with significant elite change in key political areas have both been important features of Russia’s democratic transition. Although the elite’s social biography is interesting, insofar as the relationship between recruitment and orientation is a vague one and often previous regime supporters are found to have adopted a very liberal orientation, it is evident that orientation and behaviour are not simply products of people’s backgrounds and previous positions. In this study, at any rate, the actual orientations of Russian elites are accorded greater importance than the extent of their continuity and renewal. During the 1990s the elite were composed of generally young, neo-liberal reformers who gathered around Boris Yeltsin and who staffed much of his presidential administration. Their overriding goal was economic reform and their importance lay in initiating market reforms, especially the privatisation of state property. However, this elite lacked the means for implementing their reforms in any comprehensive way. At the same time, two other sets of elites acted as major brakes on the reform process. One was the key powerholders in the array of political, economic, administrative, media and other institutions at the national level – what I call the national elite. The other was the parallel array of power-holders in Russia’s 89 regions and autonomous republics – the regional elite. The problem has been that the new representative institutions provided for by the Constitution adopted in late 1993, the ‘oligarchisation’ of the economy and the erosion of central power to the regions that accompanied – some would say ensured – Yeltsin’s rise to power after 1989 fragmented both the national and the regional political elite quite severely, leaving few of their members with strong incentives to implement the reform directives emanating from the Kremlin leadership. Basically the change of regime constituted a reallocation of power away from an ideologically integrated core elite in

Russian elites and the triple transformation 13 favour of autonomous elites, bringing us to the important question of how integration of elite orientations relates to basic societal structures and political stability.

Elite culture and political stability In all societies political stability rests on a minimum level of normative integration among the elite. Almond and Verba’s (1965) classical analysis of civic cultures maintains that political stability rests on the extent to which a political culture is ‘congruent’ with the structure of the polity, or in their own formulation: ‘Each kind of polity – traditional, authoritarian, and democratic – has one form of culture that is congruent with its own structure’ (p. 33). Later, the idea of compatible cultures sustaining political stability has been elaborated and classified by Douglas and Wildavsky (1982). Molenaers and Thompson (1999), for example, argue that political culture may be essentially categorised into four main types of social integration based on ‘individualism’, ‘hierarchy’, ‘egalitarianism’ and also ‘fatalism’. Stable democracy emerges from a certain mix of the four cultures and the same can be said for viable economic performance and functional federal governance. They argue that if only one culture dominates the result will be extremism and fragmentation. For post-communist Russia, I argue, political stability and state formation may be explained by the elite’s support to these types of political cultures. Harry Eckstein’s ‘congruence theory,’ with its more explicit elite focus, maintains that political stability follows when elite attitudes are congruent with authority patterns characteristic of the society in question. While Eckstein’s original theory was concerned with congruent values among elites and hierarchically subordinate social groups (Eckstein and Gurr 1975), the idea of ‘congruent authority patterns’ may also be applied to vertical relations between the Kremlin leaders and institutionally defined elite groups at the national and regional levels. As mentioned above, this is also the idea underlying Higley and his associates’ argument about elite integration and democratisation, of which ‘consensually integrated elites’ are just one type conducive to political stability. During the 1990s the Russian elites were obviously in severe conflict over political issues and competing for access to positions, so elite unity was weak. Nevertheless, regular elections took place, albeit not always in keeping with Western standards. Higley and Lengyel (2000) argue that by the end of the decade the Russian elites were severely fragmented and that Russia could therefore best be described as an ‘unconsolidated democracy’ with the potential for a more authoritarian regime. In their view Russian elites remain severely fragmented, engaging in unchecked political struggles that approximate zero-sum games. But if this is so, why has no major elite group to date clearly violated or sought to destroy the formal democratic procedures that

14 Russian elites and the triple transformation were adopted a decade ago and that, by and large, appear to have been strengthened in the years since? The aim of my study is to describe the underlying value patterns among the Russian elite that sustain a specific type of democracy and economic system that is ensuring stability. Since government is composed of elite groups, one has to look for variation in authority patterns among elites. In particular, intra-state congruence among different levels of the elite is supposed to have a stabilising effect. Political stability will follow when elite groups are in agreement about common norms and modes of interaction, although these may not necessarily live up to the standards of genuine democracy. It seems rather obvious that the main achievement of Vladimir Putin was to establish a largely conservatively orientated consensus among the elites, thereby breaking the devastating stalemate between the Kremlin leadership and the elites that had emerged under Yeltsin. According to this perspective, ‘congruence’ between elite levels becomes more important for political stability and economic progress than the actual ‘democratic content’ of their orientations. The focus on orientations and values may suggest to some readers that this is a ‘culturalist’ analysis. However, I do not regard historical traditions and early socialisation as shaping elite orientations and values in any comprehensive or uniform way. Elite orientations and values are shaped just as much by new opportunity structures and responses to political and policy dilemmas that arise during reform processes. I do not reject the legacy of the past – on the contrary it may account for much of the elite’s attitudes and behaviour – but the salience of traditions must be seen in connection with how radical reforms are and what social impact they have. Elites do not support or oppose reforms in a vacuum, that is, without paying attention to the problems to be solved and the effectiveness of the policies proposed by the central elite. Moreover, they interact amid much uncertainty, so that the success or failure of reforms must also be viewed as the result of elite attempts to grapple with uncertainty and find solutions to highly novel problems. One main theme in my analysis is that, because of the uncertain and novel circumstances in which they find themselves, national and regional elites inevitably differ in how they respond to the reforms promoted by key power figures. This means that reforms initiated by the policy leadership inevitably run into trouble. During the 1990s the strength of commitment to market reforms, fully representative political institutions and decentralised government varied greatly among central and regional elites in Russia. The problem the uppermost elites in Moscow faced was how to persuade or compel many other elites, both at the centre and in the regions, to bear the costs of reform and to accept the demolition of collective institutions in which elite power and much relative elite security had long been anchored. As we shall see, this was no small task. Their political discourse might be analysed through an examination of their speeches, other public utterances and sundry documents produced by

Russian elites and the triple transformation 15 them. These could then be synthesised and arranged in broad categories. However, the elite’s political discourse can also be analysed through the answers that representative samples of them, including political, administrative and business elites on the national and regional levels give to specific questions in survey studies of the sort that were conducted in 1998 and 2000. Although the transition process was chaotic and elite competition quite brutal, the system did not disintegrate. The task is, therefore, to identify how common elite values keep Russia together while also protecting their newly won opportunities, thereby preventing a return to authoritarian rule and central planning. Since the surveys cover the same or corresponding elite positions under both Boris Yeltsin’s and Vladimir Putin’s periods in power, it is possible to investigate to what extent orientations coincide between elite groups and whether they have altered from one president to another.

The structure of the book The next chapter discusses the concept of ‘elite’ and how it is used in the empirical analysis and gives an overview of the data used in the elite survey. It also considers the methodological and technical challenges encountered in interviewing elites, such as problems of representativity. Chapter 3 explores the issue of legitimate rule in Russia, asking to what extent elites have confidence in various institutions in politics, society and the economy and whether they trust each other. In Chapter 4 the main topic is what type of democracy Russia is and what the relationship is between democratic development and market preferences. Chapter 5 deals with the type of economic system emerging in Russia after the introduction of the market and asserts that a specifically post-communist type of mixed economy has broad support. The problems discussed in Chapter 6 are the new federal structure and the centre–periphery relationships. I ask how the elites appraise power-relations and functional divisions between the central and regional governments. Chapter 7 discusses possible explanations for the attitudes to democracy, economy and federation analysed in the previous chapters. Are elite attitudes influenced by relations with the executive and the state’s capacity to cope with problems? Does the legacy of the past, such as early socialisation or position in the Soviet system, matter? And how important is post-communist experience, including late socialisation and ideological orientations? The last two empirical chapters deal with decision-making cultures and the consequences of the new regime for elite interaction. Chapter 8 analyses attitudes to legal-rational decision-making in contrast to clientelism and patronage, asking to what extent the elites prefer ‘rational’ or ‘traditional’ ways of decision-making. Chapter 9 focuses on elite behaviour in networks, investigating contact patterns between elites. Chapter 10, the concluding chapter, argues that the Russian elite’s belief system is conducive to the unprecedented post-communist regime currently emerging. This regime is

16 Russian elites and the triple transformation characterised by sympathy for strong leadership and state-led capitalism and support for democratic participation rights, small business and a rather decentralised federation, and it is underpinned by weak state instruments and informal decision-making mechanisms.

Chapter Title

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17

Defining and surveying elites

Introduction Elite studies based on a sample of respondents and a large number of structured interviews share some features with surveys that analyse representative samples of a total population. In both cases, the samples are intended to say something about the universe of units. At the same time, elite surveys also have some distinctive features of their own as regards both respondents and sampling methods. Elite interviews provide a unique opportunity to study a group of people occupying key positions of power and political influence. One thing that distinguishes elites from respondents in a general population survey is that the social markers, attitudes and behaviour being studied are those of premise-setters and decision-makers who, by the nature of their formal position, have the potential to influence political outcomes. Thus, elite studies will be of special relevance in the study of politics and policymaking. Analysing the attitudes of important strategic actors can be assumed to yield a better understanding of how political processes are influenced and, ultimately, which preferences and interests may prevail in a given state. In this study the elites are defined more broadly to include influential figures from a number of spheres other than politics. The term will be used in the singular – the elite – to talk about the elite as such with shared propensities and interests; and in the plural – the elites – to indicate groups of leaders, defined by institutional positions, and with varying opinions and backgrounds. Common to the elites is that they influence political decisionmaking processes in some way, either directly or indirectly. How integrated these elites are and whether there exists an identifiable ‘power elite’ marked by continuity, cohesion and coinciding interests is, of course, a matter for empirical investigation. This will probably vary, depending on what issues are on the agenda and how specifically a set of issues is defined. In a country like Russia, characterised by weak institutions, instability in political and economic relations and shifting elite alliances, the existence of a unified power elite is likely to be more hypothetical than axiomatic. After the change of regime the Russian elite became more vertically differentiated, so it is useful to distinguish between the ‘core elite,’ the

18 Defining and surveying elites ‘national elite’ and the ‘regional elite.’ All belong to the elite in the sense of occupying key positions of influence at different, though not necessarily superior or subordinate levels. The core elite, or what may be called the Kremlin leadership is to be found in the highest echelons of the power hierarchy. In the case of Russia this would include the President and his chief advisors, members of the Presidential Security Council and members of the Cabinet. While getting access to such leaders is extremely difficult, the middle elites – the political and administrative leaders at the next level down – are generally more willing to be interviewed. From a methodological point of view this may also be an advantage. These people represent greater continuity, as they are less likely to be shaken by the sudden gusts of wind that were particularly characteristic of political life in Russia during Yeltsin’s period of government. In the present study, what is termed the ‘national elite’ includes politicians in the State Duma and Federation Council, leading officials in federal ministries and the directors of state-owned enterprises and private businesses. They also include the ‘cultural elite,’ i.e. the heads of cultural institutions and leading figures in the mass media and education. The regional elite is defined geographically and includes leaders at the regional and local levels. However, there is no sharp dividing line between national and regional leaders, since regional leaders are also represented in national decision-making bodies like the Federation Council and the State Duma. In these cases only those leaders who have no position in the centre are classified as the regional elite. One important aim of this study is to establish a better empirical foundation for determining how integrated or fragmented the elite’s orientations are. Pluralistic elites are defined by a differentiation of roles rooted in societal interests. The demise of communist rule was an institutional revolution that gave rise to parallel transitions in politics, the economy and the federal administration. While the elites are clearly operating within these new institutions, the question is what effect the institutional changes have had on their orientations. The main object of this study is to map these orientations and study how they may have changed over time. In analysing elite behaviour, I take a more indirect approach, asking respondents about their contacts with other leaders in an effort to find out more about their ‘network behaviour.’ This is important in a situation where hierarchical administrative structures are weak and respect for the rules of the game is shaky, for here elite networks may have a crucial role to play in keeping vital state functions running. Seen in formal terms, variation in institutions would imply ‘elite-pluralism’ in the sense employed by Dahl (1971). However, it is not possible to determine, either in formal or in definitional terms, whether the elites are characterised by competition, as implied by a pluralistic model, or by closed co-operation, as a ‘power elite’ model would imply (Mills 1959). Furthermore, co-operation between elites may be clandestine and still involve a considerable degree of competitiveness and conflict. A fundamental question is if the

Defining and surveying elites 19 Russian elite moves in the direction of ‘consensually integrated’ elites, as defined by Higley et al. (1991), and compete for power and influence, while sharing some basic values and a common interest in adhering to the ‘rules of the game.’ And, if so, are these rules and shared values of the same type as in established democracies?

Selection of elites Elite surveys raise the question of which elites shall be included. The validity of the results will depend largely on the sampling of the respondents (Hoffman-Lange 1987). However, in seeking to cope with the complexities of the real world, elite studies necessarily involve a considerable number of ad hoc choices when it comes to selection (Moyser and Wagstaffe 1987). In this study, pragmatic considerations of who it is possible to include in a survey have been combined with more theoretical considerations about which institutions are important in decision-making processes. The main selection criterion has been to include leaders from institutions with the greatest political, administrative and economic importance. In the aggregate the respondents from different institutions constitute a rather representative sample of the national and regional elite. In elite studies a distinction is commonly drawn between three approaches: the positional, reputational and case-study methods (Putnam 1976). The positional method assumes that actors with important formal positions belong to the elite. The reputational method holds that well-informed observers can provide the necessary information on who has power. When several such observations coincide, this then indicates elite status. Underlying the case-study approach is the assumption that an in-depth study of one or more central decision-making processes can reveal who has influence. Since the purpose here is to study the orientations of leaders who have aquired positions in certain institutions, the positional approach would appear to be the most useful. Further, it is not difficult to argue that this stratum of leaders directly and indirectly influences decision-making. Structured, face-to-face interviews were conducted with 980 respondents in leading positions in 1998 and 605 in 2000. The following eight institutions were included, with the number of respondents in brackets: prominent politicians in the State Duma (100), members of the Federation Council (30), leaders in the federal administration and ministries (100), directors of state enterprises (50) and private businesses (50), leaders of educational, cultural and media institutions (50) and political and administrative leaders at the regional level (1998 (600); 2000 (225)). Owing to reduced research resources, fewer members of the regional elite were interviewed in the 2000 survey although it covered the same regional categories as in 1998. Of the original lists of respondents (target respondents), one third could not be interviewed for various reasons. Some of the Duma members had no time or it was difficult to locate them. Some members of the Federation

20 Defining and surveying elites Council were busy campaigning in their home regions, others refused to be interviewed because of the political situation, while some still were on holiday in their home areas. A few directors of state enterprises also refused to be interviewed, citing the hard economic times in their company. If interviewing the person on the original list proved impossible, it was generally simple to find leaders in similar or related positions who were willing to be interviewed – either the heads of another Duma committee, another governor or head of a regional parliament in the Federation Council or directors of other state or private enterprises. Alternatively, interviews were held with their next in command: deputy directors and head of sections in the ministries; deputy directors in enterprises; and deputy heads of parliamentary committees in the State Duma. As far as possible the same or synonymous positions were covered in the 1998 and 2000 surveys. Similar guidelines were followed in elite studies carried out in Estonia, Latvia and Lithuania by the author (Steen 1997). However, the Russian elite survey also included a centre–periphery dimension, which meant that regional elites were given a relatively broader representation. The selection of institutions and elites conforms with what have been defined as strategic elites (Keller 1972), which are separate from the core elite. Such middle elites are institutionally diverse but all exercise influence, directly or indirectly, on decision-making. Religious leaders, artists, writers and media figures may also indirectly influence decision-making process by pushing hot issues high on the political agenda through, for example, by informal contacts or media coverage. However, a demarcation line had to be drawn and they have not been included in this study. Another important group in Russia today is military leaders, but gaining access to this group is difficult in the extreme, so they have not been incorporated either. Another group not included in the study are the leaders of so-called ‘interest organisations’. The problem is that civil society in Russia is still relatively undeveloped, often making it difficult to decide whether one is dealing with a proper institution with an apparatus and members or merely the leader of an organisation that exists in name only. In selecting respondents, several criteria were employed. Political elites in the State Duma and the Federation Council were easy to identify. The aim was to obtain a representative sample in terms of political affiliation and importance, so the criterion for selection was leadership either of a party group or of one of the main committees in the State Duma. Certain problems did arise, however. In the 1995–2000 State Duma, one party had no elected leader for a period, while the leaders of some of the other parties were no longer members of the State Duma but had taken up posts in the Cabinet or in the ministries. The point of departure for determining party affiliation was the situation at the time the elections to the Duma were held. In the case of some respondents this had to be adjusted, since they had changed party allegiance since then. Representatives to the State Duma and the Federation

Defining and surveying elites 21 Council were classified as representatives of these two institutions rather than as members of the regional elite, even though they represented regions. For this reason, the deputy leaders of the regional parliaments and the deputy governors and their associates were interviewed as representatives of the regional elite. The greatest challenge lay in the selection of respondents from the private business and state enterprises, because the ownership structure was often unclear. Available business-directories listing the names of firms and their directors as well as other comprehensive databases of Russian firms were used. Not all state enterprises in Russia are totally state-owned, so an enterprise was defined as ‘state-owned’ if more than 50 per cent of the shares in that company were in the hands of the state. Approximately 40 per cent of the heads of state enterprises interviewed were the directors of totally stateowned companies, while the remainder were directors of enterprises with mixed ownership. The state enterprises selected for the study all had between 800 and 3,500 employees. Obtaining information on employees in private firms, however, was not a simple matter. The private enterprises selected for this study were estimated to have between 100 and 1,200 employees, with an average of approximately 150. In all these enterprises, interviews were conducted with the director or deputy director, though in some cases with executives at a lower level. As most major enterprises have their head offices in Moscow, the interviews were generally conducted there. This, however, meant excluding directors of companies in the processing and refining sectors (fisheries, mining, etc.), where the head offices are often located in the regions rather than in the federal capital. Including all the eighty-nine subjects of the Russian Federation was clearly unfeasible. Five main groups of regions were chosen by consulting experts, and some federal subjects were selected from each of the following categories: geographically central, geographically peripheral, reform-oriented, regions marked by stagnation and regions with large ethnic minorities. Some of the categories obviously overlap but the classification is nevertheless useful because it differentiates between dominant structural characteristics. Due to fewer research resources in the 2000 survey, only fourteen federal subjects were included, compared with the twenty surveyed in 1998. It was also necessary to reduce the number of respondents in each region from thirty in 1998 to fifteen in 2000. The regions covered in both years are indicated below with an asterisk. In both years as far as possible, half the regional leaders were classified as ‘political’ and the other half as ‘administrative,’ although these positions often coalesce in the regional governing structure. The geographical dimension was the most straightforward, with a distinction being drawn between central regions1 (Moscow*, Moscow Oblast, St Petersburg* and Leningrad Oblast) and regions in the periphery (Murmansk*, Arkhangelsk*, Primorye* and Kaliningrad*). Another clear dimension is

22 Defining and surveying elites the ethnic regions with a predominant ethnic group (Tatarstan*, Komi*, Kabardino-Balkaryia* and Sakha/Yakutia). These regions may also be classified as belonging to the periphery. Most difficult was the classification in economic terms. ‘Reform regions’ were defined as those either having introduced, or intending to introduce, measures to change the economic system (Nizhniy Novgorod*, Samara*, Saratov* and Sverdlovsk). Those in the category ‘stagnant regions’ (Udmurtiya*, Voronezh*, Stavropol and Krasnodar) are characterised by few reform measures and the preservation of old economic structures. I did not use as criteria economic indicators like standard of living or economic growth, since these were found to correlate only marginally with the categorisation employed here.

How the interviews were conducted Compared with population surveys, elite interviews are special. For one thing, elites are well educated and consist of people whose answers cannot easily be neatly compartmentalised. There are three kinds of interview: structured, semi-structured and unstructured. The large number of respondents made it impossible to carry out unstructured or semi-structured interviews, so the only feasible option was structured interviews. Nevertheless, whatever the loss in nuances and reflections more informal interviews may entail, the fixed categories of response have the advantage of being easier to systematise, more general conclusions can be drawn and any potential subjectivity on the part of individual interviewers is neutralised. Some of the question formulations relating to democratisation and economic system have been adopted from earlier elite and population surveys that have beed conducted in Western Europe and in Russia (Putnam 1973; Reisinger et al. 1994; Wyman et al. 1995; Miller et al. 1995, 1997). Second, because elites are influential and active participants in political and administrative processes they may be reluctant to reveal their preferences or supply information on their backgrounds. This problem was solved by guaranteeing complete anonymity for the respondents. As can be seen from the tables, very few of the respondents refused to answer the questions. It is reasonable to assume that if the elites wanted to hide their opinions it would have been more natural to refuse to reply than to give false answers. The interviewing and coding were carried out by ROMIR (Russian Public Opinion and Market Research), which is one of Russia’s leading opinion survey institutes, based in Moscow. It was established in 1992 by specialists in the fields of sociology, psychology, statistics and IT. ROMIR belongs to Gallup International and participates in international interview projects like Eurobarometer, World Values Survey and RISC (Research International Social Change). ROMIR undertakes market surveys, studies of social and political conditions, media surveys, etc. Its main activity has been surveys involving representative samples of the population, but ROMIR has also

Defining and surveying elites 23 carried out elite interviews, especially in the business sector. In the elite survey reported here, use was made of the considerable interviewing apparatus available to ROMIR in Moscow and in some 40 regions in Russia. The interviewers were specially trained in interviewing elites. The first round of interviews was conducted in the period June–September 1998, with the bulk of the interviews (93 per cent) carried out in June and July. On average, each interview lasted one hour; the shortest was 40 minutes and the longest took 2 hours and 40 minutes. In cases where the position was vacant at the time, interviewing was postponed until the new person had started work. Of the interviews, 94 per cent were conducted at the respondent’s workplace, 3 per cent at home and 3 per cent in some public venue. Since a large proportion of the national elite work in the capital, Moscow was the main location of the survey, where 42 per cent of the interviews were conducted, with 9 per cent in St Petersburg and the remaining 52 per cent in the regions. All interviews with regional leaders, except those from regional structures in Moscow and St Petersburg, were carried out in the regions. The great majority of interviews were undertaken during the period when Sergei Kirienko was prime minister – i.e. between the dismissal of Viktor Chernomyrdin and his replacement by Sergei Kirienko in April 1998 and the appointment of Yevgeny Primakov in September 1998. Approximately 4 per cent of the interviews were carried out after the political-economic crisis erupted on 17 August 1998, while less than 1 per cent of the interviews took place after Primakov had been appointed prime minister. Therefore, while the first round of interviews was probably only marginally influenced by the special circumstances of the August crisis, the interviews obviously took place during a very turbulent period of Yeltsin’s presidency. The second round of interviews was undertaken in summer 2000, following Vladimir Putin’s formal inauguration as President in March. Putin had functioned as acting President following the resignation of Yeltsin on New Year’s Eve 1999. Of these interviews, 91 per cent took place in June and July 2000, with the final 2 per cent held at the beginning of September. In the second round, 92 per cent of the interviews were conducted at the respondent’s workplace and the remainder in their home or in a public place, of these, 61 per cent took place in Moscow, 9 per cent in St Petersburg and the remaining 30 per cent in the regions. While the number of respondents constituting the national elite was approximately the same in 1998 as in 2000, as mentioned above the number of regional respondents was reduced in 2000, which accounts for their lower share of total respondents. Consequently, there were two options: either to reduce the number of 1998 regional respondents to tally with the smaller number interviewed in the 2000 survey, thereby forfeiting information; or else to leave the 1998 survey results intact and face the problem of comparing groups of different sizes. I chose the latter option. Since it is important to have the broadest possible selection of regional respondents and since in the following chapters the responses are generally considered

24 Defining and surveying elites for elite groups separately, one has to be careful only when comparing the total elite. Even then, the imbalance between national and regional elites is not necessarily a major problem because of the large number of respondents. The response levels were high, exceeding 95 per cent for most questions. One may well ask why busy top-echelon leaders were willing to be interviewed – especially in a situation of considerable political turbulence when no remuneration of any kind was offered to the interviewees. The respondents were offered a summary of the main results and about a half in both rounds wanted such an abstract which was sent to them in autumn 1998 and autumn 2000. The motives for participation probably vary. A positive response could be interpreted as an expression of good will towards a serious polling institution, as a way to get fresh information about elite orientations or else leaders may simply feel it is important to be able to express their opinions.

Presentation of results The way data is presented has to be connected to the purpose of the study, the state of research in the field and available theory. The aim is here to bring forward evidence about the political culture among the Russian elite, no parallel studies exist and there is no systematic theory. The approach is therefore mainly inductive by describing what are the elite’s orientations, but it also attempts to explain these orientations and their implications for the Russian state. Some will find that the following chapters are overloaded with statistical information. I have tried to limit the number of tables but since I intend to investigate the degree of elite-consensus it was paramount to include the distributions among all elite groups. Thus, the tables had to be rather spaceconsuming. The alternative, of just presenting the aggregates or summarising the information in words is not statisfactory here: a lot of the relevant information would have been lost and the reader would have had little chance of critically viewing the reliability of the data. This study is in many respects exploratory and not purely theory testing which justifies this rather broad presentation of data.

chapter 25

3

Regime-legitimacy and political stability

Belief that the structure, procedures, acts, decisions, policies, officials, or leaders of government possess the quality of ‘rightness’, propriety, or moral goodness and should be accepted because of this quality – irrespective of the content of the particular act in question – is what we mean by ‘legitimacy’. Robert A. Dahl1 I was suddenly struck by the thought that democracy can never become really stabilized. For just when freedom gets stabilized, people will begin to take it for granted; and if they do, freedom will be in danger. Karl Popper2

Introduction3 Following the demise of communism, for the first time the elite could openly express critical attitudes towards institutions and their leaders, the main feature of the democratic process. But the new freedoms almost tore the Russian state apart. The dilemma is that stable democracy also requires a certain level of support for political and societal institutions and their leaders. Acceptance of institutions by both the elite and the masses helps to prevent disruptive conflicts. Stable institutions are a prerequisite for democracy, and they acquire legitimacy only through general approval and in particular endorsement by the elite. In the Russian case the challenge during Yeltsin’s period was how to mobilise support when economic ‘shock therapy’, poverty and a weak state undermine the incentives for this support. Conflicts may nourish democracy only to a certain point. As the Robert Dahl quotation underscores, beliefs in the system as such or its leaders as possessing certain qualities are crucial to stability. With Putin’s recentralisation policies the dilemma may change to how far can support to central authorities go before democracy is endangered, as the quotation from Karl Popper assumes. Boris Yeltsin’s period of political and economic reform spurred widespread elite-fragmentation. The first question, therefore, is what actually was

26 Regime-legitimacy and political stability the level of support following this change of basic state institutions – an epoch characterised by rather extreme elite antagonism. The other question is how elite attitudes may have changed after Vladimir Putin’s more centralised rule was introduced. Has the level of confidence among the elite increased because of more authoritarian central leadership? And what are the implications for the type of democracy which is developing in Russia? Support may be ‘diffuse’ and related to the value of the institution as such, or it may take the form of more ‘specific’ support for the leaders of the institution in question and the actual outputs they produce. Most would agree that for democracy to be stable, leaders and the masses must have a minimum level of confidence in institutions, and members of the elite must have a basic level of trust in each other. A change of regime away from authoritarian rule makes the question of regime support particularly crucial since democracy presupposes backing to its main institutions. The purpose of this chapter is to find some evidence for how solid this support is in Russia among the elite and how elite confidence in institutions compares to that of the mass public. While mass confidence in state and societal institutions is often considered the hallmark of democratic governance, elite support for institutions has been less studied. The Russian change of regime in 1991 was a process initiated and dominated by the elite, and apathy among the masses remained widespread even once democracy had been established. Therefore, the problem of legitimacy in Russia should be analysed from both an elite and mass perspective. According to democratic theory, elites are by definition not fully autonomous. They interact with the mass public, and their justification is derived from this interaction. Certainly, most post-communist elites do not have a very close relationship with the public. Since mass support is mostly a question of elite-initiated mobilisation, a main element of democratic rule is therefore the elite’s image of mass support for the leadership. Here I will investigate various aspects of regime legitimacy, asking whether the Russian elite has confidence in basic political and societal institutions; to what extent members of the elite trust each other; how the elite perceives mass support for public leaders; and how positively the masses view institutions compared to the elite.

Confidence: implications for democracy and stability According to Higley and Burton (1989), the development of legitimate and stable political regimes in Western countries initially depended on ‘consensual unified’ elites who, while divided over political issues, agreed on common norms concerning institutional support and mutual trust. These norms developed gradually over a long period and were absorbed into Western political culture. The post-communist countries, particularly Russia, are quite different in this respect.

Regime-legitimacy and political stability 27 Institutions, be they parliament, ministries or political parties, are the arenas for mobilising and regulating conflicts among the elites. ‘Institutions’ may also, however, be taken to mean functions like law-enforcement by the judiciary, the police or the military; socialisation carried out by educational institutions; or the market as an institution for distribution of resources. Pluralist societies should develop critical attitudes towards these institutions. Democracy is founded on criticism, but if that criticism goes beyond ‘sound scepticism’, which is not easy to define, it obviously has implications for the capability of the institutions and in the longer run for political stability. Trust among leaders lends much of the substance to the functioning of political and social systems. In informal relations and networks, trust among the participants is a basic element for a stable exchange of views, information and give-and-take agreements. The inter-personal aspect of legitimacy is especially relevant in the Russian context, where the rules of the game and the institutions are not yet a fully integral part of political culture. Democratic government requires mass as well as elite support in order to perform vital state functions.4 But what are the roots of legitimacy – are they to be found in support for institutions (‘the form’) or in support for leaders and their decisions (‘the content’)? Easton (1975) and Gabriel (1992) assert that the most basic kind of legitimacy comes from support for institutions as such, irrespective of policy outputs and leader success. According to Offe (1997), confidence in democratic institutions should be ‘diffuse’ because these are valued for their own sake. In this type of paradigm, confidence is understood as fundamental and diffuse attitudes. Confidence in institutions means that people have trust in basic structures and processes that by their very nature sustain vital functions or have the potential to do so. Confidence results more from a general adherence to political and societal symbols than from satisfaction with policy output or popular leaders. The alternative, ‘specific support’ approach presupposes that elites and the mass public act in response to how institutions contribute to their own well-being and the kind of opportunity structures they provide. One would therefore expect the output of institutional activities and the leaders responsible for decisions, to determine the pattern of attitudes. According to Barry (1970), the policy performance of democratic institutions over a period of time gives legitimacy to the political system. Therefore, as Smith (1972: 9) asserts, ‘value-related explanations take on a subordinate role’ for legitimacy and support. If trust arises from the ability of institutions to produce policy outputs, confidence will depend upon how the outputs from institutions meet the expectations of the elite and the masses. Low confidence will stem not from distrust in institutions as such, but from poor performance feeding back on the institutions. ‘Specific’ support is instrumental and directly related to how performance meets short-term expectations and implies a substantial destabilising potential in times of economic crisis. Economic recession and malfunctioning in society may reduce belief in institutions, but not necessarily

28 Regime-legitimacy and political stability lead to a desire to change them. A real crisis occurs when the elite proposes to replace one institution with another. According to Mishler and Rose (1999) the foundation of legitimacy differs between new and established democracies. New democracies are supported mainly for what they do, while established democracies are valued also for what they are, because of long-term political socialisation. Economic growth and a reasonable distribution of resources may be crucial, but there is no immediate relationship between economic misery and political instability. An economic and social crisis has to be converted into a political crisis by the political leadership of a country. The barrier for institutional crises is considerably lower when the elite has not been fused with democratic traditions. However, as the Russian development illustrates, poor state-performance has more raised the question of viable compromises than a desire of returning to the totalitarian past. The fascinating challenge is to understand better the new forthcoming alternative that cannot so easily be put into current regime categories. Leaders are operating ‘between’ the institutions ‘as such’ and their performance. In one sense they are ‘specific’, easy to identify and therefore prone to be blamed or praised for decisions and results. However, some leaders may acquire an ‘institutional aura’, whereby their acceptance is based more on charisma than on performance. Max Weber’s distinction between ‘charismatic’, ‘traditional’ and ‘legal-rational’ forms of governance points to the fact that legitimacy may be derived from several sources. Regime legitimacy may come both from institutional arrangements and from leaders with special personal qualities. In the following the main focus is on ‘legalrational’ rule which presupposes confidence in institutions, and on one aspect of ‘charismatic’ rule – trust among leaders. Analysing the combined confidence in both the institutions and its leaders allows a broader approach to be taken to the problem of ‘legitimacy’ and political stability. Trust in leaders and confidence in institutions should be treated as complementary modes of political support. A consolidated democracy will score high on both counts, while in a less consolidated system the elite will have low trust in both leaders and institutions. Since trust in institutions and leaders need socialisation of democratic symbols over time, one would expect ‘diffuse’ support to be low in Russia. Further, the severe elitecompetition, many zero-sum games and poor policy outputs are conducive to little ‘specific’ support. One hypothesis is that Russian elites end up with low levels of confidence in institutions and little inter-elite trust. Legitimacy of a political system not only rests on the elite’s beliefs, but the mass public’s confidence should also be included; however, such attitudes may be ambiguous since they are both ‘constructed’ and ‘objective’. The elite’s images of mass attitudes are constructed images of society while mass attitudes are also expressed objectively in opinion surveys. These two approachers are compared in the last section. To the extent that elite images of mass confidence are simular to actual mass confidence in institutions is a

Regime-legitimacy and political stability 29 substantial indicator of both elite–mass relations and the foundations of Russian democracy.

Confidence in institutions The large number of institutions included here makes it useful to identify some main categories. The distinction between ‘public’ and ‘private’ or ‘government’ and ‘non-government’ is often used in the study of support for institutions in Western countries (Rose 1984). Listhaug and Wiberg (1995) propose an empirically reductionist approach and differentiate between ‘order institutions’ (such as the police and the army), and others. In a study of mass confidence in institutions in the Baltic states a distinction was drawn between ‘old’ and ‘new’ institutions and between ‘policy-making’ and ‘policyimplementing’ institutions (Steen 1996). Here it was found that institutions with a direct effect on people’s lives, like the bureaucracy and the market, were more prone to low confidence than institutions with less tangible and more symbolic functions, like the Church and educational institutions. Keeping these ways of differentiating institutions in mind, I will focus on how the open conflicts between institutions in Russia, especially the struggle between the State Duma and the President during Yeltsin’s period, influenced confidence. A very pertinent question is how the new State Duma elected in 1999 and President Putin’s entrance on the political arena in 2000 impinged on the political climate among the elite. Table 3.1 shows the Russian elite’s confidence in various political and societal institutions. For the average of all institutions the elite is split approximately down the middle for both years, with one half expressing some confidence and the other half exhibiting low or no confidence. On average, only 5–6 per cent of all institutions have full confidence for the two years. The highest score in this category is for the Church and armed forces with 11–13 per cent. At the other end of the scale we find that about one fourth have no confidence at all in the presidential administration, political parties, the press, TV and radio and police. Separating the institutions into government and non-government shows that confidence in government institutions is split. As of 1998 the Federation Council and, in particular, the regional and local governments, enjoy a high level of confidence. The State Duma also has a relatively high degree of support. By contrast, the executive power – consisting of the President and his administration, the cabinet, civil servants and the judiciary – enjoy considerably less confidence. In fact, the President and the Presidential administration during Yeltsin’s period had an extremely low loyalty score among the Russian elite. Later, the confidence in the President dramatically changed under Putin. From a low position in 1998 the President attained the highest score in 2000, with an increase in the confidence score from 33 per cent to 75 per cent.

42 24 19 30 28 25 25 30 35 34 40 41 52 46 58 64 53 62 72

6 3 1 17 2 1 1 1 0 1 3 2 4 13 8 6 12 7 9

5 2 2 3 1 1 1 1 1 2 2 3 5 11 11 7 10 11 11

44 30 24 58 37 24 24 33 31 30 62 31 52 53 56 58 63 55 75

38 46 55 40 53 53 53 49 48 43 45 41 33 28 25 24 29 22 14

1998 37 42 54 21 47 52 51 45 54 44 31 47 37 21 31 30 20 31 14

2000

Not very much confidence 3

15 28 24 28 18 21 21 19 16 21 13 15 10 15 6 5 8 5 3

1998 13 24 20 4 14 24 25 20 15 25 4 21 7 12 6 6 5 6 2

2000

No confidence at all 4

2.6 3.0 3.0 2.9 2.9 2.9 2.9 2.9 2.8 2.8 2.7 2.7 2.5 2.5 2.3 2.3 2.3 2.2 2.1

1998

Means

2.6 2.9 2.9 2.1 2.7 3.0 3.0 2.8 2.8 2.9 2.4 2.9 2.5 2.3 2.4 2.4 2.2 2.4 2.1

2000

Question: ‘Please, tell me how much confidence you have in each of the institutions listed. Choose among the four alternatives, where 1 is ‘full confidence’, 2 is ‘quite a lot’, 3 is ‘not very much’ and 4 is ‘no confidence’’. ‘Don’t know/no answer’ is treated as missing values. The institutions with low confidence are at the top (high mean) and those with high confidence are at the bottom end of the table. The question formulation is adopted from The World Wide Survey.

Response rate 1998: 94–8% for all questions, except for ‘church’ with 90 per cent. N=980 Response rate 2000: 93–8% for all questions, except for ‘Church’ and ‘political parties’ with 91 per cent. N=605.

Average all institutions Presidential administration Political parties President Private business Press TV and radio Trade unions Civil servants Police Cabinet Judiciary State Duma Church Regional government Federation Council Armed forces Local government Education system

1998

2000

1998

2000

Quite a lot confidence 2

Full confidence 1

Table 3.1 Confidence in institutions, total elite (%)

30 Political Elites and the New Russia

Regime-legitimacy and political stability 31 The administrative apparatus of the state, including the Presidential administration, civil servants and the judiciary have not benefited from change of President. They seem to be in a permanent crisis of confidence reflecting a deep traditional Russian suspicion of the bureaucratic apparatus. The low level of confidence in the executive combined with a fairly strong belief in elected institutions and regional government underscores the main tensions between Russian government institutions as of 1998. In 2000 this was turned upside down: the elite has considerably more trust in the central power and became more sceptical to regional and local government although these institutions still enjoy a relatively high level of support. The elite quite clearly wants a firmer hand in the central power with an attraction to personal leadership but not necessarily a return to centralised and authoritarian rule. Singling out the order institutions, 36 per cent of the elite supported the police in 1998, but just 31 per cent in 2000. The Russian army has a quite high confidence level, which increased from 63 per cent to 75 per cent in this period. Allegations of a corrupt and inefficient police force may explain the low level of confidence in the police, whereas the economic crisis and reports of decline in morale among the soldiers and officers have obviously not had any substantial impact on the confidence of the elite in the armed forces as an institution. The widespread desire to preserve the Russian Federation and avoid further fragmentation after the Chechnya problem obviously mobilised national feelings and support for the main integrative power instrument of the state: the military forces. Among state institutions that are not so easily classifiable as ‘governmental’ or ‘order’, the education system has a very high confidence score in both years, with 83–4 per cent. The elites are themselves very well educated – more than 90 per cent have a university degree – and during the Soviet period the education system had a reputation for high quality. This sector has probably come through the transition period more unharmed than other institutions and therefore represents both continuity of certain values and opportunities for the future, which may explain the high support level. Elite support for non-government institutions is in general low. Confidence in political parties is very meagre, with only 21 per cent of the elite expressing some confidence in 1998, although increasing to 25 per cent in 2000. A minority also expressed positive attitudes towards private business, in 1998 29 per cent, but extending to 39 per cent two years later. While still being regarded with suspicion among a large majority of the elite, business under a firm central hand seems to be more attractive than the chaotic capitalism during Yeltsin’s period. The press, radio and TV have especially low and stable confidence scores with 25–6 per cent. Confidence in trade unions is also scanty. The only exception among non-government institutions is the Church. It enjoys quite a high level of confidence, 57 per cent rising to 63 per cent in the period. Obviously, the symbolic aspects of this institution have strong appeals to religious and traditional feelings among the elite, even after 70 years of atheist rule. In the political sphere many probably regard the

32 Regime-legitimacy and political stability Church as a way of compensating for the disruption of societal norms that followed the demise of communist ideology. In the political sphere the Church’s high legitimacy among the elite has obviously laid the basis for the increasing political influence of the Church-leaders. In summary, the Russian elites exhibit an amazing combination of positive orientations to traditional institutions and new representative state organs, and scepticism to bureaucratic and societal institutions. Since political parties are a key institution in any democracy, and private business is the backbone of a market economy, the very low level of support for these institutions is a cause for concern. It says something essential about the type of political and economic system that is emerging from the legacy of totalitarian rule and the centrally planned economy. Market reforms and a multi-party system were introduced as Yeltsin’s key reforms, and yet a decade later the elite is still very sceptical about these new institutions that are intrinsic to the development of a civic society. But one should not be tempted to interpret the figures as a wish for total change of economic and political regime. One interpretation is that they are expressing ‘sound scepticism’ to chaotic political parties and raw capitalism that probably will lead to modifications of the political and economic system more in accord with Russian state traditions. The main signal for such a prospective development is the broad support for a strong central leadership, in other words President Vladimir Putin’s programme for political and economic re-centralisation.

Elite groups and confidence The Russian elite is not a uniform group. Even during the Soviet period, there was a certain degree of pluralism and competing elite groups within the centralised nomenklatura system. Elite competition was often connected to regional interests and clan traditions. Since the change of regime the institutionalisation of heterogeneous elite groups has formalised new arenas for the elite-game. When they used the term ‘consensually unified elites’ to describe stable Western democracies, Higley et al. (1998) were referring to commonly held attitudes among the elite regarding support for democratic institutions. As shown in Table 3.1, Russian federal elected institutions enjoy considerable support among the elite, while the others have low confidence. The question here is whether this picture is also valid among the various elite groups. If confidence in institutions across elite groups is one main requirement for consensus and stable democracy, it is important to know which elite groups support which institutions. One may assume that elites will primarily rally around their own institution and that they will trust their own sector more than other sectors. Elites with positions in governmental institutions will tend to trust state institutions and be more critical of non-government institutions. On the other hand, elites in the non-governmental sector may be expected to be sceptical towards public institutions and have a higher level of trust in private institutions.

Regime-legitimacy and political stability 33 Table 3.2 compares confidence in institutions among the eight groups of respondents. Figures in shaded boxes show internal confidence inside the same or similar groups. Figures in bold indicate the highest confidence scores. The other figures indicate external confidence between different elite groups. Central representative institutions A large proportion of the central political elite (members of the State Duma and the Federation Council) has confidence in the State Duma, and the legislators are also quite confident in themselves. Support from leaders of state enterprises and, in particular, private business is much lower. The State Duma comes under attack not only from the economic sector but also from governmental institutions, but it seems to face this criticism with a high level of self-confidence. There is less variation in support for the Federation Council in 1998, which was the most popular institution among all groups except for the cultural elite. Moreover, its members are almost unanimous in their support for their own institution and, as expected, in regional government. Two years later the status of the Federation Council changed and especially leaders of state enterprises and private businesses became more negative. The central government sector Confidence in the cabinet among the State Duma deputies is very low in 1998 (23 per cent) compared with other elite groups and rose as high as 60 per cent in 2000 reflecting the attraction to Putin’s stronger leadership policies. Certainly the policy change resulted in a sharp increase in confidence in the cabinet among all the other elite groups as well. As might be expected, the profound conflicts dominating the final years of Yeltsin’s period had severe effects on the legitimacy of the presidency: confidence in the President among the deputies in the Duma was at a very low level with only 13 per cent confidence in 1998. It was also low or moderate among other elite groups, with the exception of the deputies of the Federation Council where a majority supported the President probably because of the good relations created by favourable deals with the President and the governors. As a consequence of Vladimir Putin’s re-centralisation policies the popularity of the presidency skyrocketed to between 71 per cent and 86 per cent confidence among all elite groups, even for those who might fear having less power than before – governors and regional leaders for example. The material exhibits an interesting change of attitudes in the bureaucracy. In 1998 the leaders in the ministries express quite high trust in the Federation Council and the Cabinet but only a minority has confidence in the President and his administration. In 2000 the top bureaucrats evidently found Vladimir Putin much more attractive by doubling the level of confidence from 40 per cent to 80 per cent but they still are quite critical of

69 60

48 58

41 30

30 30

Fed. Council 1998 2000

1998 2000

State enterpr. 1998 2000

1998 2000

1998 2000

1998 2000

1998 2000

Fed. admin.

Priv. busin.

Culture

Reg. govt.

Total

71 64

74 65

48 58

60 47

63 48

65 68

97 100

70 62

Fed. Council

42 65

42 63

38 58

34 59

43 64

61 78

61 83

23 60

Cabinet

33 75

35 79

34 78

33 57

29 64

40 80

56 86

14 71

The President

36 32

41 36

17 18

12 16

21 15

48 41

50 47

20 31

Civil servants

69 63

73 69

64 47

64 46

64 53

54 67

100 100

54 57

Regional govt.

29 39

26 39

26 43

70 70

32 41

20 22

45 59

26 33

Priv. business

21 25

18 27

14 16

21 21

13 2

22 23

34 32

46 40

Pol. parties

25 24

27 22

38 32

34 35

34 33

14 24

10 25

16 12

The press

*The categories ‘full confidence’ and ‘quite a lot confidence’ are merged. Only institutions directly connected to the political process and basic institutions following transition to democracy, like business and the press, are included here. The vertical list of institutions does not correspond to the horizontal list because the interviewees from the eight respondent groups were also asked to express views on other institutions. Corresponding elite group and institution are marked by shading.

25 34

27 44

24 24

21 20

17 17

31 31

46 55

11 26

The President’s adm.

Response rate 1998: 94–8% for all questions, except for the ‘Church’ with 90%. N=980. Response rate 2000: 96–8% for all questions, except for ‘Church’ with 91%. N=605.

57 56

58 60

46 46

84 77

1998 2000

State Duma

Elite group:

State Duma

Confidence in:

Table 3.2 Confidence in institutions, by elite group* (%)

34 Political Elites and the New Russia

Regime-legitimacy and political stability 35 his administrative apparatus. Obviously, the leaders of the ministries want a stronger President but not a stronger competing administration. The Presidential administration and the civil servants scored very low among the Duma deputies in 1998. Elite groups in private business and state enterprises were also very critical. While the level of support is still moderate in 2000 the increase in support comes mostly from the Federation Council, the State Duma and leaders in regional government. The support for a stronger presidency seems to spill over to more acceptance also of Putin’s administrative apparatus but only among the central and regional political elites. The same positive tendency cannot be said about civil servants in general. Confidence remains at a low level and is also declining among some groups. Regional government enjoys considerable support among all elite groups, in particular the Federation Council. The 100 per cent confidence rating may no doubt be attributed to the fact that the members during this period ex officio were recruited directly from the regions as governors or leaders of regional parliaments.5 While over time leaders of federal administration have an increasing trust in regional government the trend is negative for private business leaders, leaders of state enterprises and cultural institutions who lost a lot of confidence in the regional government during the end of the 1990s. The non-government sector Private business had a very low level of confidence among all respondents in 1998, except for business leaders themselves – 70 per cent of whom trust their own sector – and among the respondents in the Federation Council. Two years later, private business is evidently more accepted, with an extraordinarily high score among cultural and regional elites. Political parties in general enjoy the least confidence of all institutions. An exception is the somewhat higher support they get from deputies in the State Duma and the Federation Council, since these naturally have closer relations to the parties than other elite groups. However, there is little reason for optimism because of few indications of any rise in popularity during the period. The press, too, has a very low standing among all central, regional and local governmental elites. However, it does get some support from the cultural elite, private business and state enterprise leaders. The support from cultural leaders may be explained by the direct connections between this group of respondents (which includes leaders of the mass media and newspapers) and the media sector. The relatively high level of confidence among leaders in private business may be related to the close investment links between business and the media in Russia. Why leaders of state enterprises are relatively sympathetic towards the press may be explained by the blurred borderline between private and state business which both see the media-sector as a partner with whom they have quite good relations.

36 Regime-legitimacy and political stability In summary The varying confidence in institutions among elite groups indicates a fascinating pattern of conflicting and converging orientations among Russian elites. The considerable anomalies in the extent to which government institutions in Russia trust each other are astonishing. While very few deputies in the State Duma in 1998 say they have confidence in executive institutions, members of the Federation Council are quite positive towards the executive, including the President and his administration as well as civil servants. The State Duma deputies trust the Federation Council, despite its positive relations with the President under Yeltsin and this pattern of confidence illustrates the central position of the Federation Council during the 1990s as a mediator between the critical opposition in the State Duma and an impatient reform oriented President. In terms of legitimacy the Federation Council is a fascinating case during the turbulent period around 1998, enjoying a high level of confidence among all elite groups in the government and non-government sectors. By and large this confidence is reciprocated on the part of the State Duma deputies. While the Federation Council members continue to express trust in other institutions also after 2000, several of the other leaders become more sceptical about the Federation Council, indicating a declining status after 2000. These more sceptical attitudes fit in well with President Putin’s strategy of recentralisation of power by reducing the influence of the governors. The widespread impression that by 1998 the regions had attained a fairly strong position is supported by the data exhibiting a regional elite6 who expressed critical attitudes to the political centre, except for the Federation Council, their own stronghold in Moscow. After 2000 the attitudes of regional leaders to the political centre are becoming considerably more positive while the support to the Federation Council shrinks. In fact, although attaining more regional autonomy during the chaotic Yeltsin period their support for Yeltsin was meagre while their representatives in the Federation Council had more positive attitudes to the President. One explanation is that since the reforms had very high social costs in most regions these leaders wanted a more stable and predictable central power which consequently enhanced their support for President Putin, his administration and the Cabinet quite dramatically. President Putin very quickly took the initiative to reduce the power of the Federation Council. The paradox of increasingly more positive attitudes of its members towards the president illustrates the general tendency of elite integration around a vitalised central power. One may conclude that central governmental institutions connected with the President, and in particular non-government institutions, faced a deep crisis of legitimacy in 1998. This fits in with the widespread picture of Russian politics during that period as having a very fragmented centre with a lack of power instruments and regions that were striving for more autonomy and assuming increasing responsibility for policy-making and implementation.

Regime-legitimacy and political stability 37 At the same time, some of the attitudes expressed indicate some degree of integration, in particular with regard to the Federation Council. As both a focus of elite confidence in Russian politics and as an institution that itself has a high level of confidence in governmental and non-governmental institutions, the Federation Council was in a potentially strong position to mediate between fragmented elites. However, these devastating adversary processes could not continue and the Russian elite had by 2000 achieved the stronger central power they desired. With the new President starting his programme of strengthening the central authorities, not only the actual locus of power has changed. More important, the wave of enthusiastic support from leaders in both the state and non-state sectors has made the central power more legitimate among the Russian elites, thereby enhancing the possibilities for stable rule.

