Not poverty, but lack of freedom

International economic indicators suggest that Russia’s problems are not those of the developing world. Relatively speaking, its people are not poor. But its economy is just not free
Andrei Zaostrovtsev
28 December 2009

When people talk about the global contrasts between North and South, what they mean by ‘the South’ are regions where people live in poverty or complete destitution. It means a low level of education, dangerous diseases, a high infant mortality rate and a host of other problems we hear of in television reports from places like the horn of Africa, or Bangladesh.

 But where does Russia fit in? Can this northern country be regarded as the “South” in a socio-economic sense? What if we take the standard of living as a measure?

 Are Russians really so poor?

 Both foreign and Russian media often emphasize the low life expectancy rates in Russia as proof that the standard of living in the country is also very low. Statistics improved in the period 2006-2008, though in 2008 the average life expectancy at birth came to just 61.7 years for men, and 74.2 for women.

However, in citing these figures, journalists usually ignore two things. Firstly, territorial differences. In Moscow, for example, this figure is more than 66 years for men and 76 years for women.

Secondly, life expectancy at birth is often misleading. Men who reach the age of 60 can expect to live another 15 years, and women who reach the age of 55 can expect to live another 25. Why many people do not reach this age is another matter, though the explanation should not be sought in malnutrition, but rather in the widespread distribution of harmful habits (smoking, excessive alcohol consumption).

Per capita GDP in the country in 2008 came to almost $16,000 at purchasing power parity. While this figure does not reflect territorial or social income divergences, it is 2.7 times higher than the Chinese figure (around $6,000), where these divergences are just as great. This figure clearly puts Russia nearer Poland ($17,500) than Bangladesh ($1,400).

Poverty is not Russia’s main problem. It’s not the lack of prosperity, but the absence of rights. In other words, the freedom deficit.

Is the Russian economy free?

Let’s start with economic freedoms. The Fraser Institute Index of Economic Freedom (Canada) is the best known index in the world. It assesses five major indicators, which are divided into a number of smaller indicators. What do they show?

According to the last survey (the state of affairs in 2007), Russia occupied 83rd place (6.5 points out of 10) out of 141. Kenya, Uganda, Namibia and Ghana ranked higher. Estonia, which Russia dislikes so much, came 11th (7.81) and Georgia, which it dislikes even more, came 42nd (7.25). However, authoritarian Kazakhstan came 50th.

In Russia, state propaganda uses the state-controlled media to tell people that these international surveys are not objective. They are supposedly designed to “tarnish” Russia (a favourite expression of Kremlin ideologists). It is hinted that the compiling of international comparisons is managed from Washington. It remains unclear, however, why Washington finds it so important to secure a low rating for Russia, and not for Brazil or India, for example. But as we know, logic and reason are powerless against propaganda.

If Russians took a critical look at these statements in the state-controlled media, they might ask the following question: Very well, but then how do you explain the fact that Ukraine is in 128th place (5.68)? If the conspiracy theorists were right, shouldn’t it have been given a much higher rating, just to spite Russia?

In the latest survey of global economic freedoms (2008) by the Heritage Foundation and the Wall Street Journal, Russia is even less “lucky”. In a list of 179 countries, Russia stands in 146th place! But Ukraine is ranked lower, at 152, while African countries such as Equatorial Guinea, Cameroon, Ethiopia, Nigeria etc stand higher than both Ukraine and Russia.

Incidentally, in both the first and second surveys, “Western democracies” certainly didn’t occupy the first or the second places.  These were held by Hong Kong (assessed separately from continental China) and Singapore, respectively.

Law, politics and the press

Let us start with the World Bank and its annual reports on Worldwide Governance Indicators,  on countries around the world. If we look at the section “Rule of law”, we see that in 2008 Russia received the 20th percentile rank.   In the two previous years it was even two points lower. The 2008 figure means that the rule of law was better in 79% of the countries surveyed.  Only in 19% was it worse. In 1996 the rule of law was also not doing very well in Russi, but the country was still in 29th place.

Let’s look at another section – “Voice and Accountability”. Russia’s ranking is not much higher – 22nd. In 1995 it was 35th. It may be getting up off its knees (another expression favoured by Kremlin ideologists), but at the same time it’s as if it’s trying to “go up the down escalator”.

