Until last week, it seemed that various
state agencies were to blame for all of Alfa Group's problems:
either the tax men were slapping Alfa with a bill for another
billion in back taxes, or the prosecutors were hinting at a possible
investigation, or "well-wishers" were planting compromising material
about the company (though this could well have been someone's
personal initiative). But then suddenly Alfa Bank's chief
strategist, Chris Weafer, came out with some remarkable statements
in a July 8 report on the investment climate in Russia, such as the
following: "The ideal scenario for investors is some mechanism that
sees President [Vladimir] Putin remain in office (after all, one of
the characteristics of previously successful emerging economies is
the longevity in office of a strong leader) ... ."
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from you.
This from one of
Russia's leading investment analysts? Economists and political
scientists know perfectly well that a clear-cut correlation has been
observed in the 20th century between a country's rapid, stable
economic growth and its frequent change of leadership. Bruce Bueno
de Mesquita, a leading academic political scientist as well as a
successful political consultant, has written an entire book on the
subject.
Although this correlation does not mean that
economic growth necessarily depends on the regular change of
leaders, it highlights a number of well-documented trends. For
example, in many countries whose leader has clearly remained in
power for too long, per capita GDP has stagnated, often for decades.
On the other hand, nondemocratic countries such as Mexico, Brazil
and China that have performed well economically also have a
mechanism in place to ensure that new leaders periodically replace
the old. In South Korea and Chile, the rate of economic growth
increased after these countries introduced similar mechanisms.
Perhaps the most relevant examples where Russia is
concerned are the Philippines under Ferdinand Marcos, Indonesia
under President Suharto and Rafael Trujillo's Dominican Republic.
All three countries enjoyed rapid economic growth during the
dictators' first eight to 10 years on the job before lapsing into
lengthy economic stagnation after their leaders decided to stick
around for the long haul.
In his statement, Weafer deftly equates political
stability with the continued leadership of Putin. But since when do
normal elections lead to political instability? The recent events in
Ukraine, Georgia and Kyrgyzstan demonstrate how instability can
result from the attempt to manipulate election results. And no
matter how a third term for Putin were arranged, the result would be
a major constitutional crisis. It's hard to see how this could
produce stability. Moreover, comparisons with the experience of
other countries in no way guarantee the success of such a scenario
in Russia.
It is not my intention to accuse Weafer of
incompetence. We're dealing with a very Russian conflict of
interests. During the Internet boom, Wall Street analysts
sympathized with "friendly" companies. Our analysts are compelled to
sympathize with "friendly" politicians. Whom should we blame for
this? Probably Marcos and Trujillo, along with Mobutu Sese Seko in
Zaire, the Duvaliers in Haiti, Kim Jong-il in North Korea and Haile
Selassie in Ethiopia, for holding on to power so long, running their
countries into the ground and ruining the statistics. Then again,
they're probably not terribly happy about that, either.
Konstantin Sonin, professor at the New Economic
School/CEFIR, wrote this column for Vedomosti.
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