Trust between leaders In the tradition of Almond and Verba (1965) and later Putnam (1993), a certain level of basic trust in other persons is a prerequisite for a democratic political culture. However, studies of mass attitudes in post-communist societies show that the trust level is low and indicate that trust in others is less significant for democratic development than the ‘political culture’ approach suggests (Miller 1993; Miller et al. 1997). If public inter-personal trust is not crucial for democratic rule, trust between elites is probably more essential. Given a situation where a new generation of ambitious, well-educated young ‘Westernisers’ is challenging the former nomenklatura, one might expect elites to be especially critical of each other. Lane and Ross (1999) attribute the disruptive forces in Russia mainly to conflicts between the new ascendant class of intellectuals who have adopted Western-style, marketoriented thinking, and the conservatives in the central and regional bureaucracies. After comparing elite configurations in several post-communist countries, Higley et al. (1998) were less categorical about elite fragmentation, and came to the more cautious conclusion that even if the Russian elite appears fragmented and unstable, it also has the potential for consensus and unity. Therefore, one may argue that since elites are themselves a part of the system of government, they will have a sense of responsibility for the ‘common good’, avoid disruptive conflicts and therefore identify with other leaders. There is a notable lack of systematic empirical studies that address the issue of trust among elites and how to operationalise ‘trust’ is not an easy task. In Table 3.3 inter-personal distrust among the elite is measured by attitudes to two statements. In general, members of the elite exhibit very sceptical and permanent attitudes, with more than two-thirds of the respondents expressing distrust in other leaders.7 The respondents agreed particularly with the statement that politicians put their own interests before those of the country. Thus, at

38 Regime-legitimacy and political stability Table 3.3 Inter-elite distrust (%)*

Total State Duma Fed. Council Fed. admin. State enterprises Private business Culture Reg. govt.

Average (1) + (2)

Agree with statement (1)

Agree with statement (2)

1998 2000

1998 2000

1998

2000

64 59 33 67 77 83 85 62

64 48 28 74 76 85 71 61

67 63 54 70 77 80 84 67

65 57 41 75 73 85 70 65

70 68 76 73 76 77 83 69

66 65 53 75 70 84 69 68

Response rate 1998: 94–7% N=980; response rate 2000: 94–6% N=605. *Statements: (1) ‘Politicians cannot be trusted to care for the good of the country’; (2) ‘Public leaders think more about their own gain than about the interests of the people’. The attitudes were measured on a scale from 1 to 4, (‘fully agree’, ‘somewhat agree’, ‘somewhat disagree’ and ‘fully disagree’). In the table values 1 and 2 are merged into a single category consisting of those agreeing with the statements and therefore expressing ‘distrust’ in leaders.

face value the overall figures indicate quite a fragmented elite with low internal cohesion and such attitudes are stable and independent of who is the acting President. Looking at the various elite groups, the situation in 1998 was that the central political elite in the Federation Council and the State Duma, and local government leaders tend to be the most trustful. Bureaucrats in ministries and regional government leaders form a second group which expresses less trust. Leaders in the cultural sector and in state enterprises, and private businessmen, have a considerably lower trust score than the other elites. The members of the Federation Council tend to be considerably less critical towards ‘public leaders’ than to ‘politicians’, underscoring their role as more understanding with the executive than the State Duma during Yeltsin’s period. Even if elites in general have little trust in other leaders, the central politicians in the State Duma and especially in the Federation Council, had a larger potential during the 1990s for interpersonal trust. Two years later the political elite has moved towards somewhat extended accommodating attitudes, especially in the Federation Council. On the other hand distrust has increased among bureaucrats and private business leaders. What then, may explain these differences? The ranking of elite groups can be explained by proximity to political decision-making. Those who are on the sideline of the political process and operating in mass media, education, culture and in the new economy feel particularly alienated towards leaders involved in politics. Here, distrust probably stems more from mass media coverage of scandals and general impressions than from personal knowledge of political life. Those involved in political decision-making know the processes better from their own experience with political bargains than the ‘outsiders’.

Regime-legitimacy and political stability 39 A volatile and hostile political environment and few incentives for trusting other political leaders may explain the very critical attitudes of the new business leaders. On the other hand private businesses are dependent on the state to regulate the legal and economic framework in which they operate. The new state-market companionship has obviously not been conducive to trust between the business leaders and politicians, and why should it be? Since few institutions regulate the interface between the state and society, the privatisation of state responsibilities creates what Grabher and Stark (1997: 15) have called ‘flexible opportunism’, a strategy for survival not very conducive to trustful relations with politicians and state officials. How important is inter-elite trust for democracy? Miller et al.’s (1997) conclusion in their study of Russian and Ukrainian elites that ‘trust in others plays a less important role in the establishment of a democratic political culture than previously suggested’, is relevant here. Those who were less trusting of others actually saw democracy as providing institutions that would regulate the harsh forms of elite competition. Paradoxically, those who distrusted elites expressed confidence in democratic institutions. Distrust between elites, which is a form of ‘specific orientation’, may be separated from the more ‘diffuse’ and basic confidence in democratic institutions. It means that the significance of an institution is not necessarily associated with the quality of its leaders. Low trust in other leaders, however, does not necessarily mean that all leaders are regarded with suspicion. A general horizontal distrust among people typical of traditional and paternalistic societies may, as Putnam (1993) describes for Southern Italy be compensated by substantial trust in some few top leaders. As shown in Table 3.1, the dramatic increase in confidence in the Russian President after Putin came to office was an extremely important condition for stabilising Russia after the turbulent Yeltsin period. Putin’s programme of ‘verticalisation of power’ would have remained an empty slogan without being founded on vertical trust-relations between Kremlin and the national and regional elites. The optimist interpretation is that as long as institutions have a certain degree of confidence, distrust in leaders can be regarded not as a sign of crisis but of ‘sound scepticism’ in particularly turbulent political processes inside the framework of an emerging democracy. If trust in public leaders indicates ‘cohesion’, then, strange as it may seem from Table 3.3, the political elite in the State Duma and Federation Council form the most integrated group. From the point of view of integration the main problem is not the political elite that from 1998 to 2000 tends to harmonise but the elites outside the national political sphere whose increasing level of inter-elite distrust illustrates an emerging cleavage between politics and the rest of the state.

The elite’s images of mass public trust One may argue that in Western countries, because of traditions of institutional representation, popular attitudes are absorbed into the political process

40 Regime-legitimacy and political stability via intermediaries. In Russia and other post-communist countries the lack of a civic culture and of intermediary institutions means that popular attitudes will reach politicians more directly, chiefly through the elite’s conceptions of mass attitudes. A political culture in which members of the elite traditionally see themselves more as interpreters than as representatives of the public interest may have important implications for the image the elite has of itself and for how it goes about winning support for its arguments and decisions. Surveys of popular attitudes carried out during the early 1990s show little confidence in Russian leaders, particularly in the top leadership (Wyman 1997: 85). To what extent popularity barometers have an effect on the leadership is difficult to say, particularly in Russia, where the influence of the masses is traditionally weak. On the other hand, even in elite-oriented cultures, the very rationale of the leadership is its concern, real or imaginary, for issues affecting people’s lives. Therefore, it is important to know if the members of the elite are concerned about how the population perceives them as leaders. The elite’s perception of popular trust in leaders is an important component of its self-image. However, while all leaders seek popular acceptance, not all have to face the electorate. Therefore, the elected political elite will probably be more concerned with mass opinion than other elites. One may differentiate between four main types of ‘constructed realities’: (1) elites who think the mass public trusts both them and other elites; (2) elites who believe the mass public trusts them but not others; (3) elites who believe the mass public does not trust them but that other elites have such support; and (4) elites who believe the mass public trusts neither them nor other elites. The full results are reported in the Appendix, Table A3.1. The general low level of mass confidence in leaders, as identified by Wyman (1997), is not reflected in how the elite views themselves, but the picture is rather complex. On the one extreme the elite as a whole believes the public has very low trust in the leaders of private business and political parties (between only 11 per cent and 17 per cent say that ordinary people trust these leaders). The bureaucrats of the federal ministries are also associated with low popular trust. At the other end of the scale, the respondents think people put major trust in the leaders of a traditional institution like the Church, increasing from 77 per cent to 81 per cent. Military leaders, the leaders of regional government and the leaders of the Federation Council are also perceived as having a good reputation among the people. The political leaders of the State Duma and the Federation Council occupy a middle position enjoying a relatively high level of subjective trust. A very substantial and rather surprising increase is found for leaders of state enterprises and ministries. How do the respondents’ images of mass trust in their own group compare with their perception of trust in other elite groups? The general tendency is to view mass support for the leaders of their own institution as higher than the average support for all groups, except for the leaders of state enterprises in 1998.

Regime-legitimacy and political stability 41 While the leaders of state enterprises largely perceived people’s trust in them as very low in 1998, with only 26 per cent of this group expressing that they were trusted by the public, this changed dramatically a few years later with self-confidence increasing to 72 per cent. The alienation as of 1998 may be explained by the special situation of state enterprise leaders during the turbulent 1990s when they were exposed to severe criticism about the malfunctioning of the economy. Obviously, attitudes have changed rather dramatically in favour of leaders of state enterprises indicating a shift towards support for more active state involvement in the economy. In contrast to their colleagues in state companies, the business elite’s image of public support for their own sector was quite strong in 1998 with 38 per cent but decreased sharply to 17 per cent in 2000. Their self-confident assumption of public support as of 1998 bore little relation to the perception among other elites of public support for business leaders while some years later the discrepancy has disappeared. The contrasting pattern in the self-image of state enterprise and private business leaders says a lot about how market ideology and economic reforms enhanced the self-image of business leaders during Yeltsin’s type of economic liberalism while eroding the self-esteem of state enterprise leaders. The data indicate widespread support for Vladimir Putin’s more state oriented economic policies. The rest of the elites are discerning little public support for business leaders but considerable popular backing for state enterprise leaders. This picture of business leaders fits in well with the actual popular attitudes shown in the next section. With regard to the possible combinations, some groups of respondents were easier to place than others. The Federation Council and State Duma come closest to category (1) characterised by a positive image of public trust in both itself and other elite-groups, with the exception of private business and party leaders. At the other end (4) are the leaders of state enterprises, who in 1998 had a low estimation of public support for themselves, combined with quite a negative image of public support for other leaders. Some years later it is more appropriate to put this group of leaders into category 2 since their self-image has enhanced while they still consider other elites, and in particular political elites to have little popular support. Relatively speaking, the central political elites in the State Duma and especially in the Federation Council have the highest estimation of public trust in themselves and their self-confidence increases quite a lot over time. Why the political leaders are generally confident that people trust them may be explained by the fact that, as elected leaders, they see themselves as having a mandate from the people. On the other hand public support for the bureaucratic elite in the federal ministries was not evaluated positively under Yeltsin but also here the figure increased notably after Putin came to power. Another tendency is found among the regional political leadership where the level of self-confidence goes down, which may be explained by their reduced autonomy following Putin’s centralising policies.

42 Regime-legitimacy and political stability

The mass public and elite support So far a perspective ‘from above’ has elucidated the problem of regimelegitimacy. Here the question is if trust in institutions at the mass level differs from the elite’s attitudes. Because the change of regime in Russia was elitedriven, the new institutions may be expected to enjoy more support among the elite than among the masses. One argument is that, while the elite will be attracted by the ‘intrinsic value’ of institutions, the masses evaluate institutions more in terms of their output. For the elite, on the other hand, institutions also provide personal opportunities for careers and benefits not very closely related to the value of the institution itself. Mishler and Rose (1995), who surveyed nine post-communist countries, excluding the Baltic states and Russia, found that 91 per cent of the public expressed distrust or scepticism and only 9 per cent full trust in the national parliaments. In 1994 72 per cent of the public in Russia expressed distrust in the State Duma (Rose 1995). In a survey from 1994, Wyman (1997) reported that 25 per cent of Russians had trust in their parliament. From 1994, in the three Baltic states – Estonia, Latvia and Lithuania – 28 per cent of the public had confidence in the parliament. Three years later, in 1997, popular confidence had fallen to 25 per cent (Steen 1997). These studies of trust in parliament in new eastern democracies show that in general more than 70 per cent of the public had no confidence in their parliament. A study comparing mass and elite attitudes was conducted in the Baltic states in 1994 and 1997. The mean score for all institutions was higher for the elite than for the public at both points of time and increased between 1994 and 1997. The difference was greatest for political institutions.8 From the perspetive of political stability this may be a case for concern but not necessarily since a high level of elite support for political institutions may compensate for low confidence among the general population. Since my study of Russia does not include data on mass attitudes, secondary material is used from White et al. (1997) and from the World Value Survey. The question formulations are either quite similar or identical to those used in the present elite study, see Appendix, Table 3.2. Since the elite study looked at a broader range of institutions, Appendix, Table A3.2 includes fewer institutions than Table 3.1. The results from the population surveys in 1994 and 1997 correspond very well, except for confidence in civil servants. The question on trust in the President was included only in the World Value Survey. Obviously the Russian people during the 1990s do not trust any political institution, nor do they trust the bureaucracy, the ‘internal order’ institutions or the mass media. On the other hand, the army and the Church score very high, with a 60–70 per cent confidence rating. The explanation is probably because the army and the Church are not to be blamed for the recent political and economic development and are connected with historical traditions of national pride and religious life going back to long before the Soviet period.

Regime-legitimacy and political stability 43 The other end of the trust spectrum reflects frustrations about the anarchic political process during Yeltsin’s period and socio-economic outcomes of the economic ‘shock therapy’. More than three-quarters of the mass public distrust the political parties and private businesses. It should also be noted that the elite is considerably more sceptical about the mass media than is the general public. Is the Russian elite a vanguard for basic confidence in new institutions of fragile post-communist democracies, like those in the Baltic states? Since the elite may regard democratic institutions as a value in themselves and as a group are also more sheltered from poor outputs from a faulty economy, one would expect the elite to be more positive than the mass public, as is the case in the Baltic states. Table 3.6 shows that for only two institutions, the cabinet and the State Duma, is the elite’s support substantially higher. Thus, unlike in the Baltic states, the public’s distrust in the party system and in private business is not compensated for by a higher level of trust among the elite. As of 1998, the elite disbelieved the President and his administration almost as much as the public, with the State Duma deputies showing more negative attitudes than the other elite groups.9 Under Yeltsin’s period low mass support for the President was not compensated for by higher elite support but this changed very much after 2000. This alliance between the elite and masses at the end of the 1990s against the President made Yeltsin’s room for action quite limited; he simply lost the political support for his economic ‘shock therapy’ not only among the general population but, more importantly, among the national and regional elites. For the cabinet there are some compensatory trade-offs at the end of the 1990s. While 74 per cent of the masses have low trust in these institutions, the corresponding figure for the elite is 58 per cent decreasing to 35 per cent two years later. The best trade-off under Yeltsin’s era is found for the State Duma, where more than 70 per cent of the population expresses distrust, compared with 43 per cent of the elite.10 Except for these two institutions, however, the compensation effect between the masses and the elite, which was so evident in the Baltic states, is almost absent in Russia at the end of the 1990s. In summary, it seems that in post-Soviet states that broke away from the former regime in the most radical fashion, low mass confidence in political institutions and the market has been countered by fairly high levels of support among the elite. This tendency is clear in all three Baltic states and is most pronounced in Estonia, the country that went furthest in the direction of adapting to Western standards of democracy and the market and that has the best economic record. This effect is much more visible in the Baltic states, probably because the political and economic changes coincided with the achievement of national independence. Here, the nationally oriented elites saw support for democratic institutions and market economy as core instruments for demarcating national autonomy and domination of indigenous ethnic elites.

44 Regime-legitimacy and political stability The Russian elite’s contribution to stable democracy is expressed in their relatively higher confidence in the State Duma and the cabinet. Masses are naturally critical because the poor short-term performance of these institutions has failed to live up to their expectations and has done little to improve their lives. Offe (1997) argues that democracy will be unstable if confidence is related solely to ‘instrumental rationality’ and institutional outputs. In his view the transformation to democracy cannot be regarded as successfully completed until the population comes to value the new institutions for their own sake. The paradox is that, in sharing rather closely the sceptical attitudes of the general population, the Russian elite may imperil democratic stability, while the Baltic elites, who largely disagree with their populations, constitute a better guarantee for the survival of democratic institutions. Although the data shows that the Russian elite is to some extent critical of the State Duma, their scepticism is much lower than among the population. Therefore, one may argue that also in Russia the elite is acting as a ‘buffer’ between fragile democratic institutions and an impatient population that make the democratic institutions directly responsible for poor performance. The massive elite support for the President and cabinet after 2000 and substantial confidence in the State Duma, is beneficial to stable democracy. As long as a powerful President and his cabinet do not disregard the positive elite attitudes to the elected national assembly, despite popular criticism of its being incapable of solving problems, democracy cannot be abolished without major conflicts between the President and the elites. Such an outcome is not likely since the legitimacy of the President rests on the political support from exactly this elite stratum of national and regional elites with vested interests in pluralist democratic institutions.

Conclusion: high-trust state and low-trust society Most would agree that democracy and political stability must be established on a minimum level of confidence in institutions and trust among the members of the elite. Basically, the topic here has been trust in Russian democracy, both among the elite and the masses. Studying ‘trust’ raises three fundamental problems: how to measure trust and identify trust ‘paths’ (who trusts whom?); how to interpret levels of trust (what are our criteria for ‘low’ and ‘high’?); and how to evaluate varying levels of ‘diffuse’ and ‘specific’ trust in terms of implications for democracy and political stability. The findings reveal a rather complex picture of the elite’s confidence in various institutions and in itself, of its perception of public trust and of actual public confidence. When we speak of the legitimacy of a political regime we may be referring to the acceptance of a specific political order or else to support for institutions and particular leaders and what they can deliver. Here I have drawn a distinction between the elite’s confidence in institutions and trust in leaders, where both are seen as intrinsic to democratic stability. However, one complicating feature of post-communist countries

Regime-legitimacy and political stability 45 with weak institutions and often strong leader-figures are cases of ‘personalised institutions’, where people may not be able to distinguish between the two. The ‘diffuse support’ approach to political stability argues that legitimacy is based on support for institutions that have an intrinsic value, irrespective of output. Huntington (1991) maintains that, while the legitimacy of an authoritarian regime is dependent mainly on performance, the legitimacy of a democratic regime rests more on acceptance of procedures and institutions. As Offe (1997) and Mishler and Rose (1999) underline, in the West, political and economic institutions have over time become socialised into the general political culture and adopted as part of a values system. In post-communist countries they were established in a rather artificial manner by instrumental ‘shortcuts’ and to some extent copied from abroad. In the long run institutions cannot survive only on the basis of an instrumental rationality – i.e. because they are ‘beneficial’ in some sense or have a charismatic leader. Since all institutions experience periods when they are unable to fulfil expectations or fail completely, ‘the only thing that can ensure their continued validity and recognition is a firmly entrenched system of beliefs that supports them – not for the reason that they are useful, but because they are ‘right’ and hence intrinsically deserving of support’ (Offe 1997: 66). While Offe and Huntington have mass support in mind, their argument applies even more forcefully to the elite’s ‘diffuse’ acceptance of institutions. The alternative to the ‘intrinsic value approach’ is that political support is specifically related to ‘specific’ outputs. The very understanding of ‘democracy’ is relevant here. Among the Russian elite, and in particular among the masses, a common idea of what justifies a political regime is its ability to produce material well-being. As shown by Lukin (2000), one widespread definition of democracy among Russians is as a means of achieving prosperity. Accordingly, only the ability of the system to provide economic growth and necessary public goods gives legitimacy to the regime. Inglehart (1999) found that the correlation between non-authoritarian orientations and economic growth in fifty-seven countries was substantial, suggesting that when the economy is growing, authoritarian attitudes tend to decline. Russia is among those countries scoring high on ‘respect for authority’ and having a low GNP per capita. Although Inglehart’s analysis did not measure support for institutions or leaders, he clearly suggests that the public’s support for the regime is related to economic performance. When a democratic Russia remains poor, some elites may mobilise mass support to achieve economic well-being by other means, e.g. by resorting to the ‘Chinese solution’ where successful economic development has been attained by an authoritarian political regime. In fact, when asked in 1998 and 2000 which country should serve as a model for Russia, more than 30 per cent of the Russian elite named China as the best solution, considerably higher than Germany and Scandinavia, the second and third most-named countries on the list.11 The comprehension of a

46 Regime-legitimacy and political stability political regime among ordinary Russians is obviously associated with institutional outputs and although economic decline may lead to authoritarian attitudes the democratic institutions are not necessarily jeopardised as long as the elite believes in the value of such institutions. Of course, it is difficult to construe whether confidence in institutions actually comes from intrinsic democratic ideas, the leaders’ charisma, their decisions or actual outputs. Probably confidence will stem from all these, but to different degrees depending on the kind of institution in question and on how that institution, its leaders and performance affect the special interests of elites and social groups. In new democracies, however, performance becomes more directly connected to the justification of the institutions and to the leaders in charge than in established democracies, where institutions per se are held responsible for poor performance to a much lesser degree. The relatively high level of support among the elite for central and regional representative institutions (The Federation Council, the State Duma and regional government), during the Yeltsin period and later under Putin, can hardly be explained by successful performance. Why, then so much support? One explanation is the tradition of representative institutions under previous Soviet and Russian regimes. Another is that a kind of ‘legalrational thinking’ prevails among a major part of the elite, whereby these main state institutions came to be regarded as valuable because of their potential collective and integrative functions, independent of leaders and outcomes. Supporting representative institutions is also in the elite’s own interests, since democratic procedures are a counterweight towards a powerful presidency. Political pluralism, guaranteed in the Russian Constitution of 1993, safeguards the influence of the national and regional elites and serves as a guarantee against a too strong centralisation of power. The data shows that elite support varies between high confidence in representative institutions and low support for the economic and administrative sectors where expectations are directly related to outputs impinging on material interests. The argument that system outputs determine support seems to apply best to the business, state bureaucracy and ‘order’ institutions, where performance is visible and direct. The high level of distrust in these institutions could be interpreted as a desire to replace them with something else, or at least introduce more state control through a stronger presidency which happened with the election of Vladimir Putin. One major cleavage in Russian politics during the Yeltsin period is exemplified by the very low level of confidence expressed in the President and his administration. However, distrust in the President and widespread suspicion of public leaders more generally, as shown in the data, scarcely indicates a liberal attitude. As will be shown in Chapter 4 a large majority of the Russian elite in 1998 and 2000 regarded the idea of a ‘strong leadership’ positively. But, the dissatisfaction with the President expressed in the 1998 elite survey was a reflection, not of criticism of the Presidency as such but of scepticism towards the poor effects of the liberal economic policies of

Regime-legitimacy and political stability 47 President Yeltsin, lack of law and order and fears of fragmentation of the Russian Federation. The underlying problem in Russia during the late 1990s was that miserable economic performance and market failure split the elite over economic issues. The core elite who supported the President tended to have positive market preferences, while those who trusted the State Duma were sceptical about the market. This means that attitudes to the market, based on the elite’s experiences either as part of the ‘newly rich’ class or as representatives of the poorer segments of the population, spill over into confidence in institutions. The saliency of the state-market issue and left–right cleavages for the elite’s economic priorities are analysed in Chapters 5 and 7. The political constellations in Russia, where radical economic reforms were implemented by the President and his administration while the State Duma was intent on restricting these reforms because they benefited only a few, illustrates a rather paradoxical situation. The negative consequences of the ‘market economy’ for the major part of the population seem not to have undermined but rather to have sustained the elite’s support for representative institutions. The economic conflict ran directly between the President with his liberal economic advisers and the left oriented State Duma. Many of the deputies and also other elites regarded the representative assembly as the main stronghold for counteracting ‘raw capitalism’. Therefore the argument that economic misery leads to authoritarian rule has to be qualified. The Russian case illustrates that in systems with a strong President who is made responsible for failed economic policies the elites tend to defend representative institutions. Another case which is the topic of the next chapter, is that, within such a democratic-institutional context the elites’s approaches to governance may be rather authoritarian. President Putin’s more state-oriented economic policy has been favourably received by most elites and the masses. The strategy of combining state responsibilities for welfare with constraining market reforms gained considerable support. This reflects the way members of representative institutions and other elite groups have fallen into line with the presidency because of change of policies. While support for the state’s executive institutions and their leaders have increased, and may be favourable to political stability, this will not necessarily lead to a more democratic process. However, many Russians would argue that first of all the country needs stability and that a more predictable and national oriented regime is a considerable achievement. The main problem in Russia is the considerable scepticism towards nongovernment institutions and among the elites themselves. A political culture in which the values of non-state institutions like political parties and businesses are seriously undermined is not conducive to the development of either a civil society or a market economy. The data indicate that while the legitimacy of governing institutions is increasing, there is a long way to go before a viable civil society is established. In essence, civic values are founded on elite and mass confidence in institutions and trust in inter-personal

48 Regime-legitimacy and political stability relations, which may need generations to develop. And as long as interpersonal trust remains scant and business is seen as suspect the prospects for a liberal market is less positive. Returning to the hypothesis formulated earlier in this chapter, one may conclude that the confidence or ‘diffuse support’ in David Easton’s terms, in the Russian governmental institutions increased from 1998 to 2000. On the other hand the elite’s generalised trust in public leaders remains on a low level. In the non-government sector confidence still remains low. Particularly deep dissatisfaction with the new market institutions and political parties which form the core of a pluralistic society is likely to lead to more state involvement in the economic sector and further political centralisation to bring society back to order. And this is exactly what Putin has done during his first years in power. While freedom imperiled Yeltsin’s democracy stabilisation is jeopardising Putin’s democracy. As Karl Popper (1999) argues in the citation in the beginning of this chapter, a stabilised democracy may be turned towards itself when people take freedom for granted, or as in the Russian case, deposits their destiny in the hands of a strong leader. When ‘stabilisation’ takes place in a context of absence of pluralist traditions some would argue that democratic prospects are not very optimistic.12 However, as long as the Constitution of 1993 is respected the ‘new order’ does not mean a return towards a regime of the old type. The elite’s orientations presented here augur more elite integration under a strong president who also depends on the support from the national and regional elites. Their primary interest is in preserving their basis of power in representative institutions, a decentralised federation and in safeguarding business opportunities. One important question is if the solid beliefs in governmental institutions over time may spill over into the society and the market. If Putin’s centralisation policies and state-oriented capitalism is successful in generating prosperity it may increase elite and mass support for the market and thereby sustain a more viable democracy rooted in middle-class interests in a pluralist society. Even for a patient and understanding elite, in the longer perspective, the legitimacy of a democratic regime derives not only from the ‘intrinsic value’ of institutions but also from positive experiences with economic performance and a working society.

Regime-legitimacy and political stability 49

4

Democracy Russian style

If Russian ‘democracy’ did not lead to prosperity, if ‘democratic’ Russia remained ‘poor’, a wish to achieve prosperity by other means could emerge. Alexander Lukin1

Introduction After the demise of the Soviet regime the elite had to adapt itself to a completely new and unpredictable political environment and harsh individual competition following the dismantling of state hierarchy and ‘raw capitalism.’ These uncertainties raise questions of how the elite’s commitment to democracy may be challenged by a desire for more authoritarian leadership and if their orientations to democracy correlate with support for a market economy that did not fulfill its promises. The market economy was initially established by a small group of top leaders operating as advisers to President Boris Yeltsin, with varying support from the broader stratum of the national and regional elites. In a situation characterised by a crippled public sector, a lack of effective decision-making and the impoverishment of major parts of the population, one would expect the elite’s initial enthusiasm to have been replaced by a wave of more critical attitudes to democracy, paving the way for more centralised leadership. This chapter investigates whether the politically turbulent 1990s and largely negative experiences with economic performance really eroded the national and regional elites’ support for democracy, asking what form of democracy attracts the Russian elites? And, is democratic thinking linked to the wish for a market economy? Democracy rests on three main pillars: broad participation; a nonauthoritarian leadership style; and competition for power institutionalised as a multi-party system. While it is widely accepted that in Western democracies these characteristics are closely interrelated, this may not necessarily be so in post-communist democracies. In the first part the elites’ attitudes on these dimensions are compared. The argument is that such orientations may be largely inconsistent but not necessarily threatening democracy. The second part investigates authoritarian inclinations more specifically asking how far

50 Democracy Russian style the elite will allow the President and the government to interfere with democratic decision-making. The third issue to be discussed is how support for the type of economic system and democratic propensity is interrelated. One common argument is that liberal political values ensue from market-based interests because the market guarantees citizens equal opportunities and institutions to enhance their well-being and is therefore conducive to ‘democratic thinking’. Thus, the market constitutes the material foundation for democratic development, and if a major segment of the elite is market-oriented this will constitute a guarantee for democratic rule. I argue that this is not necessarily the case in Russia. Democracy did not ‘grow from below’ in tandem with the development of a market. First of all democratic institutions were ‘imposed’ from above where the procedures put down in the Constitution of 1993 guarantee the national and regional elites’ and the population basic political rights. Post-communist democracy is initially based on a ‘political interest’ and the ‘economic interests’ will only develop following the establishing of a broad middle class. Thus, the sad experiences of the market experiment during the first decade may not necessarily imply the denouncement of democracy. One may argue that ‘top-down’ elite-democracy made democratic institutions robust against demands for political change resulting from economic misery.

Participation, leadership and party competition Democratic attitudes may be measured in several ways and democratic governance can mean different things. One commonly cited categorisation is that of Robert Dahl (1971) based on what he calls ‘public contestation’ and ‘participation’. Taking Dahl’s dimensions as a point of departure I distinguish between the right of participation to influence political outcomes and the degree to which leaders contest for power. These basic aspects demarcate two main models of democracy: ‘participatory democracy’ and ‘elite democracy,’ both of which presuppose participation and competition among political parties but emphasise the people and the leaders quite differently. Here I include also a third aspect of democracy: to what extent authoritarian psychological propensities are widespread. Beliefs that a strong leader is needed to solve problems relates to what Putnam (1973) calls an ‘operative ideal’ of how to organise authority relations.2 It may be argued that favouring an inclusive political process and competitive political system and simultaneous rejection of authoritarian leadership add up to solid support for democratic governance. ‘Participatory democracy,’ by definition, implies that universal participation is the main foundation throughout the political process and is not restricted to elections (Pateman 1970). The participatory school values broad individual participation by citizens, thus implying scepticism towards ‘strong leadership’ as an organisational principle. The ‘elite democracy’ model, as formulated by Schumpeter (1996), holds that political competition among

Democracy Russian style 51 elites is regulated by legitimate procedures. While this does not exclude mass participation, the main elements in the political process are periodic elections and vigorous elites who mobilise the people as an electorate to support their bids for power. Dichotomising ‘type of participation’ and ‘type of leadership’ give four main possibilities: (1) broad participation/soft leadership; (2) broad participation/strong leadership; (3) narrow participation/soft leadership; and (4) narrow participation/strong leadership. In the first category, the elite favours mass participation and non-authoritarian leaders. This type of democracy is found in some Scandinavian countries, where the belief in the virtues of popular influence is strong and the political culture is characterised by proximity between the population and its leaders. The second category is especially relevant in new democracies where elitist traditions are combined with democratic institutions. In the third type, we find a form of delegated rule, where a belief in narrow participation is combined with a wish for liberal leaders. Elites espousing the fourth category have little faith in mass participation and believe strong leadership is important. This type of system comes closest to an authoritarian political system but embraces attitudes that may be found in any democratic state. In principle, all these attitudinal variants may co-exist within the same political system. The point is to find out how elite attitudes in Russia are distributed among these four categories, for this will tell us a lot about what type of democracy Russia is. Table 4.1 shows the elite’s attitudes towards political participation, leadership and also to multi-party systems. Obviously, ‘participation’ as a value is firmly rooted and the elite is in general very positive about popular influence in the political process. The disappointments with the market economy do not seem to have had any negative effect on attitudes to participation. Inclusiveness is not, however, the same as ‘participatory democracy’ in the broadest sense. These positive attitudes, therefore, probably reflect more the elite’s desire for an ‘electoral democracy’, where the masses can be mobilised before elections. With weak party structures and media organs controlled by a few powerful people, the masses can easily be manipulated to choose alternatives and candidates that the power elite support. Thus, in this sense popular participation does not run counter to the interests of powerful elites. Among the elite groups the variation is small and the members of the Federation Council are the most positive, with more than 90 per cent in favour of participation. There are no major changes over time among the elites, except for business leaders whose attitude to equal influence on government policy becomes more critical. Do the positive attitudes to political participation also imply liberal attitudes to leadership? In the ‘elite democracy model’ skilled leaders rule in the interest of the people and their legitimacy stems from public support in elections. Such societies will emphasise the role of leaders and much of the political process will be about the performance of charismatic persons competing for influence. Given Russia’s authoritarian traditions and the

52 Democracy Russian style Table 4.1 Elites who support equal influence, strong leadership and a multi-party competition (%) Equal influence (a)

Strong leadership (b)

Multi-party competition (c)

Total

1998 2000

80 81

81 81

48 43

State Duma

1998 2000

79 79

63 67

57 43

Fed. Council

1998 2000

93 93

77 83

26 21

Bureaucracy

1998 2000

79 83

84 88

45 47

State enterprises

1998 2000

74 78

82 98

45 46

Private business

1998 2000

86 70

86 84

33 37

Culture

1998 2000

84 76

84 90

50 40

Regional government

1998 2000

79 83

84 78

51 46

N(=100%)

1998 2000

971 588

972 589

954 593

Statements: (a) ‘Support equal rights for all to influence government policy’; (b) ‘Important to have some strong and able people who run everything’; (c) ‘Competition among many political parties will strengthen the political system’.

disintegrated leadership during the 1990s, one might expect the Russian elite to be particularly concerned about the leadership aspect of democracy. As many as 81 per cent in both years expressed a positive attitude towards ‘strong leadership’, indicating that in all elite groups a substantial majority can be classified as having affinity for authoritarian leadership. There are, however, some differences. The State Duma representatives are less authoritarian than the other elites, while the leaders of the state ministries, state enterprises and private businesses express most support for a strong leadership. More surprising are the authoritarian tendencies among the cultural elite, with 90 per cent supporting strong leadership in 2000. Since Putin came to power the national elite has become more positive about strong leadership while the regional elite has turned somewhat more sceptical. The less authoritarian attitudes among the State Duma members in 1998 can be explained by the struggle taking place at that time with President Yeltsin, which represented an attempt at demarcation vis-à-vis an overdominant president. By the same token, the higher support for a strong leadership in the Federation Council at that time can be explained by the

Democracy Russian style 53 fact that the governors and the president were generally on the same side, with major controversies seldom arising between them. An additional explanation might be that more democratic orientations have taken root among a larger proportion of the central political elite because they have been shaped by the democratic process and want to demarcate themselves vis-à-vis the executive. State Duma members seem to have been socialised into a democratic culture generated by positive experiences from mass elections in a multi-party setting. How do the elite’s attitudes fit in with the four basic orientations to democracy described earlier? The first category describes to some extent the State Duma, with positive attitudes to participation and more sceptical attitudes to authoritarian leadership. In the second category, with positive attitudes to participation as well as authority, the best examples are the Federation Council, the leaders of the bureaucracy, directors of state enterprises, the private business elite and the cultural leaders. What is encouraging for the development of democracy in Russia is that very few of the elite hold the opinion that would fit into category four – namely, restricted popular participation combined with a desire for strong leadership. While the Russian elite generally concurs in their support for equal influence and powerful leaders, they are split down the middle regarding support for a multi-party system. What is more, support for party competition diminishes over time among most elite groups. The representatives in the Federation Council and private business leaders have a particularly low opinion of such a system. The State Duma members expressed more positive attitudes than the other groups in 1998 but later their support for party competition also declined probably due to the rather chaotic party system. The elite’s ambivalent attitudes to party competition do not conform to a pluralist democracy of the Western type and can be seen as reflections of negative experiences with political parties very fragmented. It was exactly this situation the law, proposed by President Putin in December 2000 and later passed by the State Duma in July 2001, wanted to cope with, requiring a higher threshhold as to formalisation and size of a party before it is allowed to run for election. Thus, the President also in this field responded to widespread attitudes among the elites. The increasingly negative attitudes towards party competition point toward a system where political competition is becoming more limited with support from a large part of the elite. In summary, the Russian elites are quite unanimous in their support of participation in political processes, and while they also substantially favour strong leaders, they are clearly divided on the issue of how beneficial competition among several parties is. What does this tell us about Russian democracy? Obviously, the elite prefers a democracy in which popular participation is understood as mass elections and where strong leaders can interfere and make the necessary decisions. At the same time, the elites are deeply fragmented about how pluralistic this system should be. These orientations may lead one to conclude that the Schumpeterian ‘elite demo-

54 Democracy Russian style cracy model’ is quite close to the Russian elite’s conception of democracy while Schumpeter would probably disagree about inhibiting party competition. Such support for strong leadership and limited competition raises the question: have the elites endorsed the President and the government with powers that may jeopardise pluralist constitutional democracy? This is investigated in the next section.

The executive and democracy The Constitution of the Russian Federation3 regulates the relations between the President and the State Duma and clearly states that in case of controversies the elected assembly is the final authority (Article 107). Further, it gives the Constitutional Court a quite prominent position and the authority to interpret if ‘federal laws and enactments of the president’ is in accordance with the Constitution and to resolve disputes between federal state bodies (Article 125). While the President’s jurisdiction towards the State Duma and Constitutional Court is regulated in the Constitution, the government’s authority towards citizens is more indirectly regulated in the general Article 2 stating that ‘the protection of human and civil rights and freedoms is the obligation of the state’. Although the rules are fairly clear one question for democratic governance is how such formal power is made legitimate by political support. It can be argued that the elite’s positive orientations to strong leadership may sustain certain practices that may violate the ideas of the constitution. Table 4.2 shows the elite’s understanding of the President’s power towards the State Duma and the Constitutional Court, and to the government’s power towards individual rights. An overwhelming proportion of the elite wants to protect the autonomy of the Constitutional Court and very few want to give the government the opportunity to suspend citizenship rights with the exception of bureaucratic leaders who tend to be somewhat less concerned about liberal ideas. The issues, if the government should be given the opportunity, if necessary, to ignore public opinions, is evaluated in a more positive way but it is still a rather small minority in all groups. This picture of respecting liberal conceptions of presidential and government powers changes substantially when it comes to the president’s relations with the State Duma.4 As many as one third agrees that the president shall, if necessary, be able to overrule the State Duma while very few say the same about the Constitutional Court. As one may expect the members of the State Duma are the most sceptical and in particular under Yeltsin. The change of president and Putin’s more state oriented policies has influenced the attitudes of the Duma deputies but still they are rather sceptical about widening the authority of the president. The opposite trend is found for the members of the Federation Council, probably because of Putin’s intervention with the power base of the governors during late spring 2000. Why the leaders of

Democracy Russian style 55 Table 4.2 Attitudes to Presidential and government powers (%) President shall be able overrule the State Duma

President shall be able overrule the Const. Court

Govmt. should ignore public opinion

Govmt. should suspend citizenship rights

Total

1998 2000

30 34

3 4

17 12

8 7

State Duma

1998 2000

10 21

2 2

16 15

8 9

Fed. Council

1998 2000

37 20

0 0

3 0

7 0

Fed. Admin.

1998 2000

36 51

6 3

20 15

16 13

State Enterprises

1998 2000

20 22

6 2

18 18

6 6

Private business

1998 2000

51 34

4 4

18 12

11 2

Culture

1998 2000

26 42

4 8

30 10

6 6

Regional government

1998 2000

30 33

3 6

15 11

8 5

N(=100%)

1998 2000

963 602

973 600

970 602

959 581

Response rate 1998: 98–9%; 2000: 96–9%. Statements: The President shall be able to overrule the State Duma’; ‘The President shall be able to overrule the Constitutional Court’; ‘The government shall ignore public opinion if it disagrees with it’; ‘It is permissible to suspend citizenship rights to combat slander against the government’.

state enterprises are among the most negative to presidential power is not easy to say. While the strong support among private business leaders under Yeltsin can be explained by the many clashes and defeats with the State Duma in liberalising the economy. The following decrease can be understood not as the elite’s concern for the status of the elected asssembly but that they lost their most important allies in the struggle for market economy. While the leaders in the regions naturally are relatively sceptical about a very strong presidential power, the leaders in ministries and, more surprisingly, also in cultural institutions have become remarkably more positive about increasing the power of the president. Although the Russian national and regional elite want stronger leadership it does not necessarily mean a wish for authoritarianism, jeopardising constitutional rule. The data demonstrate that the elite largely agrees with the Constitution that protection of civil rights ‘is the obligation of the state’

56 Democracy Russian style (Article 2) and they also want an independent Constitutional Court. On the other hand the picture is less obvious about the President’s relations with the State Duma. It seems that for a considerable proportion of the elite the attitudes to Presidential power are more influenced by a propensity for strong leadership and scepticism towards the elected assembly, than by principal considerations of distinct power sharing.

The market-democracy connection The change of economic regime and the resulting social misery following the demise of state-planned economy has created a major dilemma for democratic development: how to legitimise democracy and market reforms when the government’s economic record is relatively poor and there are few democratic traditions on which to rely. Less attention has been paid to how a democracy emerging from under the conditions of a parallel political and economic transformation, as is the case in post-communist states, affects the elite’s orientations. In this section I discuss some theoretical contributions on economic and democratic development and in the next I will look into the relationship between market affinity and democratic orientation among the Russian elite. Elite theories of democracy take a neutral stance toward the market– democracy relationship, maintaining that elites primarily have a common interest in avoiding destructive ‘zero-sum games’, irrespective of market affiliation. They will support basic procedures for the political struggle, independent of the level of economic development or market opportunities. Two main theoretical approaches may be discerned about the role of the market for democracy. Structural theories argue that the level of economic development is decisive for democratic development, while institutional theories focus on the market as a system of exchange in which the degree of institutionalisation of ‘opportunity structures,’ like property rights, will determine democratic attitudes. This approach is essentially about political socialisation and has two variants: ‘good’ or ‘bad’ learning. The structuralist approach sees a viable democracy as a consequence of certain patterns of economic growth. Lipset (1960) is one of the most influential proponents of explaining democracy in terms of economic modernisation and growth. Diamond (1992), after reviewing the accumulated research that Lipset spurred for over three decades, concludes that socioeconomic development makes democracy and stable democratic government more probable. This ‘modernisation’ approach has been challenged on substantive grounds for not taking into account theories of ‘state capture.’ As is often seen in elite-controlled bureaucratic–authoritarian regimes, elites have more of an interest in creating an economic system that is favourable to them than in generating general economic growth. The modernisation approach is therefore criticised for not including vital intervening variables like political culture and elite interests.

Democracy Russian style 57 Institutional approaches regard democracy as a result of institutionalised market practices. This approach has gained broad theoretical and empirical attention in recent decades. One influential advocate of the idea of a close relationship between the market as an institution and political democracy is Hayek (1976), who argues that a system of private property rights is the best guarantee of liberal political freedoms. The argument has been advanced, e.g. by Lindblom (1977, 1988), that ‘no democratic state has been developed except in a market-oriented economy’ (Lindblom 1988: 115). Diamond (1995) underscores the market as an institution and a model for learning democratic practices and asserts the existence of a close interdependence between the market and democracy, saying the freedom to engage in market activities provides the foundation for political liberalism. Private ownership and market transactions as such will create a middle class with inherent interests in democratic institutions. Capitalism generates certain values of competition and freedom of choice that are ‘generalised to encompass the realms of governance’ (Diamond 1995: 113). The interesting question is how the simultaneous economic and democratic transformations in post-communist countries may sustain or erode market and democratic orientations. The Russian economic reforms that began in 1992–4 were radical. A massive ‘shock therapy’ strategy was imposed by the Kremlin leadership without consultation with affected interests and pushed into effect mainly by a few Westernised Russian elites with close connections with liberal economists at Harvard University, the International Monetary Fund (IMF) and the US government (Wedel 1999). Later attempts to mobilise support from the elite for what was essentially a ‘fait accompli’ aroused opposition, thus undermining the successful implementation of the reforms. As Przeworski (1991) argues, economic ‘shock therapy’ in democratic states creates a dilemma for reformers, who will tend to vacillate between technical blueprint reforms from the policy leadership and compromises with broader interests that take the social costs into consideration thereby diminishing the effects of the reforms. Kullberg and Zimmerman (1999), arguing from an institutionalist point of view, maintain that ‘the “cost of reform” argument obscures the character of the relationship between market economy and democracy’ (p. 327). The main object is not fair distribution of incomes but the extent to which reforms enhance the prospects for stable competition and exchange that may increase future economic well-being. Support for democratic values is thus a function of certain economic rights, first and foremost property rights. The argument seems plausible if one regards the elite as economic self-interested actors and is in tune with the classical tradition of regarding a democratic state as rooted in certain liberal rights, in particular the right to own property. According to this line of thinking, the market is inherently ‘democratic’ and the middle class and the elite will be infused with formal and informal norms operating in the market place and thus take on democratic practices as well.

58 Democracy Russian style A successful market economy has been found under authoritarian regimes with widespread elite-rule, e.g. in South America and Southeast Asia. In the Russian case I argue that the most important intervening variable is not the market or level of economic development but the political psychology of the elite. After 10 years of sharp economic decline, a catastrophic worsening of the socio-economic situation among the major part of the population and the debunked ‘market economy’, democratic institutions are still in place. While still lacking a middle class, what else other than the elite’s values can be considered to form the basis for democracy? In an economy whose performance remains below the critical threshold for generating democratic development and a predatory type of capitalism having enriched beyond imagination only some few, the national and regional elite’s interests in counterbalancing the Kremlin leaders with pluralist institutions become vital for democratic consolidation. When a middle class whose economic status is independent of the power holders is absent, as Diamond maintains referring to Mosca, the elite tend to form a ‘political class,’ where political power creates economic benefits and generates new social stratification by capturing the state. Under such conditions market liberalism may lead to ‘bad learning’ about democratic practices as well as about how to run the economy. Using democratic breakdowns in Africa and Asia as examples, Diamond argues that the main cause of such developments is the perverting effects of ‘rent seeking’ – i.e. a situation in which elites control the state for their own purposes and block economic development by sustaining a large state apparatus. Obviously, this could also have been a description of the Russian situation. The markets were designed by an elite who controlled the privatisation of state property but within the context of a collectively oriented political culture. The paradox is that while the benefits of the market were the main argument for dismantling the former inefficient state economy, the privatisation process actually put some of the elite in a position to monopolise the economy, thereby perverting the market. By giving the elite control of the new profitable businesses that often have only formally been separated from the state, the new economy largely became a distorted market.5 The problem of ‘bad learning’ may be illustrated by Anders Aaslund (1995), who was an adviser to the Russian government during the early reform period and thus one of the main proponents of ideas and recommendations for putting a radical market plan into effect over a short timeperiod. Following the failure of this project he explains with hindsight that it turned out to be a disaster because of the conservatism of the old nomenklatura and the strength of the ‘rent seekers’ who made money by distorting the market (Aaslund 1999). Others have argued that the main problem was not the ‘nomenklatura capitalists’ from the former regime but the small team of non-official economic advisers to the Russian government.6 Using presidential decrees to

Democracy Russian style 59 by-pass the parliamentary process amounted to operating with the same degree of secrecy and non-accountability as the former regime and thus demonstrated a failure to shake off the old communist mentality. As shown by Wedel (1999), Yeltsin’s adviser and architect of economic change, Anatoly Chubais, formed a ‘clan’ consisting of young Russian economists with close connections to liberal economists at Harvard University. According to Wedel, the ‘Chubais clan’ played a ‘trans-identity game’ where responsibilities were unclear and accountability lacking, resulting in open access to top authorities in Russia as well as in the United States, the IMF and the World Bank. These people were able to operate as advisers while at the same time pursuing their own individual interests. Paradoxically, the only way of instigating radical reforms was for politicians to delegate authority to closed ‘change clans,’ a situation that was mirrored in several other post-communist states. President Yeltsin and his advisers backed this group of young reformers and protected them from the pressure of groups inside and outside government who had to bear the costs of the changes. Because the first phase of economic change was legitimated by a ‘negative consensus’ about the miserable failure of state socialism, a quick surgeon-like operation was deemed to have a better chance of success than an incremental strategy. The argument was that while elites may persist in their belief in the market, even in the absence of economic results, the public soon forget the promises of capitalism and turn to idealising the past. In other post-Soviet states, e.g. Latvia, Nissinen (1999) maintains that after the ‘shock therapy’ involving privatisation, price deregulation, the abolition of subsidies and the need to balance the state budget, the economy must be consolidated by generating popular support. While the initial period was a stage of extraordinary politics, a democratic government cannot in the long run continue resorting to secrecy and delegation of policy to ‘dream teams’ of experts. Therefore, it was clear that the second phase, involving reform of the taxation system and social rights, required a broad consensus. In other words, while the government could get away with circumventing the normal political process during the initial period of reform, in the subsequent period broad elite and mass support became essential for success. A general problem in most post-communist states was that structural public sector reforms in the second phase were conceived and implemented using the same ‘closed methods’ as in the first period. From another perspective, Bartlett (1997) paints a more optimistic picture. Comparing democracy and market changes in Hungary with other postcommunist countries, he maintains that political institutions affect the course of market reform. The broad regime types ‘democracy’ and ‘authoritarianism’, however, offer only limited explanations for economic transformations and performance.7 Therefore, one has to determine how country-specific political traditions determine market reform and performance. The main point is not whether a state is ‘democratic’ or ‘authoritarian’ but how ‘particular’ norms of lobbying the state are balanced against ‘universal’

60 Democracy Russian style standards that prevent special interests from distorting the implementation of market reforms. Contrary to the conventional wisdom, Bartlett maintains that democratic institutional design, at least in the case of the postcommunist states, strengthened the capacity to implement unpopular economic reforms and restricted the manoeuvring of ‘rent seeking’ elites. While this may be an adequate description of the relatively successful Hungarian case, Russia’s institutional solutions had other consequences that are more reminiscent of O’Donnell’s (1993) analysis of Latin America. These countries are ‘electoral democracies’ with weak state capacities and lack the ‘universal’ norms and ‘civic society’ dimension of liberal democracies, thereby empowering the elites to exploit the state by patronage and special treatment. Although it is important to insulate the elite from mass demands, it is even more essential to create institutions that protect governing elites from ‘rent seekers’. The dual transformation of the economy and the political regime makes the relationship between the market and democracy complex and dynamic. The Hungarian case may exemplify how rather successful democratic institutionalisation allowed elite competition to prevent the domination of special interests in the market. At the other extreme, the dismantling of the central economy and weakened Russian state did not result in a liberal market but in new forms of interlocked arenas of patronage and dependence between the state and the new managers in the so-called private sector. The new state–business relationship goes to the very heart of the postcommunist state. Rejecting the notion of a ‘mixed economy’ in postcommunist states as imprecise, Stark (1997) adopts the term ‘recombinant property’ to describe a system of decentralised private property networks that are interlocked with central government management of liabilities, resulting in an increasingly blurred distinction between state ownership and private property. In order to survive under such unpredictable conditions a specific strategy is required. The ambiguity of decision-making environments is countered by ambiguous organisational strategies. As Stark remarks, actions may be interpreted as coherent from many perspectives at the same time and are imbued with legitimacy by both the state and the market, since public and private motives cannot be separated. While the economy may run rather smoothly, under such conditions one may expect ‘bad democratic learning’ to take place. The erosion of mass support for the market had by 1994 already reached a dramatically low level, with only 13 per cent of the Russian population reporting trust in private enterprise. For the political institutions the picture was even more gloomy: with the percentage of those who trusted the State Duma at 12 per cent, the government at 10 per cent and the political parties at 6 per cent (White et al. 1997).8 Accordingly, some argue that, given the lack of stable intermediate institutions between the state and the masses, both democracy and the market in Russia have been in jeopardy for some time.