There’s not much to be said about the Freedom House Survey of Political and Civil Liberties. Since 2005 Russia has moved from the category “partly free” to the category “not free”, and has a score of 6 points for political rights and 5 for civil rights (the lowest point is 7). In the 1990s Russia mainly received 3s and 4s respectively.

Russian officials greatly dislike Freedom House. At one time the director of this NGO was a retired former head of the CIA, which gave them a good excuse to dismiss its surveys – instead of discussing them, or criticizing them, where necessary.

Characteristically, when Russia first received these low ratings from Freedom House, it was put about by Russian media that the country had been ranked at the same level as North Korea. This was not the case, as North Korea regularly receives 7s, both for political and civil rights. However, there was no subsequent refutation of the reports.

The idea behind this propaganda campaign is absolutely clear –to discredit not only the Freedom House survey, but any other such reports, such as the Index of Democracy, published every year by the  “Economist Intelligence Unit” (EIU). In the 2008 index, Russia was in 107th place (4.48 points out of 10), between Burundi and Pakistan. It was classified as a so-called “hybrid regime” (it hasn’t yet joined the authoritarian regimes, which have less than 4 points). Unlike, for example, Kazakhstan (127th place, 3.45) or Azerbaijan (135, 3.19).

Another interesting point:  the average regional score for democracy in Sub-Saharan African countries is 4.28. Not far behind Russia’s ranking, as we can see. But there are figures in which Africa is ahead of Russia.

If we go back to Freedom House, and look at its “Freedom of the Press” survey, we find that Russia, of course, is “not free”.  It’s in 174th place between Yemen and the Democratic Republic of the Congo. With this ranking, if Russia were in sub-Saharan Africa, it would occupy 43rd place among the 48 countries there.

Modernisation, an empty declaration

Recently, Russian President Dmitry Medvedev announced a policy of modernisation. From his statements, one got the fairly firm impression that he meant changing the structure of the Russian economy, moving from the dominance of raw-material industries to the rapid development of production facilities based on modern high technology.

Russian politicians since the time of Peter the Great have been bedeviled by this limited understanding.  Modernisation doesn’t just mean using energy-saving light bulbs and the superconductivity effect announced by the president. Even if every village does get broadband internet (Medvedev’s dream), this will only mean economically unjustified expenditure, unless the nature of Russian society changes completely.

The modernisation of society means moving towards the free organisation of life in all spheres, although the rate of change in different regions may vary. We can’t begin the process without the recognition of our complete failure so far.  We need to study the superficial causes for this failure and then set precise goals to get ourselves out of the situation we're stuck in now. 

Achieving higher rankings in the aforementioned global surveys could be firm indicators of our success.  We could start with economic freedoms. But this is not very likely in Russia today. Can the system be demolished by people who spent so many years creating it with such ferocious persistence? The people to whom this system has given, and is still giving, things beyond their wildest dreams?

Not so long ago at a conference of member participants of the UN Convention against Corruption, a “gang of four” (China, Russia, Venezuela and Zimbabwe) emasculated the proposal to create an authorised international anti-corruption audit group. Their argument was that excessively independent international experts would impinge on their sovereignty.

In Transparency International’s latest corruption perception index (CPI), these four countries held 79th, 146th, 146th and 162nd places, respectively. They were supported by Algeria (111), Angola (162), Egypt (111), Iran (168) and Pakistan (139). (Countries sharing the same number have the same CPI).

Russians have a saying about letting the goat into the vegetable garden, meaning that trusting a thief to look after something he’s going to want to steal is risky. But here the “goats” that are already in the garden are not letting anyone in to supervise what they are doing there. They have fenced off their gardens with the barbed wire of their sovereignty.

There has been endless debate about the Russian president’s speeches on the subject of modernisation. But, given the international stand Russia has taken in aligning itself with a group of corrupt countries to oppose the fight against corruption, it all seems pointless. At least Russia’s ruling elite, and others like it, have openly admitted that their interests are bound up with corruption. Though this will hardly be news to anyone in Russia.        

Andrei Zaostrovtsev is economist and journalist based in St. Petersburg

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