Vladimir Yakunin - The Treacherous Path - An Insider's Account of Modern Russia

The months leading up to the announcement were filled with the usual lobbying, harassing and horse-trading by the country’s various ministries and its state-owned companies, each anxious to secure the share they felt their contribution to the nation deserved – a process made all the more feverish by the fact that the straitened economic situation had substantially diminished the pot. But in 2013, there was more at stake than ever in the budget allocations. Some of the most prolonged, energetic debates went further, interrogating the most fundamental questions facing our country. In the midst of a recession, what fiscal model would serve Russia best? Do you spend your way out of trouble, or is retrenchment the best answer? How active a role should the state play in the nation’s economic life?

The fiercest arguments played out, as they always do in Russia, behind closed doors. On one occasion, I was making so much noise at a meeting at the Ministry of Finance that the President invited some of us to sit down together to try to settle the matter. It was a closed circle, limited to the Minister for Economic Development, the Minister of Finance, the deputy Prime Minister, a representative from the presidential administration and, of course, Mr Putin. Even here, though, I struggled to control myself. The finance minister and I held completely opposing views, with neither of us willing to cede an inch to the other. At one moment, in an attempt to put my point across, I betrayed the frustration that had been building up inside me for what seemed like years: ‘You are the Minister of Finance,’ I told Anton Siluanov, [16] Mr Siluanov replaced Mr Kudrin in 2011, after the latter was asked to resign by the then President Dmitry Medvedev. ‘so you should at least be familiar with all four of the rules of arithmetic, not just division and subtraction.’ I received a calm but firm reprimand from the President for my outburst, and yet what stung most was the knowledge that, for the first time since taking over at Russian Railways, it felt as if I had been left on the losing side of the argument. It seemed that the shift in the political weather meant that I was no longer the right man for the job.

Sometimes it can seem as if the discussions Russians have about the railways are also conversations about the kind of nation they want to be. There is a famous legend about the city of Tobolsk, once one of Siberia’s most important cities. When the Trans-Siberian railway was first being discussed, the local merchants bribed officials in St Petersburg to prevent the new route from passing through their city. They were concerned that the trains would strain the nerves of the horses that were a key element in the local economy. Their money talked, and within a matter of years, Tobolsk slipped into the byways of history to become a quaint, well-preserved backwater, while Novosibirsk, its economy supercharged by the railways, became Siberia’s capital and is now Russia’s third-most populous city.

If felt as if something similar happened as we embarked on our own efforts to ensure that the Russian railway system, and by extension the nation’s economy, was equipped to deal with the accelerated demands of the twenty-first century. By talking about how the railways might be reformed and run, people from across the political spectrum were able to also talk more generally about the way in which the country should be governed.

Most models are wrong, a handful are useful, but there are others that are lethal. Russia has felt the awful truth of this more than once in the past century. For two decades now, Russia’s history – at least domestically – has been dominated by arguments about what kind of model, or what combination of models, should be used to determine the country’s future.

In the years that followed the dissolution of the Soviet Union, the momentum within the Kremlin was decisively behind those who wanted to treat Russia as a tabula rasa, one they could inscribe with the economic wisdom that, they believed, had ensured the success of the free-marketeering Western powers. Boris Yeltsin, surrounded by neo-liberals such as Anatoly Chubais, and oligarchs like Boris Berezovsky, was broadly speaking in favour of the sweeping changes that his inner circle urged upon him, even though the chaos over which he presided was perhaps not the best environment to attempt what was, in effect, an economic experiment.

Outside of Yeltsin’s inner circle, however, people were considerably more circumspect about the potential of this model to transform their lives, and the electoral success of the Communist Party’s successors throughout the ’90s was a testament to the enduring appeal of the policies it was seen to stand for. This scepticism was given an even sharper edge once the population at large became fully acquainted with the disastrous privatisations that had, for many, come to symbolise the greed, incompetence and corruption of the men who led their country.

Things were different in the new millennium – or at least that is what we told ourselves. There was little debate as to the necessity of modernising the economy; everyone knew how important it was, but before long there was profound disagreement about the route we should be taking to achieve it. It was a practical as much as an ideological conflict.

A younger generation of reformers, unbruised by the catastrophes of the previous decade, still believed that they could transform everything, invent a new Russia free from the neuroses and stagnation that, as they saw it, had been hindering its progress. The problem was not, they said, that there had been too much privatisation. Quite the opposite; there had not been enough. They found a congenial home in Vladimir Putin’s administration, which in large part committed itself to continuing the liberalising reforms that its predecessor had tried to implement. The government was honeycombed by zealous neoliberals – many of whom had been appointed by Yeltsin’s administration – whose overriding aim was to transform Russia into a Western-style economy run along the purest of free-market principles. In the process, they would shrink the state, introduce competition into sectors that had previously been governed as monopolies, render every element of our governance transparent, and clear away all the obstructive debris left by the old order.

The ‘young’ reformers of the early 2000s had read Western textbooks, and some of them had even studied in Western universities, but even though they were now in their forties, they did not know what it was like to run a factory, or to manage the complicated interactions between infrastructure and industry.

Their superficial knowledge was accompanied by a pronounced superciliousness about the professional experience of those who had helped to administer the Soviet Union. While the march of events had diminished the relevance of much of their theoretical knowledge, their practical knowledge – including but certainly not limited to their recall of the mistakes they had made and the lessons they had learned from them – had profound value. But the accumulated wisdom of the old state’s administrators was often discarded by the reformers; it seemed that, for them at least, the lessons of history were too knotty, too resistant to the pristine economic models they had learned about to be of much use.

During Putin’s first years in government, the discussions about the modernisation of Russia began, increasingly, to focus on Russian Railways. There had long been an agreement that, along with a great proportion of our country’s economic apparatus, the railway system needed to be reformed, but no real consensus as to how this might be implemented. As with every other sector of the economy, the railway system had suffered profoundly in the years after the fall of the Soviet Union.