Democracy Russian style 61

The elites as market-democrats? The results of population surveys in Russia exhibit a rather convincing correlation between democratic orientations and market support (Evans and Whitefield 1995; Miller et al. 1997), while the empirical results of previous elite studies are rather contradictory. Miller et al. (1997) investigated the relationship between support for democracy and market reform among Russian and Ukrainian elites in 1992 and 1995. Somewhat surprisingly to them, they found no clear correlation. The relationship was tenuous and much weaker than among the general public. In fact in 1992 strong support among the elite for democracy was significantly correlated with preferences for a state-regulated economy. One factor which had a major impact on the relationship between a democratic and a market orientation among citizens, was party affiliation. Those who were affiliated with a party were consistently more in favour of both democracy and the market economy. In their study, with data from 1993 and 1995, Kullberg and Zimmerman (1999) compare Russian mass and elite attitudes to democracy and the market and found a rather a different picture. They argue that an overwhelmingly high proportion of the elite embrace both democratic and market values (almost 80 per cent of the elite is labelled as ‘marketdemocrats’ in 1993 and 1995). According to the authors, such values express a fundamental consensus about and support for reform among elites, resulting from a more favourable opportunity structure than is available to the general public. The general population is shown to be considerably more sceptical toward the market and democracy. According to the authors, the economic situation facing various groups determines opportunity structures and ideological orientations. One intriguing question is why the picture of elite orientations toward democracy and the market presented by Kullberg and Zimmerman is so different from the findings of Miller et al. who report hardly any correlation at all. The purpose here, however, is not to ponder the inconsistencies of previous research findings. There may be several reasons for the differences, ranging from differing selections of elite respondents to differently formulated questions and different points in time at which the surveys were conducted. If, as Kullberg and Zimmerman argue, new economic opportunity structures shape democratic dispositions, one may expect to find a correlation between support for the market and democratic thinking in my 1998 and 2000 elite surveys. In the following, orientations toward economic system are operationalised as ‘support for state or private ownership in business and industry’ and ‘adherence to the value of individual competition’. Democracy is operationalised as ‘inclusiveness of participation’, ‘type of leadership’ and ‘competitive party system’. Table 4.3 shows the relationship between the variables. If a favourable opportunity structure is vital to the elite, the assumption is that they would systematically support both the market and liberal demo-

62 Democracy Russian style cracy, resulting in positive and rather strong coefficients. Obviously, confidence in private ownership and competition do not correlate positively with support for one basic democratic propensity – influence of citizens on government policy. On the contrary, there is a small tendency for market supporters to express scepticism about inclusive participation but this is not significant. Using type of leadership as an indicator of democracy yields an inverse, though weak relationship. Support for individualism is, however, fairly clearly related to support for ‘strong leadership’ thus indicating a psychological competitive-authoritarian disposition among the elite. However, when one examines the correlation between support for structural aspects of democracy, like a multi-party system, the ‘market-democrat’ thesis becomes rather plausible. The values of ‘private ownership’ and in particular market competition are clearly correlated with preferences for party pluralism. Thus, the data indicate the existence of a group of reformist liberal elites only when market attitudes are connected to the procedural aspects of democracy, such as how to organise the party system. And, most interestingly, the correlations are getting much stronger under Putin. Obviously, a more centralised policy style spurred more profiled ‘marketdemocrats’ among the elites. The discrepancy with the Kullberg–Zimmermann study who found a substantial group of ‘market-democrats’ may simply be a question of use of indicators. It may be related to the definition of ‘democracy’ as soft leadership style or a certain procedure guaranteeing political competition. Only defining democracy as an institutional arrangement seems to generate a group of ‘market democrats’. More likely, the difference between the studies are due to selection of elites. The Kullberg–Zimmermann sample consisted of only 200 respondents ‘whose primary expertise and position involved the analysis and/or conduct of foreign policy’ (p. 357). This group of elites Table 4.3 Attitudes to economic system and democracy. Pearson’s correlations Democracy Economy

Influence of citizens

Leadership

Party competition

Ownership

1998 2000

0.05 (N=948) 0.02 (N=588)

0.03 0.02

(N=958) (N=581)

0.08* (N=940) 0.16** (N=585)

Competition

1998 2000

0.01 (N=961) 0.02 (N=594)

0.12** (N=971) 0.05 (N=588)

0.16** (N=954) 0.20** (N=591)

**Significant at the 0.01 level; *Significant at the .05 level. ‘Ownership’: Support for private vs. state ownership in business and industry. ‘Competition’: Support for individual competition. ‘Influence’: Support that citizens shall have equal chance to influence government policy. ‘Leadership’: Support that it is necessary to have some strong and able people who run everything. ‘Party competition’: Support that competition among many political parties will make the political system stronger.

Democracy Russian style 63 would almost by definition be the most liberally oriented, because professionally speaking they are close to Wedel’s (1999) internationally indebted ‘change clans’, which were the very core of Yeltsin’s reform-minded elite with close connections to American liberals. On the other hand, Miller et al. (1997) found only a small positive correlation between liberal economic and political orientations among the elite in their sample of 112 legislators from the parliament and administrators from the major central ministries. That sample, although also quite small, tallies more closely with the composition of respondents interviewed in my 1998 and 2000 elite surveys and may account for parallel findings. Thus, the criteria for selecting ‘the elite’ and operationalising the concept of democracy may explain the varying results. To summarise, data indicate that there is no major group of ‘marketliberals’ among the Russian elite when ‘democracy’ is defined in terms of citizens’ participation and leadership style. Individual competition is clearly an important aspect of a market economy for the Russian elite and the data illustrate that in Russian-type democracy competitive values relate to approval for strong leaders. Institutionalists would argue that a market economy is conducive to democratic learning and practices. Obviously, this is not true for Russia if one restricts the definition of ‘democracy’ to values like participation and leadership-style. However, support for economic institutions, like private ownership and individual competition, corroborates substantially with positive attitudes to a political system allowing a plurality of parties. The elite’s political psychology, in particular attraction to individual competition, seem to be playing an important and increasing role in their perception of how democracy should be organised. In conclusion, Putin’s re-centralisation style seems to have stimulated a clearer cleavage between liberals and those who are critical of market and political pluralism.

Conclusion: top-down democracy and the ‘market-democrats’ A common experience of former communist states was the emergence of a central leadership who quickly established quite stable democratic institutions and introduced not-so-successful economic reforms. However, the internalisation of democratic attitudes is not an automatic consequence of replacing communism and a planned economy with a democracy and a market economy. And developing a civic culture takes time. While a political regime may be toppled in the space of a few days and institutions substituted within months, the political culture underpinning the new institutions is likely to alter only after decades or generations (Dahrendorf 1990). Does this culturalist approach fit in with the Russian case? Without relativising what is ‘good governance’ one may argue that ‘democracy’ is a manifold phenomenon and specific cases must be understood on their own conditions, not on idealised Western models.

64 Democracy Russian style In Western countries democratic governance has ensued from the incremental and long-term adoption and internalisation of certain values and orientations, making specific patterns of elite behaviour appropriate. Thus, a stable democracy and a functioning market depend on the extent to which certain enduring norms are shared by the elites. The aim of this chapter has been to find out to what extent the Russian elite has adopted democratic values under conditions very different from ‘normal’ democratisation processes. The survey reveals a quite complex picture, showing orientations going in various directions, depending on whether the focus is on ‘individualistic’ or ‘procedural’ aspects of democracy. An overwhelming majority among the elite is committed to broad popular participation in political processes, while at the same time favouring strong leaders and is clearly fragmented on the issue of party pluralism. It can be argued that a high educational level is conducive to democratic attitudes, since the new class of Russian national and regional elites stands to benefit from a democratic society. Lane and Ross (1999) show that a major change in the composition of elites took place after 1991, with the incoming elite comprised primarily of intellectuals with a much higher level of education than the old nomenklatura elite. The implications of such a fundamental generational change in the elite’s orientation for post-communist political culture have not been extensively researched. Democracy ‘Russian style’ with liberal attitudes on representation and participation and a preference for strong leadership (strangely enough, a combination found particularly among the cultural elite) may not be as contradictory as they seem. Strong leadership is not the same as unrestricted and totalitarian leadership of the kind that existed under Stalin, for example. The Stalin era was above all a tragedy for the educated elite, who became the target of the Stalinist purges because they lacked the correct class background. If one takes into account the small number of ‘market-democrats’ among the bedrock of Russian elites in the 1998 survey, the political events towards more authoritarian rule that followed the breakdown of the Russian economy in August 1998 make good sense. The double rejection by the State Duma of Viktor Chernomyrdin, the candidate proposed for the post of prime minister by Yeltsin after Sergei Kirienko had been fired, opened the way for the more ‘collective-oriented’ leader, Yevgeny Primakov. He at once distanced himself from the previous liberal economic policy, trying to combine the market with state involvement without returning to the administrative command system of the past (Shevtsova 1999). The lack of a substantial group of commited market-democrats is not a threat to the democratic institutions but is important for the type of democracy that is taking root. Russian democracy is not made legitimate by the market opportunities of the elites but by how it may solve problems for the collective, a task that requires solid leadership. The personnel changes among the top leaders in 1998 and the subsequent appearance of Putin as prime minister in 1999 and as President in 2000

Democracy Russian style 65 confirm a trend away from liberalism that had started among the national and regional elites some years earlier. The December 1999 elections to the State Duma resulted in a temporary cooperation between the communists and the new successful party of the Kremlin establishment called ‘Unity’. The widespread support for Putin as a ‘strong’ Prime minister and acting President and later his election as President shows that the former conflicts between the elites around the President and other elites, mainly in the State Duma, had largely been mitigated. Support for ‘strong leadership’ may also be a case for concern when an increasing proportion, as data shows, is positive about allowing the President to overrule the State Duma. While democracy may have suffered Putin’s regime has stabelised Russia. The relaxation of market reforms consolidated and integrated the Russian elite around a stronger Kremlin leadership. As will be analysed in Chapter 5, economic reform is a complex process where the elites expect the state to take on social responsibilities and protect large industries while also supporting the privatisation of a considerable number of smaller industries, housing and retailing. This small-scale privatisation is exactly what Putin started to propose during the autumn of 2000 and managed to implement in September 2001, albeit, under the protests of the communists in the State Duma. The new laws make possible private ownership of land with substantial consequences for buying land for small industries, housing and shops in the cities. Putin did not at this early stage propose privatisation of collective farms, which was also a highly controversal issue under Yeltsin. As shown in the next chapter widespread positive attitudes to collective farming among the elite is quite consistent with Putin’s strategy of partial privatisation of land, which was restricted to cities. Later, Putin’s incremental economic reforms have continued with proposals of privatisation of farm land as well. Obviously, the disappointing market experiment has not undermined basic democratic propensities. Why not? It seems reasonable that democracy offers better career opportunities to the Russian elites than the previous authoritarian system. Thus, by defending pluralist democratic institutions the elite is safeguarding their own positions and future. While in the previous strictly hierarchical system opportunities were mainly contingent on ideological orthodoxy and personal relations, in a democracy the elites can make use of features that are more under their individual control, and they can benefit from their competitive assets, such as education and skill. Although some would argue that ‘elitist democracy’ has weaknesses compared to ‘participatory democracy’, such a critique is not very relevant in the Russian case. A type of ‘soft democracy’ would easily destabilise the Russian political system and territory, as was clearly demonstrated during Boris Yeltsin’s period. Consequently, as shown in Chapter 3, the elite’s confidence in President Yeltsin was extremely meagre. The leadership offered by Vladimir Putin within the confines of electoral democracy was exactly what the elites wanted at the end of the turbulent 1990s.

66 Democracy Russian style The main explanation of why stronger leadership is welcomed is that the Russian national and regional elites have a genuine interest in avoiding destructive ‘zero-sum games’. Lacking necessary inter-elite trust and civic values, only a powerful leader can reduce the costs of destructive games among the national and regional leaders, co-ordinate policies and enforce decisions necessary for the collective and state integration. Thus, ‘selfimposed consenus’ among national and regional elites, as Gel’man (2003) describes elite integration after Putin, is the mirror of a stronger executive allowing the elites to benefit from liberal opportunity structures in politics and market. The elites can continue their manoeuvring and coalition building based on deep-rooted competitive instincts but under the auspices of a ‘visible hand’ of a firm authority that keeps the state together. As the elite’s orientations reveal, when state integration is paramount, the group of ‘soft market-democrats’ will be marginal. On the other hand, more centralised rule seems to be conducive to rallying market-oriented elites round the idea of ‘democratic competition’. The strengthened association between market preferences and the procedural side of democracy may, ironically, be interpreted more as a reflection of democracy under pressure than learning from the market. The beliefs of these ‘hard market-democrats’ fit well in with the general picture of a rather authoritarian-oriented elite who are constituting the political basis for ‘democracy Russian style’. Another interesting question is the elite’s orientations towards the new economic system. One expectation is that the propensities for strong leadership disclosed here bode well for a type of capitalism where the state has a leading role. This is the topic for the next chapter.

Democracy Russian style 67

5

Between the state and the market

We are stuck halfway between a planned command economy and a normal market economy. Now we have a disgusting model, a bastard of the two systems. Boris Yeltsin1

Introduction The intention of the reform leadership in dismantling the central planning system and introducing a market economy via ‘shock therapy’ was to restructure the whole economy and establish a new foundation for economic growth. The instruments for doing this were a comprehensive economic stabilisation programme, the swift privatisation of state property, extensive tax reforms, the abolition of state subsidies and a decrease in transfers from the federal budget to the regions. Although living conditions deteriorated rapidly, the reformers believed that pushing on with a sweeping and rapid introduction of the market system was the only way to revitalise the stagnating economy. One explanation for why the market experiment did not live up to the expectations is that the ambitious policy reforms were thrust upon an unprepared population who, after patiently waiting for recovery to arrive during the early post-communist years, later became critical of the reforms. Although the social effects were obviously disastrous to large segments of the society, they are not sufficient to explain why economic liberalism was eroded in favour of more state regulation. More important I believe, are the orientations and strategic position of the national and regional elites. In order to put the reforms into practice, the Yeltsin government had to rely on these leaders that were enjoying the new power base ensuing from postcommunist democratisation and federal decentralisation. I argue that while the impetus for replacing one type of economy with another came from a small Kremlin leadership, the practical outcome ultimately bore the imprint of the strategic national and regions elites. Their orientations are here examined from three perspectives. The first is the basic individual-collective values. The second is the more operational issue of privatisation. Third, the problem of privatisation is investigated

68 Between the state and the market from a more instrumental angle, asking how the elite view the state and the market as instruments for solving problems in various policy areas, and how their attitudes to state and market correlate with reform policies in various regions. Asking why the economic reforms ‘failed’, if indeed they did, is not a very useful exercise, since ‘failure’ must be measured against some standard, in this case the Western ideal of a market economy. More to the point is that the elite’s orientations may explain why the economic system has ultimately been moulded more by traditional collective Russian values than by the ideas of the proponents of the free market. Actually, this was the programme of Vladimir Putin and one pertinent issue investigated in this chapter’s last section is to show how Putin’s centralising policies changed the elite’s widespread pessimism of the Yeltsin period into economic optimism. Before investigating the elite’s reactions to the new economic system it is necessary to give an overview of the actual impacts of the reforms on economy and society. These impacts affected people’s lives to a large extent, and most likely have been formative for the elite’s orientations.

Impacts on economy and society The dramatic economic situation following the fall of communism and the introduction of a market economy during the 1990s should be put into perspective. Calculating economic development in the former Soviet Union is not an easy task. There are large discrepancies between official Soviet figures from the period 1922 to 1985, as alternative estimates recomputed at a later stage and Western estimates reveal. However, all the figures show a positive growth rate for the years 1951–85. In the period directly preceding the reforms (1981–5), official Soviet figures showed 3.9 per cent growth, Western estimates 2.0 per cent and alternative estimates 0.6 per cent. All estimates display a downward trend, but none of them, with the exception of the alternative estimates for the 1940s,2 show negative growth rates. A dramatic collapse in production, incomes and living standards took place after 1989. By 1994 GDP had declined by 50 per cent, real wages had been reduced by one-third and the real value of pensions had dropped by almost half (Becker and Hemley 1996). Developments in the years following 1994 were less dramatic. From about 1995 until the collapse of the rouble and the banking crisis of August 1998 there were some grounds for optimism. The downward trend in GDP, real wages and industrial output was halted and there were even some signs of recovery. However, the positive development was built on sand and did not last. The devaluation of the national currency and the economic ‘melt-down’ of 1998 proved that the Western model of a market economy was not right for Russia. The figures in the Appendix, Table A5.1 to a large extent speak for themselves.3 Most important was the central leadership’s open admission that the country was undergoing a severe crisis. In 1999 Prime Minister Putin (who

Between the state and the market 69 was elected President in March 2000) wrote in an article to mark the end of the millennium that ‘In the 1990s Russian GDP fell almost 50 per cent. In terms of GDP we lag behind the USA by a factor of 10 and behind China by a factor of 5’ (Ellman 2000: 1420). Judging by the table above, the Russian leadership had a very realistic perception of economic developments during the last decade of the twentieth century. The fall in GDP, real incomes and production simply could not continue. The disastrous effects on people’s living conditions may be read not only from the decrease in real pensions and wages and in average life expectancy but also from various other indicators. Ellman (2000) shows that a major element of ordinary people’s lives was mass impoverishment resulting in malnutrition, worsening public health and a consequent rise in epidemics. But poverty did not emerge with the market economy, it existed well before the market experiment. However, after 1992 the decline in real wages and pensions meant that larger segments of the population became poor. Braithwaite (1997) illustrates that poverty was expanding from about 10 per cent of the population in the 1980s to almost 30 per cent in 1993, and became increasingly concentrated to families with children, unemployed and handicapped people. According to Ellman (2000), the Gini-coefficient which measures inequality, shows that Russia has one of the largest income differences in the world. No wonder, then, that criminal activity skyrocketed. In most sectors there was a negative trend in value added per employee and in the number of employees. Taking 1990 as the base year (1990=100), Tikhomirov (2000) illustrates that industrial employment fell to 65 between 1990 and 1997 and agricultural employment to 89, while in the state apparatus it increased to the astonishing level of 161 with similar upward trends for the banking and finance sector and the oil and gas industry. The failure of the Russian reform meant that the negative economic trend was never reversed. This development looks even more dramatic if one takes into consideration the situation on the labour market. The Russian economy was producing less and, apart from the export-oriented oil and gas industry, was unable to channel the labour force into productive sectors. In contrast, the state bureaucracy grew considerably during the 1990s. Although the ‘knowledge industry’ was more crucial than ever in Russia, the country’s ‘brains’ – i.e. those engaged in research – either went abroad or spent their time working in other jobs in order to survive. During the 1990s the Russian state lost a large portion of its most qualified personnel. Employees in research and development decreased dramatically – by one half – during the 1990s. Most striking, however, is the substantial growth of employment in the ‘triangle of interests’ – the oil and gas industry, the banking sector and the state administration. The oil and gas sector is the largest export industry, creating enormous incomes in which the banking and finance sector naturally had a great interest. Although much of state control over the oil and gas industry was lifted, making possible huge profits for the managers, these

70 Between the state and the market activities also remained the main and most secure source of income for the state. At least some of the growth in the state bureaucracy – the third corner of the triangle – can be explained by the emerging ‘administrative market’, with interlocking relationships between elites, as described by Treisman (1995) and Stark and Bruszt (1998). In order to reduce uncertainty and benefit from the new opportunities, state employees began to co-operate closely with the banking sector and the managers of the lucrative export industries. The mutual dependency between these actors and the strengthening of the ‘state-banking-industry triangle’ during the 1990s underscore the peculiarities of the Russian economic reforms. Instead of creating prosperity for all, the ‘shock therapy’, which was aimed at rapid economic development, produced widespread misery and opportunities only for some few who protected their wealth in clandestine networking with state managers controlling regulation and allowances, and bankers providing the necessary credits.4

Central economic reforms and obstructive elites The Western-inspired economic reforms of Yeltsin’s administration were initiated from above without much consultation with affected interests and clashed with a major part of the elites in a rather provocative way. This is not a new phenomenon. Russian history provides many examples of grandiose, top-down ‘blue-print’ reforms that ran into trouble because of non-cooperative elites (Yanov 1987). Thus, bureaucratised authoritarian regimes often falter because of obstructive tactics by the lower level elites Olson (1982). Clearly, therefore, the additional power accorded to these elites by the introduction of democracy and decentralised rule makes the new reform leadership even more dependent on this elite stratum than its predecessors were. The elite’s mind-set is informed by two sets of attitudes: those inherited from the past and new ones created by the current opportunity structures. Both have proven to be major obstacles to sustainable economic reform. In the first instance, sympathy for the previous collective institutions is obviously at odds with the individualism on which the market is based. In the second instance, widespread opportunism perverts the market, since institutions for efficient exchange, e.g. laws for contract enforcement, do not work. A main hindrance to market reforms may occur when traditional thinking rooted in the political culture of the past coalesces with new liberal opportunities under the absence of sufficient institutions. The former stable ideology of collectivism and state ownership was discarded overnight and replaced with the idea of individual responsibility and competition in a market environment, which turned traditional political orientations completely upside down. Consequently, the main challenge confronting the reform government was to change the mind-set of the

Between the state and the market 71 national and regional elites and recruit leaders with the ‘right’ ideas in order to form pro-reform coalitions. Concerned about the adverse effect on reform of the attitudes of the past, President Yeltsin’s pro-market regime tried continuously to replace the ‘old guard’ with younger people. But while the latter took on board the ideas behind the market model they were completely lacking in experience of how a modern economy actually functioned. It would appear that the post-communist elites represents a rather anomalous combination of traditional collective attitudes, rooted in the past, and the individualism resulting from the new liberal institutions. The economic reforms stimulated a latent ‘competitive instinct’ among the elite that had been suppressed during the Soviet period by control mechanisms designed to preserve hierarchical thinking and promote egalitarianism. However, the ‘competitive instinct’ does not necessarily lead to entrepreneurial and creative market activity. In the environment of post-Soviet Russia it is just as likely to find expression in resistance to the abolition of state functions, a scramble by the elite to safeguard their jobs or competition for control over state property motivated by the prospect of personal enrichment. It may also, as Stark and Bruszt (1998) argue, result in state bureaucrats and business managers establishing a new type of network economy in the grey zone between the state and the market.5 Nevertheless, individual competition for job security and ‘rent-seeking’ do not rule out a concern for the collective interest. The paternalist political culture espoused by the elites embraces ‘strong leadership’ and state responsibility for the common interest. Faced with a dominant political culture of this kind, the ‘chaotic capitalism’ of the reformers could not last, but was obstructed by elites seeking to safeguard their own positions and attain stability without wanting to return to authoritarian rule. Perhaps as a reflection of the mixture of old-style collectivism and newstyle individualism and competition espoused by the elites, the Russian economy is now following a middle road between the state and the market. David Lane (2000) sees a trend towards mixed ownership, with governmentcontrolled financial institutions and companies run by managers who have inherited their basic orientation from state socialism. A strong undercurrent of collectivity is clearly conducive to a kind of ‘state-led capitalism’ (Lane 2000). This argument is consistent with Yanov’s (1987) observation that the failure to bring about economic reform during the authoritarian Soviet period was also due to the top leadership’s inability to co-operate with influential groups among the lower-level elites. Other authors, too, see the strong position of the managerial elites during the Soviet period and in post-communist Russia as highly detrimental to economic progress. Olson’s (1982) concept of ‘distributional coalitions’ is useful for understanding economic malfunctioning after the collapse of the communist regime. According to him collusive behaviour accounts for how the state was usurped by the managerial and bureaucratic elites, leading to economic stagnation and the decline of authoritarian empires. Collusive

72 Between the state and the market behaviour did not end with the demise of the authoritarian state, however. It is now probably more widespread than ever, with the rise of a new class of economic managers who have an interest in only partial market reforms (Hellman 1998). This tendency to ‘insider ownership’ was particularly obvious during the 1992 privatisation programme for large state enterprises (McFaul 1995). While the former Soviet management elite ‘free-rode’ the state, the post-communist elites have an interest in exploiting both the state and the market. The collapse of all-encompassing institutions and the lack of property rights and contract enforcement is for Olson the main explanation for why economic performance is even worse after the fall of communism (Olson 1992). According to Olson (2000) some markets emerge spontaneously while others thrive only when certain institutional arrangements are in place, like property rights. In his rational perspective, individual incentives, not a consensus on basic values, are what determine the outcomes of economic reforms. Here, I argue that outcomes are also determined by basic orientations. Indeed, traditions and culture become particularly important when economic institutions are weak and economic reforms are implemented abruptly from the top rather than growing gradually and acquiring legitimacy through long-term common experiences of market exchange. Further, the lack of effective mechanisms for enforcement of market institutions, the disruption of stable political paradigms following the change of regime and the disastrous social results of the shock therapy created a fertile breeding ground for resistance to effective market reforms. Parallel to the introduction of the market and democracy, a widespread decentralisation of power to the regions took place, so that building coalitions between autonomous elite groups became the key to successful reforms. Thus, reform implementation was no longer the top-down process that it had been under the hierarchical command structure of the previous regime. Democratic and decentralised federal structures meant that economic reforms initiated by the core-elite first had to obtain political support from the national elite and then be implemented by autonomous regional elites. At both stages traditional thinking led to resistance since the costs of the reforms created many losers who found a common interest in obstructing their implementation. Democracy and decentralised forms of governance soon became counterproductive to the economic reforms introduced by the Yeltsin government. ‘Co-option’ was replaced by effective ‘veto-coalitions’ among elites who also had broad popular support. The democratic institutions and the transformation of the federal-regional relationship dramatically enhanced the obstructive power of the conservative ‘distributional coalitions’ and the façadeliberal ‘winners’ of the privatisation of state property who wanted to shelter their fortunes from further market reforms. The resistance of the national, regional and business elites to Yeltsin’s ‘shock therapy’ became a crucial obstacle to putting market reforms into effect.

Between the state and the market 73 Nevertheless, the constraints varied between policy sectors. Shleifer and Treisman (2000) argue that the extent to which the reform leadership managed to form coalitions with the elites determined the success of the reforms. According to them, rapid privatisation succeeded because politicians were shrewd enough to co-opt critical elites for this project. For if reforms are to be implemented properly and survive in the long run, political support for privatisation is also vital among the majority of elites who have no direct personal economic stake in the reforms but are deeply engaged in and affected by how they work. That said, the co-option of managers and top-decision makers, while necessary, are not sufficient for viable reforms. What is important is how reforms converge with the orientations of large segments of the elite.

Individualism versus collectivism? One main issue is whether the elite divides into opposing groups, or whether the elite embraces the apparently contradictory values of individualism and collectivism. In the survey the respondents expressed their fundamental attitudes on five separate but related statements as shown in Table 5.1. Looking at the average of all statements as a manifestation of the main tendencies, the Russian elites are neither completely convinced of the pure market alternative nor enthusiastic about the all-encompassing state but opt for something in between. Over time, the tendency is more towards the market and less towards the state. In the following these main tendencies are analysed in detail in order to find out what the elite’s response is to specific statements and whether they are split on these issues. The data show that the elite strongly supports ‘competition’ as a basic value. In 1998 31 per cent (scoring 1+2 on the scale, mean 3.3) were classified as very strong adherents, increasing to 49 per cent in 2000 (mean 3.1). Clearly, individual competition – the central idea of the market – is accepted by a large part of the elite. Moreover, support for competition increases considerably over time. By contrast, after Putin came to power the elite is considerably more reluctant about accepting the economic consequences of a market economy: only 13 per cent (1+2 on the scale, mean 4.4) are willing to accept major income differences between social groups. A third message concerns the institutional consequences of the market for the state as a provider of welfare, as an owner and as an income regulator. When it comes to the question of who should be responsible for welfare the elite do not come out in favour of the market. Rather, attitudes are spread evenly along a 10–point scale. The same trend is found for ownership. On the issue of whether the state should regulate incomes or leave it to the market the elite’s collective instincts again come to the fore. In 1998 28 per cent (8+9+10 on the scale) thought the state should influence income distribution, decreasing to 20 per cent in 2000. Now, let us examine these issues by elite group, asking how individualist and collectivist attitudes may vary according to institutional affiliation. One

1998 2000

1998 2000

1998 2000

1998 2000

1998 2000

1998 2000

1998 2000

State Duma

Federal Council

Fed. admin.

State enterprises

Private business

Culture

Regional govt.

3.0 2.9

3.0 2.5

3.2 2.4

3.2 2.4

4.1 3.8

4.0 3.7

4.3 3.5

3.3 3.1

(2.0) (2.2)

(2.3) (1.7)

(2.0) (1.6)

(2.1) (1.4)

(2.4) (2.3)

(1.6) (1.4)

(2.2) (2.1)

(2.1) (2.1)

4.3 4.4

3.7 3.7

4.0 3.7

4.1 4.1

4.8 4.8

4.8 4.9

5.2 4.7

4.4 4.4

(1.7) (1.8)

(1.8) (1.8)

(1.6) (1.8)

(1.6) (1.5)

(1.7) (2.1)

(1.3) (1.3)

(1.6) (2.2)

(1.7) (1.9)

Income differences

4.8 4.8

5.1 5.0

4.0 3.3

5.5 4.4

5.5 4.8

6.0 5.0

5.8 5.1

5.0 4.7

(2.7) (2.8)

(2.8) (2.6)

(2.1) (2.1)

(2.8) (2.2)

(2.3) (2.4)

(2.2) (1.8)

(2.5) (2.7)

(2.6) (2.6)

Welfare responsibility

5.1 4.9

4.6 3.2

4.2 3.9

5.3 4.7

5.7 4.9

5.8 5.2

6.2 5.1

5.2 4.7

(2.5) (2.6)

(2.6) (1.9)

(2.1) (2.1)

(2.4) (2.1)

(2.2) (2.4)

(1.7) (2.1)

(2.4) (2.7)

(2.5) (2.5)

Ownership

5.7 5.3

6.0 4.4

4.7 3.8

5.6 5.2

5.8 5.6

5.8 5.3

6.1 5.4

5.7 5.2

(2.6) (2.7)

(2.7) (2.3)

(2.5) (1.9)

(2.5) (2.1)

(2.3) (2.2)

(1.7) (1.8)

(2.6) (2.8)

(2.5) (2.5)

Income regulation

4.6 4.5

4.5 3.8

4.0 3.4

4.7 4.2

5.2 4.8

5.3 4.8

5.5 4.8

4.7 4.4

(2.3) (2.4)

(2.4) (2.1)

(2.1) (1.9)

(2.3) (1.9)

(2.2) (2.3)

(1.7) (1.7)

(2.3) (2.5)

(2.3) (2.3)

Average all statements

Response rate, all elite: 1998: 98–9%, N=980; 2000: 98–100%, N=605. * Attitudes are measured on a scale from 1 to 10, where 1 indicates an extremely individualistic attitude and 10 indicates an extremely collectivist attitude. The following five pairs of statements were used: ‘Competition is good’ – ‘Competition is harmful’; ‘Incomes should be equal’ – ‘Accept income differences’; ‘Private ownership in business’ – ‘State ownership in business’; ‘Individuals should take more responsibility for their own welfare’ – ‘The state should take more responsibility for the citizens welfare’; ‘The state should be more active in regulating incomes’ – ‘The state should leave incomes to the market’.

1998 2000

Total elite

Competition

Table 5.1 Individualism and collectivism (average means (standard deviation in brackets))*

74 Political Elites and the New Russia

Between the state and the market 75 would expect this dimension to be split along left–right cleavages among the political elite, to arouse a more pro-collectivist response among the administrative elite and a more individualist one among the business elite. For the managers of state enterprises and the cultural elite two opposite hypotheses are equally plausible. Since these leaders are very exposed to the uncertainty of capitalism they will seek protection in collectivist values. On the other hand, precisely because of the severe problems with financing these activities and the new opportunities provided by the market economy, this group of people may be attracted by individualist values. The members of the State Duma are the most collectivist-oriented among all the elite groups but they also support individual competition to quite a large extent. The generally high standard deviations illustrate a rather clear left–right division among the deputies. A rather substantial shift has also taken place away from the collectivist orientation of the 1998 Duma to the new 2000 Duma. The change illustrates two opposing tendencies: while the deputies are generally becoming more market-oriented, leftist values have also become more visible. On one value, however, a tendency towards concurrence is discernible: both sides of the political spectrum now tend to favour the value of individual competition. The picture of increasing individualism and a polarisation of collective values in the State Duma is somewhat surprising. While under Yeltsin there were fierce struggles over his policies of economic liberalisation, debates on economic reforms under Putin have become far less controversial. One explanation of this anomaly is that although basic attitudes have remained the same or even become more polarised, the overall political game has changed. After the disruptive conflicts between the President and the Duma under Yeltsin, a mood of national accord directed at lending support for the policies of a stronger Presidency paved the way for pragmatic co-operation between the Unity Party of Vladimir Putin and the Communist Party. Obviously, the ideas of the market reforms have become easier to swallow under a more law-and-order-oriented President. The Federation Council shows much of the same picture but with one exception: the level of polarisation between individualist and collectivist ideas is considerably lower than for other groups. The top bureaucrats in the federal ministries show similar attitudinal patterns to the members of the Federation Council but they are more divided. Elites that have been more directly exposed to the market and may make use of its opportunities – i.e. the leaders of state enterprises, culture and especially business leaders – are as one may expect more positive about market solutions, particularly about acceptance of individual competition and income differences. Obviously the marketisation process is perceived more as an opportunity than a threat. Not surprisingly, the leaders of state enterprises and culture are more concerned about the state’s welfare responsibilities and income regulation than the business leaders, but their underlying individualistic attitude is indisputable. The combination of seemingly incom-

76 Between the state and the market patible orientations is most visible among the cultural elite, who want to have it both ways. While favouring a competitive society with large income differences they also want the state to shoulder responsibility for income distribution. In all these groups there has been a major shift towards more individualist attitudes. In regional government attitudes are, as expected, less individualistic than among business leaders but they are not as collectivist as those of the central political-administrative elite. After the fall of communism many of the former nomenklatura moved to the regions and found a basis for their power and traditional views. Hanson (1997a) argues that the new regional elite had little interest in implementing decrees issued in Moscow and carrying out blueprint reforms for reducing the local state apparatus and abolishing price controls. Accordingly, it has been argued that the regional elite will be more conservative than the national elites. But, the data do not support the thesis of particularly conservative attitudes among the regional elite. Rather, the most traditional attitudes are to be found in the State Duma, the Federation Council and the Federal administration. On the specific issue of ‘competitiveness’, the regional elite is considerably more individualist than the central elite. It seems that the decentralisation of power is conducive to competitive attitudes. The basic attitudes of the regional leaders are somewhere between the collectivist orientation of the central political leadership and the market inclinations of the business elite. Their responsibility for the welfare of local constituencies combined with their personal stake in ‘insider privatisation’, allowing control over profitable industries, gives them an interest in both the state and the market. For all the other groups one can observe a rather substantial shift towards supporting more competitiveness over time while the attitudes of the regional elite are very stable. In general, it seems fair to conclude that the differences among the elite groups are smaller than one might have expected. Although central politicians and bureaucrats adopt the most traditional attitudes, the new business elite does not have very different values. In other words, behind the façade of market reforms and privatisation, a ‘collectivist propensity’ is prevalent across elite segments. But the tendency is in no way extreme and indicates an elite culture that supports a ‘third alternative’. The peculiar thing is that this option includes both considerable state regulation and individualism. In fact, these attitudes are not as inconsistent as they seem. The state may be active in regulating incomes in order to safeguard the living standards of low-income groups and at the same time accept that other sectors of society earn a lot. A preference for public ownership in some sectors may very well be combined with advocacy of private ownership and individual competition in others, as is shown below. Furthermore, the value of individual competition may thrive in a state where the borders to the private sector are blurred. In such a state, as Olson (2000) remarks, what matters most is competing for subsidies, not a sector’s status as ‘private’ or ‘state’.

Between the state and the market 77

The ownership issue: the basis of the elite compromise One interesting question is how strong the basic idea of collectivism is when it comes to more specific issues like type of ownership in various sectors. This issue is at the heart of Russian economic reforms and debates about the role of the state and the market. How has the privatisation programme influenced the attitudes of the elite and how may the elite’s attitudes explain the various outcomes of the privatisation programme in different sectors? Although the privatisation programme went far and Russia is now claimed to have one of the most privatised economies in the world, private ownership varies considerably between sectors. Thus, while privatisation has to a large extent been implemented in small businesses and housing, the privatisation of farmland was still quite limited in 2000. Ownership is not only a question of ‘state’ or ‘private’. A third type of ownership is ‘co-operative’, which has solid traditions in Russian society. Particularly in the agricultural sector workers and farm managers have been organised as independent co-operatives. In the survey, the respondents were asked to choose between the three alternatives and asked which they thought was most suitable for various sectors, such as heavy industry, light industry, agriculture, housing and the retail sector. The elite’s attitudes are definitely influenced by which sector is involved. As shown in Table 5.2, first of all, the Russian elite is overwhelmingly in favour of state ownership in heavy industry. Even among private business leaders more than 80 per cent support state-owned large industries and only 6 per cent (!) favour private ownership. This tendency is very stable over time. While their general support for private ownership is stronger than among other elite groups (Table 5.1), when it comes to more practical implications the business leaders prefer the state as an owner of heavy industry enterprises. This finding may be a surprise but illustrates the importance of the ‘grey zone’ between state and private business. It should also be noted that the privatisation programme of large state enterprises in early 1992 sparked heated debates among the elites. First and foremost the Russian Union of Industrialists and Entrepreneurs and its political affiliate, the Civic Union, argued that mass privatisation would simply localise ownership in the hands of the mafia and foreigners. The best solution was to leave privatisation to the directors who understood the local conditions (McFaul 1995). Privatisation accelerated but the elites’ state propensities put their imprint on the actual implementation. The state still controls major industries and mixed state–private ownership has been predominating. For light industry the picture is completely different. State ownership has much less support with only 15 per cent in favour, while co-operative ownership has widespread acceptance among almost half the respondents. A quite unexpected finding is that also here many private business leaders express support for a collectivist alternative. The greatest change in attitudes is found among the deputies in the State Duma, where support for the state owner-

1998 2000

1998 2000

1998 2000

1998 2000

1998 2000

1998 2000

1998 2000

State Duma

Fed. Counc.

Fed. admin.

State enterpr.

Priv. busines

Culture

Reg. govt.

85 84

79 79

84 82

88 90

87 92

87 87

87 84

85 85

9 7

11 13

10 12

6 10

7 4

13 10

10 9

9 8

6 9

11 8

6 6

6 0

6 4

0 3

3 7

6 6

16 19

6 8

10 6

12 16

16 18

10 10

22 10

15 15

47 37

47 48

54 44

50 48

49 36

59 60

52 61

48 44

38 44

47 44

36 50

38 36

35 45

31 30

26 29

36 41

State Co-op. Private

State Co-op. Private

Response rate 1998: 95–8%, N=980; 2000: 98–9%, N=605.

1998 2000

Total

Light industry

Heavy industry

Table 5.2 Attitudes to form of ownership in various sectors (%)

10 13

4 2

2 4

8 16

12 18

3 0

10 9

9 11

54 54

57 34

40 50

54 52

54 18

73 67

68 59

55 51

36 34

38 64

58 46

38 32

34 41

23 33

22 32

35 38

State Co-op. Private

Agriculture

17 19

4 16

12 10

21 14

20 25

7 3

17 16

16 17

27 19

49 46

36 30

36 44

36 23

23 33

29 27

30 27

56 62

47 38

52 60

43 42

44 52

70 63

54 57

53 55

State Co-op. Private

Housing

3 3

0 0

2 2

2 0

3 3

0 0

4 0

3 2

13 11

19 8

8 2

14 10

29 15

7 20

20 17

15 12

84 86

81 92

90 96

84 90

68 82

93 80

76 83

82 86

State Co-op. Private

Retail

78 Political Elites and the New Russia

Between the state and the market 79 ship option fell from 22 per cent in 1998 to 10 per cent in 2000. Although a majority support co-operative ownership, a rather large proportion favour private ownership and this share increases over time. In the agricultural sector, co-operative solutions have the most support, with few respondents favouring state ownership. However, the co-operative idea seems to be losing support, while the privatisation alternative has gained greater acceptance over time. But co-operative ownership is still favoured for agriculture. Collective ownership of the land for several generations during the Soviet period combined with considerable social costs experienced by most agricultural workers and managers following privatisation may serve to explain the elite’s preference for this traditional alternative. The housing issue impinges directly upon ordinary people’s lives. While about half of the elite want private ownership of flats, as many as one-third prefer a co-operative solution, and a relatively high proportion want state ownership in this sector. Why collectivist attitudes in this sector are so widespread, even among the business elite, may be explained by the poor supply of housing in Russia.6 Obviously, privatisation did not help much to improve the long tradition of scarcity of housing and flats inherited from the Soviet period. The varied approach of the elite to the issue of housing may reflect both distrust in the market and also the fact that housing needs vary a lot. For some segments of the population private housing is a good alternative, while for others some form of co-operative or state organisation is best. The sector where new private business activity is most visible is the retail sector. Here hardly any respondents favoured state ownership.7 A large majority of all elite groups prefer private ownership of shops, while some deputies in the State Duma and leaders of federal ministries and state enterprises still prefer the co-operative form. Specifying fields of ownership does not split the elite, however, with even private business leaders following the general pattern. Thus the attitudes to ownership in various sectors reveal major consensus among the Russian elite. While private ownership is rejected for heavy industry, it is a universally popular alternative for the retail sector. Interestingly, the same patterns are found for the mass public in a survey of 1996 where a majority of 64 per cent opposed the private ownership of large plants and factories while a majority supported private property in small firms, stores, restaurants and small plots of land.8 Why should this be? One explanation is that these fields of economic activities are very different. Shops and restaurants belong to what Mancur Olson (2000) calls ‘self-enforcing’ or ‘spontaneous’ markets that do not need much state regulation in order to function. Heavy industry and to some extent light industry, by contrast, impinges upon collective concerns and coordination and need encompassing institutions in order to function. The elite obviously think these industries will be better run by the state and cooperatives than if they are exposed to capitalism. Confronting such a major opposition among both elites and the general population to privatisation of

80 Between the state and the market large industries was in fact a considerable challenge to the Russian government. The high speed of privatisation between 1992 and 1994 struck observers (Shleifer and Treisman 2000) and with about 80 per cent privatised enterprises, the size of the Russian non-state economic sector is impressive. However, the mixed ownership predominated in 1997, considering the number of employees and total output (Lane 2000), meaning that the state has a substantial share in the larger industries. As will also be discussed later, the main explanation that ‘privatisation’ has been regarded as successful is that privatisation of industries to directors and workers were blurring the borders between state responsibility and private property. The institutionalisation of mixed ownership and informal state–market relations, as Lane (2000) calls ‘state-led capitalism’, served to level out the antagonism between Kremlin reformers and critical elites and one may argue both sides had their way.

The state and the market as policy instruments In this section the approach is to ask what the role of the state and the market should be in meeting challenges related to policy-making, like stimulating economic growth, providing infrastructure and safeguarding welfare. State involvement in these sectors varies a lot between countries, and most commonly, one finds a sharing of functions between the state and the market. There are three main models, ‘state control’, the ‘mixed economy’ and the ‘liberalist’. In reality all countries have combined solutions but the border between state and market varies considerably dependent on the type of function in question and political traditions. This balance is still to be settled in Russia and in 2000 scholars were, referring to Putin’s state-oriented programme, discussing how far back the pendulum would oscillate from Yeltsin’s liberalist state. One substantial indication of the future equilibrium between state and market in Russia is the elite culture in which the economy has to be embedded. At least their orientations constitute a major context for shaping the state–market balance. Table 5.3 shows the categories catching various degrees of blended state–market solutions. Apparently there is a lack of enthusiasm for pure or predominantly market solutions in all policy sectors and there is remarkable stability in attitudes. Advocates of the market as the only instrument for problem-solving are almost completely absent for all sectors, except for a very few market adherents in the field of food production and industrial production. In the other sectors the elite favour a certain balance between state and market solutions, and alternatively, substantial state domination. Most surprising is the scepticism about the market in the fields of production and economic growth. Only about 15 per cent of the elite prefer the market as the dominant instrument for solving industrial problems, and as few as 8–10 per cent think the market should be the main instrument for stimulating economic development. The problems of industrial production

Between the state and the market 81 Table 5.3 The state and the market as instruments for solving various problems: total elite (% and mean average) State only 1

State mainly 2

50/50

Market only 5

Mean

3

Market mainly 4

Growth problems: Industrial production

1998 2000

13 11

26 25

44 48

15 12

1 3

2.6 2.7

Economic development

1998 2000

9 6

27 27

56 56

8 9

0 1

2.6 2.7

Food production

1998 2000

3 3

8 9

44 44

39 36

5 7

3.4 3.3

Infrastructure problems: Energy 1998 2000

48 49

38 34

12 14

1 2

0 1

1.7 1.7

1998 2000

22 24

36 28

36 39

6 7

0 1

2.3 2.3

1998 2000

44 44

43 44

12 12

1 0

0 0

1.7 1.7

Health care

1998 2000

24 25

51 50

23 24

1 0

0 0

2.0 2.0

Environment protection

1998 2000

31 22

53 54

15 23

0 0

0 0

1.9 2.0

Transport Welfare problems: Pensions

Response rate: 1998: 98–100%, N=980; 2000: 99–100%, N=605. The question was about what should be the role of the state and the market in solving the problems in the various sectors.

and economic growth are best solved, the elite believes, either by sharing responsibility equally between the state and the market or by a dominant state that is able to control major parts of the economy. These attitudes correspond well with the positive attitudes to state ownership in larger industries shown previously. Industrial production and growth problems are still thought to be a task for considerable state involvement. The somewhat more market-oriented attitudes to food production can probably be explained by a long tradition of family-based agricultural production and co-operative farming outside the state sphere. In most societies the state has considerable responsibility for providing the infrastructure, e.g. in energy and transport. In Russia the elite is very positively disposed towards major state control in the energy sector. In transport a relatively high proportion (36–9 per cent) favour a mixed solution, although a majority is pro-state. Evidently, the elite are very sceptical about letting private interests dominate in such public domains.

82 Between the state and the market In sectors providing welfare, like pensions, health care and environmental protection, the critical attitude to the market is clearly spelled out. Although pensions are very low and sometimes were not even paid at all during the 1990s, the elite think this is a state responsibility, though one that can be combined with private initiative. In the health sector the tendency towards the market is more widespread but again only in tandem with substantial state involvement. Much of the same profile is found for state responsibility for environmental protection. The elites evidently do not believe in the market as an all-powerful instrument for solving problems. Whether these attitudes prevailed throughout the 1990s or whether they constitute a later reaction to chaotic capitalism is difficult to say. In either case they reveal a political culture in which a large majority entrusts the state with major social responsibility, such as providing welfare services and an infrastructure but also for instigating production and stimulating economic growth. These patterns may be interpreted as a desire to bring the state back into the economy. However, they probably stem from pragmatic considerations and wishes for a mixed type of economy, since there is far from a majority among the elite for a total state solution. One may conclude that, as in other countries, Russia is heading for mixed state-market solutions, but the balances vary a lot between the sectors. In welfare the elite wants a solution that is not so different from the ‘Scandinavian model’ with considerable state domination and is far from the liberalist solution. Establishing an infrastructure – i.e. providing energy and transport – is considered to be primarily the responsibility of the state but with use of the market where this seems practical, especially in transport. Such policy orientations are also widely held in Western Europe. Neither in sectors related to economic growth does there exist substantial liberalism. Instead ‘state-led capitalism’ seems to be a viable solution for the elite. A parallel to the Russian elite attitudes may be the French economic system of financial integration between the state and large corporations propped up by elite consensus between state and business. According to Lane (2000) this trend was fairly institutionalised in Russia at the end of the 1990s and distinguished by considerable state influence on the financing of private enterprises and the appointment of public officials to boards of private companies benefiting from government financial support. The elite’s attitudes towards opting for market solutions, not independent of the state but as an integral part of it, enable a sort of capitalism that is ‘state-led’.

Elite orientations and regional performance The eighty-nine federal units, spread over an extremely large and geographically varied territory, have gained a substantial degree of autonomy, and some observers have therefore predicted an accelerated fragmentation of the Russian Federation. Direct election of the governors has certainly

Between the state and the market 83 sustained regional autonomy, but at the same time the Russian Federation has become consolidated and most governors have entered into rather stable bargaining relationships with the political centre in Moscow (Solnick 1998). The predominant issue in the regions is now more how to instigate economic growth than how to obtain further autonomy from Moscow. One main assumption among the central reformers is that when the basic orientations of the regional decision-makers change, the economy will improve. The question here is to what extent reforms in the regions may be related to the regional elite’s economic orientation. Do we find the economic liberalists in the reform regions? First, however, this issue is discussed in a broader context, considering what other factors should be taken into consideration. Although the regions have remained loyal to the federation, their varying bargaining power has meant that some regions have been much more successful with regard to distributional and jurisdictional issues than others. The regional authorities have also inherited very different legacies of natural resources and industrial structures from the previous regime. At the same time, decentralisation of power has given regional government unprecedented possibilities for individualism and market solutions. Specific elite interests may be identified where policy networks and political clans are strong. While central policy networks are often pragmatic and unstable, in some regions ‘clan-politics’, based on family ties, patronage and traditions, have become quite widespread (McAuley 1997). An important question is how the regional authorities have made use of the newly won opportunity structures. Kirkow (1994) asks whether the Russian regions have the potential for autonomous development or whether economic change must necessarily be a top-down process controlled from Moscow. Much depends on the outcome of struggles within the regional elites. The fate of national economic reform policies tends to be decided by whether regional leaders have an interest in exercising ownership rights through the market or in controlling enterprises via traditional state instruments. In a case study of the remote region Altai Krai, Kirkow finds only limited potential for regional economic reforms and recommends a more authoritarian, top-down approach, especially in privatisation and land reform. The great variation among the Russian regions should lead one to expect differences in attitudes to reform among the regional leadership. When they investigated the links between the economic structure inherited from the past and adaptation to the new circumstances of seventy-seven main administrative regions using data from 1993, Sutherland and Hanson (1996) found only a moderate degree of linkage during the early years of reform. More promising for understanding regional economic reforms is the degree of urbanisation, the availability of technical expertise and the extent of openness to foreign markets and investment. In Samara Oblast, for example, favourable economic development may be directly related to such factors (Hanson 1997c).

84 Between the state and the market When a political and economic regime breaks down, the processes of deinstitutionalisation and building new institutions go hand-in-hand, and the scope for elite manoeuvring increases enormously. In another article Hanson (1997b) asks to what extent the differences in economic development in the regions can be explained by the actions of the regional elites and to what extent by more or less favourable structural conditions. The point is that structural conditions and demands from the population have to be mediated by elites to have an effect. Socio-economic conditions influence policies, particularly when institutions are weak, as to the extent to which elites have an interest in changing the economic environment. McAuley’s (1997) argument that the fate of Russian national reform programmes depends primarily on the interests of the local and regional elites seems plausible. Comparing the Russian regions, Hanson maintains, first, that there is no significant positive correlation between reform efforts and various privatisation measures (in housing, farming, and small- and large-scale enterprises). He argues that the attitudes to reform of regional leaders do not correlate with the effectiveness of privatisation. In fact there may even be an opposite correlation. Regional elites may have a propensity to block privatisation in prosperous regions, especially in medium- and large-scale enterprises, in order to ensure their control over such assets. Hanson (1997a) mentions as an example Moscow Mayor Aleksandr Luzhkov’s campaign to avoid the implementation of the federal privatisation plan. If the closed network economy is more dominant in Moscow and the more reformoriented one more dominant in St Petersburg, one would expect the attitudes of the Moscow elites to be more conservative than those of their St Petersburg counterparts. They will also enjoy more legitimacy, since a conservative strategy will prevent large-scale unemployment and social misery and therefore increase popular support for the local leadership. The Moscow situation appears to be a paradox: Mayor Luzhkov rejected much of the privatisation programme that Yeltsin’s young reform team proposed. One may thus be tempted to conclude that the Moscow leadership is much the same as before the change of regime. However, Moscow’s rejection of large-scale privatisation probably reflects not so much a continuing traditional collectivist orientation among its leadership but rather the emergence of a new network economy where public and private leaders are inter-connected and have a common interest in controlling the city’s economy. By warding off the harsh consequences for ordinary people of large-scale privatisation, the city’s leadership actually managed to maintain the stable political situation that makes the city attractive for investment and business activity. Hanson discusses the reforms in terms of a struggle between a traditional and a market-oriented leadership. All other factors being equal, regional leaders with a reputation as reformers did only slightly better with regard to economic performance, according to Bradshaw and Hanson (1994), than their more conservative counterparts. One problem is that the researchers

Between the state and the market 85 had to depend on media coverage for assessing whether leaders were reformers or not. The argument easily becomes circular, since the media tend to label leaders as reformers precisely because they have implemented successful privatisation programmes. Another problem is the crude categorisation into only two groups: ‘reformers’ and ‘traditionalists’. Further, measuring ‘effects’ is not easy since which indicators are most relevant and in what time perspective? As Hanson remarks: ‘Whether leaders make a difference is a tricky question’ (undated: 5). His main conclusion is that both the performance of regional leaders and the impact of federal income equalisation policies between regions should be regarded with some caution. The economic legacy of the past combined with a region’s location and degree of urbanisation may, according to him, actually be more important than the attitudes and policy decisions of the elite. Van Selm (1998) compares the economic situations of the Russian regions and illustrates a complex link between reform policies and economic performance. Using several indicators for variations in policies, structural conditions and economic performance, he concludes that liberal, pro-reform regions hardly perform better, if at all, than conservative, anti-reform regions. Actually this is not surprising, since anti-reform policies aim to preserve existing employment structures and therefore stimulate traditional production. According to mainstream economic theory, in a longer-term perspective reform regions will benefit from having endured the hardship of economic ‘shock therapy’. However, van Selm’s main conclusion is that structural differences account for some of the variation in regional performance, while policy does not. Like Hanson, van Selm agrees that beneficial industrial structures seem to be more important than liberal reform leaders. How does this research fit in with my query of how attitudes to the state and market among the regional elite is related to economic performance? Is it the case that elites in stagnating peripheral and ethnic regions tend to favour mainly collective and state solutions, while elites in prosperous central and reform regions support individualism and market strategies? The full results are reported in the Appendix, Table A5.2. As one may have expected, the mean scores of the five main region types show that a more individualist and market-oriented leadership is found in the ‘reform regions’. These respondents score particularly high on competitive values. On the other side of the continuum elites in regions classified as stagnating are clearly more traditional in their orientations. The variation among the leaders of the central regions is not large, but there are some distinct tendencies. Since the Moscow City leadership did not go far in implementing privatisation programmes and thereby retained control over economic activities, the Moscow elite is more traditional in its ideological orientation than the elites of the other central regions. The average scores for the five statements confirm that the Moscow leaders are more conservative than the leaders of St Petersburg, who turn out to be the

86 Between the state and the market most liberal among the central regions. The Moscow City leadership’s strategy of preserving economic control seems to be rooted not only in a pragmatically-based power struggle with the Kremlin but in some real ideological differences. The leaders of the ethnic regions also tend to be rather traditional in their economic outlook, perhaps with the exception of the republic of Sakha. On the periphery Arkhangelsk Oblast is the most conservative, while the leaders in Primorye Krai are somewhat more oriented towards individualistic solutions.9 As one might have expected, the elites tend to be the most conservative in the stagnation regions. There is a correlation between a lack of reforms and anti-market attitudes among the elites in all these places, in particular in the republic of Udmurtiya. The leadership of the so-called reform regions shows the largest variation. The elite in Nizhniy Novgorod Oblast tends to be the most conservative in this group, while the leaders in Saratov Oblast clearly have the most individualistic views. One may conclude that since the national and regional elites hold much the same values, together they constitute a formidable obstacle to extensive topdown liberal economic reforms. However, there are nuances in this general pattern of sceptisicm. The stagnation regions with the most traditional and state-oriented economic policies also have the most conservative leadership, while in reform regions we find the most market-oriented leaders. At least there is some consistency between elite orientations and policies. Another question is the actual outcomes and concrete results, but since they will be manifest only after several years, they are extremely difficult to predict. However, the reform-propensities should not be exaggerated. Although the attitudes of the leaders of the reform regions together with those of private business leaders on the central level come closest to prop up a liberal reform programme, they are far from enthusiastic adherents of the market.

From pessimism to optimism The economic ‘shock therapy’ had an earthquake-like impact on basic industrial production and living conditions throughout the country. Nevertheless, President Yeltsin and his supporters repeatedly underlined that after the initial years of economic hardship, the situation would improve and the ‘valley of tears’ would be short-lived. The President and his team of freemarketers were committed to believing in positive economic development, despite most evidence to the contrary. More interesting than the ideological pledges of the central leaders, however, is whether the attitudes of the President’s team were paralleled among the elites and whether these attitudes changed over time. Comparisons can be made between the elite’s attitudes in the summer of 1998, before the financial crash in the early autumn of that year, and two years later, when the new President started a programme to mitigate raw capitalism. If the leaders’ general mood will influence prospective policy moves then the

Between the state and the market 87 ‘psychology of trust in the future’ may be read as an indicator of future possibilities for economic development. Because national and regional elites are not only strategic actors in decision-making and implementation but also leave their mark on the political-economic climate, the elite’s orientations may be seen as a push factor that may influence economic development in positive or negative ways. Did the optimism of Yeltsin’s administration about the blessings of the market have any support among the elites? And, how did the change of President influence the elites beliefs in the future? Apparently, only a smaller part of the elites thought the future would improve under Yeltsin’s rule and about a half thought the economy would grow worse. As the table shows, after Putin came into office the attitudes changed dramatically in favour of optimism. During the Yeltsin period, the most pessimistic group were the members of the State Duma, with 70 per cent. Symptomatically, in the private business sector and among state enterprise leaders about half were pessimists. One would expect that institutions closer to the President, such as leaders in the ministries and the Federation Council, would have more faith in economic improvements than the others. The data show some tendency in this direction but it is rather small. Yeltsin’s market reforms suffered from a severe lack of credibility among all elite groups.

Table 5.4 Perceptions of future economic development (% and mean average)

Total State Duma Fed. Council Fed. admin. State enterpr. Priv. business Culture Reg. govm.

1998 2000 1998 2000 1998 2000 1998 2000 1998 2000 1998 2000 1998 2000 1998 2000

Optimists

No change

Pessimists

Mean

27 59 19 64 34 62 30 52 31 61 27 67 22 62 27 57

26 27 10 20 33 14 31 29 16 25 27 29 22 28 29 29

47 14 70 15 33 24 39 19 53 14 46 4 55 11 45 13

3.4 2.9 3.8 3.1 3.0 2.9 3.2 2.9 3.5 3.3 3.5 2.6 3.6 2.8 3.4 2.9

Response rate 1998: 98%, N=980; 2000: 94%, N=605. The respondents were asked to say how, in their opinion, the economic situation would develop in Russia over the next few years on a 1 to 5 scale: 1 (‘significantly improve’), 2 (‘improve somewhat’), 3 (‘no change’), 4 (‘become worse’), 5 (‘become significantly worse’). In the table the categories 1 and 2 are merged as ‘optimists’ and 4 and 5 are represented as ‘pessimists’.

88 Between the state and the market The change of President and gradual improvements of the economy had a direct and profound impact on the elite’s attitudes to the economic prospects. The pessimistic mood marking the end of the Yeltsin period turned into considerable enthusiasm after 2000, with an increase in the percentage of optimists from 27 per cent to 59 per cent for the total elite. Comparing the means for the elite groups reveals that among private business leaders the change in attitudes was quite sensational: having been among the most pessimistic in 1998 they became the most optimistic in 2000, when as many as 67 per cent expressed confidence that the economy would improve. Interestingly, the Duma representatives come in second place with regard to faith in future economic growth, while the cultural elite is the third most optimistic group. What is more, the regional elite increased their trust under Putin, even though they lost some of their power just before the interviews were conducted in the spring and summer of 2000. The very substantial increase in optimism among the various elite groups illustrate that Putin’s re-orientation of economic policy was supported by major segments of the elite. Putin did not push his programme on reluctant national and regional leaders; on the contrary, Putin’s regime represented the necessary political stability that met the expectations among a major part of the elite.

Conclusion: from economic chaos to state-led capitalism The major architect of the economic reforms, Yegor Gaidar, who went from being a convinced communist to becoming the leader of the first radical economic reforms in the early 1990s, thought the main issue was to change the Russian mentality, replacing one ideology with another. When Marxism failed to provide the answers, he says in an interview, he turned to Friedrich Hayek who ‘gave a very clear and consistent picture of the world, as impressive as Marx in his way’ (quoted from Gustafson 1999: 20). For some time the young reformers lived in the euphoric world of liberal economic models and had a decisive influence on the policies of the Russian government. These neo-institutionalists envisaged a ‘promised land’ that would emerge if the government were strong enough to reduce the state apparatus and enforce laws regulating business and societal activities. However, in March 1999 Yeltsin was forced to admit that the reforms had produced an unfortunate mixture of the worst aspects of both central planning and capitalism, a ‘bastard of the two systems’ was crumbling Russia.10 What had happened during these years? The answer is that the policy leadership had simply tried to implement an unprecedented blueprint reform without taking the political and cultural context into due consideration. Once again in Russian history the strategic lower level elites had obstructed central reforms. Institutions may change overnight, mentalities may only change over decades or generations. After the economic crash of 1998 public rhetoric became even more negative towards the market and privatisation. Some of the previously radical

Between the state and the market 89 reformers quickly began to speak of the necessity for state regulation. The findings here show, however, that a return to the previous state-planned economy is not likely. If political culture matters for economic reforms, the fascinating question is what type of economic system is likely to emerge from the elite’s seemingly inconsistent attitudinal patterns? The main conclusion from this is that a decade after the reforms started, collectivist conventions are still very much alive and well represented among the Russian elite and only a few people have become enthusiastic adherents of the market in traditional state sectors. Nevertheless, the elite wholeheartedly supports the individualistic value of ‘competition’ and also to a great extent accepts economic stratification among social groups. The data disclose a complex but also a rather clear picture of an elite who want an economic system that is not easy to place on the conventional state–market axis. Yeltsin’s energetic reforms and frequent firing of government leaders obviously did not alter the elite’s basic mentality in a fundamental way. However, irrespective of collective propensities among the elite, the previous centrally planned economy will not return. In the following I shall discuss what type of economic system is emerging in Russia by posing three sub-themes. First, what type of system developed during the chaotic 1990s? Second, what are the contours of the emerging economic system after Putin’s re-centralisation of 2000? And third, what may explain these patterns? The ‘bastard’ economy of the 1990s Shevtsova (1998) maintains that Russia has become a ‘hybrid regime’ in both a political and economic sense. Accordingly ‘privatisation was often not about purchasing an enterprise’s shares; it was about gaining access to an enterprise’s management’ (p. 73). She indicates that about 80 per cent of privatised firms are owned by insiders, mainly directors, and only 11 per cent are majority-owned by outside investors. Financial and industrial groups primarily wanted to expand and control property and created a ‘peculiar model of a market system based on the use of state resources’ (ibid. p. 73). Treisman (1995) found in his study of subsidies and low-interest credits for Russian business enterprises that personal relations between business and politics seemed to be the main reason for preferential treatment. Connections are significant even when ownership and the importance of production are taken into account and have resulted in markets appearing to be ‘not replacing but fusing with systems of personalised political redistribution’ (Treisman 1995: 967). The extraordinarily swift privatisation of state property resulted in a tremendous transfer of property rights to what Hanson (1997b) calls ‘sitting tenants’ – i.e. managers of large-scale and medium-scale enterprises from the former regime who, often in co-operation with the workers, attained control over a majority of the equities. Some have portrayed this economic ‘bastard’ as the result of a few persons enriching themselves by exploiting collective property. The terms ‘rent-

90 Between the state and the market seekers’ and ‘financial oligarchs’ have been used to describe the new powerful actors who were the product of the economic reform process (Aaslund and Dmitriev 1999; Andresen 1999). A limited group of directors of financial and industrial enterprises seems to have been very influential in political processes. Few major decisions could be taken without consulting these people, since the well-organised economic elite had captured most channels of influence that penetrated the Russian state (McFaul 1998). The new business elites became more interested in controlling property and safeguarding their own power bases and monopolistic economic interests than in stimulating further economic reforms. The web of personal ties and relations to conservative state structures inhibited real market reforms and economic progress. The consequence of ‘half-way reforms’ has been ownership forms in the grey zone between the state and the market capable of flexible adaptation to extremely turbulent environments (Stark 1997). The concurrent transformation of property and politics in post-communist societies has created alternatives to market and hierarchy (Stark and Bruszt 1998) that we are only just beginning to comprehend and identify. The basic agents in this new form of co-ordination are active elites who bring collective orientations into networks and bargaining agreements with the state, thereby making chaotic environments less uncertain. Towards state-led capitalism It is tempting to conclude that the new elites are espousing a form of consensual ‘social market’ economy or a ‘Scandinavian model’. However, the rather extreme individualism of the elite and acceptance of income differences would suggest otherwise. Moreover, the specifically Russian economic and institutional context, with its lack of economic prosperity and poor respect for law and order, makes social democracy an implausible outcome (Shlapentokh 1999). It is more likely that what we are now seeing is the outline of a peculiar post-communist type of political-economic system – neither socialist, and nor capitalist nor social democratic – in which decisionmaking is determined by networks and inter-elite bargaining under the umbrella of legitimate strong leadership. One problem is how to conceptualise and identify this new sort of economic system, which encompasses competitive elites who believe in collective institutions and who are unified by beliefs in strong leadership. Some have suggested that this constitutes a kind of communitarianism, combining liberal ideas with collective responsibility, as a solution to the contradiction between individualism and collectivism in post-communist societies. But is the Russian population ready to accept communitarianism ‘as a new state ideology’, as Labikovskaya concluded (1999)? Mass surveys in Russia and Eastern Europe have revealed widespread collective attitudes, but these are generally combined with a wish for hierarchical subordination, not

Between the state and the market 91 liberal ideas (Koryshkin 1999). The liberal and communicative aspects essential to the communitarian model are generally weak among postcommunist populations. The data draw a picture of an elite who pay considerable attention to collective responsibility and support a rather strong central power while at the same time competing for influence and the right to economic privileges. David Lane (2000) has termed such a system ‘state-led capitalism’, in which self-interested and rough elite competition is combined with self-restrictions stemming from loyalty to a strong President and shared concern for collective control of strategic segments of the state. A combination of being attracted to competition and support for comprehensive collective institutions points toward individualist elites united by a paternalistic mentality, in which the success of economic reforms hinges not on more effective state intervention but on acceptance by the elites. ‘Muddling through’ the new economic system There are two main explanations for why economic reforms did not live up to expectations, one institutional, the other cultural. The neo-institutionalists argue that implementation was not effective enough. Top-down implementation of radical market reforms in an environment of inherited, non-profitable industrial enterprises, a weak state and social institutions and a lack of enforcement instruments might have been successful if the national and regional elites had been receptive and willing to co-operate in bringing about radical economic change. The ‘will to action’ of the executive is not only crucial for the success of a certain policy but also feeds back into acceptance of institutions and enforcement mechanisms. A main message from our data is that the attitudes of the Russian elite are quite conducive to changes away from central planning but not to the sort of economy propagated by Gaidar, the head of Yeltsin’s reform team. The belief of Gaidar and his followers that new economic institutions would instil attitudes in the elite beneficial to competitive markets and economic growth did not come true, simply because the required liberal values could not be internalised by command. The elites’ preference for flexible state interference and their criticism of the market, combined with a rather excessive individualism, seems to point partly to cultural ‘path dependent’ mental models inherited from the collective past and partly to the unique situation after the change of regime which encouraged individualistic elite behaviour. Obviously, the elite wants to make use of the opportunities created by the market experiment but they also want an active state. Western-type capitalism has clearly failed. If we now return to the question of what sort of capitalism is emerging in Russia, the literature gives few reliable clues. However, if ‘path dependency’ is crucial for change, one implication is that ‘grand change’ models forwarded by the Yeltsin reformteam must be replaced by incremental methods in accord with the national

92 Between the state and the market and regional elite’s practices determined by traditional norms, personal strategies and compromises. Such incremental behaviour, the effects of which will still only be vaguely discernible, will always be less attractive for impatient reformers and international partners than the economic miracle promised by rational ‘blue-prints’. The puzzle of the emerging Russian economy is gradually falling into place as elites continue muddling through in extremely difficult decision-making environments. Hedlund (1999) attributes the Russian market failure to the ‘heavy burden of history’. A specifically Russian ‘path dependency’, where basic norms are difficult to change, which creates attitudes that stand in the way of legitimate formal rules and the efficient implementation of reforms and which sustains a type of ‘predatory capitalism’. In the longer term the worrying perspective is, Hedlund (2001) maintains, that path-dependent behaviour may be reinforced by the ‘capture of the Russian state by roving bandits’ (p. 234). Given the widespread sense of collective responsibility among the Russian elite revealed in our elite survey, this scenario would appear to be overly pessimistic. Rather, the impetus of national and regional elites imply as Przeworski (1991: 179) argues that reforms neither ‘succeed’ nor ‘fail’ but ‘proceed in spurts: advancing, stumbling, retreating, and advancing again’. Przeworski makes the point that elites will learn from past mistakes to design better programmes but also from past failures that reforms will fall short again. The Kremlin leaders’ muddling along after 2000 may as Gustafson (1999) argues turn out to be Russia’s formula for progress. Capitalism Russian style may not win general support among ordinary Russians but seems to be the system best suited for the emerging ‘middle class’, and even more important, I argue, has a political basis since it fits in with the beliefs of Russian elites. Referring to studies of debates among elected representatives in the Congress of People’s Deputies in 1989, Fleron (1998) argues that the reflection of traditional Russian culture found in the political elite’s discourse is just a continuation of the idea of sobornost. It is a conception of a mythical, collectivist mutual responsibility found in the self-governed Russian village commune, the mir. Such attitudes, opinion polls demonstrate, are very widespread on the mass level. While Russian elite culture is characterised by considerable collective norms, it also embraces patterns of extreme individualistic behaviour and lack of trusting other elites. Harry Eckstein and his associates, in their study of political culture in Russia (1998), maintain that political stability will follow when elite attitudes and political institutions are congruent with the prevailing authority patterns (be they democratic or authoritarian) in society. Accordingly, Putin’s more state-oriented policies, supported by national and regional elites will stabilise the situation since it is more in harmony with traditional values and authority patterns of the mass public. At the very least, the myth of sobornost has been vitalised.

Between the state and the market 93 The transition to ‘capitalism Russian-style’ is a pragmatic project in which elite attitudes are being shaped not only by the legacy of the past but also by new incentives and opportunity structures created by the failure of the new institutions, such as market monopolies. North (1990) writes that institutions providing disincentives for a market economy will create groups with an interest in the existing constraints, and participants will rationalise this structure and reinforce it. During the Soviet period the collective state created disincentives for co-ordination, and ‘distributional coalitions’ among the economic managers and political elites produced large-scale inefficiency (Olson 1982). After the demise of communism the conditions for establishing elite coalitions and collusive networks became very fruitful. Controlling valuable state property became more important than investing in new activities which created ‘winners who took all’ and halted further market reforms as Hellman (1998) argues. A more optimistic view is that elite coalitions did not necessarily halt reforms; they could also be used as a resource. Shleifer and Treisman (2000) argue that while ‘culture’ was a restraint, it did not make reforms impossible. The ability of the central leadership to co-opt or include the strategic national and regional elites by giving them some influence over decisionmaking was crucial to the successful implementation of some reforms, e.g. macro-economic stabilisation. On the other hand, privatisation, most would agree, was only halfway successful in sustaining a viable market and had major negative side-effects. Most agree that the tax reforms were also a major failure. Shleifer and Treisman make a case that these reforms had the potential to succeed but they failed owing to a lack of effective co-option of the elites by the Kremlin leaders. The rhetorical solutions – ‘more market’ as recommended by Westernisers or ‘more hierarchy’ as proposed by traditionalists – ignore the unparalleled ‘third way’ that seems to be emerging in Russia and is reflected in the elite’s orientations. Anatoly Chubais, a main proponent of the market experiment, is optimistic about this emerging ‘mixed economy’. Complaining about Russian businessmen during ‘raw capitalism’, he said, ‘they steal absolutely everything and it is impossible to stop them. But let them steal and take their property. They will then become owners and decent administrators of this property’.11 To what extent the new capitalists will become well-mannered property owners remains to be seen. As shown in Chapter 7, how privatisation works is a highly controversial issue among the elites. While Yeltsin’s privatisation programme fuelled the traditional dichotomy between stateownership and liberal values, Putin’s state-led capitalism provokes both leftwingers and the liberals. One telling example is the bill proposed to the State Duma in October 2002 aimed to deregulate the electricity sector where ‘the bill would liberalize the energy industry while, at the same time, allowing the government to retain control over the sector’.12 The bill was passed under sharp protests from the communists and the liberals. The law according to

94 Between the state and the market the liberal party leader of Yabloko, Grigorii Yavlinski, would lead to ‘the creation of electricity oligarchs in the regions’ and establish a ‘basis for political-corporate authoritarianism’ in Russia.13 As robbery capitalism thrived on the remnants of state property, a new form of ‘network economy’ seemed to fuse with old structures, yielding new forms of elite-state dynamics. In this relationship individualism and ‘raw capitalism’ go hand-in-hand with paternalistic ideas of state regulation and social responsibility. The ensuing restriction on raw capitalism is more likely to come from paternalist intervention than from emerging civic values. With the broad support of the elites for Putin’s partial recentralisation of the state the period of ‘roving bandits’ and ‘predatory capitalism’ appears to be on the decline. Although criticised by liberals, it seems that state-led capitalism will be stable because it is upheld by a compromise between the Kremlin leaders and a post-communist elite culture deeply entrenched in traditional Russian values.

Chapter Title

6

95

Integration in a decentralised federation

If we look at the situation two years ago, I think many will agree with me that centrifugal forces had gained such a momentum that they were threatening the destruction of the state itself. Vladimir Putin1 As experiences elsewhere show, for a federation as a particular organisational form of democratic rule to work successfully, it not only requires appropriate institutional structures, procedures and conventions, but must also be matched by a set of socially held beliefs that value both unity and respect for difference. Graham Smith2

Introduction3 After the break-up of the Soviet Union many expected the process of fragmentation to be unstoppable, ultimately resulting in the secession of several other regions from the newly established Russian Federation. However, although decentralisation went far during the Yeltsin period, the federation did not fall apart. The intriguing question is why the weakening of the state centre and the far-reaching decentralisation of power did not lead to more federal disintegration. I argue that the Kremlin leaders and national and regional elites have a common interest in keeping the federation together as long as the federal institutions allow the regions a substantial degree of autonomy. The purpose therefore is to analyse how decentralisationist and integrationist attitudes may constitute the basis of the Russian federation. The large amount of regional autonomy provided for in the liberal Constitution of 1993 clearly reflects a decentralised type of federation. It was in the interests of most regional elites to attain sufficient autonomy from the centre to gain more control over their own natural resources and internal matters while continuing to benefit from collective goods and economic transfers, receive a satisfactory share of tax revenue and preserve the career opportunities provided by the federation. Because of the disappointments of

96 Integration in a decentralised federation the market experiment and the rapidly deteriorating economy, the momentum of decentralised rule created both new local responsibilities for providing public services and dependency on central transfers. In regions where the titular nationality formed a major part of the population ethnic autonomy became more an instrument for negotiating better economic deals with the centre than a serious splintering force. The elite’s attitudes to these issues of regional autonomy, economic redistribution and ethnic relations are germane to the more fundamental question of what keeps the Russian Federation together. Centralised and direct interference from Moscow disappeared with the demise of the totalitarian system. Under Yeltsin’s period governing instruments were severely weakened and federal cohesion was determined by the extent to which executive power allowed national and regional elites sufficient autonomy to take responsibility for solving their own problems. Decentralisation of power also created numerous problems of policy co-ordination and federal fragmentation of which Chechnya is the most serious example, which incited Vladimir Putin’s more control-oriented regime. After first reviewing some main contributions from the discourse on federalism in general this chapter analyses the elite’s attitudes to some fundamental challenges inherent to Russian federalism. The first topic is power-sharing between levels of government; second, allocation of economic responsibilities; and third, the use of agreements to organise central-regional relations. The elite’s attitudes on these issues, as Preston King (1973) argues, constitute the federal solution. Type of ‘federal solution’ should be understood not only as choice of formal institution but probably more importantly how federalism is working in terms of the elite’s political priorities. Not only are the formal institutions the result of elite bargaining, but the actual content and priorites which is filling the institutions, varying over time, is a process driven by elite interests and bargaining.

The federal bargain There exist numerous definitions of ‘federalism’ and ‘federation’. ‘Federalism’ refers to social and territorial pluralism that produces certain tensions between diversity and co-ordination. A ‘federation’ is the institutional answer to such problems where the constitution guarantees a certain regional autonomy (Burgess 1991). A federation may be regarded as a negotiated institutional outcome whose basic purpose is to reconcile unity and pluralism by establishing balances between centrifugal and centripetal forces. However, since such issues vary, federations find different institutional solutions. As Preston King (1973) argues, the type of federation is best understood in terms of the problems to which it constitutes the answer. In order to grasp the political relevance of such problems, Burgess (1991) maintains that one has to acknowledge that federal solutions reflect values and commitments and are closely related to political beliefs among the elite.

Integration in a decentralised federation 97 Types of federations One may distinguish between federalism as a political ideology and federalism as an institutional arrangement (Smith 1995). Advocates of federalism as an ideology hold that decentralisation within a framework of unity is most conducive to liberal values, civic rights, democracy and the fair distribution of resources. Federalism combines authority and freedom. Another justification for federalism is the desire to preserve stability and peace inside and between territorial units. Federalism may be explicitly construed as an instrument for pre-empting conflicts emerging from ethnicity, language or religion. As an institutional construction federalism may be seen as a political form in which diversity is the main principle. Even unitary states may be decentralised. What distinguishes federalism from other state forms is decentralisation based on a constitution guaranteeing autonomous territories basic self-rule as well as electoral influence on the central level. More fundamentally, the central government has no right to interfere in the jurisdiction of a local territory on certain defined issues. In this sense a federation consists of regional states with a large amount of autonomy. In a comparative and historical perspective federalism obviously varies a lot with regard to its ideological underpinnings and institutional arrangements. Nevertheless, one principle common to all federal states is that neither the central nor the regional government should be subordinate to the other legally or politically (Watts 1992). As Watts argues, the principle of ‘separation of powers’ varies between federal states. Two main forms of federalism may be distinguished: the presidential federative system (as in the USA), where the executive and the legislature are clearly separated; and ‘parliamentary federations’ (like Canada), in which the cabinet is chosen from an elected assembly and plays a more prominent role. The Russian form of federation is somewhere between the two. It is characterised by a strong presidency that is to some extent dependent on the parliament and probably comes closest to the US type. The Russian Constitution adopted in 1993 describes the Russian state as a federation consisting of eighty-nine federal subjects.4 The Constitution prescribes clearly the allocation of jurisdiction between the levels of government but also lists areas of joint competence amenable to negotiation5. The asymmetrical nature of the Russian Federation, in which ethno-territorial regions enjoy a favourable status under the Constitution, has been identified as a source of potential instability by some observers. However, apart from Chechnya there have been no other serious attempts to break out of the Federation. An asymmetric federation may serve quite different functions under centralised and decentralised governance. During the previous centralised command system the asymmetric structure was conducive to ethnic protests and secessionist movements, starting with the three Baltic republics in the late 1980s.

98 Integration in a decentralised federation The present decentralised structure may be an incentive to stay inside the federation because of the possibilities it offers for mutually favourable deals and divisions of responsibilities between the central and regional elites. Stephen Hanson (1999) maintains that while the centralist Leninist ideology triggered the break-up of the Soviet Union, the absence of a centralist ideology keeps the present Russian Federation together. Ethnic and economic factors must be seen in this broader context of a decentralised structure. But the context may change according to the prevailing ideology of the centre: decentralism may turn into centralism and will influence how the elite define the ethnic and economic situation. Or, as formulated by Alexseev (1999: 5): ‘The key question is how regional elites in post-Soviet Russia interpret regional ethnopolitical identity and economic incentives’ and make use of these factors either for separatist purposes or in bargaining strategies with Moscow. Incentives: autonomy and redistribution The formation of regional identity may be based on ethnic cleavages but also on tensions between the centre and the periphery stemming from economic redistribution issues. Dependency on transfers from the central government may encourage integrative forces, since connections must be built with the centre in order to compete with other regions for a share of resources. The distribution of subsidies and the advantages brought by collective goods and shared costs are the substance that binds a decentralised federation together. The stability of the federation largely depends on how the distribution of resources in practice measures up to the expectations of all federal elites. The Kremlin leadership, national and regional elites do not necessarily have opposing interests in this distributional haggling. In fact, this is an empirical question the answer to which cannot be deduced from theoretical assumptions about regional identity formation. Going beyond a formal constitutional approach, Nathan (1993) argues that the distributional substance determines the federation’s approach to reconciling unity and diversity. Power relations and levels of trust between central and regional levels of government, the fiscal role of the regions and the central authorities in levying taxes, and the sharing of responsibility for public services form the flesh on the constitutional skeleton. Not only the type of federation but also the policies of the centre influence elite strategies on the regional level. Donald Horowitz (1992), writing during the break-up of the Soviet Union, argues that the federalism and regional autonomy inherited from the Soviet period may provide the potential for renegotiating a federal structure without severe conflicts. Instead of regional attributes, like the economic situation and ethnic composition, it may be the policies of the central state that shape the preferences of the republican elites. During the 1990s the regions obtained a high level of autonomy without breaking their bonds with the federal government.6 Instead of speculating

Integration in a decentralised federation 99 about whether this structure will lead to regional secession one should ask what keeps such a heterogeneous and decentralised federation together. Here it is argued that collective services and redistribution in a decentralised context are a pivotal centripetal force. They make the federation legitimate by generating acceptable divisions of responsibility for policy between the centre and the regions, thereby also keeping regional dissatisfaction in check. The elite’s attitudes to the decentralisation of power, to the distribution of economic responsibilities between the centre and the regions and to ethnic conflicts provide clues as to what holds the new federation together. Boris Yeltsin’s various deals with the regional governors between 1994 and 1998 confirm that decentralisation had gone far. The process of reshaping the federation has always been and still is characterised by unexpected changes of direction. One example is President Vladimir Putin’s attempts to reduce the power of the governors.7 Hanson (1999) argues that recentralisation of the federation may lead to more regional autonomy and ethnic rebellion against the centre. Accordingly, the legitimacy based on decentralisation and on support from the governors will be replaced by more tension between the regions and the centre following Putin’s strengthening of vertical rule and increasing control over the regions. Still, the pendulum will not swing back to Soviet-style centralisation. A pluralist elite comprising of both the centre and the regions has simply become too strong a force. The president needs its support, and the elite see too many advantages in decentralised rule. Sakwa (2002) argues that Putin seeks to reverse the erosion of constitutional principles, so-called ‘segmented regionalism’ that flourished under Yeltsin but Putin is torn between ‘compacted’ and more pluralistic forms of statism. Several observers have described the problems of the Russian Federation at the outset of the new millennium as less a question of ethnic separatism than a bargaining game between regional and national elites competing for political and distributional privileges.8 Furthermore, identity is not only about ethnic bonds like culture and language. Mobilisation against the centre may also be stimulated by a distinct regional identity experienced by a predominantly Russian population or by a mixed population in a given geographic area. Regional assertiveness vis-à-vis the centre may stem from a variety of local, symbolic and material factors. Two possible causes of resentment that cut across ethnic cleavages are ‘relative deprivation’,9 whereby the cost-benefit flows between the centre and the region are perceived by the regional elite as disadvantageous, and lack of control over local natural resources. The stability of the Russian Federation is usually studied from the perspective of the regional elite. This chapter takes a somewhat different approach, focusing on both central and regional elites. In fact the distinction between the two groups is a purely formal one, since most members of the central elite, particularly the political elite, are to a large extent recruited from the regions. A crucial point is how strong integrationist tendencies are among the regional elite compared with the national elite.

100 Integration in a decentralised federation One harmonising factor is career. As David Laitin (1998) argues, the regional elite has a strong incentive to be part of the national elite. Over longer periods of time members of the regional elite are co-opted by the centre and their motives become related to personal status. Career ambitions become bound up with opportunities to influence decisions that have vital consequences for their home region. Philip Roeder (1991) helps to explain the separatist wave before 1991 in terms of how successfully republican elites managed to negotiate redistribution deals with the centre, thereby creating or inhibiting occupational mobility for the republican elites. Roeder’s model may also illuminate why the Russian Federation did not continue to dissolve. In the major part of the regions the elites have continued to see opportunities for mobility and access to additional resources from Moscow in a decentralised federation. Consequently, the elite’s personal ambitions are intertwined with the issues of autonomy and distribution.

Images of power sharing The elite’s comprehension of power relations between levels of governance is one fundamental ‘social construct’ constituting the psychological context for political processes and distributional decisions and the legitimacy of the federation. It is important because it will influence not only the scope of government action but also how the elites evaluate ethnic mobilisation and economic incentives as possible ways of obtaining better deals for their home region. The ‘federal ideology’ adhered to by the various elites may be centralist or decentralist. An important question is whether the regional elite is more decentralist than the national elite. Do we find opposing camps or is there a common ‘federal ideology’ across elite institutions? One way of ascertaining the prevailing federal ideology is to ask how the elite perceive the actual power of central, regional and local government (Table 6.1) and how it would prefer power relations to be in the future (Table 6.2). Table 6.1 Perceptions of power of various levels of government (%) Very strong

Very weak

1

2

3

4

5

Mean

Central govt.

1998 2000

2 6

8 15

30 43

30 26

30 10

3.8 3.2

Regional govt.

1998 2000

5 5

18 27

43 38

22 23

12 7

3.2 3.0

Local govt.

1998 2000

5 4

19 16

33 28

23 31

21 21

3.4 3.5

Response rate: 1998: 98%, N=980; 2000: 98%, N=605.

Integration in a decentralised federation 101 In both years few respondents describe federal, regional and local government as ‘very strong’. A large group thinks these governmental levels are quite weak and the rest take a middle position. The figures reflect a situation of partial abdication of state power and rule of law, resulting in weak governing structures on all levels. While the central government is seen to be generally weak, a distinction is drawn between various levels of power. The table shows clearly that in the unstable year of 1998, in particular, both regional and local governments were seen as stronger than the central government. Of the respondents, 60 per cent regarded the federal government as weak, a proportion considerably higher than that regarding regional and local government as weak – 43 and 44 per cent, respectively. After Putin came to power, the elite’s ‘psychological power-map’ changed. In 2000 the percentage seeing federal government as weak decreased considerably from 60 per cent to 36 per cent, while those still regarding central authorities as ‘strong’ are quite modest. On the other hand, as shown in the next table, the elite want to entrust considerable power in the Kremlin leaders. Perceptions of regional power remain relatively stable, though there is a slight tendency to see it as stronger. Local government, on the other hand, was regarded as somewhat weaker than in 1998. The elite’s perceptions in 1998 correspond well with the actual decentralisation of power that took place and the weakness of the central power under Yeltsin. By the summer of 2000 Putin’s re-centralisation policies had obviously found a positive resonance among the elite and affected their images of power rather substantially. However, in the elite’s minds there has been no one-way process: a double process of centralisation took place. Not only was federal power vis-à-vis the regions strengthened but the regional level itself was also perceived as holding a stronger position. In the early Putin period the image of regional subordination to the centre was not becoming more widespread and as shown in the next table, the elite wants only minor changes in the division of power. A comparison of the various elite groups reveals quite uniform opinions about the federal government being weak and about the relative strength of regional government. However, while the central elite, in particular members of the State Duma and the Federation Council, evaluate local government as becoming weaker over time, the regional and local elite put local government in a stronger position in 2000. This is the only example of the cognitive ‘power map’ being influenced by the elite’s institutional affiliation. Although the tendency over time is for the elite to describe central government as more powerful – a consequence of Putin’s policy of ‘verticalisation of power’ – the general picture painted by the elite is of rather weak government at all levels, with relatively stronger regional and local government. This picture indicates a fragile centre dependent on a decentralised power structure – an accurate reflection of the actual development of relations between the centre and the regions during the 1990s. This decentralised

102 Integration in a decentralised federation governing structure seems to be a dominant social construct among the elite, thereby constituting the elite’s image of power relations. Assuming that the Russian elite have a vested interest in a pluralist political system the reintroduction of a more hierarchical style of government must be seen more as developing a minimum of state loyalty in which the regional elite will preserve and safeguard its autonomy. The ‘loser’ in this process seems to be local government, despite Putin’s signals of strengthening its influence. These images of power relations provides a main ‘ideological’ context within which the central and regional elites operate. Decentralisation creates political room for manoeuvre and opportunities for influencing decisionmaking that would not have been possible under centralised rule. Does the picture of a rather weak federal government represent a wish for a more powerful central government in the future, or does the elite want a permanently decentralised and constrained federal government? Table 6.2 shows the elite’s preferences for how power should be distributed between the centre and the periphery in the future. In 1998 relatively few members of the elite wanted to strengthen central government (27 per cent) and as many as 37 per cent preferred to reduce the power of the centre.10 The large proportion of respondents wanting to strengthen regional and local government in 1998 is astonishing but is easily explained by the decentralisation policies of Yeltsin’s administration. Two years later a marked shift took place. The elite’s attitude to centralisation had become considerably more positive, with 57 per cent saying they wanted to strengthen central power and only 18 per cent wanting less power for the centre. For regional and local government there was a tendency towards positive centralisation sentiments over time but the change was minor. In summary, the table reveals two layers of preferences which are complementary: the elite support the new president’s ‘verticalisation of power’ while at the same time they want to defend a decentralised federation by preserving the power of regional and local government.

Table 6.2 Perceptions of future power distribution (%) More power

Less power

1

2

3

4

5

Mean

Central govt.

1998 2000

13 22

14 35

36 26

26 14

11 4

3.1 2.4

Regional govt.

1998 2000

14 11

36 30

36 39

11 16

3 4

2.5 2.7

Local govt.

1998 2000

21 17

32 30

31 34

11 14

6 4

2.5 2.6

Response rate: 1998: 96%, N=980; 2000: 97%, N=605.

Integration in a decentralised federation 103 One crucial question is whether this represents a general tendency among the elite or whether there are differences between the central and regional elites? In 1998 53 per cent of the deputies in the State Duma and 52 of the leaders in the central ministries had strong preferences for increasing the power of the central authorities. Regional leaders, managers of state enterprises and deputies in the Federation Council were much more in favour of reducing the power of central government, with less than 20 per cent wanting more centralisation. The most visible cleavage, however, was between different central political elite groups, in particular between procentralists in the State Duma and the de-centralists in the Federation Council. How then did the change of President affect the views of the elite groups? The effect is greatest for the regional elite. In 1998 17 per cent supported more power for the centre, while in 2000 the share increased to 54 (!), compared with the more stable situation in the State Duma, where the figures were 53 and 64 per cent, respectively. Do the regional elite also wish to strengthen their own decentralised position? The figures show quite clearly that a large proportion of regional leaders still want more power, but there is a reduction from 57 per cent in 1998 to 40 per cent in 2000, indicating that the decentralisation wave while still having considerable momentum, is levelling off. Although the views of the ‘centralists’ are becoming more dominant than before, it would be over-simplistic to say that top-down government is being reintroduced. The change in the governing ideology from decentralisation to centralisation seems to be more of a two-tier process resulting in a new layer of governance. The main task of the new leaders of the seven ‘federal districts (okrugs)’11 introduced in May 2000 and called ‘Presidential representatives’, is to co-ordinate the work of the central and regional levels, of which taxation is one of the main challenges. Actually, this new mid-level federal institution fits well into the prevailing attitudes of the Russian national and regional elites revealed in this study. The Russian elite obviously supports Putin’s policy of strengthening the ‘vertical power’ but on condition that a major part of the decentralised structure and regional power can be preserved. While formal power structures matter, the real challenges however, are about establishing elite consensus on how to share basic state functions, like redistribution and taxation policies, and create a legal fundament for transactions between central and regional levels that the elites are supporting. These are the two next topics of this chapter.

Redistributing resources One major incentive for regions to stay loyal to the federation is the prospect of benefiting from resources provided by the federal centre. Federal redistribution institutions create the necessary structures for regional access to resources controlled by the central government. Accordingly, federal

104 Integration in a decentralised federation subsidies and collective infrastructures have substantial integrative functions. Poorer regions, in particular, benefit by receiving more than they pay to the federal budget and thus being net receivers. There are about a dozen net contributors among Russia’s regions and so far these have not coincided with areas of serious ethnic mobilisation. A redistributional system creates incentives for members of the regional elite to take into consideration personal benefits, such as material pay-offs and career opportunities. According to Laitin (1998), they combine their own mobility in the federation and other republics with bargaining for federal resources and cost sharing. It has been argued that regional autonomy will not develop into separatism as long as the elites are part of an attractive system of promotions and benefits directly from distributional outcomes. Accordingly, the splintering effect of ethnicity and regionalism may easily be exaggerated. As Treisman (1995) maintains, during the ‘sovereignty wave’ at the beginning of the 1990s the regions in question were fighting more for a share of resources than for ethnic sovereignty as such. Despite a general economic decline, many regions have emerged as ‘winners’, benefiting from central transfers and control over regional tax revenues, a price President Yeltsin had to pay for keeping the federation together. The President negotiated separate deals with several of the regional leaders, which reflected variations in the cost-benefit equation stemming from factors like administrative status inherited from the Soviet period, ethnic mobilisation, regional control over advanced industries, the presence of natural resources and the negotiation skills of the regional elite. The preferential treatment accorded to some regions enhanced their loyalty to the centre but was also problematic, since such policies were at odds with the strongly rooted principle of equal treatment. By way of background for understanding the elites’s attitudes, an outline of the central-regional transfer policy of the 1990s is pesented first. Second, the focus is on how the elite evaluate the new system of sharing benefits and responsibilities. The questions are about the elite’s perceptions of the effects of inter-regional equity, which federal level it thinks should have responsibility for providing public goods, which administrative level should be in charge of collecting taxes and whether fiscal relations between the centre and the regions should be regulated by special agreements or general law.

The transfer system: fixed criteria or ad hoc?12 The new system of economic relations between central and regional government has been founded since 1992 on the principle of independent budgets at all levels of government, adopted in the budget law of October 1991. The law abolished the traditional system of automatically refunding financial deficits incurred by programmes at lower levels of government from the central budget. The result was a swiftly emerging gap between prosperous and poor regions. Economic ‘shock therapy’ produced a deterioration in

Integration in a decentralised federation 105 economic and social conditions in many regions and the system of federal transfers was resumed in three ways: transfers for specific purposes; sectoral funding; and a general fund for making regions more equal again. From the beginning specific transfers constituted the largest and an increasing proportion of federal support to the regions. The grants were used mainly to cover expenses resulting from presidential and governmental ad hoc decisions to meet demands for wage increases, to compensate enterprises and to finance development programmes in certain regions. Specific transfers were made to finance essential services like hospitals, to subsidise certain closed cities with military and nuclear assignments, to compensate for extra transportation costs in remote areas, and to Moscow to take account of the additional expenditure incurred through its status as the capital. The criteria for such transfers were not clearly stated in the budget document and the decision-making process was non-transparent and negotiated on an individual basis, often with a particular ministry. Other types of funding were connected to specific sectors. In order to provide a fairly uniform infrastructure in all regions, sectoral funds were established in the fields of federal roads, employment, ecology and medical insurance. These constitute a second type of resource transfer, but the rules governing them are so ‘fuzzy’ that their redistributive effects are unclear. These special direct transfers generally resulted from decisions taken on an ad hoc basis and from non-transparent allocation criteria. The fixed criteria fund seems to have been the most ‘rule-based’ transfer mechanism. The Federal Fund for Financial Support to regional governments was established in 1994 and introduced a new mechanism for transferring resources. It was founded on a ‘formula’, providing for more transparency in the allocation process. The idea was to compensate regions suffering particular financial hardship. In 1995 the fund accounted for about half of the federal budget transfers to the regions. The fund was financed by fixed incomes amounting to 27 per cent (1995) of VAT revenues. About three-quarters of the fund’s resources are allocated to regions with per-capita budget revenues below a certain percentage (95) of the federation average. The remaining quarter is allocated to regions with economic problems of a more temporary nature. The equalising effects of these three types of transfers may be questioned. Le Houerou and Rutkowski argue, however, that during the period 1991–4 there were some positive effects for the seventy-five regions they investigated. After 1995 the effect was negligible, and the overall non-transparency of the decision-making process led to some already strong regions attaining beneficial agreements regardless of the fixed criteria. The most institutionalised mechanism for transferring resources is the one based on specified requirements. Here certain formal criteria for revenue collection and allocation are used. Even if some transparency was introduced into the funding criteria in 1994, in reality ‘the politically powerful regions claim transfers under the category ‘mutual settlements’ regardless of

106 Integration in a decentralised federation any written rules’ (Le Houerou and Rutkowski 1996: 41). Often the very nature of specific allocations makes them susceptible to ad hoc treatment, not governed by formal rules. Atomised and ‘distributional politics’ are characteristics of certain political arenas in which patron-client relationships dominate. Accordingly, since 1992 ad hoc transfers have accounted for the largest share of central transfers to the regions, and the proportion has increased over time (Le Houerou and Rutkowski 1996). Political bargaining and clientele relationships seem to distort the equalisation impact of the fund, although the principle of objective criteria for allocation and transparency at least represents a gesture towards formal bureaucratic decisionmaking and institutionalisation.

Transfers and equity Economic inequality is not new in Russia. During the Soviet period there existed significant and quite entrenched economic differences between the regions. The change of regime intensified and accelerated many of the existing inequalities and new regions were added to the list of the backward. However, irrespective of the inadequacy of the transfer system before and after the change of regime, the main justification for its existence was and is the effects of redistribution on social and economic conditions in the regions. An active state that cares about people’s living conditions is a deeply ingrained part of Russia’s egalitarian culture and of the elite’s cognition of state responsibility.13 Redistribution presupposes centralisation and a mechanism for negotiating who shall get what and for co-ordinating the administration of a complex inter-governmental system. Redistribution is also a two-way process: subsidies are transferred from the centre to the regions and taxes are collected in the regions to finance the transfers, presupposing legitimate procedures in order to function well. The main idea of the transfer system is to bring about more equality between the regions. This goal is not just political rhetoric. Empirical analysis has shown that the Russian government is seriously concerned about redistributing resources to poorer areas.14 The extent to which the members of the elite support a centralised redistribution system is directly related to

Table 6.3 How economic transfers and taxation influence equality between regions* (%)

1998 2000

Much equality

Some equality

Some inequality

Much inequality

1 2

11 15

33 38

56 45

Response rate: 1998 95%, N=980; 2000 97%, N=605. *The elite was asked to assess the consequences for equality between rich and poor regions of the present system of taxes and transfers between the federal and regional level.

Integration in a decentralised federation 107 how they evaluate its equalisation effects. The legitimacy of the transfer system is therefore one of the strongest roots of loyalty to the Russian centre. With only 12 to 17 per cent believing in the equalising effects of the transfer system as shown in Table 6.3, it is obvious that the Russian elite have very little confidence in the accomplishments of the subsidies and taxation system. A substantial majority, more than 80 per cent, holds the opinion that the transfer system leads to inequality. The consensus is overwhelming and stable, with no differences between elite groups or types of region. If the transfer system is holding the federation together, as the instrumentalist perspective would imply, it is not because of its redistributional effects. For the very idea of the egalitarian transfer system is in a deep crisis. Why this sweeping scepticism? One reason may be that the transfers have actually had the very opposite effects of what was intended. Despite egalitarian declarations and objective criteria for distribution, the real flow of taxes to, and subsidies from the centre is severely distorted. This does not contradict the finding that the redistribution of the Russian government is motivated by equity considerations (McAuley 1997). While subsidies may end up in poor regions in line with central directives, a corrupt regional administration has many opportunities for enriching itself rather than using the transfers to alleviate poverty and a depressed economic situation. In both cases the dismal evaluation of the equity effects of the redistribution system by the elite reflects their concern about the poor functioning of the system in reality. Another explanation is that the elite’s perceptions differ from the actual situation for strategic reasons. Showing concern about inequality is one bargaining chip in the regional elite’s efforts to extract more resources from the federal authorities. By dramatising the situation the regional elite may be able to persuade the central government to give it more money. If this explanation is valid one would expect the elite from economically depressed regions to be particularly negative about the effects of redistribution. The data do not show any differences in attitudes between the elite from prosperous or stagnating regions, or between the political, administrative and business elites at the centre. This means that the negative perceptions cut across institutional and territorial affiliations and cannot be regarded as a strategic instrument used by certain elites in the bargaining process. The data draw a picture of a realistic elite who sees few substantial effects from the redistributional system. Such an interpretation tallies with findings described in Chapter 5 showing a rather widespread egalitarian culture among the elite. These egalitarian ideas reflect a concern for the miserable effects of the central transfers. Putin’s ambitions of a more active state to counteract the injustices of the market mechanism have so far had only minor effects on the elite’s perceptions of the effectiveness of equalising programmes. As will be shown in the next chapter the growing economic differences and unfair distribution of resources seem to stimulate a left–right ideological mobilisation among the elites.

108 Integration in a decentralised federation

Sharing responsibilities According to Thane Gustafson (1999), a new way of sharing responsibilities between the centre and the regions evolved during the 1990s. Regional government became responsible for health, welfare, basic education, housing, transportation and public utilities, and shares of revenues were assigned accordingly. In theory the regional government receives a corresponding share of tax revenue to cover the expenses. The problem, as Gustafson remarks, is that the responsibilities are continuously subject to renegotiation, whereby ‘the centre tries to recapture revenues’ (p. 207) and reassign expenditure to the regional level. And a report from the World Bank concludes: ‘The system is not a system, but a collection of ad hoc, negotiated, nontransparent agreements whose effects are not well understood’ (Bahl and Wallich 1995: 337). The debate on privatisation of state responsibilities has even brought in a new source of financing: the single citizen. Although the sharing of responsibilities is confusing we know even less about the elite’s attitudes regarding which level of government should bear the burden for financing which public services. The administrative level responsible for public service varies a lot between unitary and federal states, and also among federal states. Responsibility for public services may be organised in various ways depending on the type of service in question. The ‘theory of collective goods’ says that the availability of services and the degree of collective consumption determine the ‘public character’ of the good and how service provision should be organised. Economists use this idea to separate state tasks from tasks the market can solve. In a federative state the ‘public character’ of a service is, however, also a question of which governmental level is responsible for providing the service. One assumption is that the level of government that is regarded as most useful depends not only on ‘collective consumption’: large-scale benefits and equity considerations will also be influenced by the elite’s attitudes. Some services like universities have large-scale advantages and naturally will be more centralised than ordinary schools. Pensions are more directly related to equity than hospitals and child-care. Main roads and energy are more of a collective good than local public transport, since they bind the federation together and it is difficult to exclude people from consumption. If the sharing of financial responsibility follows a ‘collective logic’ of this kind, one would expect the elite to perceive a relationship between the type of public service and administrative responsibility. Table 6.4 shows how the elite allocates responsibility for education, welfare and the infrastructure between governmental levels and the private sector. The elite expresses one core idea of the federal state: responsibilities are related to a specific division of functions between administrative levels. In keeping with the Russian perception of functional specialisation, the elite assigns services that need a certain level of concentration (universities), have consequences for equality among major population groups (pensions) or need

Integration in a decentralised federation 109 Table 6.4 Responsibility for providing public services (%) Federal govt.

Reg. govt.

Local govt.

Private sector

1998

2000

1998

2000

1998 2000

1998

2000

Education Universities Schools

86 36

86 36

11 31

13 31

2 32

0 33

1 1

1 0

Welfare Pensions Hospitals Child care

82 32 10

88 34 8

14 48 21

10 54 26

3 20 67

2 12 64

2 0 3

0 0 3

Infrastructure Main roads Energy Public transport

68 64 9

64 67 8

27 30 37

31 28 48

4 4 49

4 2 39

0 2 4

1 3 5

Respons rates 1998: 98–99%, N=980; 2000: 97–100%, N=605.

large investments and bind the state together in a very concrete sense (main roads and energy) to the federal level. It delegates other functions more relevant to local community requirements to lower levels of government. In summary, the elite first has a very positive attitude to public responsibility for basic national services, thereby renouncing the private sector. This picture corresponds with their positive attitudes to state ownership in large industries, as shown in Table 5.2. The elite simply does not trust the market to provide these services. Second, the elite quite systematically allocates responsibilities to different governmental levels according to the type of public service, for example, hospitals and child- care are seen as tasks that should be assigned to regional and local governments. The widespread elite consensus about divison of functions should be a good basis for stable resource exchange between governmental levels. However, it remains to be seen if the confusing renegotiation of responsibilities, as Gustafson (1999) observed during the 1990s, may be ended.

Controlling taxation A major challenge for the Russian government was to design a new system of fiscal federalism. Taxation posed two problems: to define what should be taxed and which level of authority should be responsible for collecting taxes. Here the focus is on the latter. As early as in the last months of 1991, Michael Gorbachev introduced laws that recognised independent budgetary levels and a variety of special taxes, creating unclear responsibilities. A question persistently nagging the Russian Federation was how fiscal responsibilities should be shared between levels of government. The new way of sharing responsibilities in a decentralised federation soon had dramatic consequences

110 Integration in a decentralised federation for providing revenues after privatisation of many state industries. Regional expenditure as a share of total general government expenditures increased from 36 per cent in 1992 to about 50 per cent in 1995. The regions’ share of the total social sector budget rose from 66 to 80 per cent during the same period. Regional spending on subsidies to industry sharply increased, from 47 per cent in 1992 to 71 in 1994 (Le Houerou and Rutkowski 1996). The new system represents a continuation of the decentralised administrative practices of the former Soviet Union in which tax revenues were passed upwards from raions to oblasts and then to the federal budget. This system of federal financing may have contributed to the dissolution of the Soviet Union, for republics used the withholding of tax revenues to the federal centre as political leverage. During the mid 1990s the Russian Federation was still vulnerable in this respect (Bahl and Wallich 1995). The Yeltsin government saw the need to mandate a clearer and more efficient tax system. The former system was replaced with value-added tax (VAT) and excises on certain products, thereby coming to resemble Western taxation practices. In addition to profit tax, personal income tax and export and import duties constituted the main sources of revenue (Shleifer and Treisman 2000). The idea was that revenues from different categories of tax objects should be wholly assigned to specific administrative levels. Thus, VAT revenues were assigned to the federal level, while corporate profit tax was reserved for regional government. As Shleifer and Treisman write, the implementation of this assumed accountable and less complicated system soon turned into chaos. Bargaining between the reformers and their opponents in the regional and central parliaments led to ‘a chaotic and fluid tax-system’ (op. cit.). Instead of assigning main types of tax to different levels of government, these taxes were shared between federal and regional governments on an ad hoc basis, thereby creating ‘incentive problems’15 and ultimately eroding the state’s financial capabilities. In Russia during the 1990s there was no fixed assignment of expenditure responsibilities to particular levels of government. According to Kirkow (1998), referring to Wallich (1992), available tax revenues prescribe which administrative level has responsibility for expenditure. The rather ad hoc and non-formalised way of imposing responsibilities for controlling tax incomes opens the way for extensive bargaining among the central and regional elite. As of 1998, 53 per cent of the tax revenues was kept in the regions and 47 per cent was transferred to the federal level. A large portion of federal tax revenue was used for things like defence, energy, or the railway system and the rest was redistributed back to the regions. At the end of the 1990s one main issue under discussion was changing the share of taxation obtained by the centre and the regions. The federal government wanted to increase its tax revenues, and by 2000 its share had increased to 57 per cent and by 2002 to 63 per cent. A major priority was to make tax-collection more effective. Shortly after Putin came to power a new law on taxation, simplifying and standardising

Integration in a decentralised federation 111 the complicated system of varying tax rates, was adopted in the spring of 2000. However, the idea of reorganising the tax-collecting system was not something entirely new. During his second presidential period Yeltsin continuously advanced plans for changing taxation but these were never carried out because of his loosening grip on power. How tax incomes are shared go to the heart of a federation’s capability of establishing a balance between centripetal and centrifugal forces. Who shall be controlling taxes is always an issue of bargaining among central and regional government but federal stability depends largely on a minimum elite consensus. Here the question is what type of balance between central and regional government do the elites support. The majority of the elite (more than 70 cent) obviously want a mixed system, with shared control over taxation between the federal and regional level, see the Appendix, Table A6.1. The purely centralist alternative has very little support, even among the central elite, while the absolute decentralist option is only marginally more popular. While a major part of the elite agrees on a shared solution, how to strike the balance between central and regional influence is less clear. Over time there is a quite obvious trend towards accepting more federal control over tax resources. These changes in elite attitudes coincide with President Putin’s tax laws to strengthen the redistributional component of the federal budget. The laws were adopted in the Federation Council with the support of governors from the poorer regions but met with protests from the ‘donor’ regions (Blakkisrud 2001). There are only minor differences between the elite groups. The largest discrepancy is found between leaders in state ministries and regional leaders. As expected, the regional elite is most eager to have regional control, while bureaucratic leaders in Moscow want more federal influence. Comparing types of regions one would expect poor regions to benefit from a central tax system, while a decentralised taxation system would be more advantageous to rich regions. Regional adversary between rich and poor federal subjects is not found among the regional elites, however.16 Members of the elite from central and reform regions have exactly the same attitudes to the tax system as those from peripheral and ethnic regions. The conflicts about the new tax law between the governors in the Federation Council seem not to have been nourished by political mobilisation of opposing interests in the regions. Probably the protests against Putin’s new tax regime among the governors from prosperous regions were more an expression of concern for their own positions of power. As data shows the issue is not a blunt either central or regional rule but to do with a different weighting of federal and regional control. The question of striking a proper federal balance, obviously both unite and split the elites, illustrating that antagonism over taxation is an integral part of elite bargaining in a federal system. Thus, a main challenge for Russia was how to institutionalise the complex exchanges of taxes and subsidies between centre

112 Integration in a decentralised federation and regions. There are two main options, bilateral agreements or federal law, and in the next section I ask which alternative does the elite support.

Bilateral or universal deals? The relationship between the central and regional level may be organised in two fundamentally different ways: the centre may either deal with the subnational actors as a collective or individually (Solnick 1998). According to Solnick, universal deals do not exclude bargaining but are likely to afford greater transparency in the bargaining process, ensure that jurisdictional and distributional issues are fixed and make legitimate central sanctions for violations of the rules. Although the application of the rules in practice may vary depending on the strength of the regions, the sub-national actors cannot attain formalised special treatment through ad-hoc bilateral negotiations. The essence of bilateral agreements is to institutionalise special treatment of certain regions. The questions here are, how do the elites assess the two systems of governing relations between the centre and the regions, and do the national and regional elites have various platforms for these two alternatives? During the Yeltsin period a large number of special treaties were established between the centre and the regions. The provisions of these agreements stipulated who should benefit from subsidies and who should control tax revenues. The agreements formalised special treatment of regions with a favourable bargaining position – e.g. ethnic dominance of non-Russians or valuable natural resources – and were a main instrument for the President to form beneficial alliances with these governors and attain political support from the regions. Although criticised for its preferential treatment, the special agreement system obviously also had an integrative effect. By co-opting the regional leadership, the centre managed to establish bonds of loyalty between the centre and the periphery. Such arrangements are conducive to establishing and maintaining patron-client relationships favourable to both the centre and the regions. Otherwise these regions might have found the secessionist solution more attractive. As Hanson (1999) argues, if material incentives for staying in the federation are insufficient and ethnic distinctive is strong, the push for independence will be considerable. Bilateral agreements became particularly important for the centre to prevent discontent among ethnic regions. Solnick (1998) argues along the same lines, maintaining that when the federal authorities fear that they might not be able to impose universal rules, they prefer bilateral agreements as an alternative means of preserving a consensus. As a reward for regional honouring of specific agreements regarding jurisdiction and distribution, central government will offer additional side-payments to these regions. The foundation for the subsequent separate agreements was laid with the signing of a ‘Federation Treaty’ in 1992 giving the republics various attributes of statehood that were not shared by the okrugs and oblasts (Treisman 1999).

Integration in a decentralised federation 113 A total of forty-six bilateral and also some trilateral agreements were signed, starting with Tatarstan in 1994 and St Petersburg in 1996. The provisions of the agreements differ considerably between the various republics and regions. The agreements with Tatarstan and later Bashkortostan were comprehensive and included a large amount of autonomy.17 In Vladimir Oblast the agreement was quite limited and formal, while in other regions, like Yakutia the agreements mostly financed federal programmes for the use of natural resources. The agreement between Moscow City and the federal government was quite special because of Moscow’s capital status. It gave the city government a certain degree of autonomy in the economic sphere18 and a Presidential decree from Yeltsin gave leeway in how to privatise city property. The last agreement between the centre and the regions was signed in June 1998. The actual effects of these treaties are not easy to assess. While some maintained they would tear the country apart others argued they were more temporary political compromises than legal acts. Still, as Treisman (1999) remarks the treaties were opportunities for several regions to extract additional benefits. However, the bilateral treaties that gave considerable autonomy included only some few regions, of which Tatarstan, Bashkortostan, Sakha, Sverdlovsk and Moscow are the most prominent cases. A more uniform way of regulating relations between the centre and the regions is by federal laws. The most important of these are the Constitution and constitutional laws, like those governing the Supreme Court and the Constitutional Court. There are also various federal laws regulating taxation, education, labour, health, the police and spheres like public relations and the mass media. The selective, and from an integrationist point of view, effective negotiating strategy employed during the Yeltsin era has changed quite radically. Soon after Putin was inaugurated as President, steps were taken towards a more centralised federal system. Decrees were issued ordering regional laws to be brought into line with the Constitution and federal law, and a special federal law was adopted requiring that all special agreements should be made to comply with the Constitution within three years. One important question for the future of the federation is how the elite regard special agreements and universal rules as instruments for regulating distributional issues. There are two standard hypotheses: first, inherent tensions between federal levels imply that the central elite will support universal rules, while the regional elite are likely to respond positively to special agreements; and second, when the centre takes measures to recentralise the federation, the regional elite will resist, because they want to preserve their autonomy. The survey of the elite dates from 1998 and 2000, so the respondents should have had enough time to assess how the system of special agreements is functioning for the regions compared to universal laws. The figures are shown in the Appendix, Table A6.2. In 1998 the total percentage of the Russian elite supporting universal rules (scoring 4 and 5 on the scale) was 58 per cent, increasing to 79 per cent in

114 Integration in a decentralised federation 2000. Evidently, federal law has strong support among all elite groups. Even the regional elite shifted from a relatively low level of support for federal law in 1998 to a very positive attitude in 2000. It is easy to understand that the increasing number of special deals concluded between the centre and specific regions became a cause of concern for the adherents of a centralised federation. Special agreements not only conferred preferential treatment and paved the way for clandestine decision-making but they also raised fears that they could be a first step towards separatism. Generally speaking, this argument has been exaggerated. As shown in Table A6.2, the regional elite do not deviate from the central elite’s support for federal law as a regulating mechanism. Moreover, after Putin came to power the leaders of regional governments overwhelmingly support federal law’s taking precedence over special agreements. Following the ‘ethnicity argument’, special agreements will take on more importance in so-called ethnic regions than in regions with a large Russian population. But how much of a role does ethnicity play in the desire for separate agreements? Table 6.5 shows to what extent the elite from ethnic regions prefers special agreements more than other regional elites. The leaders of ethnic regions support special agreements somewhat more than leaders of other regions. The leaders of stagnating regions on the other hand, are the most positive towards federal law. The difference is significant enough to assert that ethnic elites have a greater interest in special agreements than other regional leaders. But ethnicity is first of all a ‘marker’ and not necessarily a splintering force, as Solnick (1998) maintains. Special agreements have become more a means of attaining a higher status inside the federation than a force for separatism. Dual bargaining and preferential treatment backed up by a special ethnic status only changed these regions’ position on the ‘autonomy continuum’ without affecting their status as federal subjects. However, not only ethnic republics but also the leaders of other regions see advantages in special agreements. Obviously, elites in stagnant regions

Table 6.5 The opinions of various regional elites on special agreements and federal law, 1998 (%) Special agreements

Total Central Ethnic Stagnant Periphery Reform

Federal law

1

2

3

4

5

Mean

12 11 15 11 5 13

15 13 21 9 17 15

22 19 30 17 20 22

17 21 10 14 20 20

35 36 24 49 24 21

3.5 3.6 3.1 3.8 3.5 3.4

Response rate: 98.3%, N=980.

Integration in a decentralised federation 115 fear that such a type of central-regional relationship is conducive to inequal treatment. The overall message is that in all types of region elite preferences are mixed, with a major tendency to favour federal law. The pattern can also be interpreted as elites opting for the most pragmatic solution, whereby some issues are best regulated through bilateral bargaining while others should be subject to federal law.

Conclusion: the new elite bargain as a force for cohesion In September 2001 President Putin introduced a rewritten version of the national anthem by the same author who made the anthem from the Soviet period. While the lyrics were changed the melody was preserved the same as before. In the Soviet version the first verse opens with the words ‘Unbreakable union of free republics’. In the new version, reference to the union comes in the refrain which means that three times the line ‘Eternal union of fraternal peoples’ is repeated. The idea of an unchangeable multi-ethnic union lives on while the inspiration secessionists in the regions may have seen in the words ‘free republics’ have been deliberately removed. A large majority of the State Duma voted for the proposal. They also agreed that Peter the Great’s tricolour flag, which was re-introduced in 1991, should be the national flag. The Romanov family’s two-headed eagle from before the 1917 revolution should be the state emblem, while the armed forces should use the red communist flag as its common banner. These measures not only reconcile the past with the present, they also signal a more vigorous assertion of central power intent on uniting the federation by means of common symbols. However, symbols do not necessarily indicate a recentralisation of power. While the Russian elite surely want more stable central power, including traditional national symbols, it also wants a decentralised federal structure that both safeguards regional self-rule and reaps the benefits of a redistribution of central resources. One purpose of this chapter was to analyse images of the Russian Federation among the elite. The asymmetric federative structure inherited from the Soviet period created instability during Yeltsin’s period that induced the central government to take both concrete and symbolic measures to strengthen its power. Here I have argued that the actual integration of the federation must be seen from the perspective of the orientations of those who are directly affected: the national and regional elites. These questions have been asked: What kind of ‘federal ideology’ prevails? How does the elite perceive the division of responsibilities for providing goods and control tax revenues between levels of government? How do they want to organise central–regional relations? Stephen Hanson’s argument that the absence of a centralist ideology is what keeps the Russian Federation together seems to be quite illuminating of the nature of distributional and ethnic problems to which the Russian type of federation has appeared as a solution.

116 Integration in a decentralised federation Putin’s policies of centralisation were carried forward by broad elite support for more ‘rule of law’ and economic stabilisation. Nevertheless, the data show that the decentralised structure of the Russian Federation adopted under Yeltsin is now deeply rooted among the elite. This paradox means that the political scope for centralisation is more limited than many people think. Only if central power accommodates itself to regional autonomy will the regional elite support the measures taken by the centre. Decentralisation makes the federation legitimate, because it allows room for regional variations and elite autonomy. At the same time an autonomous elite benefits from redistribution from the centre, from the provision of collective goods and from a federal structure that gives career opportunities to individual members of the elite. Following the argument of Michael Burgess (1991), the ‘federal solution’ is a part of political beliefs and practices, and a type of federalism that is dynamic and will change over time. While the description of Russia as a decentralised federation with considerable regional autonomy was most apt under Yeltsin, Putin’s intention to reassert central power may raise the question of where to place the regions on the ‘autonomy continuum’. A programme for more central rule is one thing; the degree of centralisation the elites will allow to be implemented is quite another. The elite’s support for both stronger central government and regional and local selfgovernance reveals a rather hybrid approach to the federation under Putin. One possible implication of Stephen Hanson’s thesis is that the emerging recentralisation after 2000 will lead to reactions and more secessionist politics in the regions. The data do not support this view. It seems more accurate to say that members of the elite support a certain degree of centralisation and firm leadership without fearing a loss in status of the decentralised federal subjects. The Russian elite has internalised a profound sense of autonomy based on tradition and one decade’s experiences with self-governance sustained by their traditional scepticism to rule from Moscow. Economic responsibilities, negotiation between the centre and the regions and the ethnic factor must be seen in relation to the federal structure. The Russian national and regional elites agree that the present system of transfers and taxation leads to inequality. The tendency towards centralisation, whereby more federal control of taxation and use of federal law is seen as preferable to special agreements with the regions, may be regarded as an egalitarian response to the inequalities created by excessive decentralisation and harsh capitalism. Despite its centralisation tendencies, Putin’s regime does not represent a retreat to unitary Soviet-type governance. The elite’s taste for autonomy has become too deeply rooted and bound up with a legitimate divison of state functions and personal career interests. The dilemma that confronted Yeltsin of how to find a viable balance between the centre and the regions remains. Graham Smith (1995) argues that the choice is between ‘refederating along more decentralist lines or moving towards a highly centralised system of federation,’ and either way the risk of fragmentation is great (p. 167). And the most notable obstacle to pluralist

Integration in a decentralised federation 117 federal integration in Russia is ‘the lack of a federal culture of associative democracy to generate a sense of coexistence and well-being’ (op. cit. p. 157). The Russian Federation has neither fragmented nor returned to a Soviettype centralist command system. It seems that the integrative potential of the Russian elites’ basic orientations has been severely underestimated and it would be a mistake to think that integration comes only from centralisation initiated by the Kremlin leaders. A more viable force for federal cohesion is decentralisation made possible by responsible national and regional elites with interests in both central redistributional institutions and delegated authority. Compared with the Soviet period there has been a fundamental change in how resources are actually distributed and the shift coincides well with the elite’s attitudes. Even after Putin came to power, almost half of the elite supported putting a major portion of taxation under regional control and basic services and parts of the infrastructure were considered to be the responsibility of regional and local government. And beneath these operational attitudes one finds a solid bedrock of decentralisation ideology. The elites’ orientations exposed here seem without much doubt to constitute a viable basis for what Graham Smith calls ‘refederation along more decentralist lines’ while ingrained values of ‘associative democracy’ may take generations to develop. Decentralisation is not synonymous with ‘democracy’. To what extent delegation of authority leads to more democratic rule in the regions is an open question. For example Cameron Ross (2000) argues that the Russian type of asymmetrical federation was created at a time when the centre was weak during the early 1990s. Consequently democratic practices were not sufficiently institutionalised in the regions and political processes are often dominated by authoritarian leaders and political and business elites who have joined forces in closed power networks. In conclusion, the elites favour a functional division of responsibilities between governmental levels stemming from an ideology of decentralised federal structure. Decentralisation gives the regional elite substantial influence on regional and local decision-making and a basis for bargaining with the centre which they do not want to lose. The best guarantee of a stable federation is not one-sided centralisation, which may provoke not only regional separatism based on ethnic or regional identities, but also resistance among the national elite. The strengthening of the regions and the turbulence between the centre and the periphery during the 1990s were misconceived as fragmentation of the Russian Federation. In retrospect these processes were more about negotiating a new balance of responsibilities between the federal executive and the regional elites within a decentralised federation. The main ‘glue’ holding the Russian Federation together is an elite culture supporting a decentralised federation, in which the Kremlin leadership permits a mutually beneficial division of responsibilities between the centre and the regions and is allowed by the elites to keep closer eye on federal fragmentation and free-riding.

118 Political Elites and the New Russia

7

What matters for the elite’s orientations?1

[T]he importance of specific learning of orientations to politics and of experience with the political system has been seriously underemphasized. Almond and Verba2

Introduction The previous three chapters described the elites’ orientations to democracy, economic system and federal structure. Taken separately these reforms have resulted in tumultuous changes of the Russian state and society. Additionally, this triple reform was carried out almost simultaneously and became intertwined in such a way that the accomplishment of each of them depends on the success or failure of the others. A large literature has been dealing with the question of why these reforms did not live up to initial expectations. Following the argument that reforms have to be seen in connection with the actual political culture in which they shall be implemented, the purpose of this chapter is to ask what factors influence the crucial intermediate variable: the elite’s political culture. In particular after such a dramatic tripple-change elites have to adapt to completely new circumstances and will adopt orientations to fit actual contingencies. This is in line with Almond and Verba’s (1965) argument that in any polity political culture will seek congruence with its political structure and performance where also political memories may play a role. However, these authors did not take into consideration orientations following the unprecedented way of changing regime in previous communist states. Thus, one may question if weak political institutions have any substantial effects on the elite’s orientations. Further, I argue that post-communist experiences are more important for explaining the elite’s orientations than socialisation during the communist regime. The ‘institutionalist’ argument is that loyalty to the Kremlin leadership and the state’s capacity to rule are crucial to norms and therefore necessary for successful reforms. In contrast, the ‘traditional’ argument maintains that past legacies restrain reforms because they preserve conventional thinking. However, and in particular in transitional societies, culture is continuously

What matters for the elite’s orientations? 119 being reshaped. Thus, less attention has been paid to the importance of what here is termed post-communist ‘learning’. Change of regime and the ensuing triple reforms created an unparalleled context for the elites. Democratic and economic opportunities spurred political re-socialisation and new ‘ideological’ cleavages. According to this view, the elite’s attitudes to how to organise democracy, economy and federation are shaped by recent experiences where party activism and revitalisation of the left–right axis are crucial. The purpose here is to connect these explanations to what type of state model the Russian elites prefer under Yeltsin and Putin. The tendencies are towards sympathising with ‘elitist democracy’, ‘state-led capitalism’ and a ‘decentralised integrated federation’ identified in the previous chapters. How may these inclinations be explained? These dimension simply do not correlate in the usual models of a ‘liberal state’ and an ‘authoritarian state’. Thus, do the elite’s perceptions about the Kremlin policy making leadership and the state’s capacity, the length and form of involvement under the communist regime and post-communist actual behaviour and ideological orientation, have effects on the sides of the triple-transition triangle? These approaches may be illustrated in Figure 7.1.

Loyalty to the leadership In particular, scholars who adopt a neo-institutionalist approach regard political outcomes and economic policies as the products of formal rules and internalised norms that leave relatively little room for choices. In this view, the behaviours and orientations of the Russian elites reflect bonds of loyalty to organisations and institutions erected by the policy leadership. Although the norms that make up a political culture change only slowly, institutions may change much more rapidly. Referring to North’s (1990) treatment of institutional change, Hedlund (1999) argues that in Russia a clash between new economic institutions and old norms helps to explain much of the country’s turbulence during the past decade. This is particularly

Kremlin leadership State capacity Legacy of the past Post-communist ‘learning’ Figure 7.1 Shaping of elite orientations.

The elite’s orientations towards democracy, economy and federation

120 What matters for the elite’s orientations? salient when the top elite, as a result of liberalising and eroding state structures, is lacking effective mechanisms for enforcing the policies. Shleifer and Treisman (2000) argue that although reforms were enacted it makes little difference if they are not implemented because of little loyalty to the central leaders. They see the struggle with the Kremlin leaders over implementation and coalitions of anti-reform stakeholders as the main hindrances for viable reforms. Thus, the first hypothesis (a) is that the more loyal the elites are to the President and his administration (measured as confidence), the more they will accept the policies of the incumbent President. State capacity Any state’s capacity to rule depends on hierarchy, sufficient resources and efficient instruments that is operated by loyal elites. Under the centralised Soviet regime the official communist ideology served to unite elites, at least outwardly in their public expressions, while semi-autonomous spheres were regarded as threatening effective governance. But democratisation, decentralisation and economic competition requires role-differentiation in the political, bureaucratic, and economic spheres (Aberbach et al. 1981). The challenge for post-communist states is how to govern when hierarchical rule and a unified elite are substituted by new roles following unclear legal norms and elite pluralism. Logically, it is not so easy to deduct the direction of the hypothesis since both a positive and negative perception of the state’s ruling capacity may go in either direction: a wish for a stronger or preserving the ‘soft’ state. One may, however, hypothesise (b) that the more the elites perceive the state’s ruling capacity as strong and regional government as weak, the more they will identify with elitist democracy, state-led capitalism and a centralised federation. Legacy of the past In a study of ‘civic culture’ Putnam (1993) asks why economic growth is so different in North and South Italy. Building on Almond and Verba’s (1965) political culture approach, he argues that differences in economic development occur because the social norms of the two Italian regions have always differed so much. Referring to Putnam’s study, Hedlund and Sundström (1996) have been asking ‘Does Palermo represent the future for Moscow?’ They argue that because cognitive models are transmitted across generations among people who are closely linked in families and small groups, the culture that gives rise to such models has great longevity. A main ingredient of the cognitive models that predominate in ‘Palermo and Moscow’ is lack of confidence in the state. Where norms that they call ‘commitment mechanisms’ are lacking in the public arena co-operation to solve common

What matters for the elite’s orientations? 121 problems is difficult, if not impossible. Thus, some argue that the legacy of the Leninist and totalitarian past is severely influencing the cognitive models of the elites and therefore impairing both political and economic reforms (Jowitt 1992; Crawford and Lijphart 1995). The hypothesis (c) is that those elites who were involved with the previous regime (being older and having been elected to office in the Communist party) are more prone to supporting an authoritarian model of democracy, a state controlled economy and a centralised federation. Post-communist learning The change of regime created fundamentally new political and economic orders and completely unprecedented challenges to which the elite had to adapt. One may argue that elites, after a change of regime, quite easily adapt their orientations to new circumstances and career possibilities. First, postcommunist democratic learning is resulting from the elite’s political activities. The argument is that those who are party members take part in an organisation of ‘democratic learning’ and will be more democraticallyminded than those outside party-politics. Second, the dismantling of state planning and the introduction of a market economy opened up the way for uncertainties and pragmatism (McAuley 1997), but we must also ask how uncertainties created problems and challenges that may have vitalised new socio-economic cleavages and political identities. Some elites were eagerly taking advantage of economic opportunities while others defended traditional egalitarian values against capitalism. Thus, the replacement of the previous monolithic state with pluralist structures may shape new divisions among the elite, and, as Kullberg and Zimmerman (1999) indicate, ideological variation in Russia largely results from different opportunities created by the market. However, not only the market caused new opportunities, but also democratisation and decentralisation produced unprecedented arenas for elite games and coalitions. As Almond and Verba (1965) argue, a political culture is mainly determined from experiences with actual political performance in a broad sense. On the mass public level Mishler and Rose (2002) found that economic and particularly political performance of postcommunist regimes explains the most variance in regime support, while the legacy of the past accounts for considerably less. They argue that political support must be ‘re-learned’ after a change of regime and over time this effect will increase. Probably such a ‘re-learning’ of political loyalties will be even more notable for the elites who have a clearer stake to accommodate with the new regime. Accordingly, a dramatic breaking with the past gives recent impressions a great impact. If activity in a political party is a ‘school in democracy’, as theories of ‘democratic socsialisation argue’, one would expect that (hypothesis d1) party membership will induce positive preferences for liberal democracy, market economy and power to the regions. Second, I hypothesise

122 What matters for the elite’s orientations? (d2) that ideological position on the left–right scale is expected to have effects on type of economy but not necessarily impinge on attitudes to democracy and federation. The results While the policy leadership factor intends to explain what may make policies successful, ‘the legacy factor’ is concerned not only with what disrupts reforms but also with how the past may be conducive to unprecedented forms of co-operation, representing a flexible adaptation to an insecure environment. In fact Russian reality is not so much about success or failure3 but, as I will argue, more about an intricate mixture of change and continuity determined by competing elite’s preferences. Thus, the elite’s orientations are fundamental to vertical and horizontal coalition-building, where the main issue is to strike a sound balance between stability and differentiation, between predictability and uncertainty. If political stability follows from particular authority patterns among the elite, only a certain degree of harmony between the Kremlin elite and the national and regional elites can produce less turmoil. I argue that Vladimir Putin’s more authoritarian state is above all a response to a widespread wish among the elite for order and stronger rule. Nevertheless, the elites are also an autonomous force whose positions are institutionalised in distinct groups and underpinned by a democratic Constitution. In other words, despite this self-imposed stronger leadership, the national and regional elites have a vital interest in preserving their bargaining position vis-à-vis the President and his administration. The model (Figure 7.1) suggests various explanations of the elite’s attitudes to democracy, economic system and type of federation. More generally, I ask, do beliefs in institutions like the Kremlin leaders and state capacity matter, or is the pre- or post-communist culture more important. Below, the hypotheses are tested out using regression analysis. Obviously, the total effects of the model (measured by R2) are unimportant (Table 7.1). But some partial effects stand out and the lack of effects of some variables which have been presumed as essential, e.g. legacies of the past, are quite astonishing. In the following I comment on the effects of the independent variables on each main group of the dependent variables. Democracy The independent variables do not influence in any significant way attitudes towards equality of influence. The national and regional elite’s trust in the executive affects one democracy indicator: after Putin came to power trust in the President’s administration leads to preferences for stronger leadership, while trust in the President as such has no effects on democratic attitudes. The only example of how the perceptions of state capacity influence

What matters for the elite’s orientations? 123 Table 7.1 New institutions, old legacies and post-communist experiences influencing the elite’s orientations.4 Regression coefficients (R2) in 1998 and 2000 Democracy Equal influence

Economy Strong Party Income Ownerleader- compe- differ- ship ship tition ences

The Kremlin leaders The President 1998 2000

0.02 0.01

President’s admin.

1998 2000

0.09 0.02

State capacity Fed. govmt. 1998 2000

0.02 0.05

0.05 0.07

1998 2000

0.01 0.07

0.01 0.02

Legacy of the past Age 1998 2000 Elected to 1998 office 2000

0.03 0.01 0.05 0.07

Reg. govmt.

Post-communist ‘learning’ Democratic 1998 0.04 experience 2000 0.05

Federation

0.02 0.01

Power of central govmt.

0.05 0.02

0.06 0.08

0.06 0.01 0.13** 0.02

0.05 0.03

0.04 0.03

0.03 0.09

0.01 0.12**

0.02 0.08

0.05 0.02

0.03 0.07

0.02 0.05

0.03 0.00 0.09** 0.09

0.03 0.00

0.04 0.05

0.10** 0.11**

0.02 0.02 0.05 0.07 0.03 0.05 0.02 0.06 0.03 0.11** 0.09* 0.07

0.06 0.05 0.04 0.09

0.02 0.05 0.03 0.05

0.05 0.11** 0.02 0.05

0.10** 0.10**

Ideology

1998 2000

0.06 0.04

0.01 0.00

R2

1998 2000

0.02 0.02

0.02 0.04

0.06 0.03

0.06 0.06

0.15** 0.06 0.05 0.09

Power of regional govmt.

0.09* 0.07 0.01 0.03

0.02 0.02

0.11** 0.08* 0.03 0.05

0.05 0.20** 0.22** 0.19** 0.06 0.18** 0.23** 0.41** 0.07 0.06 0.02 0.06

0.08 0.10

0.14 0.22

0.03 0.04

0.03 0.04

Coefficients significant on the 0.01 level are marked with ** and on the 0.05 level with*. Also other coefficients may indicate effects but should be interpreted with care.

democratic attitudes is that those who regard regional government as strong also support party pluralism. It is a widely assumed that the legacy of the past is important since individuals are socialised into certain values at an early stage. However, age does not affect democratic attitudes in any significant way. Some may think this is quite strange, but the same is found in population surveys in postcommunist countries showing low effects between age and support for democratic regime (Rose et al. 1998: 205) and in a study of post-communist elites in the Baltic states (Steen 1997). Obviously, the issue of ‘democracy’ is not splitting those who had their formative years under communism and the younger generations. ‘Democracy’ has become an internalised value across generations.

124 What matters for the elite’s orientations? One should also expect that having been elected to a representative body during the previous regime leads to more scepticism towards democratic institutions. This variable has a rather clear effect on attitudes to leadership but is the opposite of what is expected: under Putin those who had such a position in the Soviet period tend to disagree about the blessings of strong leadership (0.11*). While a previous position does not matter, as shown in Chapter 4, the main response is that more than 80 per cent of the elites are supporting strong leadership. Also quite unexpectedly, during Yeltsins’ period those who held a power position in a Soviet elected body tend to be the most positive about party pluralism. Although the effect is not significant it may indicate that the previous confrontations between Yeltsin and the communist opposition made them see party pluralism as a way of protecting the Communist Party. Under Putin’s regime the elite tend to change their opinions and are becoming clearly more negative about the value of party competition, probably because of the confusion created by the many small parties. Post-communist ‘learning’ has a positive effect on democratic orientations. Those who are a member of a political party both during Yeltsin’s and Putin’s periods are more positive about participation and party competition and significantly more critical of strong leadership than those who are not active in politics (0.10**/0.10**). Taking part in political organisations seems to socialise leaders into democratic thinking. Since Russian political parties tend to serve as ‘schools of democracy’ this is a considerable achievement for democratic development. An interesting observation is that under Putin the right-wingers are much more positive about party competition than those on the left side of the political spectrum (0.18**). In Yeltsin’s period the left–right divide was less important for attitudes about party pluralism, indicating that Putin’s re-centralisation policies are appealing to the more authoritarian left’s propensities to streamline the political process while liberals tend to mark their pluralist instincts. The economy During Yeltsin’s period trust in the President significantly influenced support of private ownership (0.15**), but under Putin, the President does not seem to give rise to any cleavages among the elites. State capacity as measured by the elite’s perception of regional strength, indicate that strong regions lead to a wish for a levelling-out of income differences. The legacy of the past does not influence attitudes to the economic system except that those who had an elected position before tend to support state ownership. The must substantial effects on economic system come from post-communist learning. The left–right preferences among the national and regional elites, both under Yeltsin and Putin, strongly affect their attitudes to income-differences and ownership (0.20**/0.23** and 0.22**/0.41**). Over time, the effects are getting considerably stronger, showing that among

What matters for the elite’s orientations? 125 the elite, new ideological cleavages emerging from post-communist experiences, are much more important to the future economic system than loyalty to the core leadership’s policies, the state’s governing capacity and legacies from the previous regime. Under Yeltsin party membership affected attitudes to economic reforms, which probably reflects the heated debates on the ‘shock therapy’ with the communist opposition. While the effects of party membership disappear under Putin, the ideological position increases in importance. The federation Trust in the leadership under Yeltsin and Putin does influence the issue of future centralisation of the federation, but not significantly. On the other hand those who are positive about the President’s administration support more power to the regions, so the picture is mixed. Regarding state capacity an interesting shift has taken place: perceiving the regions as strong under Yeltsin’s government resulted in preferences for even more autonomy (0.10**), while the relationship reversed under Putin (0.11**). After 2000 the elites who regard the regions as politically strong want less federal decentralisation. This illustrates the pragmatic shifts of elite attitudes that have taken place following Putin’s regime. Looking at legacies of the past, one finds the opposite of what was expected, the younger elite want less power devolved to regional government, a tendency that is growing over time and underscores that Putin’s policy of recentralisation has a particular support base among the younger generation of leaders. Post-communist learning significantly affects federal attitudes during Yeltsin’s period of rule where party-membership and left orientations instigated preferences for more centralised governance and less power to the regions (0.11** and 0.19**). After Putin came to power, party membership and ideology are far less important for the elite’s preferences for type of federation. In summary As the regression analysis illustrates, it is not an easy task to explain the elite’s attitudes to the triple transformations in the political, economic and federal systems. Obviously, the indicators measuring the trust in the ‘executive’ and ‘state capacity’ are targets for criticism since they are based on the elite’s subjective perceptions and not on objective circumstances. But, when clearcut objective indicators of ‘past legacies’ like age and communist activities do not affect attitudes in any convincing way one may doubt that alternative institutional indicators will do better. The institutional factor, like loyalty to top leaders explains little. However, it is important to note that the ownership issue was rather closely connected to trust in President Yeltsin, while this relationship disappeared under Putin. Obviously, the politicisation of the Russian Presidency was connected to the

126 What matters for the elite’s orientations? turbulent economic ‘shock therapy’. The (a) hypothesis that trust in the President induces sympathy for their policies was valid just during a certain period of the Russian economic transition. Certainly, a disassociation between trust in the President and controversial policies is crucial for the President’s authority. While the federal government’s capacity to rule has no effects at all, perceiving that regional government is strong has some consequences for liberal political orientations, but these elites also want more income equalisation and less delegation of power to the regions. It seems that the state’s capacity is less important than expected in the (b) hypothesis. The cultural factors relating the elites to the past explain much less than expected, and the hypothesis (c) arguing that age and previous connections with the regime influence orientations, have little support. In the hypothesis (d1) I argued that the variables emanating from the elite’s recent post-communist experiences and thus connected with their more immediate interests are important. The ‘school in democracy’ thesis gets considerable support. Experience with membership in a political party encourages preferences for liberal democracy, market economy and decentralisation of federal power. In the (d2) hypothesis I argued that ideological position on the left–right scale will have effects on preferences for type of economy but not necessarily impinge on attitudes to democracy and federation. The main finding here is that ‘ideology’ accounts for the two major political controversies in Russia both under Yeltsin and Putin: how to redistribute wealth and ownership. These socio-economic ideological disputes are obviously getting stronger over time among the elite. While the issues of type of democracy and federal structure also split the elite, as shown in the previous chapters, only the economic issues follow a clear left–right divide. The lack of ‘ideologisation’ of the fundamental procedures of the state indicates a rather small possibility for politisation of the ‘rules of the political games’. On the other hand, the highly ideological controversial distributional issues related to equality and property rights is a manifestation of prospective elite clashes. The elite’s orientations to democracy, economy and federation analysed in the previous chapters have revealed basic patterns of uniform beliefs across elite groups, while this chapter illuminated the potential for socio-economic cleavages among the elites. However, attitudinal patterns are moulded in specific decision contexts that in post-communist countries are characterised by weak formal institutions, clientelism and personal relations. The purpose of the remaining two empirical chapters is to analyse decision-making culture and network behaviour in Russia.

Chapter Title

8

127

Decision-making cultures

But, we might hypothesize, at a time when political structures are demolished and new rules introduced, the informal conventions governing behaviour will provide the only element of stability in an uncertain world. Mary McAuley1

Introduction A major purpose of the post-communist reform programme was to institute a more law-abiding civic culture furthering public transparency, the values of a civic society and a functioning market. One formidable challenge was to pass laws and establish institutions regulating relations between the state, society and the new business community but even more important is the internalisation of these civic values into the elite’s thinking and behaviour. This legal approach to how to organise decision-making is often associated with political modernisation and modern bureaucracy and is contrasted with more traditional forms based on informal mechanisms like ‘clientelism’ and unwritten codes. Here it is not the ‘impersonal’ law but individual connections and the self-interest of holders of public office that prevail. This chapter examines the Russian elite’s beliefs about these two cultures of decision-making in the post-communist era: is an anti-modern or a rational bureaucratic culture dominating? One challenging puzzle is where the attitudes of the national and regional elites may be placed on a continuum between ‘clientelism’ and ‘legalism’, asking if, as McAuley hypothesises, postcommunist Russia is characterised by a mix of the two cultures. Another is whether the elites’ attitudes have changed from the rather ‘clientelistic and bargaining regime’ under Boris Yeltsin’s chaotic reform period to a more ‘law and order’ oriented regime under Vladimir Putin’s centralising policies. The problem of reforming Russia may be understood from the inertia of decision-making culture. This administrative legacy implied both a certain elasticity and stiffnes. As described by Ledeneva (1998) in the Soviet regime ‘the availability of unwritten codes alongside the written ones, and the usual practice for authorities to switch to the written code only ‘where necessary’ created certain freedom and flexibility. On the other hand, such leniency

128 Decision-making cultures could be restricted at every moment’ (p. 77). The idealistic reform team surrounding Yeltsin took it more and less for granted that laws and directives would be implemented through political and administrative structures. They did not take sufficient account of the fact that a decision-making culture based on law and loyalty had taken root only to a limited extent among political and administrative organs. Beneath the façade of an apparently loyal civil service governed by regulations, patron–client relationships were alive and well. Decision-making cultures may vary from ‘traditional’ to ‘rational bureaucratic’ organisation. And ‘clientelism’ is more a continuum than a constant. Its meaning may vary from traditional personal relations and preferential treatment accorded between patrons and clients to criminal activity, whereby decision-makers are held to ransom via bonds of dependency like bribes or threats. Here I will analyse the following questions, all vital to the development of a democratic culture and viable markets: First, how open or closed is the decision-making process? Second, how important is bargaining as opposed to formal procedures? And third, to what extent has organised crime infiltrated decision-making? Since clientelism is by definition a covert process these issues are inherently difficult to investigate. But it is possible to take a less direct approach. The elite, as participants in decision-making, can be regarded as a mirror that reflects at least parts of the hidden decision-making culture. Thus, the informed elite’s evaluations provide a crucial indicator if a ‘traditional’ or ‘modern’ type of administrative culture is prevailing in post-communist Russia.

Legal-rational and traditional decision-cultures Max Weber contrasts legal and traditional authority by different ways of submission. In traditional societies submission rests upon the belief in charismatic persons or respect for an ordered tradition, while submission under legal authority ‘is based upon an impersonal bond to the generally defined and functional ‘duty of office’ . . . and the right to exercise authority is fixed by rationally established norms, by enactments, decrees, and regulations . . .’ (Weber, in Gerth and Mills 1977: 299). In some Mediterranean countries, in Latin America and in Asia, clientelist relations have become more than a deviation from ‘ordinary’ institutions. Vertical clientelist connections between decision-makers and societal groups are, according to Eisenstadt and Roniger (1980), a permanent institutionalised pattern in these countries. In the Soviet Union the state bureaucracy and clientelism became especially intertwined during the Brezhnev period. As Eisenstadt and Roniger argue, such conventions should be regarded as institutionalised behaviour arising out of specific political cultures upheld by informal norms among members of the elite in the state and society.

Decision-making cultures 129 Periods of de-bureaucratisation – i.e. reducing the state apparatus – are particularly conducive to the growth of special dependencies between the state and client groups (Eisenstadt 1959). In some cases like in Italy, Putnam (1993) argues that the Mafia adjusted quickly from previous feudal relations to new representative political state institutions. The post-Soviet period can be seen as an enormous experiment in dismantling old governing structures and introducing new institutions and codes of conduct imported from the West. In Russia, and to a large extent in the former Soviet Union, the combination of clientelism and bureaucracy resulted in a hybrid in which hierarchy, professional specialisation and rules were just a formal framework in which decision-makers regarded public positions largely as a kind of personal ‘property’. Personal networks based on ‘generalised exchange’ became widespread, while the collective aspect of decision-making and social responsibility was accorded a secondary role. Accordingly, networks and clientelism were a hindrance to the ‘specific exchange’ that is a characteristic of both market relations (McAuley 1997) and rule-based decision-making in a state administration. Since the clientelistic model is characterised by nontransparency and personal connections it is more open for influence by nonlegitimate groups like organised crime. Patron–client relations express culture-specific conventions of interdependent personal relations deviating considerably from formal structures. To understand political and economic changes, it is necessary, as McAuley (1997) underscores, to understand which ‘cultural conventions’ impinge upon attitudes and behaviour. During a period in which old institutions are breaking down and new ones being introduced, members of the elite orient themselves towards the most predictable circumstances. Informal conventions for problem-solving will constitute the context for behaviour in this case and are, paradoxically, one main stabilising element in an environment of change and unpredictability. Clientelism can been described as an alternative relationship between state and society found especially in regions with weak state structures (La Palombara 1964). Here state officials are permanently involved in exchange relations with special interests – e.g. family clans or a dominant political party – and others are excluded. The source of authority comes from personal control over resources and the individual attributes of the decision-maker rather than from a depersonalised position or role. Obviously, in such an administrative culture clandestine networks will prosper and decisionmaking will be deviating from the Weberian legal-rational model of bureaucratic administrative behaviour.

Transparency According to the clientelistic model, decision-making involves interpersonal and covert relations. The legal-rational model assumes more transparent processes where decisions stand up to scrutiny by outsiders. Members of the

130 Decision-making cultures Table 8.1 Elites saying decision-making is ‘closed’ in various sectors (%)

1998 2000

Business

Bureaucracy

Politics

Central govt.

Reg. govt.

91 87

90 91

79 76

77 73

55 59

Response rate 1998: 97–9%; 2000: 97–9%. The attitudes were measured on a four-point scale, where 1 is very closed, 2 is rather closed, 3 is rather open and 4 is very open.1 and 2 are merged in the table.

Russian elite were asked how they would assess ‘openness’ in business, politics and public administration. One may assume that transparency varies a lot among these three sectors. In the economic field, for instance, theories of ‘distributional coalitions’ (Olson 1992), ‘winners take all’ (Hellman 1998) and ‘recombinant property networks’ (Grabher and Stark 1997) predict that clandestine relations will be dominating. About 90 per cent of the elite say decision-making in business and bureaucracy is closed. In politics and central government the percentage is lower, while in regional government only just over half the respondents consider decision-making to be closed. As expected, business and bureaucracy are perceived as being conducted under especially clandestine conditions, while political processes on the central, and especially on the regional level, are deemed to be more visible to the public. Attitudes remain quite stable over time, indicating that the degree of openness in decision-making is a structural propensity of these sectors. The more closed nature of decisionmaking in business and bureaucracy fits in with the idea of closed elite relations within and between business and bureaucracy suggested by Olson, Hellman and Grabher and Stark. Lack of transparency is more of a problem among these elites than in the political process, where competition guarantees a minimum level of openness. There are no major differences between the elite groups, with one important exception. The members of the Federation Council and regional leaders are conspicuous in perceiving regional processes as more open. Regional government looks more closed from the central perspective than it does to the regional elite themselves. It is a long way from Moscow to the regions. Easter (2000) describes the informal network system on the periphery as being rather autonomous and independent of the central authorities, not only after the change of regime but even during the communist period. The data indicate that those most closely involved in regional government tend to agree about the existence of quite porous regional decision-making structures. But members of the central elite do not say the same about their own decision-making. Regional networks obviously are widespread and important for the cohesion of the regional elite, but according to the elite they are also different from the more closed central networks.

Decision-making cultures 131

Formal and informal contacts As La Palombara (1964) argues clientelism is an alternative state–society relationship, deviating from Max Weber’s non-personal bureaucratic governance. In the clientelist model special interests and persons have established permanent exchange relations with the state. The Soviet system was a peculiar mixture of patrimonialism, or even ‘sultanism’,2 and rigid bureaucratisation and flexible clientelism. The main element of Soviet-type ‘clientelistic bureaucracy’ was professional specialisation, where authority was derived not from a person’s position as such but from control over specific resources upon which others were dependent. Hierarchical control eroded as this group of specialists grew throughout the union and personal networks developed between the central and regional elites.3 These people regarded their positions as a kind of ‘private property’ where personal and public interests could not easily be separated. In the post-communist era the patrimonial aspect has been severely weakened; legitimacy is no longer derived from the personality of the national leader, as it was in the Stalin era, for instance. The bureaucracy has not been reduced, but democratic institutions and the deregulation of the economy have created new power bases for the elites. The argument is that this process of fragmentation among the elites in the post-communist era probably has increased the propensity for clientelism and weakened the law-based element in decision-making. Moreover, the business elites, who one would expect to be especially oriented towards personalised contacts, have become more important. The relative weight accorded to the two ways of decision-making is, of course, difficult to demonstrate. One approach is to ask the elite how appropriate they think these alternatives are as ways of problem-solving for ordinary people. If the bureaucratic model is a widespread one, one would expect a high degree of rule-orientation; if clientelism dominates, direct contacts will be regarded as important. For all respondents taken together, the clientelist and the law model were regarded as equally important in 1998 (see Table 8.2). Two-thirds of the elite thought that it was best for ordinary people to use both the law and personal connections when solving problems. Two years later the law has gained more support, indicating that the clientelistic style of decision-making under Yeltsin is prominent but is gradually giving some way to Putin’s rule of law policies. The beliefs of the respondents indicate that the two quite contrasting decision-making cultures are intertwined and exist side by side in Russia. A comparison of elite groups shows that members of the Federation Council have the most trust in the law model and relatively few of them opt for the clientellist solution. The State Duma members are moving in the same direction. The bureaucratic leaders prefer the law, but 50 per cent of the political elite also mention personal contacts. Regional government leaders put more emphasis on the law.

132 Decision-making cultures Table 8.2 The importance of ‘the law’ and ‘personal contacts’ (%) The law

Personal contacts

Difference

Total

1998 2000

63 71

63 57

0 14

State Duma

1998 2000

72 80

73 52

1 28

Fed. Council

1998 2000

80 93

50 55

30 38

Federal admin.

1998 2000

61 68

49 56

12 12

State enterprises

1998 2000

54 62

78 59

24 3

Private business

1998 2000

64 54

76 63

12 9

Culture

1998 2000

66 58

57 70

9 12

Regional govt.

1998 2000

62 74

63 55

1 19

Response rate 1998: 98–9% N=980; 2000: 98–100% N=605. The respondents were asked to rank on a five-point scale first the importance of law and then the importance of personal contacts for ordinary people in dealing with the state. In the table values 1 and 2 on the scale are merged.

Those members of the elite who are not so directly connected with state decision-making deviate from this pattern. During the period of economic reforms at the end of the 1990s the leaders of state enterprises were most sceptical about law-based decisions and heavily favoured the clientelistic description of state–society relations. It seems that after the hectic privatisation period their views changed. Private business leaders score high on clientelism both before and after Putin. The cultural elite is also moving towards describing decision-making in terms of personal relations. One may conclude that the elite’s image of state–citizen relations combines two opposing decision-making cultures. A reliance on rights enshrined in law is combined with direct contacts with leaders in charge. Ledeneva’s (1998) description of the Soviet practice of ‘switching’ between personal relations and written codes also remains after the change of regime. But, clientelism remains stronger in non-state sectors. The tendency over time for political and administrative elite groups to underscore ‘the law’ while business leaders think personal contacts are more important in dealing with the state shows that the advent of the new market economy opened a new arena for patron– client relations. Having ascertained which type of decision-making the elite thinks is dominant in problem-solving among ordinary people, one also needs to ask which model the elites regard as most efficient for decision-making in differ-

Decision-making cultures 133 ent fields. Here ‘law’ is contrasted to ‘bargaining’ as models of decisionmaking. Bargaining involves personal relations but not necessarily ‘clientelism’. It implies that decisions are subject to negotiation but doesn’t necessarily result in personal favours. However, in general one may argue that due to the direct contact in the bargaining process the threshold for playing on patron– client dynamics is rather low. As shown in Table 8.3, the Russian elite obviously regard the law as a more significant vehicle for reaching decisions than bargaining through personal contacts. For the total elite the differences are rather substantial in politics and administration while smaller in the business sector. During the period examined the law option has a consistently high degree of support. It is clear that bargaining is falling out of favour with the elite as a whole. From 1998 to 2000 the political elite in the State Duma and Federation Council preserves a substantial and somewhat increasing support for federal law and shows a particular loss of trust in bargaining in the fields of politics, administration and to some extent in business. The same tendency is also found among leaders of state enterprises, private business and culture. The leaders of regional government changed their opinions only slightly over time.

Table 8.3 The importance of the ‘law’ and ‘bargaining’ (barg.) in various sectors as perceived by the elite (%) Politics Law

Barg.

Administration

Business

Law

Barg.

Law

Barg.

Total

1998 2000

85 87

54 41

89 92

50 40

79 79

68 59

State Duma

1998 2000

88 94

59 35

91 98

51 34

86 88

68 56

Fed. Council

1998 2000

90 90

50 24

97 100

50 37

83 86

60 56

Fed. adm.

1998 2000

84 66

41 37

92 82

36 34

80 58

50 46

State enterprises

1998 2000

88 90

50 34

86 94

50 32

80 92

60 46

Private Business

1998 2000

94 92

51 33

96 94

44 30

92 84

72 54

Culture

1998 2000

85 92

53 32

82 90

60 32

74 86

61 62

Regional govt.

1998 2000

83 89

56 54

88 91

53 52

77 79

71 69

Response rate 1998 98–9% N= 980; 2000 98–9% N=605. The question was about assessing the importance of two alternative approaches for reaching effective decisions: ‘abide by the federal law’ and ‘bargain with influential persons’. Percentage scoring 1(very important) and 2 (quite important) were merged on a scale from 1 to 5.

134 Decision-making cultures One anomaly is the decreasing confidence in the law in all three fields among administrative leaders. Focusing on the business sector, it should be noted that its leaders express considerably less confidence in bargaining in 2000 than two years earlier; and although the percentage of people saying they rely on the law is slightly reduced in 2000, it remains very high. Contrary to mainstream beliefs the support for rules regulating conduct in politics and administration is in fact very strong among business leaders and the bargaing option is losing popularity! The main picture is that both federal law and bargaining are regarded as an efficient way of decision-making among a large majority of the elite. However, ‘law’ and ‘bargaining’ are not mutually exclusive as some theories of administrative modernisation invites us to believe, but rather complementary (La Palombara 1964; Weber, in Gerth and Mills 1977). As Eisenstadt and Roniger (1980) indicate clientelism may thrive in bureaucratic organisations. They coexist in a symbiotic relationship, whereby law-abiding activities are nourished by an interest in a rather stable framework for bargaining activities. The balance between the two over time is not static. It is influenced by the experiences of the reform processes. Where the centre saw fragmentation and chaos, the regions experienced autonomy. The centripetal forces of the power centre want more regulation while centrifugal interests in the regions are desiring self-rule by opting for the bargaining alternative. The data indicate that the central political elite obviously see ‘bargaining’ as a way of reaching decisions as much less attractive after Putin came to power. On the regional level the balance is stable: the ‘bargaining alternative’ enjoys the same support as before and the ‘federal law’ option is still attractive. The regional leaders want to preserve autonomy and the bargaining style from the Yeltsin period while the national political elite has become more critical of decision-making by bargaining with influential persons. Thus, changes of decision making style reflect the basic shifts in centre–periphery relations that followed in the Putin era. Data shows that there is huge potential support among the elite for a state based on the rule of law. Putin did not create the new centralist mood, he simply responded to the general orientations of the Russian elite. However, the ‘rule-orientations’ does not exclude clientelism. The concept of ‘abiding by the law’, which the Russian elite evidently support, and the type of decision-making expressed by Max Weber’s ‘legal rational’ authority may be very different things. While the ‘personal’ and the ‘official’ roles are clearly separated in Weber’s model they are often blurred in other bureaucratic systems lacking ‘legal rational’ traditions. Clientelism and bargaining may very well thrive under a Russian form of law-regulated system.

Mafia and decision-making The ‘mafia’ is not a very precise concept and covers a wide range of activities from clandestine networks, through various forms of corruption to black-

Decision-making cultures 135 mail and the use of violence to silence opponents. One common characteristic of mafia activities is that they are not only illegal but that they have organised links to the state and may therefore represent an institutionalised alternative pattern of decision-making. The purpose here is to detect these extreme habits of ‘clientelism’ on the ‘legal-clientelist’ continuum which according to several observers has been deeply ingrained into Russian decision making. Organised crime is distinguished from other forms of illegal behaviour by a hierarchical and specialised organisational structure. It has certain rules of conduct, a strict discipline controlling the organisation, and an exclusive membership that makes use of threats and, if necessary, bribes and violence to attain its goals. Williams (1997), an international expert on organised crime has reproduced a report issued by the US authorities on Russian émigré crime. It distinguishes between three major types of criminal organisations: (1) the vory v zakone (thieves in law), whose roots go back to the Gulag prisons of the 1930s and have much in common with the Italian Mafia and Camorra, particularly their use of strict codes of conduct; (2) the young entrepreneurs in their 20s and 30s who emerged after the collapse of the Soviet regime and operate in small groups; (3) the avtoritety or ‘thieves in authority’, some of whom had important positions in the Communist Party and/or state bureaucracy. They are well educated and sophisticated and have international networks that enable them to operate in the grey zone between crime, the market and government. While some criminal formations have their roots in the Soviet system, the opportunity structures created by dismantling the state, by the new market economy and by pluralism spurred new criminal activities. Citing official figures Williams (1997) reports that organised crime skyrocketed in Russia during the 1990s and the number of criminal organisations grew from 3,000 in 1992 to 8,000 in 1996. Despite the ambiguity and uncertainty of the figures they clearly illustrate the saliency of the problem. But they say nothing about the relationships between the groups and how they are connected to the public sphere. Some observers argue that in particular Southern Italy and post-communist Russia have similarities: legal institutions and a political culture characterised by informal relations and mafia influence. Robert Putnam (1993) in his study of political culture and economic performance in Northern and Southern Italy tentatively predicts that ‘Palermo may represent the future of Moscow’ (p. 183). It is not really possible to assess the extent of mafia influence on the state, since mafia activities are covert and not open for research or public scrutiny. However, some research has been done on mafia activities in Southern Europe. One important observation is that the wealth motive is supplemented by the paramount aim of increasing power by infiltrating politics and the public administration (Siebert 1996). According to Allum (2000), during the ‘takeover’ of local politics by criminal groups in Italy during the 1980s, some

136 Decision-making cultures main phases of power expansion may be identified. These stages may also be used to characterise the expansion of organised crime more generally on national and regional levels. During the first phase, which is labelled ‘clientelistic exchange’, politicians are provided with resources like money for campaigning or networks for collecting votes in return for protection. The next stage is the infiltration of political parties, representative organs and the administrative apparatus by members of the Mafia, or ‘buying-off’ people in influential positions. In the third stage the Mafia uses its ‘representatives’ to set the political agenda and control the policy-making process in order to increase their own economic returns. In the final phase organised crime becomes fused with the political, administrative and economic sectors. Organised crime is not a new phenomena in Russia. Old patterns of illegal behaviour from the Soviet period have, according to Rawlinson (1997), merely been adapted to fit new circumstances. Williams (1997) remarks that the Soviet regime intentionally used illegal activities, like the black market, as a way of compensating for the deficiencies of the command economy. Under communism there existed a symbiotic relationship between parts of the nomenklatura and the black economy. In post-Soviet Russia the problem is corruption applied by mafia elements to ‘protect criminal organisations from law enforcement’ (p. 21). He asserts that a new type of symbiotic relationship has been established, whereby the post-communist elite have been forced to accommodate organised crime because it is now the dominant force controlling resources that the business, political and administrative elites depend on. The combination of the old personal relationships and the mafia’s power to use positive and negative sanctions make the elite vulnerable to pressure. How then does this rather gloomy description of organised crime correspond with the Russian elite’s evaluation of the situation? Table 8.4 reveals that a majority of the elite sees mafia and organised crime as important actors in all fields, 65 per cent in 1998 and decreasing to 58 per cent in 2000. All elite groups regard the mafia as less influential after Putin came into office and this trend is considerably stronger among the central political elites, especially among the Federation Council representatives. The rather short period Putin had been in power when the last survey took place in the summer of 2000 obviously could not have reduced the influence of the mafia in any substantial way. The effects must mainly be understood as the elite’s positive psychological reactions to Putin’s law-and-order programme anticipating less mafia influence. The private business sector is the one deepest entrenched in organised crime, a view asserted by all elite groups. Mafia influence is seen as somewhat weaker in politics, central administration and government of rich regions and as notably weaker in poor regions and local government. This pattern corresponds with the Italian model of how mafia influence expands, presented above. In the first phase organised crime gains control over the business sector. In the Russian context this meant that the resources generated during the privatisation process – i.e. the ‘stealing’ of profitable

Decision-making cultures 137 Table 8.4 Strong mafia influence in various sectors (%) Business

Politics Fed. Govt. Govt. Local Average admin. of rich of poor govern- all regions regions ment sectors

Total

1998 2000

90 82

66 57

62 57

66 62

53 49

45 43

64 58

State Duma

1998 2000

92 76

60 51

57 50

72 53

59 38

42 25

64 49

Fed. Council

1998 2000

87 80

79 56

59 27

57 26

40 3

28 7

58 33

Fed. admin.

1998 2000

93 85

63 60

57 42

74 70

55 55

71 55

69 61

State 1998 enterprises 2000

91 85

72 62

78 47

83 77

63 65

75 55

77 65

Private business

1998 2000

92 77

74 64

71 52

75 73

64 65

67 63

74 66

Culture

1998 2000

94 86

68 62

64 48

78 80

68 44

64 69

73 65

Regional govt.

1998 2000

89 81

67 56

61 49

61 58

49 51

36 38

61 56

Response rates 1998: 93–7% N=980; 2000: 96–9% N=605. 1 and 2 are merged on a scale from 1 (very strong influence) to 5 (very weak influence).

state property – was the stepping stone for the next stage: influencing the political process and government. This rather pessimistic picture is mitigated by the small but overall tendency towards reduced perceptions of mafia influence over time. The period of privatisation and economic liberalisation under Yeltsin was highly conducive to mafia-type activities; although these activities are still going on, it seems they are at a somewhat lower level. The need to finance election campaigns, the blackmailing opportunities generated by the leaking of sensitive information, and personal relations make politicians a rather easy target. This explains why politicians see organised crime as playing a role in politics. In 1998 60 per cent of the politicians in the State Duma thought this was the case and as many as 79 per cent of Federation Council representatives did. Over time the members of the Federation Council became much less negative in their attitudes and they describe in particular the federal administration and regional and local government as quite independent of the mafia. The leaders of state and private economic enterprises are also relatively concerned about the influence of organised crime in politics and they think the federal administration, in particular, has been infiltrated by organised crime. More than 70 per cent of the economic elite were of this opinion in 1998, but their attitudes had changed quite a lot by 2000. Those who represented individualism and market interests during the turbulent period

138 Decision-making cultures under Yeltsin perceived not only business but also the state as very prone to criminal influence. Putin’s anti-corruption campaigns and ‘law and order policies’ has to some extent changed this image. It has been maintained that mafia is a problem in particular for regional leaders. McAuley (1997) argues that elites, e.g. in Krasnodar, depend on the mafia for staying in power. The elite’s perceptions about the mafia vary according to type of region. While rich regions have a major mafia problem, poor regions and in particular local government is in a relatively better situation. It is also interesting to observe that views differ on this point between elite groups: the regional elite and members of the Federation Council say this is a smaller problem than the elite in other institutions. Whether the differences come from a better knowledge of the actual situation or from distortion of the truth is not easy to judge. In summary, reports from international experts, evaluations by Russian analysts and the images of the Russian elite all confirm the same picture: the influence of organised crime in the Russian economy and government is substantial. What is new from this study is the apparent variation of mafia impact between the business sector and central and local government, how various elite groups rather unanimously assess such activities, and the tendencies to perceive less mafia influence over time. What are the explanations for this persisting influence of the various activities lumped together here as ‘mafia influence’? One main condition is that the Russian state’s lack of resources to finance a decent level of wages for its employees makes government officials and politicians extremely vulnerable to bribes. However, it is quite a big step from bribery to organised crime influencing decision-making. As mentioned above, Williams (1997) argues that in the post-communist period connections from the past regime have been important for establishing links between poor government and organised crime in which corruption is systematically used as a means of exerting influence and protecting the mafia from the legal system. A major part of the Russian elite evidently supports this view. From a cultural perspective mafia influence and organised crime have often been related to the existence of a certain sub-culture marked by a lack of civic responsibility where the population may have something to gain from supporting illegal activities (Putnam 1993). From an institutional perspective organised crime arises out of the new ‘opportunity structures’ following establishing of liberal market and state institutions, as described by North (1990). Organised crime may compensate for a weak state unable to provide protection and services. During the turbulent Yeltsin period the combined effect of a sudden breakdown of the old institutions, the existence of organised crime during the Soviet period, the absence of civic society norms, the new opportunities created by the carving up of state property and conditions of ‘raw capitalism’ produced extremely fertile ground for illegal activities in general and organised crime in particular. The elite’s images of organised crime in the

Decision-making cultures 139 state and society reflect a problem that is not only widespread but also resilient to being tackled by legal means. For such behaviour is deeply bound up with rooted cultural norms that after the downfall of communism are being nourished by a fragmented state. The tendencies towards reduction of mafia activities after Putin came to power illustrate that such forces may be counteracted by stronger state structures, but will they disappear? As Rutland and Kogan (1998) indicate, corruption and organised crime are serious for Russia but they are not necessarily disabling problems and it is not clear that either liberal institutions nor a strong leader will bring them under control.

Conclusion: a mixed decision-making culture Yeltsin’s reform team was keen to introduce a market economy but did not pay much attention to the institutional and cultural context in which markets function. One main precondition for the success of a market economy and liberal democracy is that norms underpinning legal-rational rule are accepted as legitimate by the actors. Yeltsin’s administration hoped new attitudes would quickly take hold once the political and economic institutions were in place. This chapter has presented an outline of the elite’s images of post-communist decision-making culture. The point of departure was that decision-making may be placed on a continuum from the legalrational and accountable bureaucratic type to personalised forms of rule where bargaining, clientelism and organised crime decide outcomes. It is impossible to measure exactly where Russian decision-making is on this continuum but it is not really necessary. Since the elites are the best informed and their orientations are extremely important for behaviour and decisions, it can be assumed that their responses will give some basic insights into the Russian decision-making system. Here I have concentrated on three aspects of decision-making: ‘transparency’, ‘rule-orientation’ and ‘illegal influence’. The elite’s images draw a broad canvas of a decision-making culture where processes are closed, where the law is important but personal relations and bargaining are also very significant, and where decisionmaking is infiltrated by organised crime. It may come as a surprise to some that the elite substantially support law-based decisions and a purely clientelistic culture is not reflected in the elite interviews. This attitude may be explained by a tradition of bureaucratic thinking among the Russian elite that lives side-by-side with a clintelistic decision-making culture. In fact, as a consequence of the new decentralised federation, bureaucracy in terms of the numbers of state positions and organisations has grown since the fall of communism. Eisenstadt (1959) remarks on this paradox that bureaucratisation and clientelism may develop side-by-side. The growth of bureaucratic activities ‘may be accompanied by deviation from its rules’ (p. 313). A bureaucratic structure implies rules and regulations but also provides resources that can be exploited for personal purposes and

140 Decision-making cultures make clientelism work. This argument may be applied to the political sector as well. Politicians are entering democratic institutions with new forms of exchange and are becoming directly dependent on the support and resources of clients, be they voters, ordinary pressure groups, financial oligarchs or organised crime. However, in contrast to Southern Europe, where external actors gradually infiltrated politics and public administration and to some extent were confronted with an existing legal-rational culture, in Russia the business leaders were recruited from the previous state structures. The problem was that a mixture of the communist-era nomenklatura, the former Soviet managerial elite and the new young, and often well-educated, careerists became rentseekers more interested in exploiting the state than restructuring the economy. The break-down of the formerly all-encompassing state and the resulting blurred boundary between the state and the private sector is sustaining a specific Russian decision-making culture where informal relations and formal institutions go hand-in-hand. Whether the elite’s cognitions reflect real processes cannot be decided here. At least, that is how the elites interpret their decision-making environments, with important consequences for their orientations and how they are acting. If a clientelistic culture is inherent to how decisions are made, ‘networking’ can be expected to be an ingredient part of the elite’s behaviour, which is the topic of the next chapter.

Chapter Title

9

141

The network state

The most common method of bringing proximate policy makers into agreement with each other is their informal efforts toward mutual adjustment. Charles E. Lindblom1

Introduction2 Following the dissolution of the monolithic state structure and the abolition of the hegemony of the Communist Party, almost overnight the elite lost their two main pillars of orientation: a stable hierarchical order and a common belief system. It therefore became imperative for them to find alternative ways of co-ordinating decisions. One main strategy for doing this was the formation of networks. As a medium of social exchange a network is less formal than an organisation but also less fluid than market relations. The hallmark of networking is communication through personal contacts with some regularity. Networks were not a new phenomenon after 1991, but since the old power institutions broke down and the elite had to reorganise, the importance of informal contacts increased. Elite-networks are particularly crucial structures for co-ordination in periods of swift political and institutional change. The purpose here is to identify such networks, the political background of the elites and to what extent legacies of the past shape the patterns of contact. After the privatisation of state property, networks between the state and business flourished (Stark and Bruszt 1998). Others claim that because of the Russian clientelistic tradition, elite networks are generic to central and regional governance (McAuley 1997; Easter 2000). One may argue that political pluralism, a weakened state and poorly functioning market institutions paved the way for new opportunity structures that intensified informal contacts among the elite. However, elite contacts are not formed incidentally. They are derived from a person’s professional affiliation and position in the hierarchy and steered by institutional constraints, and they are nourished by his or her experience under the previous regime. As post-communist pluralist institutions and values take shape, it is fascinating to investigate how both past and present institutional affiliations may influence elite contacts.

142 The network state The first part of this chapter analyses patterns of contacts not only between government and business elites but also among the other elite groups included in this study. Do we find an evenly knit network of elite contacts across all state and business institutions, or do certain state elites – politicians, bureaucrats or leaders of state enterprises – have closer connections with business than others? In the second part the focus is on the elite’s various types of ‘capital’, in Pierre Bourdieu’s (1985) term, and how such resources may influence contact patterns. I investigate how the elite is connected by existing family bonds and by its previous positions (membership and rank in the Communist Party) during the Soviet period. It may be argued that contacts will be intensified if the elite brings its ‘political capital’ into the network. Consequently, I ask whether those who held higher positions during the Soviet period are especially active in post-communist networks. It has often been hypothesised that this kind of ‘political capital’ is convertible into personal advantage under a new regime, so that the same people who held positions of influence in the Soviet Union now form the political and business elite in contemporary Russia and maintain specific, selective patterns of contact. If elites do indeed succeed in transferring their influence from one regime to another, then the next question is whether such backgrounds produce certain patterns of contact among the present elite. Do certain groups have more intensive contacts with each other than others? According to the widespread ‘nomenklatura capitalist’ thesis, previous political influence is easily converted into closed business networks. This issue also raises the question of whether connections with the previous regime are conducive to certain conservative attitudes. As shown in the previous chapter having been elected to office during the Soviet period has very little effect on basic attitudes. But does it mean that communist background is also insignificant for the elite’s behaviour? Networks are flexible arenas for solving conflicts and finding pragmatic solutions, but they also tend to be clandestine and therefore not amenable to democratic control. Lack of accountability is a particularly pertinent issue after the departure of a totalitarian regime when major parts of the old elite may re-emerge in new positions of power. At the same time, the flexibility of networking between new and re-emerging elites may be a major asset in coping with the extreme uncertainty that arises in the wake of institutional earthquakes. Networks may also be seen as a pragmatic mechanism for negotiation between old and incoming elites. While hierarchy and market as organising principles easily create winners and losers, direct personal contacts may create trust and smooth over controversies. Direct personal relations make possible the achieement of a consensus on unprecedented problems under turbulent decision-making circumstances. The aim here is not to disclose actual networks between specific persons but to provide more substantive knowledge about general patterns of cooperation between the leaders of various institutions. By asking which elites

The network state

143

interact, how frequent their contact is and what influences their behaviour it is possible to construct a better empirical foundation for understanding the ‘Russian network state’.

Self-interest and culture Elite networks have gathered momentum and are flourishing. And they are an extension of a Russian governing tradition that became widespread during the Brezhnev period, when a rigid bureaucracy became an integral part of personalised patron–client relations and stable elite connections. Networks provided an informal structure for social relations, trust-building and collaboration that was fundamental to early Soviet state-building and influenced the construction of Soviet political institutions. These relations acquired even greater importance after democracy, market reforms and decentralisation weakened central power. Networks may be analysed from the perspective of self-interested elites seeking personal benefits or from the perspective of a political culture in which networks dominate as accepted norms for relations among elites. Both perspectives assume that networks will be carried over from one regime to another and that the weakening of central power increases the potential for interaction based on self-interest and informal norms to continue. Both approaches imply that networks may be highly undemocratic. I start by discussing the view that deviations from the ordinary, vertical chain of command represent a strategy devised by national and regional elites to obtain advantages through co-operation. I then go on to outline the cultural perspective, and conclude by examining the thesis that when elites are carried over from one regime to another networks raise special democratic challenges in transitional societies. A basic precondition for the existence of elite networks is the authorities’ control over attractive resources. Such resources, according to Mancur Olson (1982, 1990), are objects of collusive self-interested elite behaviour. Olson maintains that economic decline during the Soviet period and later in the Russian Federation may be attributed to the existence of networks, or what he calls ‘distributional coalitions’, organised around sectors and special interests among medium- and upper-level elites from the mid-1960s onwards. Particularly during the Brezhnev period, these elites escaped collective sanctions by the central state and formed a new independent ‘class’ of administrators and planners out of the control of the party leadership. These personal networks were able to frustrate or hinder reforms in the segment of the economy they administrated and provide stable positions and supplies of resources for the people involved. The aggregated negative effect of such self-interested behaviour became formidable during the 1980s. While the communist elite thwarted reform of the socialist economy by building network coalitions, under the new regime the same elite stratum caused major problems for market reforms. As Olson (1992) emphasises,

144 The network state especially among ‘meso-elites’ and ‘sub-elites’ one will find a considerable degree of conservatism. Resistance towards market reform and sympathy for central governance will be more widespread among these elites than among the Kremlin leaders. The network alliances among the conservative elites not only undermined the collective rationality of the Soviet system but also perverted the new Russian market economy. After the fall of communism Hellman (1998) observed that the former managerial elite initially supported liberal reforms, such as privatisation and a competitive market, but as soon as a few elites had gained control over and monopolised the most attractive state assets, they took steps to prevent further reforms that might threaten their monopoly interests. These ‘winners’ thereby effectively weakened the rationality of a free market economy. Such networks are small, closed and extremely difficult to study, and their leaders were therefore not included in this survey, but it is reasonable to assume that the respondents from business reflect some of the same attitudes. While often at loggerheads, the conservative elites and the oligarchs also seem to have a perverse common interest in restricting market reforms and preserving the state. Networks may also be understood as an integral part of a political culture. As Eisenstadt and Roniger (1980) maintain, patron–client relations exist in all forms of political systems. Typical of ‘pure’ clientelist systems are ‘generalised exchange relations’, which are stable and based on informal agreements, but they also include important elements of competition and negotiation about the terms of the exchange. Particularly in times of profound economic and social change, when resources are free-floating, competition among elites to join favourable networks will be especially fierce. Patron–client relations became an integral part of the Soviet system and were moulded by hierarchy and certain norms of competence and loyalty. After the change of regime a more open society, fragmented elites, a plurality of power bases and a weak political centre changed traditional patron–client relations (Willerton 1998). As in the Soviet period, the elite’s main aim was to gain control over state resources. A well-known Russian term denoting clout or influence is blat, whereby personal interests are advanced by circumventing formal procedures and regulations (Ledeneva 1998). A person’s access to public resources is determined by how much blat he or she has. Blat is regarded an important part of informal norms and regarded as legitimate, since it is deeply rooted in Russian political culture. Elite competition for material benefits became widespread during the Soviet time and some would maintain elements of ‘pluralism’ existed under the official façade. The appropriate network connections could be used to obtain positions and material benefits (like flats and consumer goods). During the privatisation period, from 1993 to 1995/6, networks were of vital importance for the redistribution of state property to the new capitalists, and cash became an important new element in the equation, largely replacing material goods.

The network state

145

It has been argued that regional elite networks were the main social mechanism for the consolidation of the early Soviet state as well as an informal source of power interacting with the central command lines to produce the stalemate and inefficiency of the late Soviet period (Easter 2000). After 1991, when the formal governing hierarchy had broken down, the new institutions were still weak and a ‘civic culture’ had yet to take hold, informal contacts and networks between elites probably became an even more important source of power than they were before. Also McAuley (1997) believes that such informal conventions have been carried over from the Soviet past and that these norms are now the only stable element in an extremely uncertain world. Particularly under the Yeltsin government, weak central power and rapidly changing coalitions spawned informal contacts among the elite (Shevtsova 1999). Under such unstable conditions networks became important integrating mechanisms for national and regional elites. Networks are covert, often changing, cut across formal organisational structures and therefore raise problems of democratic governance. They are often blamed for non-accountability and for encouraging non-democratic processes. People who held senior positions under the former regime tend to utilise previous networks to bolster their own positions and give preferential treatment to partners, friends and family members, thus establishing a system of clientelism and patronage in closed circles. The use of networks to convert former political capital into economic advantage in the new market economy is also known as ‘nomenklatura capitalism’. Since the economic situation of the elite may change rapidly in an unstable market economy, and regular elections have introduced an element of unpredictability, patron–client relations will tend to be even less stable than before. One feature of the post-communist era is that elite alliances tend to be short lived. In particular the grey zone between the state and the market provides fertile ground for the emergence of networks between political actors and the new private entrepreneurs. According to Kryshtanovskaya and White (1998), such coalitions are especially important in decisionmaking processes. The problems of economic development in post-communist countries have been attributed to the fact that they moved not from plan to market but from ‘plan’ to ‘clan’. This idea was initially propounded with respect to post-communist Hungary (Stark 1990), but it probably applies in even greater measure to Russia. And because of widespread ‘patronage politics’ in the Russian regions, ‘political clans’ are probably even more important than in the centre. Although clans and family relations always had a considerable role to play during the Soviet period, democratic institutions like elections and a free press have actually extended the scope of ethnically- and family-based clan politics in several regions (McAuley 1997).3 Under turbulent circumstances the most predictable factors are family-based networks. One assumption therefore is that family ties will be more widespread among the regional elite than among other elite groups. The central administrative and political

146 The network state leaders are more committed to formal procedures and more vulnerable to criticism of clan politics. However, in the business sector one may assume that family ties thrive since they compensate for weak market institutions.

The web of contacts A network may be seen as a continuum along which elite interaction may be organised in various ways. Van Warden (1992) systematises several network dimensions, of which the most important are: number of participants, identity of the participants, the function of the network (exchange of information or decision-making) and degree of formalisation. At one end of the network continuum one finds limited participation, important participants, frequent interaction, stability and decision-making as functions and a high degree of formalisation. This kind of network may be said to represent the corporatist arrangements that organise relations between the state and society. At the other end of the continuum are issue networks, which are characterised by extensive but informal participation that varies from issue to issue and whose main activities are the exchange of information and views. The main purpose is first to find out who contacts whom, how often, and is more close to the idea of open and flexible issue networks than ‘iron triangles’. ‘Contact’ implies several forms of interaction: face-to-face, by telephone or in writing. How intensive the contacts are indicates how important elite relations are. Variations in interaction between institutions may, however, indicate that some elite networks are more closely knit than others. The mapping of contacts by interviewing elites has been used in several studies of Western elite integration. In America and Australia Heinz et al. (1990) and Higley et al. (1991) interviewed elites to reveal general contact patterns and more specialised inner circles and elite cliques. In these studies it was possible to talk to members of the elite in person and thereby identify personal networks. Here I use a more indirect method where the aim was not to investigate contacts between specific persons but among group-specific leaders. The Norwegian (Maktutredningen 1983) and Swedish (Petterson 1989) power studies used this type of interview to analyse contact patterns among elite groups. A similar approach was employed in Estonia, Latvia and Lithuania to analyse how the new national elites interact and how ethnic issues create certain patterns of elite interaction (Steen 1997). The advantage of this indirect approach is that higher level leaders are more willing answer questions about contacts if information about actual personal networks is not disclosed. Legal-rational rule in a Weberian sense is characterised by clearly defined roles for politics and the administration, a generally recognised demarcation between the state sphere and the market sphere, and centre–periphery relations founded on well-defined and legitimate interest-mediation. Such a differentiation of roles generates tensions in modern states that are processed

The network state

147

and moderated through consensus-producing bargaining institutions, often named as corporatism. In the Russian case, such institutionalised forms of bargaining are largely absent. One may, therefore, expect informal networks to be particularly important as a decision-making mechanism. Interesting questions are whether contacts are arbitrary or do institutions channel elite contacts into more specific patterns? And have contacts taken other directions following the more hierarchical rule by Putin’s government? Table 9.1 shows with which leaders of various institutions the respondents have been in contact. The frequency of contact for the total elite remains fairly stable over time. The main contacts are with leaders of state enterprises, regional government and leaders of the mass media. The members of the federal Cabinet, State Duma, federal ministries and political parties have the least contact overall with the respondents. This pattern is in some ways surprising and indicates the increasing importance of certain institutions outside central governance and politics. Contacts with leaders of state enterprises, regional leaders and mass media bosses were particularly intensive under Yeltsin, while contacts Table 9.1 The elite’s contacts with leaders of other institutions. Percentage of contacts occurring monthly or more often Contact with Elites in

Federal State Federal State Regional Political Private Mass Cabinet Duma ministries enter- govt. parties business media prises

Total

1998 2000

29 32

35 43

40 47

80 73

76 69

38 32

56 62

70 62

State Duma

1998 2000

70 66

99 94

76 81

78 72

84 90

90 86

35 49

8 79

Federation 1998 Council 2000

67 93

60 70

80 77

96 100

94 100

50 77

60 83

97 97

Fed. admin.

1998 2000

55 45

37 59

73 94

57 62

52 63

9 16

25 39

32 39

State 1998 enterprises 2000

18 2

2 4

42 44

68 86

46 34

2 0

73 74

22 16

Private business

1998 2000

8 2

8 2

26 30

74 70

41 36

6 2

90 88

24 30

Culture

1998 2000

20 14

18 18

45 32

66 54

44 30

22 24

54 58

68 68

Reg. govt. 1998 2000

19 21

29 33

29 16

86 78

86 81

39 49

60 66

81 76

Response rate 1998 97–9% N=980; 2000 99–100% N=605. The respondents were asked how often (every week or more often, every month, sometimes during the year, or never) they had been in contact with leaders of various institutions, by letter, telephone, meeting etc., during the last 12 months.

148 The network state with the central political-administrative institutions were relatively infrequent. While one should be cautious in drawing firm conclusions, the data would appear to show that Vladimir Putin’s programme of ‘verticalisation of power’ has reintensified elite interaction at the centre. The elite’s contacts with leaders of the central authorities (Federal Cabinet, Federal Ministries and State Duma) have increased. This is also the case for contacts with business leaders. Elite relations may be described in terms of whether they are intra- or inter-institutional and whether they are mutual or one-sided. In the table the interactions between state and private economy are shaded. The State Duma deputies are in close contact with leaders of their own institution and also with the leaders of the federal Cabinet, ministries, state enterprises, regional government, political parties and the mass media. In 1998 70–84 per cent and in 2000 66–86 per cent of the deputies said they had monthly or more frequent contact with these leaders. Only the business leaders have less contact, although this has increased considerably over time. The members of the Federation Council exhibit roughly the same pattern, with numerous contacts to other elites which have intensified over time. A particular increase can be observed in their communication with the federal Cabinet and with leaders of political parties and business leaders. This indicates that the Federation Council became ever more politicised during the late 1990s until its power was curtailed in the summer of 2000. The Federation Council is the institution that maintains the most frequent contacts with the leaders of the mass media. The generally very high level of contacts with other leaders reflects not only the importance of this institution but also provides a clue as to why President Putin adopted measures in the summer of 2000 that may reduce the power of the Federation Council representatives. The leaders of the federal ministries score low on contacts with leaders outside the state, such as party, business or mass-media leaders. They have moderate contacts with the Cabinet, politicians in the State Duma and leaders of state enterprises and regional government, but the contacts tend to be initiated by the politicians. The more selective and limited networks of administrative leaders reflect more specialised bureaucratic roles. Even more selective are the networks of state enterprise leaders. First, there is an interesting reduction in contacts with the cabinet which may reflect the state enterprises’ growing independence. Contacts with State Duma representatives and party leaders are also either minimal or nonexistent and state enterprise leaders seem to have little interest in cultivating the mass media. On the other hand, contacts with bureaucratic leaders remain consistently quite high (more than 40 per cent in 1998 and 2000). A similar tendency is found for regional leaders. Obviously the political sphere has minor relevance for state enterprise leaders, while bureaucratic regulations remain important. They also need to keep up contacts with the regions, since the latter provide both the natural resources and markets for their products. Together with other state enterprise leaders the new private

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149

business leaders constitute the most important network for state enterprise leaders. The data show very clearly that networks among state enterprise leaders and business leaders are intensive, mutual and flourishing (indicated by shading in Table 9.1). Business leaders exhibit much the same contact patterns as their colleagues in state enterprises. Business and state enterprise leaders share solid mutual contacts over time, indicating that particularly specialised and viable market–state links are at work. Like state enterprise leaders, the business elite have a certain amount of contact with bureaucratic leaders, regional leaders and mass media leaders, while business contacts with politicians are almost non-existant. Mutually strong contacts are found only between private business and state enterprises, supporting the thesis of Stark and Bruszt (1998) that networks in the blurred area between the state and private sectors are a major force in the development of a distinctive type of postcommunist capitalism. The cultural elite has close contacts with leaders of the mass media (almost 70 per cent report such contacts) and also with private business. Contacts with politicians (the federal cabinet, State Duma and political parties) are restricted. Quite surprisingly, cultural leaders have fairly frequent contact with the leaders of state enterprises. The relatively broad contacts with private business illustrate how cultural institutions also tend to move towards the market in order to generate new resources. As shown above, the central politicians in the State Duma and Federation Council have extensive contacts with leaders on the regional level. Quite naturally, the Federation Council has more contacts than the members of the State Duma, who, in turn, have considerably more contacts with party leaders. This difference reflects the strong regional basis of the Federation Council, while the composition of the State Duma reflects both party lists and geography. The contact pattern of the regions with the centre are quite different. The regional elite initiate far less contact with political and administrative leaders on the central level and are primarily oriented towards their regional colleagues and leaders of state enterprises, the mass media and private business, in other words actors outside the central political-administrative arena. The low intensity of upwards contacts in the political and administrative fields may reflect the relatively autonomous status of the regions. On the other hand the high intensity of downwards political contacts do not reflect hierarchical rule but rather the representative functions of the Federation Council and the State Duma. The regional representatives in these bodies feel responsible for looking after what is going on in their constituencies. In summary While the data do not say anything about the formalisation of elite relations, the subject of the contacts or whether connections are consensual or conflicting, they testify to the variation in intensity of contacts between elite groups

150 The network state and reveal who initiates contacts with whom. Some main patterns can be discerned: •

•

• •

Active and mutual relations between the central political and administrative organs – i.e. between the State Duma, Federation Council, the federal Cabinet and the federal ministries – and also within the institutions; Frequent, top-down communication between the centre and the regions, whereby the State Duma and Federation Council very often initiate contacts with regional and local government; Energetic, mutual contacts among the leaders of state enterprises and private business companies; Close, but apparently unilateral contacts between central and regional political-administrative elites and mass media leaders.

One may therefore conclude that the central political-administrative elites are well integrated in terms of close contacts within and between the elite groups. Inter- and intra-elite integration is most consistently visible for members of the Federation Council and leaders of the federal ministries. The central authorities very often initiate contact with lower levels of government, while contact is seldom initiated in the opposite direction. After Putin was elected President, the top-down flow of contacts increased. These trends may be interpreted as a result of efforts to strengthen central rule, while networks among regional leaders remain strong. Two of the most far-reaching post-communist reforms involved the privatisation of state property and the emergence of new mass media institutions. The data illuminate contact patterns in these two sectors that impinge on two of the main problems facing Russia: how to create a real market economy separated from the state and how to guarantee the independence of the media from the authorities. Separating private business and media from the state is clearly not a straightforward task, and in certain respects the continuing existence of networks obstructs progress towards the formation of a civic society. During the transition period these networks functioned as pragmatic mechanisms for solving problems under extremely uncertain decision-making conditions. But long-term close links between the state and private business and the mass media blur the demarcation line between the state and society, one of the main hallmarks of pluralist democracy.

Family ties Family bonds between elites are prominent in clientelistic political cultures, in particular on regional and local levels. In such cultures trust is normally limited to personal networks in which the family is the core element (Eisenstadt and Roniger 1980; Putnam 1993). Amid political change, unstable elite coalitions and insecure economic and social environments,

The network state

151

personal relations and kinship bonds provide some stability. One would, therefore, expect family ties to be an important part of the Russian decisionmaking culture, especially among the regional elite. During Yeltsin’s term as President many of the top positions were occupied by his relatives, friends and cronies often known as ‘the family’. Obviously, this was a way of securing political control and safeguarding material interests. Interestingly, some of these top leaders remained in important positions even after Putin came to power. The question here is whether the national and regional elites also exhibits the same nepotistic tendencies. Survey respondents were, accordingly, asked whether any of their family or relatives had a leading position in the federal government, the State Duma, the federal ministries, local government, regional government, state enterprises, political parties, trade unions, private companies or the media. It was not possible, however, to ascertain whether relatives had actually been appointed to these positions by the respondent. The results showed that in fact very few respondents have relatives in important positions, except for those dealing with the private business sector and state enterprises, so the Table 9.2 is limited to these economic elites. The number of family members in business and state enterprises is relatively high, but the national and regional elite had very few relatives in leading positions in other institutions in 1998 and 2000. The figures for the total elite in 1998/2000 respectively were: the federal Cabinet (1/0 per cent), the State

Table 9.2 Members of the elite with family and relatives in leading positions in private firms and state enterprises (%) Private business

State enterprises

Total

1998 2000

18 23

20 20

State Duma

1998 2000

16 25

10 18

Federal Council

1998 2000

10 7

10 13

Fed. admin.

1998 2000

13 18

18 22

State enterprises

1998 2000

24 38

36 34

Private business

1998 2000

56 50

24 16

Culture

1998 2000

10 28

6 18

Reg. govt.

1998 2000

17 15

22 18

Response rate 1998: 99–100% N=908; 2000: 99–100% N=605.

152 The network state Duma (1/0 per cent), the federal ministeries (2/2 per cent), regional government (4/1 per cent), the political parties (1/2 per cent) and the mass media (5/5 per cent). Among the cultural elite, as many as 18 and 16 per cent, respectively, said they had relatives in top positions in the mass media. The data clearly show that the regional elite has few relatives in regional government, with only 5 per cent in 1998 and 3 per cent in 2000 reporting such connections. Evidently, if the close ties among regional political elites, as described by McAuley (1997) during the Soviet period, have continued in the post-communist era, such connections are not based on family bonds. The numerous contacts among regional elites shown in Table 9.1 must therefore be explained by patron–client relations also outside the family sphere. In contrast to other sectors, in private business and state enterprises family ties are more common. In both sectors about 20 per cent of the total elite reported having close relatives in leading positions. More than 50 per cent of the business elite said they had such ties with private business, and 24 vs 38 per cent of leaders of state enterprises said this was the case. Even 25 per cent of the State Duma deputies had family connections with private companies in 2000. Family affiliations among the leaders of state enterprises are also widespread. More than one third of the leaders of state enterprises said other members of their families were also high up in this sector. Family connections between private business leaders and those in state enterprises were not quite as common (24 vs 16 per cent), about the same level as regional leaders. A rather unexpected finding was that a rather high proportion (about 20 per cent) of the leaders of federal ministries had family members among the leaders of state enterprises and a similar tendency emerged for State Duma deputies. Evidently, the elite does not have family connections everywhere. Rather, these ties are strongest in the sector that underwent the most dramatic transition: the economy. The close family connections within the private business sector are less surprising. In uncertain environments it is natural that private companies should be established on the basis of family bonds. The internal cohesion of the business community will make it strong but not necessarily isolate it from the state, for the data show that a relatively large proportion of the political elite, the administration and the cultural elite have family ties with business leaders. These relations, and even more so the state enterprise leaders’ close connections with the private business sector, illustrate an important social condition for the emerging ‘grey zone’ economy between the state and the market, which Stark (1997) describes as ‘recombinant property’ distinguishing post-communist capitalism and also referred to as ‘state-led capitalism’ in Lane (2000).

The elite’s ‘political capital’ Some observers maintain that many members of the old nomenklatura have continued to hold leading positions under the new regime, often in the

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business field (Kryshtanovskaya and White 1998). Other studies show substantial changes in the composition of the elite. In particular, younger people with higher education saw new career opportunities in democracy and a market economy that the former hierarchical system could not provide (Lane and Ross 1999). According to Lane and Ross, the old central political elite was largely replaced by a younger and materially ambitious generation who came to dominate the private business sector in particular. At the same time, some members of the former political elite found a new power basis in their home regions. While previous research has focused on the top leaders in Moscow the question here is how widespread are members of the old communist party and state elite among the present middle-level elite? In Russia, as in other post-communist countries, ‘political capital’, in the sense of political connections and networks that may be converted to power in other sectors, became a major stepping stone for ambitious members of the older generation elite to obtain leading positions after the change of regime. A variety of career paths became open to the elite but access was not straightforward in all sectors. And in some post-Soviet countries, like the Baltic states, ethnic nationalism made political careers difficult for previous supporters of the Soviet regime. In Estonia, for example, a large proportion of the former members of the republican Central Committee of the Communist Party had, by the mid-1990s, attained higher positions in private companies, while very few of them continued to hold positions in the institutions of the new state, the parliament and the public administration (Steen and Ruus 2002). The idea of converting political capital into new forms of capital is from Bourdieu (1985) but assessing ‘political capital’ is not a straightforward matter. Rivera (2000) argues that a differentiated approach is useful for studying elite continuity in Russia and proposes a continuum of affiliation with the Soviet regime, ranging from ‘regime-challenging’ to various levels of ‘regime-supporting’ activities. While dissident activities are rare there is a great variety in types of regime-supporting activities among the present elite. Here I draw the distinctions between whether a person was a member of the Communist Party of the Soviet Union (CPSU), the ‘strength’ of that membership in terms of length and function, and the level of the position held in some Soviet representative body. Party membership and tenure under the former regime Finding out about the elite’s background is not easy. In 1998 72 per cent and in 2000 68 per cent of the elite reported previous membership in the CPSU and 97 per cent and 87 per cent, respectively, reported membership of the Komsomol. Less than 1 per cent reported membership in another party or movement. In other words, the elite has a very strong communist background. Among the elite groups there is not much variation in the rate of Communist Party membership, with the exception of business leaders, who

154 The network state had the lowest membership rate (approx. 50 per cent), and the members of the Federation Council, who had the highest rate (approx. 80 per cent). In the Soviet Union access to membership in the CPSU was restricted, but it was imperative for making a career and constituted the first step in moving up the state hierarchy. Because of the CPSU’s exclusiveness, only a small percentage of the Soviet population were party members, so those who were constituted an elite. Harasymiw (1984) reports that among the total population only 7.5 per cent in Russia and 6.8 per cent in the USSR as a whole were Communist Party members in 1981. According to theories of socialisation, the impact of CPSU membership on the orientation and behaviour is related to how many years they were members of the party. The longer the membership, the broader the previous and present networks. Table A9.1 in the Apppendix shows the length of membership for the elite groups, while Table 9.4 investigates the effects of membership on contacts. The mean period of membership was 16 years in 1998, with only small differences between the institutions. Over time the tendency remains quite stable, with a reduction to a mean of 15 years in 2000. The central political elite in the State Duma and Federation Council had the longest tenure as CPSU members, with many of them having been party members for 20 to 25 years. Among other elite groups, like state enterprises and private business, many respondents also reported having been members of the CPSU for more than 15 years. Over time, the mean length of former communist membership declines in all groups except business and culture, where people with a long tenure in the CPSU seem to have become more dominant. Among the political elite in the State Duma and the Federation Council, the decline is particularly marked. Thus, even several years after the fall of communism, the elite was still dominated by people who had been party members for a long period and long membership of the CPSU seems to be an important precondition for gaining elite status under the new regime. Probably even more important for later access to the ranks of the elite is the type of position held in the CPSU. There is quite a difference in the later fortunes of those who were rank-and-file members and those who were top party officials. One hypothesis is that the higher the former position, the more political capital can be converted into subsequent elite status and network access. If political capital is convertible from one regime to another and between sectors, one would expect post-communist elites to have held high party office under the previous regime. Table A9.2 in the Appendix shows the position in the CPSU hierarchy of those who were members. About half of the former party members were leaders, and of those about 20 per cent held top positions. These proportions remain stable over time. However, there are large variations among the elite groups. Particularly among the political elite many respondents previously held top party positions. As many as 50 per cent of the Federation Council members said in 1998 that they had been leading officials in the Communist Party, while only

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29 per cent were ordinary members. In the State Duma and among regional government officials, too, several respondents had reached the top ranks of the CPSU. In the other groups, a lower-level background is more common. The business elite and leaders in the federal ministries and state enterprises are mainly recruited from the party rank-and-file or the middle level elite. Much the same pattern is found for the Komsomol. As many as 97 per cent of the respondents had been members of the Komsomol, among whom 43 per cent had held some type of leading position. Here, too, the deputies in the Federation Council and the State Duma report the highest proportion of previous leading positions. Former party membership is very widespread, and a large majority of the present national and regional elite were CPSU members for many years. Moreover, a considerable proportion of the present elites held top party offices. The data from Tables 9.3 and 9.4 support the contention that political capital is important for a later career. It seems that also the type of political capital has an influence on later career paths. Previous experience as highlevel party functionaries obviously channels members of the elite into the central and regional top political positions. On the other hand, in private business and the federal ministries, political capital in the form of previous top party positions is less important. Previous positions in Soviet legislative bodies The respondents were asked whether they had been deputies in Soviet legislative bodies – i.e. the USSR Supreme Soviet, the RSFSR Supreme Soviet, the regional Soviets (republican or oblast) or local Soviets (city, district or rural). Table A9.3 in the Appendix shows the proportion of respondents who have held such elected positions. In 1998 36 per cent and in 2000 34 per cent of the respondents said they were elected to a legislative body during the Soviet era.4 Such a background is found among a large majority of the members of the Federation Council (83 per cent in 1998 and 2000) and of the State Duma (66 per cent in 1998 and 52 per cent in 2000). Also quite a few of today’s regional officials were previously members of the Soviets. In private business and in the federal administration only 10 to 12 per cent were previously deputies. This tallies well with the proportions of the various elites who held leading positions in the CPSU, as shown in the Appendix, Table A9.2. The State Duma and Federation Council deputies in this respect represent considerable continuity from the previous regime. Many people who had their first experience as elected representatives in Soviet institutions on lower and intermediate levels seem to have used this political capital to advance into the new political elite after the change of regime. This kind of continuity is, however, different from the re-emergence of the Soviet nomenklatura. The new national and regional political elites have actively used their political capital from the previous regime to make post-communist political

156 The network state careers but only exceptionally does one find a member of the present elite with a top nomenklatura background. The new political elite has combined political capital with other resources. Intellectual capital, arising from higher education and leading positions in the state bureaucracy,5 is linked with political experience in the Soviet period. Thus, the power of the new political elite is generally based not on a single resource but on a ‘package of capitals’. According to James Coleman (1990), one may identify various forms of capital, such as physical, human and social capital. The strength of the capital depends on its accumulation and whether one type of capital may be substituted for another. More than 90 per cent of the respondents in the State Duma and 100 per cent in the Federation Council have completed post-graduate studies, and a large proportion has a scientific degree. Intellectual capital is thus merged with considerable political experience at lower and intermediate levels. Most of the new political elite are academics who have made use of democratic institutions as career ladders in politics. But, education is a type of ‘human capital’ that may be converted into both political and business opportunities. The political elite in the State Duma and Federation Council are not ‘bright youngsters’6 without political experience. The younger generation with little political luggage of the past seems to have been attracted more by business opportunities than political positions. To conclude, the data presented here does not indicate as argued by Kryshtanovskaya and White (1998), continuity of old nomenklatura members encroaching on leading positions after the change of regime. Neither, can a wave of non-experienced younger people be observed among the new political elites, as indicated by Lane and Ross (1999). The picture is quite complex but two basic patterns emerge: (1) The national and regional political elites (State Duma, Federation Council and regional government) tend to be recruited from the middle and higher leadership in the CPSU and elected to deputies in the Soviet legislative bodies; (2) The elites outside electoral politics, i.e. in business, bureaucracy and culture, to a much lesser degree had leading positions in the CPSU and very few had been elected deputies in some Soviet body. Thus, if the focus is on the political elites the ‘continuity of the nomenklatura’ thesis gains support, while when emphasise is on non-political elites the ‘young careerist’ thesis seems more plausible.

The elite’s images of political capital Political capital is not only an objective phenomenon, its importance is very much related to how it is subjectively perceived. Before investigating the connections between the elite’s present positions and their past activities, it is necessary to find out whether the present elite perceives such relations as important or not for present decision-making. The idea of ‘old boys’ networks’ working in a clandestine manner in Russia has gained considerable currency and is regarded almost as axiomatic

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by some observers. Conspiracy theories nurture such images when few systematic studies exist. Others have argued that such networks are not necessarily an integral part of the present system and that the question of their existence must be investigated empirically. One example is Kroh (1992) who reports that the post-German Democratic Republic elites just after the GDR collapse established ‘power cliques’ in profitable privatised enterprises and media. In the political and administrative spheres, however, the elites were stripped of their power. Therefore, even if such connections exist, they are not necessarily significant for decision-making. Since it is extremely difficult to assess the actual effects of networks inherited from the past, one indirect method is to ask the elite themselves. If the present elite perceives connections from the past as important, then one may assume that these networks actually have an impact on present decision making processes. The main picture is that even several years after the end of the Soviet Union, the elite thinks Soviet connections still have a major impact on decision-making. In 1998 57 per cent of the total elite said such connections were very or quite important and only 6 per cent thought they were unimportant. In 2000 the figures were, respectively, 47 and 48 per cent. As expected, and as the mean values of 2.6 and 2.9 illustrate, the significance of such connections has slowly decreased, but even almost a decade after the Table 9.3 Importance of Soviet connections in present decision-making (%) Very important

Not important

1

2

3

4

5

Mean

Total

1998 2000

26 21

31 27

24 26

13 17

6 8

2.6 2.9

State Duma

1998 2000

22 6

28 31

34 28

13 28

3 7

2.8 3.2

Federation Council

1998 2000

20 3

23 23

23 27

20 30

13 17

2.8 3.3

Federal admin.

1998 2000

19 21

26 34

24 23

28 15

3 6

3.0 2.6

State enterprises

1998 2000

40 33

23 19

13 19

15 27

9 2

2.7 2.7

Private business

1998 2000

14 34

39 18

27 26

8 10

12 12

2.8 2.5

Culture

1998 2000

25 27

33 27

25 24

6 12

10 10

2.7 2.7

Regional govt.

1998 2000

28 23

32 28

23 29

11 12

6 8

2.5 2.9

Response rate 1998: 98%, N=980; 2000: 96%, N=605.

158 The network state fall of communism about half the Russian elite still evaluate such connections as essential. There have been interesting changes over time among certain elite groups. In 1998 a majority of all groups said such connections were very or quite important, and there were only minor differences between the groups, though with some exceptions: leaders of state enterprises and regional government assigned particular significance to past networks. Two years later the picture is somewhat changed and the differences between the elite groups are more visible. Why do the political elite in the State Duma, the Federation Council and regional government now attach less weight to past connections, while the leaders of ministries, private business and state enterprises think such connections have the same as or even larger importance than before? This pattern is the opposite of what one should expect from the data about the political elite’s rather broad experience from the former regime. It seems that the closer elites are to actual political processes the less important they consider Soviet connections to be for present decisions. Among politicians, Putin’s regime seems to be less associated with the Soviet time than among other elite groups. Why leaders in federal administration stress the importance of Soviet connections more in 2000 than in 1998 is not easy to explain. However, one might attribute the change among leaders of federal ministries to their experience with Putin first as Prime Minister and later as President. His administration obviously made the Soviet regime more acceptable again, not only on the level of state symbolism but also by bringing persons into important positions with sympathies for the Soviet system. Since the leaders of ministries are more directly a part of the central state apparatus than other groups are, a nostalgia for the past may explain why they see Soviet connections as increasingly important. The business leaders, on the other hand, probably stress the connections with the Soviet past for the opposite reason. Since they are the group that is the most sceptical about Putin’s more state-oriented economic policies, his positive attitude towards the former regime and his use of personal connections as a recruitment criterion, they probably perceive the communist past as continuing to exert a major influence, albeit a negative one.

Political capital and networking As Pierre Bourdieu (1985) argues, individual capital constitutes a part of personal history and may be converted and made use of as new institutional opportunities present themselves. Education is human capital that is easily transferable from one regime to another, for expertise is to a large extent regime-independent and new regimes, in particular, need skilled personnel. The post-communist transition thus opened up many career opportunities to the highly educated, careers that previously were restricted to loyal party activists. As the previous section shows, the elite regard connections during

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the Soviet period as quite important several years after the fall of communism. However, a new political regime also creates a specific context for the conversion of political capital. So, what about the effects of the political capital of the post-communist elite? Does past political activity have any relevance for networks between the post-communist elites? There are two possible scenarios. Under the first, the elites first of all establish access to economic institutions in order to enrich themselves. By utilising their former positions they seek to build business connections with the new economy. One would therefore expect their contacts to be mainly with new business leaders. Under the second scenario the elites seek to utilise their political capital in arenas as similar as possible to Soviet institutions. Consequently, they will try to maintain contacts mainly with the leaders of the new political institutions. Political capital does not have to be transferred to other fields, for democracy also permits continuity in post-communist political institutions. Table 9.4 discloses how various forms of political capital from the former regime (deputy in a Soviet body, CPSU membership, position in the CPSU and length of membership in the CPSU) correspond with the level of contact with leaders of various institutions in 1998 and 2000. The findings show a clear correlation between previous political office and contacts with the leaders of new political institutions. This applies both to former Communist Party members and, to an even greater extent, to former deputies of Soviet legislative bodies, who now have quite close contacts with leaders of the Cabinet, the State Duma, political parties and regional and local government. Having a background as a Soviet deputy also seems to be especially important for contacts with leaders of trade unions. A similar correlation emerges for contacts with mass media institutions. In the economic sector political capital is considerably less important, while in the private business sector the correlation is even reversed. The higher the position a person held under the Soviet regime, the fewer contacts he or she has with business leaders. Past experiences have much less effect on contact with state enterprise leaders than many would expect. And there is no support for the thesis that political capital is converted into contacts with business leaders. Previous regime affiliation is more of a burden than an asset for business relations, and the longer the period of CPSU membership the less contact with business leaders. The only contacts that seem to be rather independent of a person’s former political career are those with the leaders of the federal ministries. While former party membership does have an effect, seniority does not. This suggests that the bureaucracy is rather immune to contacts motivated by the ‘strength’ of the elite’s political capital. One interpretation is that the ministries have adopted a certain element of political neutrality by not giving preferential access to those with more developed political resources. Another is that ministerial leaders are not particularly relevant as partners for former Soviet functionaries, who seek first and foremost to form networks with new political allies.

160 The network state Table 9.4 Political capital and elite contacts7 Contact with leaders of:

Deputy in a Soviet body

Membership in the CPSU

Position in CPSU

Years of membership in CPSU

Federal cabinet

1998 2000

0.09** 0.16**

0.12** 0.12**

0.02 0.12**

0.04 0.03

State Duma

1998 2000

0.22** 0.18**

0.14** 0.15**

0.10** 0.17**

0.09** 0.05

Federal admin.

1998 2000

0.04 0.02

0.10** 0.15**

Regional govt.

1998 2000

0.19** 0.20**

0.11** 0.12**

0.13** 0.11**

0.02 0.01

Local govt.

1998 2000

0.17** 0.23**

0.04 0.10**

0.16** 0.08*

0.05 0.07

Political parties

1998 2000

0.20** 0.24**

0.10** 0.10**

0.09** 0.17**

0.02 0.05

Trade unions

1998 2000

0.10** 0.17**

0.12** 0.15**

0.00 0.07

0.01 0.00

Private business

1998 2000

0.08* 0.02

0.15** 0.09*

Mass media

1998 2000

0.16** 0.14**

0.08* 0.03

0.08** 0.16**

0.05 0.03

State enterprises

1998 2000

0.05 0.08*

0.01 0.07

0.02 0.09*

-0.04 0.02

Average N=

1998 2000

976 602

0.06* 0.05

0.10** 0.10**

978 604

0.04 0.05

705 410

0.05 0.06

705 411

**Significant at 0.01 level; *significant at 0.05 level.

Obviously, the effects of political socialisation are weaker than expected. The longevity of CPSU membership, which averaged 16 years among respondents in 1998 and 15 years in 2000,8 is evidently not important for contact with any leaders other than those in the State Duma. Those who served for many years in the CPSU are eager to keep up contacts with their communist colleagues in the Duma while they reject contact with the new business elite. For its part, the business sector has intense but selective contacts with other elites, where previous regime connections are not an asset. This pattern seems to follow age cohorts. While age seems to be a moderate asset for contact with political and administrative elites, it has a negative effect on contacts with business leaders (1998: 20**; 2000: 16**).9 The evidence is clear enough to conclude that the younger generation elite is evidently more attracted by the new business leaders than by the political and bureaucratic elite.

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The findings in Table 9.4 would appear to disprove the conversion theory, whereby Soviet political capital is transformed into economic capital in the era of the market. While this thesis undoubtedly held more truth for the early years after the demise of the Soviet Union when state property was dismantled almost overnight and the communist nomenklatura scrambled to exploit the first privatisation wave for their own material profit (Rona-Tas 1998), its validity seems to have declined with time. As Gustafson (1999: 169) argues, over time patron–client relations inherited from the Soviet period will decline in importance, therefore in the business sector younger people will not have old Soviet networks to support them. Now that the period of economic ‘shock therapy’ and hasty privatisation is over, elites seem to be paying far more attention to acquiring new political capital. As the data show, contacts with political leaders are much stronger than those with business leaders. Political networks among the Russian national and regional elites a decade after the fall of communism are still marked by the legacy of the past, a tendency that seems to be increasing as the core leadership under Putin returns to more centralised rule. Thus, former political capital is now being used to create networks suitable for building new political capital. This conclusion confirms Lane and Ross’s (1999) assertion that political assets from the former regime were not, in fact, exchanged for economic capital during the Yeltsin period, as widely thought, but that new positions in the economy were occupied by the former managerial class, who converted not political but intellectual capital into economic assets. Although clearly some managers who were politically active during the Soviet period also went into politics. What the data show is that the previous level of political position has a role to play in generating political networks and in gathering electoral support in the new political environment. But, as shown in Chapter 7 the legacy of previous regime connections have no clear effects on the elite’s democratic and economic orientations. A path can be traced from the previous communist political elite to post-communist democratic political behaviour but not to political orientations.

Conclusion: networks, elite integration and the state Following the institutional earthquakes after the demise of the Soviet system, elite relations became a main mechanism for solving disputes and making decisions. Therefore, contacts between politicians and the administration, the centre and the periphery and the state and the private sector are crucial for governance, democratic development and economic reforms. The data presented here to some extent speak for themselves, but amid the ‘messy’ reality of contemporary Russia it is still difficult to ascertain how widespread networks are and when a network actually does exist. While contacts are a necessary pre-condition for a network, they do not in themselves constitute one. As van Warden (1992) suggests, a network can be

162 The network state defined in terms of various dimensions, such as form of contact, its function and level of formalisation and the motivation of the actors engaging in that contact. The purpose of this study was to get a better idea of how tightly woven the contacts are between various elite groups and whether past experience has any bearing on contacts in the post-communist era. The findings show that elite connections vary considerably between sectors, patterns of initiating contact are different and the role played by past experience varies according to the object of the contacts. In this concluding section I will first summarise to what extent elite groups are integrated in terms of contacts and background, and second discuss some implications of the network configurations exposed in the preceding empirical part. One may distinguish between three distinct types of elite relations: political–administrative, centre–periphery and state-market. In the political– administrative sector interaction between politicians and leaders of federal administrative bodies is close. Politicians also actively cultivate relations with leaders of other institutions, like state enterprises, the mass media and regional government. Compared with the other elite groups, a very large proportion of the political elite was politically active in the Soviet Union. Such political capital seems to be important for gaining access to political positions under the new regime and for establishing an extensive network of contacts. The creation of more autonomous regions gave a new and important impetus to centre–periphery relations. The central political elite maintains frequent contact with the regional and local elite, while the regional elite, who are in close contact with each other, perhaps surprisingly, seldom initiate contact with the federal level. The exception are the leaders of the central regions, who tend to be more in contact with the Russian leadership than the leaders of other regions. Geographical proximity naturally has some role to play in determining the intensity of contact, but contact is also significantly influenced by political capital, so that regional leaders who were Soviet deputies or CPSU members have more contact than those who were not, with seniority also playing a role. Intense, mutually-initiated contacts are maintained among leaders of private business and state enterprises. The networks that exist within and between these sectors do not have their roots in the former Soviet Union. One may, therefore, classify this as a new elite segment. The emergence of this active state–business segment supports Olson’s (1982) contention that the ‘distributional coalitions’ that undermined the economy during the Soviet period later formed ‘winner takes all’ coalitions with the new business leaders, thereby crippling the new market economy.10 Treisman (1995) calls such relations an ‘administrative market’. The new market system has not replaced the former system but has become intertwined with the ‘systems of personalised redistribution [where] established interpersonal networks apparently continue to determine financial allocation in practice’ (p. 967). Aaslund (1997), too, attributes the inadequacy of reforms and economic

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stagnation to dysfunctional elite behaviour. ‘The dominant problem of the transition in Russia was rent-seeking, implying that certain people used the state to their benefits, either reaping monopoly rents thanks to state intervention, or receiving subsidies from the government’ (p. 184). This contrasts with an earlier, more optimistic statement from Aaslund (1995) remarking that since private business leaders seek profit in the market, they will have a weak incentive for contacting the state administration. The leaders of state enterprises had a greater incentive to exploit the state and block reforms than to restructure their enterprises. The data show that the main target of lobbying is not the politicians but the leaders of ministries, producing quite intense mutual contact between these two elite groups. While Treisman and Aaslund underscore the existence of contact between leaders of state enterprises and the government, which is confirmed by this study, our data also reveal extremely close elite connections in the grey zone between state enterprises and the private sector. State enterprise leaders are especially active as intermediaries between the state and the market. From a functional viewpoint, such a ‘culture of rent-seeking’ (Aaslund 1999: 86) founded on tripartite informal contacts is a vital precondition not only for exchanging benefits but also for building trust. Many other scholars are more pessimistic and argue that personal relations ‘have been impermeable to the penetration of abstract processes such as competition, generalised trust, or law’ (McDaniel 1996: 166). From this perspective networks are collusive and devastating for economic reforms and provide the most obvious explanation of why things went from bad to worse. All of the authors cited tend to see the process of reform in Russian as a top-down mechanism, whereby the political leadership decides to adopt Western-inspired reforms and then tries to implement them. Experience shows, however, that ideals are seldom realised, particularly in Russia. The very Russian idea of reforms being applied as ‘surgery’ by the ‘right people’ was, according to McDaniel, propagated by Yeltsin in keeping with a Russian tradition going back centuries. The idea of a brave and skilful ‘enlightened ruler’ engaging in technocratic social engineering pre-supposes a top-down state that necessarily is at odds with adverse elite networks. There are other perspectives, however. Hedlund (1999) explains the failure of the Russian reform programme in terms of Russian cultural peculiarities rooted in ‘the heavy burden of history’, or so-called ‘path-dependencies’. Such conditions created insurmountable obstacles to implementing Western economic ideas in a setting alien to the norms of a market economy. North’s (1990) theory of economic change introduces a more explicit institutional perspective. He maintains that while formal rules, e.g. economic plans or programmes, may easily be changed by the top leadership, the outcome will always be determined by informal elite norms, which change only gradually. Accordingly, widespread elite networks are apt to distort centrally initiated reforms in a situation where the state hierarchy and common norms are

164 The network state weak. This view has important implications for the feasibility of change, for political stability and the ability of ‘post-communist learning’. But are widespread networks described in this study inherently bad? Informal norms and lack of enforcement instruments are the context in which actual processes take place. Seen from this angle, networks and the ‘culture of rent-seeking’ are not dysfunctional per se but serve certain basic political and social functions. The informal network structures can be seen not as obstacles to rational behaviour but as forms of ‘specific exchange’ between elites. These make consensus workable, offer some predictability and enable pressing problems to be solved as well as possible, thus benefiting not only the elite but employees in the administration and in state and private enterprises, and hopefully, in the long run the general population. With weak central authorities and widespread social apathy, networks formed by elites are a way of ‘organising’ elite interaction that might otherwise dissolve into anarchy or produce totalitarianism. Elite continuity and networks in the political–administrative field have made possible the survival of basic Russian clientelistic values and thereby ‘lubricated’ the transition process. Networks are crucial arenas for finding politically and culturally pragmatic solutions, rather than following some master plan. Russian state–market relations are paradoxical and have at least two faces. While the Russian business elite has, to a larger degree than other elites, discarded the influence of the past, they have also established close connections with leaders of state enterprises. Such informal contacts constitute a stabilising element in an extremely uncertain environment. The remarkably close connections between business and state enterprise leaders are consistent with the idea that a new type of economy, with close state– market relations, is emerging in Russia and providing opportunities for ‘rent seeking’. Those who occupied favourable positions under the former regime, it has been argued, obtained special benefits in the process of rent-seeking by capitalising on their personal links (Harter 1997). The data here do not, however, bear out the theories of political capital conversion but instead show that the Soviet past is considerably less represented among business leaders than among other elite groups, with past privilege seeming to have little bearing on present contacts with business. On the contrary, the weaker the legacy of the past among the elite the more intense their contacts are with business leaders. It seems that ‘path dependency’ plays less of a role among business leaders than is often assumed. What emerges is a strange combination of private entrepreneurship and exploitation of state resources that does not necessarily produce poor management and stagnation. While political capital is of minor importance, social capital is rather prominent in business–state relations. Business leaders are rather often connected through close family bonds. Several other elite groups also have close social connections with business, in particular the leaders of state enterprises, who have both professionally- and family-based mutual ties with the private sector.

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The existence of these tightly knit business–state networks supports David Lane’s (2000) prediction that a kind of negotiated, state-led capitalism will emerge in Russia where the state and the market co-ordinate economic activities and the state is especially active on the financial side, providing resources for private entrepreneurs. However, one should not regard this ‘co-ordination’ as an institutionalised activity. The lack of permanent co-ordinating bodies and the volatility of elite connections make the term ‘network economy’ a more apt description. Networks of this kind are forming at the interface between the reorganised state and the raw capitalist economy and may gradually formalise into more stable arrangements, especially in vital economic sectors like energy and the banking system. At this stage of Russian political-economic development, the elite has relinquished old political capital as an asset in forming links with business leaders, and the dense business networks that now exist are mainly concerned with establishing contacts with the leaders of state enterprises. As Aaslund (1995) correctly assumes, the new business elite have more incentives to contact business partners inside and outside the state, than get in touch with bureaucrats. These types of ‘path independent’ networks are a necessary stage in the development of more vital and institutionalised forms of co-operation between the state and the market. It remains to be seen whether an institutionalised ‘state-led capitalism’, as David Lane (2000) suggests, will come to prevail in Russia. The nomenklatura capitalism thesis cannot be rejected since there are numerous examples of top communist leaders who succeeded because of successful business networks. However, the data shows that the new business relations are less influenced by communist connections than is often taken for granted. On the other hand, a decade after the demise of the Soviet Union, ‘the legacy of the past’ still has a considerable impact on political networking. Whether networks are bad or beneficial to political and economic development is another discussion. I will argue that those who dismiss elite-networks per se because some elite segments interact closely and include activists from the communist period have missed the point. By itself, a network is a resource but, as Stark and Bruszt (1998) argue, they are not unproblematic. They carry the potential to be agencies of development brought out of the shadows or clandestine rent-seeking cliques inhibiting economic growth (p. 129). A positive interpretation of the Russian case is that differentiation of networks and frequent elite contacts is an asset for efficient problem-solving. However, qualified decision-making and satisfactory implementation may take place only when economic entrepreneurship is founded on political stability. The impetus of the past on Russian political networks as demonstrated in this study, is conducive to compromises between traditionalists and reformers and safeguards political stability. While, on the other hand, the economic networks’ tendency to discard previous old guard communists may stimulate innovative economic behaviour. The elite’s network activities

166 The network state may turn out to be a crucial force for Russia. At least the network approach provides a necessary supplement to other conceptions of co-ordination like hierarchical control and the market mechanism.

Chapter Title

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10 The elites and the emerging Russian state

Introduction Russia is still not meeting the basic standards of a viable democracy; the economy is characterised more by immature capitalism that benefits a few than by fair market principles and legal thinking; during the last decade farreaching decentralisation has brought the Russian Federation to the brink of disintegration; and governance is infused by clientelism and personal networks more than by a belief in rational bureaucracy. Why is it so difficult to establish a well-functioning state in Russia? The literature offers a variety of answers: Russian society is not prepared for Western-style democracy; economic reforms have taken the form of ‘shocks’ without ‘therapy’; the country’s leaders are unskilled and in the grip of big business; the legacy of the past continues to influence thinking and behaviour; or else, there is a deliberate international conspiracy to destroy Russia. In all these explanations the main focus is on the policies of the President and his advisers – initially the liberal reform project under Yeltsin and later the recentralisation policies initiated by Putin. The numerous elites occupying positions in legislative bodies, in the state administration and in private business on the national and regional levels are generally seen as obstacles to top-down reforms rather than as a self-reliant force shaping the direction of political and economic development in the new Russia. Following this argument I regard these elites as an important strategic political power base whose interests and orientations represent alternative solutions to both the liberal and the centralised state models proposed by various Kremlin leaders. I argue that the Russian elites constitute both a serious political obstacle and a potential resource for the Kremlin leadership and that these national and regional leaders will ultimately determine the emerging ‘Russian form’ of democracy, economy and system of governance. Therefore, to understand the unique transformation of the Russian state, one needs to investigate these important but often neglected elites’ beliefs and behaviour, the degree of their integration and their relationship with the central leadership. This concluding chapter summarises the basic patterns of elite orientations and then outlines some implications of the post-communist elites’ political culture for the new Russian state.

168 The elites and the emerging Russian state

The many faces of the Russian elite The collapse of the Soviet state and the ensuing weakness of the new institutions redefined the symbolic and behavioural parameters of the elites. The state became the subject of restructuring and continuous elite networking, inducing apparent anomalies in the elites’ orientations. In the preceding chapters these were analysed along the following dimensions: (1) democracy– authoritarianism; (2) state–market; (3) centralised–decentralised federalism; (4) legal–clientelistic norms; and (5) network behaviour. Defining democracy is not an easy task.1 A specific set of criteria, which observers are socialised to believe are human and useful norms, have produced ethnocentric inspired recommendations based on Western experience. I find it more useful to ask which conditions are conducive to which type of democracy. One condition for democratic rule is a certain level of ‘elite trust’. The data show that confidence in political and governing institutions as such, irrespective of poor performance, is quite high. On the other hand, the elites are very sceptical about fundamental societal institutions, such as private business, the media and political parties. They express a widespread preference for popular participation in politics but also want strong leaders, even though they do not trust their fellow leaders and are severely split on the issue of a competitive party system. These attitudes exhibit a specifically post-communist conception of democracy founded on a desire for a resolute ruler in the Kremlin who, if necessary, can discipline unruly subordinates but whose authority is made legitimate by deeply rooted values among the elites. Elite attitudes to economic reforms seem to be linked to the elite’s acceptance of executive power. Yeltsin undermined the power of the Presidency through radical economic reforms, confrontations with the national elite and the diffusion of power to the regions. Putin’s more authoritarian style seems to coincide with a desire for co-ordinated governance and more state responsibility for welfare felt particularly by the national elites but also by their regional counterparts. The elites’ attitudes to economic reforms reflect a deep contradiction between a unanimous embracing of the idea of individual competition on the one hand and a concern for egalitarian values and a desire for state regulation to safeguard wages and social benefits on the other. The elites are apparently quite inconsistent on distributional issues but seem to reconcile these contradictions by supporting centralised leadership. A similar anomaly is found for ownership. The elites almost unanimously support state ownership of heavy industry and about half see mixed ownership as the best organisational form for light industry. For housing and in particular for the retail sector, on the other hand, a large majority favour private ownership. The third anomaly concerns the type of federalism favoured by the elites. The study shows that a considerable proportion of the Russian elites support ‘localism’ and the delegation of authority to the regions, while at the same

The elites and the emerging Russian state 169 time wishing for more centralisation and rule of federal law, an attitude that has become reinforced since Putin was installed in the Kremlin. The main picture, however, is of a consensus among the elites in favour of an emerging ‘federal ideology’ of power-sharing between governing levels. Under Yeltsin, a majority of the elites wanted substantial regional control over tax incomes; under Putin, however the elites are split down the middle on this issue. Nevertheless, despite a lack of consensus on who should be responsible for taxation, their orientations reflect a more normal distribution of policy positions within the framework of a re-centralised federation than real zerosum confrontation. These attitudes to democracy, economy and the federation are embedded in a decision-making culture that combines fairly strong clientelistic propensities with bureaucratic thinking and widespread network behaviour. Since the state’s capacity to rule was dramatically weakened following the change of regime, economic reforms, democratic practice and the organisation of the federation depend to a greater extent on the elites’ political psychology, how consensual their attitudes are and what kind of compromises are arrived at between the Kremlin leaders and the middle level elites. The data illustrate how the national and regional elites constituted the political basis for Putin’s take-over as President and subsequently for his programme of state consolidation. For some this may be a cause for concern. However, many others would argue that after the chaotic 1990s, stronger central leadership was highly necessary from the point of view of state integration. Yeltsin’s ambitious blueprint for economic reforms could not be continued, primarily because it faced substantial resistance from the elites. Putin’s achievement has been to gain active support from this segment of leaders by appealing to their collective values, thus paving the way not for a reintroduction of state planning but rather for a continuing restructuring of the economy by incremental means.

Legacy of the past, new institutions and post-communist learning As discussed in previous chapters the elite’s orientations may be understood both from a ‘culturalist’ and from an ‘institutional’ perspective. According to cultural theory, belief systems are conservative and stable and therefore do not change very much from one regime to another. Neo-institutional theorists argue that orientations shift because elites are loyal to new institutions resulting from reform and that consequently a change of regime affects attitudes and behaviour. In this study I suggest a third way, which bridges the rather pessimistic path-dependent and overly optimistic neo-institutional approaches. I argue that the Russian elite orientations have been determined neither by early socialisation and traditions nor by loyalty to the policy leadership but by ‘post-communist learning’ based on a decade’s political and economic experiences of how Western models work.

170 The elites and the emerging Russian state The analysis in Chapter 7 suggests that institutional factors, like loyalty to the Kremlin leaders and perceptions of state capacity, and the historical legacy of the past have only negligible or minor effects on the elites’ orientations. Much more crucial for shaping political preferences are the issues of economic distribution and ownership. In addition, membership of political parties stimulates democratic thinking. In other words, the elites’ approaches to democracy, economy and federation are moulded not by past experiences and the new institutions but rather by the post-communist context itself. Experience of economic performance and political practice is producing a unique political culture with new elite cleavages. Recent experience of raw capitalism, for instance, seems to have formative influence on left–right cleavages that to a large extent determine conflicts on redistribution issues. And party activism after the change of regime has nurtured pro-democratic attitudes, tendencies that are highly compatible with pluralist democracy. The anomalous but generally homogenous attitudes revealed in this study must be understood against the background of autonomous actors building power bases to solve unprecedented problems in an environment that has given rise to both new opportunities and extreme uncertainty. The demise of authoritarian rule restructured the political basis of the regime and created pluralist elites who hold the key to future development. As Sakwa (1999) argues referring to Bryant and Mokrzycki (1994), the transformation of post-communist states is an open-ended process where only the point of departure is known. The findings presented in my study indicate that the legacy of the Soviet past no longer has any substantial impact on the attitudes of the elite, suggesting that the departure from old institutions has become irrevocable. On the whole there is a tendency among observers to over-estimate the impact of past experience and the new institutions on the elite’s orientations. The chapter on elite networks does, however, show a link between the positions held by the elite during the Soviet era and current behaviour. The more closely the post-communist elites were involved with the previous regime the more intense their present contacts are with leaders of all institutions. The exception is private business leaders – where the opposite applies. In other words, ‘political capital’ counts for political networks but not for business connections. While the past obviously has a role to play in the contacts that the elite establishes, the link between their current orientations and their experience during the communist period is much more tenuous. The fact that ‘old boys’ networks’ continue to exist does not necessarily imply continuity of past attitudes. The elites seem more to re-orientate themselves by adapting and learning from democratic and market opportunities. Authoritarian and state-oriented attitudes are prevailing more because strong leadership and state involvement are better suited for solving post-communist problems and not a wish to replicate methods of the past.

The elites and the emerging Russian state 171

The horizontal basis for vertical elite consensus Theories of why the economy is not prospering, why the federation has tended towards fragmentation and of how stable democracy is in Russia often underscore the lack of integration among the elites. The contributions of Alexandr Yanov, Mancur Olson and John Higley referred to in previous chapters reflect a variety of perspectives, but all of them highlight the importance of elite cohesiveness for economic reforms and political stability. They argue that the degree of elite integration affected political and economic reforms during the Soviet period and political stability, not just in post-communist Russia, but also during the Soviet period as well. But what is elite cohesiveness? There is a substantial difference between disagreement among elites about decision-making procedures and conflicts about policy priorities. While the first concerns the fundamental choice of political system, the second is a conflict about distributional issues that is a normal part of the political struggle. Furthermore, in a visibly patrimonial state like Russia one should both differentiate between horizontal and vertical elite relations and how they are connected. The main purpose here has been to study how cohesive elite orientations are on the horizontal level when exposed to various vertically-initiated institutional and policy reforms. Yanov (1987) argues that during the communist period coalitions between conservative top- and lower-level elites were a crucial element in the stalemate and bureaucratic sclerosis of the Soviet system and that the potential for reforms generated towards the end of the Soviet period was the result of shifts in these coalitions. The power of the central leadership during the period of stagnation under Brezhnev was based on a coalition between top leaders, party professionals, the central economic bureaucracy, the military– industrial complex and nationalist intellectuals. The coalition was upheld less by ideology than by material incentives and the nomenklatura system. During the Soviet period leaders were ideologically unified, not only about procedures but also about basic values. The foundation for elite unity was hierarchical subordination, which was very distinct from elite integration in Western democracies based on diversity. Furthermore, as Higley argues, the Soviet elite was quite homogenous with regard to recruitment and their positions depended on the top leadership. An ‘ideocratic elite’ of this kind is peculiar to one-party states and totalitarian regimes. Yanov forecast the fate of Gorbachev’s liberal policies by recognising that reforms were dependent on the ability of the Kremlin elite to build an alliance with the new managerial ‘middle class’, which had an interest in economic reforms. With the help of the professional classes, the liberal intelligentsia and metropolitan elites, political and economic reforms would receive the necessary support and loyal implementation. However, Gorbachev’s coalition was not strong enough and his experiment came under attack from both conservatives and liberals. The traditionalists tried to stop the reforms

172 The elites and the emerging Russian state and almost overthrew the whole experiment in the putsch by Communist Party hard-liners of August 1991. If Boris Yeltsin had not entered the arena and grasped the political reins supported by the emerging elites in business, culture and the regions who wanted to defend their newly won opportunities, the pendulum would most likely have swung back to authoritarianism and an ideocratic type of elite. The values and orientations of the national and regional elites reported here not only reflect the priorities of decision-makers and post-communist Russian political culture, they are also the basis for viable ruling alliances in Russian politics. As history shows, the core leadership during the Soviet period was often less successful when reform policies conflicted with the interests of the economic and regional elites, who co-ordinated their efforts in ‘distributional coalitions’ (Olson 1982). In a more recent analysis of the conditions for economic growth in post-communist countries, Mancur Olson (2000) shows that this relationship continues to exist. The problem is the contradiction between self-interested elites who do not want voluntarily to contribute to the collective and the central leadership’s all-embracing concern for the common good. His theory of why post-communist economies are not prospering points to the structural tension between centrally initiated economic reforms and lower level elite networks that soon bring changes to a halt. The idea of covert ‘distributional coalitions’ among enterprise managers and bureaucrats is consistent with the argument advanced by other authors, treated in previous chapters, that clandistine networks among elites are prohibitive to real economic reforms. In particular some managerial elites are better off with only partial reforms or no reforms at all. Whether the recentralisation of power and co-operation between the state, business and regions under Putin really precludes elite ‘free riding’ and ‘rent-seeking’ remains to be seen. Yeltsin’s power rested primarily on the support of a limited group of leaders: the new business leaders and the governors of the regions. These groups had vested interests in a capitalist society, a liberal constitution and the decentralisation of power. Shleifer and Treisman (2000) found that by co-opting strategic partners among some elite segments Yeltsin’s central reform team was able to negotiate and persuade ‘stakeholders’ in the legislative bodies, bureaucracy and state enterprises not to obstruct some reforms. Aaslund (1999), however, sees these co-option strategies as undermining reforms, writing that the political leadership’s close connections with business and its inability to cope with ‘rent-seekers’ were the main reasons for the perversion of economic reforms. The coalitions obviously had major political costs, challenging traditional Russian ideals of a strong state and egalitarianism, and were resisted by other elite groups whose economic status and national pride had become dramatically reduced during Yeltsin’s economic ‘shock therapy’. During the early years of reform, it was not only those outside the inner sanctum of power who constituted an opposing force. Support for Yeltsin

The elites and the emerging Russian state 173 also eroded among his inner circle of supporters. By early 1992, as Shevtsova (1995) writes, key allies of Yeltsin during the August 1991 attempted coup d’état had become his most vocal critics and powerful rivals. Furthermore, during the 1990s the elites became widely differentiated with regard to recruitment (Lane and Ross 1999), had a low level of mutual trust, shared only a few common norms and, according to Higley et al. (2003), were best characterised as ‘fragmented elites’ leading to an ‘unconsolidated democracy’ under Yeltsin. The patterns revealed in this study raise the question of how applicable this characterisation of Russian elites is. Looking at the elites’ orientations I argue that the widely accepted picture of ‘fragmented elites’ must be modified. According to the data, there is considerable horizontal integration in the orientations of the national and regional elites. This, in turn explains both the vertical elite fragmentation and instability under Yeltsin and the non-conflictual vertical integration and stable rule under Putin.

Coalition-building under Putin Putin’s coalition with the military–industrial complex, nationalists, communists, corporate business and also the Orthodox Church is just the latest example of how Kremlin leaders have redefined support from the elites. It differs substantially from Yeltsin’s confrontational style, in particular his quarrels with the Communist Party in the State Duma during his early period in office. Putin’s ideology of a strong state and collective institutions leading to an alliance with business may be more surprising, but it is an interesting example of how the political basis of the emerging Russian state is continually being reshaped through policy compromises between strategic lower level elites and Kremlin leaders. In summer 2001, after the disordered years of raw capitalism and the selling off of state property under Yeltsin, business leaders in co-operation with Boris Nemtsov, the leader of the liberal Union of Right Forces party represented in the State Duma, proposed a partnership with the state, declaring that ‘business and power should not attack or blackmail one other, they should be partners working towards the economic recovery of Russia’.2 This proposal for finding the middle ground was formulated by a group of businessmen, who called on the Kremlin to declare a moratorium on any investigation into the legitimacy of privatisation over the past decade and to refrain from redistributing former state property. In exchange the business community pledged to play by the rules, pay taxes and obey the law. Obviously, Putin could not force business to co-operate. Rather, the financial oligarchs themselves discovered that the time had come to subordinate themselves to the state in their own interests. Some years earlier, according to Nemtsov, when ‘the oligarchs were fighting like mad dogs for a piece of property’, this would have been impossible, but now ‘they have stuffed themselves and they themselves need the rules’.3 The compromise with big

174 The elites and the emerging Russian state business interests, which shows up very clearly in the interviews with the business leaders, and the generally consensual relations between the President and the other national and regional elites illustrate Putin’s political success in stabilising Russia by means of vertical consensus-making. The comparatively rare open vertical elite conflicts and a political style that espouses conciliation are conspicuous features of the Putin regime. One may ask whether these trends indicate the emergence of a ‘consensual elite’ similar to Western pluralist democracies or a return to an ‘ideocratic elite’ with a single belief system and monolithic political structure. The data from the elite surveys of 1998 and 2000 presented here do not indicate any widespread scepticism about democratic procedures. On the contrary, the elites generally espouse common basic values about a pluralist political structure. At the same time, however, they would also like to see a stronger leadership concerned with the collective interest and state unity. The elite controversies during the Yeltsin period resulted above all from clashes over economic policy rather than from dissatisfaction with the new political institutions as such. These, as the elite interviews show (Chapter 3), in fact enjoy quite a high degree of confidence. This apparently anomalous combination of democratic and authoritarian thinking suggests not a fragmented elite but, on the contrary, widespread support for a special type of post-communist regime. The low level of interpersonal trust among the elites and lack of a consensual political culture in Russia make it necessary to integrate the elites by certain accepted procedures, of which strong leadership is an integral part. But Putin did not impose obedience. Putin’s policy style is congruent with the expectations generated by deeply rooted elite values, and this peculiar type of elite consensus may, as Gel’man (2003) notes, be characterised as ‘self-imposed consensus’. In a context of plural political institutions, as the Yeltsin era illustrates, it is not otherwise possible to make decisions that are both conducive to political stability and seen as legitimate by the elite. The data from the elite surveys show a considerable degree of horizontal integration among Russian national and regional elites concerning their attitudes towards ruling procedures under both Yeltsin and Putin. The main achievement of Putin has been to meet the expectations of the elites and establish a vertical consensus between the executive and the various leaders of political and economic institutions. A similar degree of homogeneity can be observed among the elites with regard to the type of federation Russia should have. The main trend is one of general support for an active role for the centre with considerable autonomy for regional governments. Over time attitudes among all elite groups investigated veer more in the direction of giving additional power to the central government. One general conclusion, therefore, is that there exists widespread consensus among the elite about procedures for federal powersharing. It is a shift in favour of greater centralisation but far from returning to the strict hierarchy of the past.

The elites and the emerging Russian state 175 While the procedural issues of democracy and federation are ‘win-winsituations’, the role of the state and the market relate more directly to distribution, economic interests and ‘zero-sum-situations’. One would therefore expect the elites to be more divided over these issues. In fact, while divisions exist, they are not dramatic. There exists substantial agreement about the need for active state ownership of larger industries, although there is some disagreement about whether co-operatives or private companies constitute the best solution in other sectors, such as small industry and agriculture. A majority would like the state to play an active role in stimulating economic growth and in tackling issues related to infrastructure and welfare. More surprising is the widespread support among elites for ‘individual competition’ as a social value parallel to their support for an active role for the state. As with the rather anomalous combination of support for both democracy and strong leadership, one explanation here might be that in the economic sphere Russian elites have established a modus vivendi, whereby capitalist values are united with a concern for collective obligations. How do these rather homogenous attitudes towards governing procedures and far-reaching consensus about distributional arrangements fit in with the numerous observations of elite conflicts in post-communist Russia? First, the conflicts during the Yeltsin era mainly took the form of vertical confrontations between the radical reform programme of the executive on the one hand and the values of the national and regional elites on the other. In such a situation controversies about redistribution and the malfunctioning of the market economy served as justifications for widespread elite support for stronger leadership and federal integration. When Putin came to power his leadership style corresponded with the elites’ desire for a firm hand capable of holding the state together, taming the financial oligarchs and moderating the excesses of raw capitalism. Second, horizontal conflicts among the national and regional leaders did not disappear as a result of a basic consensus over values. Competition for resources, positions and prestige among the elite continues to be harsh and often relentless. However, this form of elite rivalry is a product of the opportunities offered by pluralist structures. As Chapter 7 indicates, distributional conflicts have led to the formation of opposing elite camps, and in the spheres of income distribution and ownership a political left–right cleavage is highly visible. In any case, such confrontations should be welcomed as a normal expression of socioeconomic interest in the political process. The problem of ‘elite integration’ is basically about social control. As noted by scholars who have studied political development in Third World countries, the mobilisation of political support for state leaders’ policies depends on three levels of government: the central executive leadership, the leaders of bureaucracies and regional state officials. Paradoxically, the need to build alliances between the various levels of government in order to effect state policies may in fact jeopardise efficacy, since powerful sub-organis-

176 The elites and the emerging Russian state ations may become centrifugal forces and threaten state stability (Migdal 1988). Furthermore, as Linz and Valenzuela (1994) argue, mixed Presidential– parliamentary systems, like the one in Russia, create a problem of ‘dual democratic legitimacy’. When the President and the parliament are elected by the people and when the prerogatives of the President are only broadly specified, the potential for conflict between the President and the parliament majority is obvious. When controversial policies are on the agenda one may always ask what is the source of legitimacy. This was what happened during the 1990s because Yeltsin did not organise a sufficiently strong party base in the State Duma. After Putin came to office, however, much effort was invested in organising a robust and loyal party organisation that could cooperate with other parties and safeguard a pragmatic majority. This was much easier for Putin with his broad appeal to national and regional elites deeply traumatised by the turbulent Yeltsin years.

The triple transformation and the erosion of the state The three simultaneous reform projects – democratisation, the market economy and decentralisation – put forward in the ‘500 days programme’ in 1990, which later formed the basis for Yeltsin’s liberalist crusade, were in principle very different and yet at the same time closely related because they undermined, as Offe (1991) argues, each other’s accomplishments. Unsuccessful economic liberalism and privatisation leading to monopolies endangered political liberalism, while decentralisation and the weakening of the federal structure allowed authoritarian rule and anti-democratic practices to prosper in many regions and republics (Ross 2002a). The combination of regionalisation and privatisation of state property created a new class of local managers who took control over profitable state enterprises and were often linked through networks with a political clan for whom democratic thinking was rather alien (McAuley 1997). The Constitution, which provided for a separation of the executive and legislative powers and the introduction of competitive elections, instigated a powerful elite in the State Duma with the ability to block economic reforms. A main problem for Yeltsin was the mutually destructive effects of the various reforms that seriously incapacitated the state. The efficiency of the Russian political and economic system now hinges largely on the President’s ability to reach compromises on economic reforms with the new political and business elites (Shleifer and Treisman 2000). Lane (2000) argues that a kind of state-led capitalism has evolved, based on consensus between the President, the dominant groups in the State Duma and leaders in industry and the federal ministries. The elite orientations revealed here seem to be highly conducive not only to state-led capitalism but also to a redistributive state and broadly defined regional autonomy. Pluralism and the delegation of power to the regions necessarily decreased the Kremlin elite’s control over the implementation of economic reforms, thus

The elites and the emerging Russian state 177 putting elites in the State Duma, the federal bureaucracy and the regions in a position to form effective veto coalitions if they chose to. Economic ‘shock therapy’ turned out to be more a trauma than a remedy, and the catastrophic reduction in the population’s standard of living clearly destroyed illusions about Western-style democracy and the market; it did not, however, seriously undermine the Russian Constitution or basic democratic procedures. The negative effects of the transformation were felt directly not only by the population but also by the elites. Many believed that long-term negative experience of state performance (e.g. a reduction in state services) and the market (e.g. high consumer prices and social injustice) would erode the legitimacy of the whole transition project and pave the way for the return of a totalitarian state and a command economy. Yet this did not happen. Why? One answer lies in how the triple transformation was received by the national and regional elites and their acceptance of a kind of ‘second-best democracy’. As Linz and Stepan (1996) argue, democracy in post-communist Russia survived despite poor economic performance because the political alternative was not attractive to the elites. Referring to Winston Churchill’s thesis that imperfect democracy may continue indefinitely as long as it is a lesser evil than an authoritarian regime, Rose et al. (1998) argue that post-communist limited democracies are quite stable. Only elites can provide better government and the choices offered to the people are restricted by limitations among the elites. Thus, ‘the chief obstacles to democratisation in post-Communist countries are on the supply side’ (p. 217). The purpose of my study has been to investigate some of these ‘supply side obstacles’. Paradoxically, although ‘the triple transition’ created many problems it also limited the dramatic swings of the pendulum between anarchy and totalitarianism that have characterised Russian history. Yeltsin’s firm commitment to defending democratic institutions and strong regions undermined his market project and shook the federation, but it also laid the foundation for a pluralist structure with vested elite interests in democracy and decentralisation, even if many of them rejected Yeltsin’s liberal economic policies. Therefore, even if Putin had wanted to, he would not have been able to reintroduce authoritarian rule. As Leon Aron (2001) put it in his biography of Boris Yeltsin, Yeltsin finally succeeded in bringing the ‘cursed pendulum’ of Russian history to a standstill. While Aron refers to constitutional rights as such, what is probably even more important is that the Constitution and economic reforms created elites who had a direct interest in defending these rights against the Kremlin leaders. Ironically, these elites undermined Yeltsin’s decentralised reform project by playing ruthless self-interested games, in particular those in business and the regions. Another irony is that after Putin came to power, as the elite interviews and actual reforms reveal, the partnership between the President and the traditionalists seems to have kindled more support for market reforms and privatisation among the very elite groups who under Yeltsin ferociously rejected marketisation, e.g. in agriculture.

178 The elites and the emerging Russian state After the fall of communism, the disappointed expectations engendered by the failure of reforms had crucial consequences for public opinion about the emerging state. Comparing attitudes to democracy among the general population in a large number of countries, Inglehart (2000) reports that respondents in Russia score considerably lower than those in other countries on support for democracy, and widespread dissatisfaction with the government correlates with negative democratic orientations. Although, such popular sentiments did not have substantial effects on the composition of the State Duma or Presidential elections during the 1990s, the elites were not unaffected by public opinion. Przeworski’s thesis (1991) that post-communist governments are likely to oscillate between technical blue-print economic reforms, which give rise to popular protest, and later compensate with participatory-style reforms to maintain consensus is less applicable to Russia than to pure parliamentarian democracies. With a strong Presidency and a political culture dominated by the idea that politics should be the domain of the elites, ordinary people’s influence is at best indirect. In Russia the government’s shift from Yeltsin’s grand laissez faire plan to Putin’s more stateoriented approach was a reaction to the opinion of the elite rather than that of the people. The triple transition has resulted in an unprecedented type of state defined by certain elite configurations and orientations and cannot easily be categorised in terms of mainstream concepts like ‘corporatist state’, ‘welfare state’ or ‘liberalist state’. The foundation of the new Russian state is the post-communist elite, whose power base derives from the dramatic reduction in state capacity that has ensued from the disappearance of the centralised Soviet state and from their institutionalised bargaining position vis-à-vis the Kremlin leaders guaranteed by the Constitution. Although Russia is often described as a ‘hybrid’ of democratic and undemocratic characteristics, a mixture of state and market solutions and a federation with both centralising and decentralising features, this does not bring us much nearer to a more specific description of political trajectories. The ‘hybrid’ approach implies that the future is open and underplays the stabilising factor of widely-shared elite orientations. Post-communist Russia under Yeltsin and Putin can more aptly be described as a quite constant, albeit differentiated elite culture in which traditionalists and reformers strive to achieve a balance. Moving away from Western normative definitions of ‘democracy’ and a ‘market economy’ and taking a more ‘anthropological approach’ to studying the Russian state necessarily leads us to focus on Russian conceptions of the state. After a decade of disappointment with political and economic developments, the time has come to stop viewing Russia through the prism of Western models and recognise the importance of country-specific elites and their political culture. Some observers have moved in this direction. Solnick (1999), for example, describes Russia not as a democracy but as a system dominated by the sharing of power among rather stable elites. Referring to the data in the previous chapters, I would not go so far as to exclude the term ‘democracy’

The elites and the emerging Russian state 179 but would argue instead that Russia is a special type of democracy in which elites have an imperative role to play. What determines a ‘democracy’ encompasses a variety of structural, cultural and external factors but, as Gitelman (2001) argues, in periods of change – and Russia is still a society in the process transformation – the most important factor is elite choices.

The elite and state stability As discussed in Chapter 1, Nettl (1968) maintains that states are not a constant but will vary, first, according to ‘constitutional structures’ in which formal and normative mechanisms are used to deal with policy problems, and second, along with the impact of informal ‘elite cultures’ on these structures. In the former USSR informal elite relations were conducted under the auspices of the Communist Party, which had an integrative function for the Soviet state, just as the Boyars did under the Tsarist regime. In this study I have argued that post-communist elite culture will shape the policies of the Russian state. Formal political structures become less important than horizontal and vertical value-congruence among elites. As asserted by Nettl, elite interaction in such societies takes precedence over institutional structures and ‘the area of normlessness’ is filled by contending norms. The object of my study has been to describe how the demise of the communist state created a structural vacuum, that was filled by new elite norms that claimed to be legitimate for society as a whole. However, even better than the ‘vacuum’ metaphor, is the idea of amorphous institutions where clientelism and elite networks have precedence over ‘rational bureaucracy’. These elite norms shape the very political basis of the new Russian state, in the form of integration between the national and regional elites and the Kremlin leaders. One crucial implication of this ‘soft state–strong elites’ approach is that studying elite orientations may indicate in which direction the Russian state is developing. Various culturally-oriented political scientists claim that there is a correlation between political culture and type of state. As mentioned in the introductory chapter, Almond and Verba’s (1965) argument that political instability stems from incongruence between political culture and state structure applies strongly to the Russian situation, which was what happened when liberalism and de-regulation dominated during the Yeltsin period. Generally, the classification of cultures proposed by Douglas and Wildawsky (1982) catches some useful insights about how political cultures relate to state structure and political stability. In the beginning of the 1990s political and economic liberalisation soon brought about an imbalance between ‘individualism’, ‘egalitarianism’, and ‘hierarchy’ with serious consequences for social integration in general and elite integration in particular. The ambitious marketisation and decentralisation programme undermined egalitarian institutions and fragmented the federation. While some elites benefited from this situation, the majority were extremely worried by it and expressed a desire for egalitarian policies, stronger leadership and hierarchical

180 The elites and the emerging Russian state rule. However, the fatalism and loyalty to the state, deeply rooted in Russian thinking, prevented these wishes from coming to the fore until an impasse had been reached. This eventually happened because Yeltsin’s support diminished and during the end of his era was limited to the regional elites and the financial oligarchs which was not a broad enough political basis. The clashes with other elites over distributional and federal issues could not continue indefinitely, and re-hierarchicisation fulfilled the expectations of the national and regional elites. Putin’s assumption of the Presidency was followed by a change in the balance between the cultures, and the new equilibrium became more congruent with Russian traditions of a stronger state, hierarchical rule and redistribution. I argue, these preferences were not mainly transferred from the past, they developed first of all from experience with poorly working liberal institutions in the post-communist era. As the data show, liberal values, like individual competition, are still widespread among the elites, but when it comes to the more concrete issue of private ownership they support it only in the form of small business. In the view of the elites, large industries and collective tasks are so crucial for egalitarian concerns that they should not be subjected to market forces. Putin’s policies may be seen as a response to the elites’ desire for a better balance between individualism, egalitarianism and hierarchy.

Conclusion A decade after the triple transformation was launched analysts are still asking what type of democracy, economy and federation is emerging in Russia. My point is that these reforms must be analysed in tandem, whereby the orientations of the elites are a filter through which the reforms impinge upon each other and are reshaped. In this array of policy initiatives and elite games, some basic patterns seem to stand out over time. Thus, one main key for understanding the new Russian state and the potential for stable development is that, as this study shows, elite orientations are either monolithic or they are incompatible while largely co-existing. When Putin launched his programme before the presidential election of March 2000 and proclaimed that ‘the stronger the state, the freer the individual’ and that the essence of more state regulation ‘is not to stifle the market and extend bureaucratic control into new branches – but quite the opposite’,4 he was not being inconsistent. Rather, he had the clear political intention of bridging the values of the elites with necessary reforms. The apparently contradictory policies espoused by the Putin regime of building a stronger state and also supporting democratic principles and a market economy are basically a strategy for establishing a consensus between concomitant reluctant and modernising political cultures. As Yanov (1987), McDaniel (1996) and others argue, reforms are not possible unless the central leadership has a strategy for accommodating policies with national and regional elite cultures.

The elites and the emerging Russian state 181 The patterns of attitudes presented in this book indicate that the political culture of the Russian elites is not a threat to democratic stability but is conducive to a specific type of democracy different from the Western model. In Western democracies a civic culture has evolved over generations and has internalised basic political norms rooted in mutual elite trust, where mass preferences impinge much more directly on the elites’ attitudes. One main conclusion is that while Russia is not embracing a Western model, neither is it returning to its authoritarian or totalitarian past. Rather it finds itself in the midst of a long process of institutionalising a unique model of its own, a process that entails searching for a viable compromise that may bridge the tension between revived collective sentiments stemming from harsh experiences with the turbulent Yeltsin period and new pluralist structures and economic modernisation. If elite attitudes matter for policy formulation and implementation, the orientations investigated in this study provide some indications of the direction future developments might take. Russia is neither on the road to fragmentation nor to totalitarianism but has embarked on a lengthy process of strengthening the state by establishing a more capable central leadership, more state intervention in the economy and less far-reaching decentralisation, while at the same time continuing with market reforms. Exactly what type of state will emerge from the national and regional elites’ strategic position in the bargaining process is more difficult to say. However, political and territorial stability and the economic agenda are currently safeguarded by widespread congruence between the Kremlin leaders’ policies and the orientations of the national and regional elites. Given the lack of a pluralist tradition, the main challenge for Russian democratic development is to combine the widely shared procedural and policy orientations, that have an obvious potential for uniformity, into accountibility in governance, viable political competition and the establishment of a critical opposition. While the political base for the Russian state is solid, the same cannot be said about values nourishing a civic society. The unprecedented triple transformations in politics, economy and federal structure made the Russian transformation primarily a ‘political project’, but one, as Offe (1991) argues, that lacked fixed parameters. As a result of the reform, leaders were forced to cling to the ‘new’ doctrines of the neoclassical market economy and nationalist rhetoric for political mobilisation. After the fall of communism, according to Offe ‘everything became possible’ because of the primacy of politics, weak formal institutions, covert elite networks and clientelism. I argue that if one takes post-communist elite culture into consideration ‘everything is not possible’ in Russia. Political processes and policy outcomes have been substantially moulded by the elites’ outlook. The main insight ensuing from this study is that combining reform with stability in Russia depends on a certain mix of collective and individualistic cultures among the national and regional elites that corresponds with the Kremlin rulers’ policy ambitions.

182 Political Elites and the New Russia

Appendix Additional tables

Table A3.1 The elite’s image of the masses’ trust in leaders of institutions* (%) Image of mass trust of leaders in State Fed. Fed. Reg. Duma Council min. gov.

State Armed Church Priv. Pol. enter- forces business party prises

Total

1998 2000

37 38

49 51

21 41

52 54

40 72

56 68

77 81

11 14

17 16

State Duma

1998 2000

49 63

45 59

17 49

46 56

46 73

62 80

74 81

6 17

29 24

Fed. Council

1998 2000

47 41

61 89

34 78

67 93

47 97

97 93

97 86

10 15

17 22

Fed. admin.

1998 2000

31 44

46 52

32 51

42 58

39 63

51 64

75 71

8 18

19 15

State enterpr.

1998 2000

19 23

43 43

21 32

49 50

26 72

64 73

77 72

12 15

4 13

Priv. 1998 business 2000

28 34

48 52

25 50

56 71

31 69

60 78

76 81

38 17

21 14

Culture

1998 2000

33 31

48 49

19 50

48 55

37 79

45 69

84 93

19 17

16 17

Reg. govt.

1998 2000

37 29

50 43

19 26

55 43

41 72

53 57

77 83

10 9

15 12

* The respondents were asked what their personal impression was of the extent to which ordinary people trusted the leaders of the institution in question. The categories ‘total trust’ and ‘some trust’ are merged. The table also includes attitudes towards party-, military- and Church leaders, even though these elite groups were not among the respondents. Furthermore, the cultural elite does not match directly with a corresponding institution. For all the other groups of respondents there are corresponding institutions.

Appendix – additional tables 183 Table A3.2 Mass public and the elite with no or little confidence in institutions (%) Mass 19941

Mass 19972

Elite 19983

Elite 20004

Political parties

82

81

79

75

Private business

76

77

71

61

Cabinet

74

74

58

35

President

70

–

67

25

State Duma

70

77

43

44

Civil servants

71

51

64

68

Police

71

69

64

69

Judiciary

65

61

56

68

Mass media*

60

60

74

75

Armed forces

39

31

37

25

Church

33

34

N=

3.535

2.040

43

34

980

605

White et al. (1) made use of a seven-point scale while the World Value Survey (2) employed four categories, as in my study. Therefore comparisons should be made with some care. In Table 4 the scale is simplified and only the value ‘no confidence’ is included. 1 Adapted from White et al. (1997) who used data from New Russian Barometer 1994. The attitudes are measured on a scale from 1 to 7, where 1 is no trust at all and 7 is full trust. In the table the scale was simplified to 1, 2, 3no confidence; 7, 6, 5, 4confidence. 2 Data from the World Value Survey (1995–7), provided by the Norwegian Social Science Data Service. The scale is from 1 to 4 and the question-formulation corresponds with the scale and question used for measuring the elites’ confidence (see Table 1). 3 The Russian Elite Study 1998. 4 The Russian Elite Study 2000. * In (2), (3) and (4) the question was specified to ‘TV and radio’. It was also asked about confidence in ‘newspapers’ which had almost the exact same percentages of replies.

184 Appendix – additional tables Table A5.1 Selected economic and social indicators for the Russian Federation, 1990–19981 1990 1991 1992 1993 1994 1995 1996 1997 1998 Economy GDP Per capita* Real income per capita* GDP2 Ind. output2 Agr. output2 Inflation3 Real wages4 Social sector: Pensions4 Life-expectancy (years)5

100 100 3 – 4 – –

95 116 5 8 5 – –

81 74 65 62 60 61 71 80 68 68 15 9 13 4 4 18 14 21 3 4 9 4 12 8 5 2509 840 215 131 22 – 40 0 – 8 28 13

– 64

– 64

– 62

28 59

100 100 100 100 100 100

98 100 111 99 109 96

94 104 125 82 123 85

91 104 133 80 146 94

3 19 58 58

61 58 70 57 1 5 2 5 1 12 11 84 5 10

9 60

5 61

5 –

72 95 180 54 199 166

65 89 193 51 194 161

– – – – – –

Employment* Industry Agriculture Oil R and D Banking/finance State apparatus

81 106 139 65 185 96

75 100 156 60 204 118

1 Here some figures were collected directly from IMF publications and some are from secondary sources based on Goskomstat. Some of these economic indicators and social sector data are the result of a joint project between Goskomstat (the Russian Statistical Central Bureau State Committee for Statistics), the World Bank and the IMF (The International Monetary Fond), which used alternative data and introduced estimates of unreported and under-reported activity (Becker and Hemley 1996:4). One special problem is the size of the shadow economy. Goskomstat reported that by the end of 1996 such activities accounted for about 30% of the total economy, while the Russian Ministry of the Interior has suggested that the percentage amounted to 35% in 1996 (p.6). Others suggest that the shadow economy may account for as much as 60% of GDP (Hagen 1999). 2 Annual percentage change. Source: Goskomstat and IMF Staff Country Report No. 99/100, September 1999, table 1. 3 Inflation on consumer products: percentage changes from December to December. Source: ibid. table 15. 4 Annual percentage change. Nominal numbers deflated by the consumer price index. Source: ibid. table 17. 5 Source: ibid. p.36 * 1990100. Source: Tikhomirov (2000).

3.9 4.3 3.9 3.6 4.0 4.6 5.4 4.4 4.1 4.3 4.4 4.5 4.3 4.3 4.4 4.4 4.7 3.9 4.6 4.5 4.0 4.3 3.6 3.4 4.5

3.1 3.5 2.9 3.0 3.1

3.0 2.9 2.9 3.5 2.8

3.1 3.1 3.2 2.8 3.2

3.2 3.5 2.9 2.9 3.5

2.5 2.3 2.8 3.2 1.9

Average central regions Moscow Moscow Oblast St Petersburg Leningrad Oblast

Average ethnic regions Republic of Tatarstan Republic of Komi Republic of Kabard.Balk. Republic of Sakha

Average periphery regions Murmansk Oblast Arkhangelsk Oblast Primorye Krai Kaliningrad Oblast

Average stagnation regions Republic of Udmurtia Voronezh Oblast Stavropol Krai Krasnodar Krai

Average reform regions Nizhniy Novgorod Oblast Samara Oblast Sverdlovsk Oblast Saratov Oblast

4.4 5.3 5.0 4.5 2.9

5.5 6.0 5.7 4.6 5.7

4.9 5.5 4.9 4.6 4.8

4.7 3.9 4.8 5.4 4.9

4.6 4.9 4.7 4.7 4.0

Welfare responsibility

4.8 5.2 4.8 5.5 3.7

5.8 6.0 5.7 5.9 5.7

5.1 4.9 5.6 4.9 4.9

5.0 4.4 6.2 4.9 4.5

5.0 4.8 5.8 4.5 4.9

Ownership

N= 30 in each region. Response rate: 98–100%. On measurement scale and the statements, see note 1 to Table 5.1. About the criteria for selecting regions, see Chapter 2.

Income differences

Competition

Table A5.2 Individualism and collectivism among regional elites, in 1998 (means average)

5.3 6.2 4.8 5.5 4.8

6.2 7.1 6.7 6.0 5.1

5.6 5.1 6.4 5.1 5.7

6.1 6.7 5.8 6.2 5.5

5.3 5.0 5.8 5.1 5.3

Income regulation

4.2 4.7 4.2 4.4 3.6

5.0 5.5 5.0 4.8 4.9

4.6 4.6 4.9 4.3 4.6

4.7 4.6 4.8 4.8 4.4

4.4 4.5 4.6 4.1 4.3

Average all statements

Appendix – additional tables 185

186 Appendix – additional tables Table A6.1 Elite attitudes to controlling tax incomes (%) Total central control 1

Mainly central control 2

Mainly regional control 3

Total regional control 4

Mean

Total

1998 2000

5 10

29 42

42 34

24 14

2.8 2.5

State Duma

1998 2000

18 9

46 49

27 36

8 5

2.3 2.4

Fed. Council

1998 2000

3 3

40 30

43 57

13 10

2.7 2.7

Fed. admin.

1998 2000

9 18

57 52

29 26

5 4

2.3 2.2

State enterpr.

1998 2000

2 16

38 50

42 28

18 6

2.8 2.2

Priv. business

1998 2000

8 12

51 57

27 18

14 12

2.5 2.3

Culture

1998 2000

4 8

41 45

37 33

18 14

2.7 2.5

Reg. govt.

1998 2000

2 6

18 31

49 38

31 25

3.1 2.8

Response rate 1998: 98%, N=954; 2000: 97%, N=584. Question: ‘How to distribute tax revenues between central and regional levels has been much discussed. What, in your opinion, is the best way to divide tax revenues between central and regional levels? Choose one of the following four options that comes closest to your opinion’. 1 ‘All tax revenues should be controlled by the federal government, and the federal government should decide how to distribute them between the centre and the regions, and among the regions.’ 2 ‘A major portion of the tax revenues should be controlled by the federal government and the rest should be distributed directly by the regional governments.’ 3 ‘A small portion of the tax revenues should go to the federal government, and the regions should themselves be responsible for allocating the major portion of revenues.’ 4 ‘All tax revenues, with the exception of certain basic expenditures on national infrastructure and defence, should be controlled by the regional authorities.’

Appendix – additional tables 187 Table A6.2 Elite support for special agreements and federal law (%) Fully support special agreements

Fully support federal law

1

2

3

4

5

Mean

Total

1998 2000

8 4

13 6

22 11

17 18

41 61

3.7 4.3

State Duma

1998 2000

3 2

7 6

15 8

12 21

63 63

4.2 4.4

Fed. Council

1998 2000

3 3

10 23

37 3

17 13

33 57

3.7 4.0

Fed. admin.

1998 2000

2 3

5 4

25 18

22 14

45 61

4.0 4.3

State enterpr.

1998 2000

4 2

12 4

14 10

14 18

55 65

4.0 4.4

Priv. business

1998 2000

4 2

12 0

16 8

16 22

52 67

4.0 4.5

Culture

1998 2000

2 0

13 17

33 8

19 23

33 52

3.7 4.1

Reg. govt.

1998 2000

12 7

15 4

22 12

17 17

35 60

3.5 4.2

Response rate 1998: 99%, N980; 2000: 98%, N605. Question: ‘Many special bilateral agreements on taxation and subsidies have been negotiated between the federal government and regional authorities. Some people have argued this is the right and most appropriate approach, which takes into account the diversity of problems among the Russian regions. Others feel this creates advantages for some regions, resulting in unacceptable inequality among the regions, and that therefore federal law should take precedence over such agreements between the regions and the centre. What is your view? Please indicate your opinion on the scale from 1 to 5, where 1 means you fully support the idea that special agreements are beneficial to the regions and 5 means you believe that federal law should take priority.’

188 Appendix – additional tables Table A9.1 Length of membership in the CPSU (%) 1–5 years

6–10 years

11–15 16–20 21–25 26–30 31+ Mean years years years years years years

Total

1998 2000

11 12

20 23

21 22

21 22

14 11

9 7

3 3

16 15

State Duma

1998 2000

8 12

13 19

15 22

28 23

15 15

15 7

6 1

18 15

Fed. Council

1998 2000

0 7

4 10

32 31

29 28

21 21

11 3

4 0

19 16

Federal ministries

1998 2000

9 8

24 25

20 32

17 13

16 14

7 6

7 3

16 15

State enterprises

1998 2000

6 14

22 19

19 22

28 19

14 11

8 11

3 3

16 15

Private business

1998 2000

9 16

9 11

30 16

26 21

13 5

9 26

4 5

16 18

Culture

1998 2000

7 10

30 17

17 10

13 40

23 3

7 13

3 7

16 18

Reg. govt.

1998 2000

14 13

22 31

22 18

20 22

13 9

8 5

2 3

15 14

Response rate 1998: N707 (100%); 2000: N411 (100%)

Table A9.2 Former status in the CPSU (%) Ordinary member

Mid-level leader

Top-level leader

Total

1998 2000

48 51

31 32

21 17

State Duma

1998 2000

42 30

32 37

27 33

Fed. Council

1998 2000

29 34

21 28

50 38

Fed. ministries

1998 2000

61 68

37 29

1 3

State enterprises

1998 2000

56 50

33 47

11 3

Private business

1998 2000

57 37

43 53

0 11

Culture

1998 2000

57 43

30 43

13 13

Reg. govt.

1998 2000

47 59

30 24

24 17

1998: N707 (100%); 2000: N411 (100%).

Appendix – additional tables 189 Table A9.3 Elected as a deputy of a Soviet legislative body (%) Yes

No

Total

1998 2000

36 34

64 66

State Duma

1998 2000

66 52

34 48

Fed. Council

1998 2000

83 83

17 17

Fed. ministries

1998 2000

10 8

90 92

State enterprises

1998 2000

20 14

80 86

Private business

1998 2000

10 12

90 88

Culture

1998 2000

18 10

82 90

Reg. govt.

1998 2000

38 45

62 55

Response rate 1998: 100% N980; 2000: 100% N605

190 Political Elites and the New Russia

Notes

1

Russian elites and the triple transformation

1 This study of Russian elites, like my previous research on Baltic elites (Steen 1997), has benefited from Putnam’s (1973) approach to interviewing British and Italian political elites. 2 Even in the Soviet period the concept of an all-encompassing state did not always fit in with realities. In economic policy the central planners often had to enter into compromises with influential industrial sectors, a system Nove (1987) calls ‘centralised pluralism’. See also Lane (1992: 3), who argues ‘the traditional system was characterised by an evolving autonomy of elites which was not subject to autocratic Party control’. 3 For an overview of Russian approaches to elite studies in Russia, see Gel’man and Tarusina (2003).

2

Defining and surveying elites

1 All federal units in the following were included in the 1998 survey, while only those marked with an asterisk were compiled by the 2000 survey.

3

Regime-legitimacy and political stability

1 Dahl 1963: 19. 2 Popper 1999: 130. 3 This chapter is a revised and extended version of papers published in Europe– Asia Studies, vol. 53, no. 5, 2001 and in Steen, A. and Gel’man, V. (eds) (2003). I am grateful for comments to the earlier versions from Vladimir Gel’man and Ola Listhaug. 4 Political support among the public has been the focus of several population surveys. In Western countries the tendency over time has been an erosion of public support (Pharr and Putnam 2000). Listhaug and Wiberg (1995) paint a less pessimistic picture, claiming that there was no general decline in public support for governing institutions during the 1980s. 5 Later, just after the second round of elite interviews in summer 2000, Putin put an end to the governors’ automatic right to a seat in the Federation Council.

Notes 191 6 Those respondents included in the group of ‘regional leaders’ were deputy governors, deputy chairmen of regional parliaments and other political and administrative leaders in the regions. Governors and regional Duma chairmen were included among the respondents selected from the Federation Council. The selection of respondents is examined in more detail in chapter 2. 7 Distrust between elites is not only a Russian phenomenon. The elites in the three Baltic states also have a low level of trust in each other (Steen 1997). 8 In 1997 in the Baltic states the proportions for elite/mass confidence was as follows (unpublished data from the Baltic Elite Project, conducted by Steen, A.). Estonia: parliament 74%/23% ; cabinet 75%/30%; political parties 41%/13%; priv. bus. 75%/49%. Latvia: parliament 54%/24%; cabinet 69%/32%; political parties 27%/15%; priv. bus. 60%/47%. Lithuania: parliament 61%/29%; cabinet 64%/32%; political parties 34%/17%; private business 68%/36%. 9 It should be noted that the most sceptical members of the elite are the State Duma representatives, who constitute a fairly large proportion of the total elite surveyed (see Table 3.2). Among the other elite groups attitudes are less negative. 10 The fairly large sample of Duma representatives influenced the result (with only 16 per cent of the deputies expressing distrust). But even among other elite groups, e.g. the Federation Council (31 per cent) and the regional elite (40 per cent), levels of distrust were much less than among the mass public. 11 Source: The Elite Study in Russia 1998 and 2000. 12 I argue that ‘democracy’ may be understood as a continuum where authoritarian elements may be an ingredient part of certain types of democracy. Chapter 4 deals with various conceptions of democracy and the Russian elite’s attitudes to this manifold phenomenon.

4

Democracy Russian style

1 Lukin 2000: 211. 2 For a discussion of post-communist authoritarian and democratic attitudes among Baltic leaders, see Steen (1997), Chapter 5: ‘Elite personality and the democratic mind’. 3 All references to the Russian Constitution is from the English translation presented in Sakwa (1996). 4 According to the Constitution’s article 107 the President may reject a federal law adopted by the national assembly, the State Duma and the Federation Council. But if the law, after repeated examination is approved by a two-third majority in the two chambers the President has to sign it. Thus, the full meaning of the paragraph is that the President has the right of suspending but not overruling laws passed by the national assembly. The formulation of the question should therefore be clear enough. 5 For an account of historical and cultural reasons why the Russian market reform turned out to benefit only a few, see Hedlund (1999). While Stefan Hedlund in his many writings, sees few hopes for the Russian economy, his fellow-countryman, Anders Aaslund, as early as 1994, wrote about ‘Russia’s success story’. 6 Aaslund was himself closely associated with the ‘Chubais clan’ and an active participant in the team advising the Russian government during the early Yeltsin period (Wedel 1999).

192 Notes 7 Looking at the empirical lessons yielded by the experience of Third World democracies and authoritarian regimes in the 1980s, Bartlett maintains that regime type offers only tenuous causal links to economic changes (Bartlett 1997). 8 Positive answers were defined as those scoring 5, 6 and 7 on a scale from 1 to 7, where 1 was ‘no trust’ and 7 was ‘great trust’. 9 In another article from 1995, based on the same data as 1992, Miller et al. conclude that there is ‘overwhelming support for democratic capitalism among the Russian elite’ (Miller et al. 1995: 32).

5

Between the state and the market

1 Boris Yeltsin in Presidential State of the Union speech. Quoted and translated from the Norwegian daily Aftenposten 31 March 1999. 2 The figures are from Lavigne (1995), who also discusses technical aspects of calculating Soviet performance figures. 3 The statistics should be used with some care. As Birman (1996) remarks, statistical information in Russia may still suffer from the old Soviet habit of distorting reality by under,- or over-reporting economic activities and results. 4 The gas company, ‘Gazprom,’ is an example of an attractive export company operating under the ‘the new Russian corporatism’. It is characterised by its social and economic importance and the unclear dividing line between the state and private sectors (Kryukov and Moe 1996). 5 See also the economist approach of Gaddy and Ickes (2002) who argue that the Russian experiment ended up as a ‘mutant system’ of old industrial enterprises and informal institutions which they call the ‘virtual economy’, and Reddaway and Glinski (2001) historical approach, where they use the term ‘market bolshevism’ about the economic reforms. 6 During the Soviet period the housing sector was extremely regulated and an important part of central state planning. In connection with a local government reform the privatisation of housing started as early as 1991 and by 1995 more than 53% of the housing stock had been taken over by private owners. The process then slowed down (Kosareva et al. 1996). 7 For ownership of restaurants the pattern is very similar to that for shops. Figures are not shown here. 8 ‘VTsIOM, Monitoring obshcestvennogo mneniya, 1996’, reported in Shleifer and Treisman (2000: 22); VTsIOM is one of the major polling companies in Russia. 9 The elite survey also included a question about which regions have the best and worst economic and social conditions and the best and worst leadership. It is interesting that the elites overwhelmingly singled out Primorye Krai as the worst region with the worst leadership, although the leaders of the region are relatively reform-oriented. 10 Boris Yeltsin in Presidential State of the Union speech. Quoted and translated from the Norwegian daily Aftenposten 31 March 1999. 11 Financial Times, 27 May 2000. 12 Deputy Development and Trade Minister Andrei Sharonov in Kommorsant Daily, 10 October 2002. Referred to in RFE/RL (Radio Free Europe/Radio Library), 10 October 2002. 13 Kommorsant Daily, 10 October 2002. Referred to in RFE/RL (Radio Free Europe/Radio Library), 10 October 2002.

Notes 193

6

Integration in a decentralised federation

1 Television interview with President Vladimir Putin, 7 October 2002. Reported in RFE/RL (Radio Free Europe Radio Library) Newsline, 8 October 2002. 2 Smith 1995: 117. 3 Some parts of this chapter build on Steen and Timofeev (2003). 4 Of the 89 federal subjects, 32 are defined as ethnic units with some autonomy (21 republics, 1 autonomous oblast, 10 autonomous krais) and 57 are defined by territory (6 okrugs, 49 oblasts, and the two cities Moscow and St Petersburg (Article 5 of The Constitution of the Russian Federation). 5 Articles 71 and 72 of The Constitution of the Russian Federation. 6 A large volume of literature is devoted to identifying differences in regional autonomy and explaining how and why these came about. Ethnic mobilisation and the elite’s use of ethnicity for its own purposes are the two main paradigms. Often these are case studies of single regions or comparisons of a small number of regions. One example of a large-scale study of nearly all 89 federal subjects is made by Kathleen M. Dowley (1998). 7 In May 2000 President Putin introduced a new administrative level between the central authorities and the federal subjects, consisting of seven federal districts (okrugs). A set of leaders controlling federal agencies in the regions were appointed by the President, thereby limiting some of the powers of the regional leaders. Putin also abolished the governors’ automatic right to a seat on the Federation Council and interfered directly in gubernatorial election campaigns by supporting candidates loyal to Kreml. 8 See, for example, Steven Solnick (1998), who regards ethnicity as a ‘marker’ uniting a block of republics capable of establishing favourable collective deals with the centre; and Stephen E. Hanson (1999), who argues that ethnic distinctiveness and economic incentives for secession are a rare combination. Ethnic regions tend to have many economic reasons for staying inside the federation. 9 Dowley (1998) distinguishes four possible motivating factors for the regional elite: ‘essentialism’, ‘instrumentalism’, ‘relative deprivation’ and ‘resource mobilisation’ and puts all 89 regions on an autonomy continuum based on the actual behaviour of the regional elite. She concludes that although these factors are important they are not a good predictor of ‘federalists’ and ‘anti-federalists’ and opts for a ‘combined model’ that gives substantial insights into the elite’s behaviour. 10 1 and 2 are merged on the five-point scale. 11 Each ‘federal district’ consists of 10 to 15 federal subjects. 12 This section is based mainly on Le Hoerou and Rutkowski (1996). 13 See Chapter 5 on the widespread collective mentality of the Russian elite. 14 Alastair McAuley (1997) shows with a large data-set from 1995 that ‘the Russian government is now substantially motivated by equity considerations in its policies of regional redistribution’. Europe–Asia Studies, vol. 49, no. 3, pp. 431–44. 15 Shleifer and Treisman (2000) maintain that the confusing tax system is one reason why the federal government is so unsuccessful in collecting taxes, with severe consequences for financing basic services. The incentive problems created by a fluid tax system include overlapping tax bases between federal levels, collusive deals between enterprise managers and regional authorities to conceal taxes from the federal level, competition over tax sharing between administrative levels, divided

194 Notes loyalties among the tax collectors to the federal, regional and local governments and negative relationships between increases in tax collection and increases in transfers. After August 2000 a new and simpler tax system was adopted. 16 The figures are not shown here. 17 The agreements with Tatarstan and Bashkortostan recognised the autonomy of these republics to decide on its own budgets, laws, the judiciary, foreign trade and establishing diplomatic relations with other countries (Myklatun 2000). However, to what extent agreements were implemented is a more open question and many have later been renegotiated. While all other members of the federation paid 10 per cent of the income taxes into the federal budget, as a result of the special treaty Tatarstan paid only 1 percent. Tatarstan and Bashkortostan kept all excise taxes on alcohol, petroleum, petroleum products and gas, but the rest of the federal subjects had to pay 50% to 100% of excise taxes to the central government (Mitrokhin 1996, referred to in Ross 2000). 18 Moscow city and some other regions (St. Petersburg, Samara Oblast and others) were given the right to form economic agreements with foreign countries and issue special stocks to be exchanged with foreign business and investors.

7

What matters for the elite’s orientations?

1 This chapter builds partly on the article: Steen, A. (2002): ‘The post-communist transformation: elite orientations and the emerging Russian state’, published in Perspectives on European Politics and Society, vol. 3, no. 1, pp. 93–126. 2 Almond and Verba (1965: 33). 3 Such a view of developments in Russia easily leads to normative debates based on Western success criteria. 4 The operationalisation of the independent variables are as follows: ‘The executive’: The elite’s trust in the President and the President’s administration.‘State capacity’: The elite’s perceptions of the strength of central and regional government. ‘Legacy of the past’: Age of respondent; and having been elected to a representative body during the Soviet period (The Supreme Council of the USSR, The Supreme Council of the Russian Soviet Federative Socialist Republic, deputy of regional councils, deputy of local authorities). ‘Post-communist learning’: ‘Democratic experience’ is operationalised as present membership in a political party; ‘ideology’ is operationalised as self-placement on the left–right scale.

8

Decision-making cultures

1 McAuley (1997: 17). 2 Chehabi and Linz (1998) argue that the patrimonial Soviet system had some similarities with ‘sultanism,’ especially in some of the regions where loyalty to one leader was founded on a system of rewards and sanctions. 3 Easter (2000) analyses how regional elite networks during the Soviet period influenced state-building and paradoxically also the demise of the Union.

9

The network state

1 Lindblom (1968: 93). 2 An earlier version of this chapter was presented at the 28 Annual European

Notes 195

3

4

5 6 7

8 9 10

Consortium for Politial Research (ECPR) Joint Session of Workshops 14–19 April 2000, Copenhagen. According to McAuley (1997), the elite had few other choices. The only thing regional elites could rely on were existing networks. This was particularly evident in some republics, like Tatarstan and Sakha, where the only means of political consolidation was ethnic-based clan politics. ‘Soviet-era deputy’ is, however, not a clear-cut category. The 1989–90 elections were to some extent competitive but without a multi-party system. Those elected during these years thus followed other recruitments paths than the traditional nomenklatura way of entering Soviet legislative bodies. I am obliged to Vladimir Gel’man for this note. However, as Linz and Stepan (1996: 379–81) note parliamentary-like parties emerged only after the 1989–90 elections. Until then the discarding of article 6 of the Soviet Constitution in March 1990 was guaranteeing the monopoly of the Communist Party of the Soviet Union. More than 80% of the respondents in the State Duma and Federation Council have a background as director or leader in the state bureaucracy. Average age of the State Duma respondents is 50 years, with only 6% under 34 years. In the Federation Council the average is 53 years with none under 34 years. The correlations are measured using Kendall’s tau-b. Causal directions were checked using percentage tables showing the effect of independent variables on contact. Tau-b as a measure is useful, since it combines the range of variablevalues without excluding some units. ‘Contact frequency’ was operationalised to contacts by meetings, telephone, letter during the last twelve months: ‘at least once a week’, ‘once a month’, ‘sometimes during the year’, ‘never’. CPSUmembership: no/yes. Position in the CPSU: member, lower-level leader, top leader. Deputy of some Soviet legislative body (Supreme Soviet of the USSR; Supreme Soviet of the RSFSR; a republic or oblast Soviet; a city, district or rural Soviet): no/yes. See Table A9.1. These figures are from separate calculations. As illustrated in Chapter 8, the leaders of state enterprises are a special group. They emphasise widspread ‘clientelism’ and hold the opinion that considerable mafia influence exists in most areas.

10 The elites and the emerging Russian state 1 One of the most oft-cited set of criteria for democracy is Robert Dahl’s (1971) catalogue of freedoms, rights and institutions. The list includes freedom of organisation and speech, the right to vote and be elected for public office, the right to compete for votes and support, the establishment of institutions guaranteeing alternative information, free and fair elections and government policies rooted in the people’s preferences. 2 Financial Times, 24 July 2000. 3 Boris Nemtsov was one of the young reformers who started his career under Yeltsin and was appointed governor in Nizhny Novgorod in 1991. Later, in 1997, he advanced into the inner circles of the Kremlin leadership, when he became deputy Prime Minister. Quoted from the Financial Times, 24 July 2000. 4 Financial Times, 27 February 2000.

196 Political Elites and the New Russia

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References 207

Index

Note: page numbers in italics denote tables. Aaslund, Anders 58, 162–3, 165, 172 agriculture 65, 69, 81 Alexseev, M.A. 98 Allum, F. 135–6 Almond, G.A. 13, 37, 118, 120, 121, 179 Altai Krai 83 anti-corruption 138 Arkhangelsk 21, 86 army 31, 42 Aron, L. 4, 177 authoritarianism 170; democracy 49, 59–60; economic growth 47; legitimacy 45; market economy 58; Putin 6, 122, 168 autonomy 95, 96, 116, 176 Baltic states ix, 42, 97, 123 banking sector 69–70 bargaining process 112, 133, 134 Barry, B. 27 Bartlett, S. 59, 60 Baylis, T.A. 3 black market 136; see also grey zone blat 144 Bourdieu, Pierre 142, 153, 158 Bradshaw, M.J. 84 Braithwaite, J.D. 69 Brezhnev regime 7–8, 128, 143 Bruszt, L. 11, 70, 71, 149, 165 Bryant, C.G.A. 170 bureaucracy 19–20, 129, 131, 134, 139–40 Burgess, M. 96, 116 Burton, M.G. 10, 26 capital 142; see also political capital capitalism: competition 57; democracy 4; nomenklatura 58–9, 142, 145, 165; predatory 92, 94; raw 31, 47, 93, 138, 173; Russian-style 92, 93; stateoriented 48, 90–1, 93, 119, 152, 165, 176

careerists 100, 140, 153, 156 centre–periphery relations 108, 111–12, 115, 162 Chechnya 31, 96 Chernomyrdin, Viktor 22, 64 China 45 Chubais, Anatoly 59, 93 Church 31–2, 40, 42, 173 Churchill, Winston 177 civic cultures 13, 40, 47–8, 120, 127, 138, 145 civil society 47–8, 55–6, 181 clan politics 63, 83, 145 clientelism: Brezhnev 128; bureaucracy 129, 134, 139; decision-making 135, 140; elites 7, 127, 128, 141; family ties 150–2; patrimonialism 131; resources 106; state enterprises 132; see also patron–client relationships coalition building 122, 173–4 Coleman, J. 156 collectivism: agriculture 65; and communitarianism 90–1, 92; individualism 67–8, 73–6, 185; ownership 65, 70–1, 77, 79 communism, fall of ix, 1, 18, 25, 68, 178 Communist Party of the Soviet Union (CPSU) 153–5, 159, 160, 188 communitarianism 90–1, 92 competition 57, 62, 71, 73, 76, 175 confidence: see trust Congress of People’s Deputies 92 Constitution 46, 54–6, 95, 97, 113, 176, 177 contacts 145, 146–50, 161–2; see also networks co-operatives 81 corporatism 147 crime 69, 135–9 cultural elite 18, 76, 149, 169–70 culture 122, 129, 179

208 Index Dahl, R.A. 10, 18, 25, 50 Dahrendorf, R. 63 decentralisation: autonomy 96, 116; decision-making 102; democracy 1, 72, 176; elites 72, 99; federalism 97; property rights 60; recentralisation 3; regional elite 9, 14, 103; responsibilities 117; Russian Federation 3, 167; taxation 110; verticalisation of power 101–2 decision-making: clientelism 135, 140; decentralisation 102; elites 5, 130, 132–3, 156–7; law 127; loyalty 128; political stability 165–6 democracy 4, 14–15, 176; authoritarianism 49, 59–60; capitalism 4; decentralisation 1, 72, 176; economic growth 45, 49, 177; electorate 51; elites 10, 14–15, 25, 44, 49–50, 122–4; Estonia 43; federation 95, 175; freedom 25, 48; institutions 26, 57, 123–4; legitimacy 28; market economy 6, 56; political culture 13; property rights 57; stability 48; trust 39 democracy, types 168; associative 117; consolidated 28; elite/participatory 49, 50–1, 53–4, 61, 65, 119; hybrid 178; multi-party 49, 53; pluralist 1; Russian style 64, 179, 180; top-down 63; unconsolidated 13; Western 64 Diamond, L. 56, 58 distributional coalitions 71–2, 105–6, 143, 162, 172 distrust 38, 42, 46–7; see also trust Douglas, M. 13, 179 Easter, G.M. 130 Easton, D. 27, 48 Eckstein, Harry 13, 92 economic growth: authoritarianism 47; democracy 45, 49, 177; distrust 46–7; industry 80–1; post-communism 172; regions 83 economic policies 41, 88, 89–90, 106–7, 159 economic recession 27–8, 88–9 economic reform 4, 93, 163–4, 168–9, 176–7 economic shock therapy 57; elites 161; hardship 70, 85, 177; industry 86; Latvia 59; reform leadership 67; regional differences 104–5; resistance to 72; Yeltsin 25, 43, 70, 86, 125, 172–3 education 31, 64, 108–9, 153, 158

egalitarianism 13, 179–80 Eisenstadt, S.N. 128, 134, 139, 144 elections 51, 137 elite studies 17, 19, 20, 22–4 elites 2, 3, 17, 64, 153; autonomy 116; careers 100, 140, 153, 156; clientelism 7, 127, 128, 141; Constitution 54–6; contacts 145, 146–50; continuity 8, 12, 18; decentralisation 72, 99; decision-making 5, 130, 132–3, 156–7; democracy 10, 14–15, 25, 44, 49–50, 122–4; economic shock therapy 161; Federation Council 20–1, 38; fragmentation 5, 6–7, 13, 131, 173; horizontal/vertical relations 171; institutions 3, 8–9, 17, 20, 25, 30, 43; interviews 146; leaders 71; legalism 127; loyalty 170; market-democrats 61–3, 64–6; market economy 49, 56; networks 143; nomenklatura 12, 32; ownership 77–80; pluralists 10, 18, 32, 53–4, 99, 124; political capital 142, 152–8, 160; post-communism 26, 71, 141, 170, 181; Putin x, 1, 14, 180; State Duma 2, 20–1, 38; trust 28–9, 30, 37, 39–41, 44–5, 168, 173, 174; Yeltsin x, 1, 6, 172 elites, types: central 76, 101; consensual 6, 10, 13, 19, 32, 174; core 17–18, 47; idiocratic 174; see also national elites; regional elites Ellman, M. 69 Elster, J. 4 employment 21, 69 energy sector 81, 93–4 Estonia 20, 42, 43, 146, 153 ethnic regions 22, 85, 111, 114 ethnicity 97–9, 104, 112, 114 ethnopolitics 98 family ties 142, 145–6, 150–2 Federal Fund, Financial Support 105 federal law 113, 114, 187 federalism 96, 97, 100, 109, 115, 168–9 federation 95, 96, 97–8; administration 19–20, 103; decentralised integrated 119; democracy 95, 175; fragmentation 116–17; recentralisation 125, 169 Federation Council: background of members 154–6; contacts 148, 149; elite studies 19–20; elites 20–1, 38; individualism/collectivism 75; leaders 40, 52–3; legal-rational model 131; legitimacy 36; mafia 136; participatory democracy 51; Putin 36;

Index 209 State Duma 36; taxation 111; transparency 130; trust 29, 33, 41 Federation Treaty 112 financial oligarchs 9, 90 500 days programme 4, 176 flag 115 Fleron, F.J., Jr 92 fragmentation: elites 5, 6–7, 13, 131, 173; federation 116–17; Russian Federation 9, 82–3, 95 freedom 25, 48 free-riding 72, 117, 172 French economic system 82 Gabriel, O. W. 27 Gaidar, Yegor 88, 91 GDP 68–9 Gel’man, V. 6–7, 66, 174 German Democratic Republic 157 Gitelman, Z. 179 Gorbachev, Michael 4, 7, 109, 171 Grabher, G. 39 grey zone 71, 77, 90, 135, 145, 152 Gustafson, T. 92, 108, 109 Hanson, P. 76, 83, 84–5, 89 Hanson, S. 98, 99, 112, 115, 116 Harasymiw, B. 154 Harter, S. 164 Hayek, F.A. 57, 88 heavy industry 77, 168 Hedlund, S. 11, 92, 119, 120, 163 Heinz, J.P. 146 Hellman, J.S. 93, 144 hierarchy 13, 179–80 Higley, J. 6, 10, 13, 26, 32, 37, 146, 171, 173 Horowitz, D. 98 housing 79, 168 Hungary 59–60, 145 Huntington, Samuel P. 11, 45 ideology 121, 126, 169 income distribution 68–9, 73, 85 individualism 13, 179–80; collectivism 67–8, 73–6, 185; leadership 62; market economy 137–8; state regulation 76 industry 77, 80–1, 86, 168 infrastructure 81–2, 105 Inglehart, R. 45, 178 institutionalists 63, 118–19, 169–70 institutions 1–2, 45; culture 122; democracy 26, 57, 123–4; economic change 163–4; elites 3, 8–9, 17, 20, 25, 30, 43; government/non-government 29, 31, 32; leaders 19–20; legitimacy

27, 36; mass public 183; norms 119–20, 179; opportunity structures 56; pluralists 27; post-communism 45; trust 27–8, 29–32, 34, 46, 182 integrationism 99, 117 Italy 120, 129, 135–6 Izvestia 7 Kabardino-Balkaryia 22 Kaliningrad 21 King, Preston 96 Kirienko, Sergei 22, 64 Kirkow, P. 83, 110 knowledge industry 69 Kogan, N. 139 Komi 22 Komsomol 153, 155 Krasnodar 22 Kroh, F. 157 Kryshtanovskaya, O. 145, 156 Kullberg, J.S. 57, 61, 62, 121 La Palombara, J. 130 Labikovskaya, E. 90 Laitin, David 100, 104 land ownership 65, 79 Lane, David 6, 37, 64, 71, 82, 91, 152, 153, 156, 161, 165, 176 Latin America 60 Latvia 20, 42, 59, 146 law 127, 133, 134; see also federal law Le Houerou, P. 105–6 leaders 49; charisma 28, 46, 51–2; elites 71; Federation Council 40, 52–3; individualism 62; institutions 19–20; legacy factor 122; loyalty 119–26; participation 51; political 19–20, 40; private business 19–20, 55; Russian democracy 66; trust 28, 37–8, 40, 44–5, 125 Ledeneva, A. V. 127, 131–2, 144 legacy factors 122; see also nomenklatura; traditionalists legal-rational model 129–30, 131–2, 134, 146–7 legitimacy 25, 26, 27, 28, 36, 45, 173 Lengyel, G. 6, 10, 13 Leningrad Oblast 21 liberalism 176 light industry 77, 168 Lindblom, C. 57, 141 Linz, J.J. 2, 4, 176, 177 Lipset, S.M. 56 Listhaug, O. 29 Lithuania 20, 42, 146 living conditions 67, 68–9, 70, 177

210 Index local government 101 localism 168–9 loyalty 112, 119–26, 128, 170; see also trust Lukin, A. 45, 49 Luzhkov, Aleksandr 84 McAuley, M. 84, 127, 129, 138, 145, 152 McDaniel, T. 9, 163, 180 Mafia 129, 134–9 management 71–2, 89 market-democrats 61–3, 64–6 market economy 1, 176; authoritarianism 58; core elite 47; crime 137–8; democracy 6, 56; elites 49, 56; individualism 137–8; institutionalists 63; mass support 60; patron–client relationship 132; policy-making 80–2; reforms 14, 91; Yeltsin 49, 87 Marx, Karl 11, 88 mass public 40–1, 42–4, 51, 60, 183 military leaders 20, 40 Miller, A.H. 39, 61, 63 Mills, C.W. 18 mir 92 Mishler, W. 28, 42, 45, 121 Mokrzycki, E. 170 Molenaers, N. 13 Moscow City 84, 85–6, 113 Moscow Oblast 21 multi-party system 49, 53 Murmansk 21 Nathan, R.P. 98 national anthem 115 national elites 12, 18; democracy 2–3; federation 95; institutions 8; Putin 6–7, 93, 169; trust in executive 122–4 natural resources 112 Nemtsov, Boris 173 neo-institutionalism 88, 91, 169–70 Nettl, J.P. 1–2, 3, 179 network economy 94, 165 networks: clandestine 156–7; contacts 161–2; elites 143; family ties 142; informal 130, 145; path dependency 165; personal 7, 129, 131, 141, 142; political capital 158–61, 170; political culture 144; privatisation 144; regional elite 145 Newsweek 7 Nissinen, M. 59 Nizhniy Novgorod 22, 86 nomenklatura: capitalism 58–9, 142, 145, 165; elites 12, 32; political capital 152–3; privatisation 161; re-emergence 155–6; regions 76; Westernised 37

non-accountability 142, 145 norms 2, 119–21, 164, 179 North, D.C. 93, 119, 138, 163 October Revolution 8 O’Donnell, G. 60 Offe, C. 4, 27, 44, 45, 176, 181 oil and gas industry 69–70 Olson, M. 70, 71, 72, 76, 79–80, 143–4, 162, 171, 172 opportunism 39 opportunity structures 56, 135, 153 ownership: city property 113; collective 65, 70–1, 77, 79; elites 77–80; forms 78; insider 72; land 65, 79; mixed 71, 80 Pakulski, J. 10 participation 49, 50, 51, 53, 61 particularism 59–60, 113–14 path dependency 91–2, 163, 164, 165, 169 patrimonialism 131, 171 patron–client relationships 106, 128, 129, 132, 144–5 pensions 68–9, 108–9 personal gain 139–40 pluralists: Constitution 46; economic reform 176–7; elites 10, 18, 32, 53–4, 99, 124; institutions 27; obstacles to 116–17; post-communism 141 police 31 policy-making 17, 80–2, 141 political capital: economic sector 159; elites 142, 152–8, 160; networks 158–61, 170; nomenklatura 152–3 political culture 2, 13, 92, 121, 144, 170 political elite 131, 156, 158 political stability: see stability of state Popper, Karl 25, 48 population surveys 123 post-communism 5; crime 136; economic growth 172; elites 26, 71, 141, 170, 181; institutions 45; patrimonialism 131; pluralists 141; population surveys 123; reform 2–3; state–business relationship 60 post-communist learning 119, 121–2, 164, 169–70 poverty 69 power relations 10, 97, 100, 101, 102, 146 predatory capitalism 92, 94 Presidential administration 35, 55, 103 Primakov, Yevgeny 22, 64 Primorye 21, 86 private business 87, 159; employees 21; family ties 151–2; leaders 19–20, 55; mafia 136; networks 170; state

Index 211 enterprise directors 148–9; trust 31, 35 private ownership 62, 65, 79, 124–6, 168 privatisation 1, 67–8; legitimacy 173; liberalism 176; mafia 136–7; management 89; networks 144; nomenklatura 161; property 58, 113; sectoral differences 77; state enterprises 161; state responsibilities 108; Yeltsin 93 property 56, 57, 58, 60, 113, 152 Przeworski, A. 2–3, 57, 92, 178 public services 108–9 Putin, Vladimir 23, 52, 64–5, 68–9, 95; anti-corruption 138; authoritarianism 6, 122, 168; coalition-building 173–4; economic policies 41, 88; elites x, 1, 14, 180; Federation Council 36; national anthem 115; national/regional elites 6–7, 32, 93, 101, 169; recentralisation 7, 25, 26, 33, 48, 63, 116, 124; reforms 3; regional government 99; Soviet system 158; State Duma 29, 176; state intervention 107; taxation 111; trust in 39; Unity Party 65, 75; verticalisation of power 101–2, 103, 148; Yeltsin 9 Putnam, R.D. 3, 37, 39, 50, 120, 129, 135 Rawlinson, P. 136 recentralisation 3, 103, 125, 169; Putin 7, 25, 26, 33, 48, 63, 116, 124 redistribution 106–7, 126, 176 reform 1, 8–9; failure 163; leadership 67; market economy 14, 91; postcommunism 2–3; Putin 3; top-down 9, 167; traditionalists 171–2; Yeltsin 9, 25–6, 59, 139 reform regions 22, 85 regional elites 12, 18, 21; competitiveness 76; contacts 149; decentralisation 9, 14, 103; democracy 2–3; ethnicity 114; ethnopolitics 98; federation 95; government 111; institutions 8; networks 145; Putin 6–7, 32, 93, 101, 169; special agreements 113–14, 187; transparency 130; trust in executive 122–4 regional government 35, 40, 76, 99 regions: autonomy 95, 176; economic growth 83; economic shock 104–5; economic transfers 106–7; ethnicity 98, 104, 112; expenditure 110; income distribution 85; inequalities 104–5, 106; infrastructure 105; mafia 138; mutual settlement 105–6; natural

resources 112; networks 130; nomenklatura 76; redistribution 106–7; Russian Federation 104; segmented 99; taxation 106–7 religious leaders 20 rent seeking 58, 71, 89–90, 140, 164, 172 republics 112–13 resource distribution 103–4, 106, 144 responsibilities 108–9, 117 retail sector 79, 168 Rivera, S.W. 153 Roeder, P. 100 ROMIR 22–3 Roniger, L. 128, 134, 144 Rose, R. 28, 42, 45, 121, 177 Ross, C. 37, 64, 117, 153, 156, 161 rouble 68 Russian émigré crime 135 Russian Federation 2, 21–2, 31; Constitution 54; decentralisation 3, 167; economic and social indicators 184; ethnic separatism 99; fragmentation 9, 82–3, 95; ideology 115; regions 104; symbols 115; taxation 109–10 Russian Union of Industrialists and Entrepreneurs 77 Rutkowski, M. 105–6 Rutland, P. 139 St Petersburg 21, 84, 85–6, 113 Sakha/Yakutia 22, 86, 113 Sakwa, R. 9, 99, 170 Samara 22, 83 Saratov 22, 86 Scandinavian model welfare state 82, 90 Schumpeter, J. 50, 53–4 secession 97 self-confidence 41 self-interest 127, 143 separation of powers principle 97 separatism 99, 100 Shevtsova, L. 89, 173 Shleifer, A. 73, 93, 110, 120, 172 Smith, A. 27 Smith, G. 95, 116, 117 sobornost 92 social control 11, 163, 175–6 social relations 44–8, 143, 160 Solnick, S. 112, 114, 178–9 Soviet bureaucracy 131, 158 Soviet legislative service 189 special agreements 113–14, 187 stability of state 26, 48, 127, 165–6, 176, 179–80 stagnant regions 22, 85, 86, 114–15

212 Index Stalinism 64 Stark, D. 11, 39, 60, 70, 71, 149, 152, 165 state: administration 69–70, 128, 167; capacity to rule 120, 122–3, 125–6, 170; citizens 131–2; employment 138; infrastructure 81–2; intervention 91, 107; regulation 76; trust 44–8; see also bureaucracy state–business relationship 60, 141, 148–9, 150, 165, 173–4 State Duma 155–6; authoritarianism 52; contacts 148, 149; elite studies 19–20; elites 2, 20–1, 38; Federation Council 36; individualism 75; legal-rational model 131; participation 53; political leaders 40; Putin 29, 176; state ownership 77, 79; trust 41; trust in 29, 33; Yeltsin 87, 176 state enterprises: clientelism 132; family ties 151–2; leaders 19–20, 21, 40–1, 131–2, 148–9, 163; privatisation 161 state ownership 58, 70–1, 77, 79, 94, 168, 175 statehood 112–13 Stavropol 22 Steen, A. 20, 29, 42, 123, 146 Stepan, A. 2, 4, 177 Stolypin, Petr 7 subsidies 104, 107, 111–12 Sundström, N. 120 Sutherland, D. 83 Sverdlovsk 22, 113 Tatarstan 22, 113 taxation 106–7, 109–12, 186 Third World studies 175 Thompson, M. 13 Tikhomirov, V. 69 totalitarianism 121, 164 trade unions 31–2 traditionalists 171–2, 177 transformation 1, 2, 4–6 transparency 112, 127, 129–30, 139 transport sector 81 Treisman, D. 70, 73, 89, 93, 104, 110, 113, 120, 162, 163, 172 tricolour flag 115 trust 31, 35, 39; elites 28–9, 30, 37, 39–41, 44–5, 122–4, 168, 173, 174; Federation Council 29, 33, 41;

government 98; institutions 27–8, 29–32, 34, 46, 182; inter-personal 37, 47–8; leaders 28, 37–8, 40, 44–5, 125; national elite 122–4; networks 143; private business 31; private ownership 124–6; regional elite 122–4; State Duma 41; state enterprise directors 40–1; state/society 44–8 Udmurtiya 22, 86 Ukraine 39, 61 Unity Party 65, 75 universalism 59–60, 113–14 Valenzuela, A. 176 Van Selm, B. 85 Van Warden, F. 146, 161–2 Verba, S. 13, 37, 118, 120, 121, 179 verticalisation of power 101–2, 103, 148 Vladimir Oblast 113 Voronezh 22 wage levels 138 Wallich, C.I. 110 Watts, R.L. 97 wealth distribution 126 Weber, Max 28, 128, 134, 146–7 Wedel, J.R. 59, 63 welfare sector 82, 90 White, S. 42, 60, 145, 156 Wiberg, M. 29 Wildavsky, A. 13, 179 Williams, P. 135, 136, 138 World Bank 108 World Value Survey 42 Wyman, M. 40, 42 Yakutia 22, 86, 113 Yanov, A. 7, 8, 71, 171, 180 Yavlinski, Grigorii 94 Yeltsin, Boris 12, 67; economic reforms 169; economic shock therapy 25, 43, 70, 86, 125, 172–3; elites x, 1, 6, 172; the family 151; 500 days programme 4; liberalism 176; market economy 49, 87; privatisation 93; Putin 9; reform 9, 25–6, 59, 139; regional government 99; social engineering 163; State Duma 176; taxation 110–11 Zimmerman, W. 57, 61, 62, 121