Russia Forum Buzz: Turning Point: Communism Was Russia’s Answer to the Challenges of the 20th Century. What Can We Expect in the 21st Century?

April 18, 2013

 

The 20th century was a turning point in world history: two world wars, massive scientific and technological advancement, and change in usual ways of life and political systems in most countries worldwide – often through revolution and more than once.

After the 2008–2010 global crisis, everyone understands that the world will never be the same: the global economy is undergoing serious changes, and inequality and sociopolitical instability are rising. Familiar traditions and institutions are unable to answer the questions and challenges of a new era.

Just like 100 years ago, Russia faces a dilemma: is it East or West, or does it have some new path to follow? In the 20th century, Russia’s answer to global change was communism, which impacted the development of the world at large. Can Russia handle the challenges it now faces? What will be Russia’s answer to the 21st century? These questions were offered for discussion at the panel session.

  • Tony Blair stressed that the 20th century was a time of fundamental change that taught the world a lesson. In order to build a just society, three necessary conditions should be met. First, the economy should be open. Second, the rules must be predictable. Third, a social system should be provided, including education and healthcare, among other things. This is very hard to implement, but society has no choice. Mr Blair also thinks that it does not make sense to discuss whether a Western or Eastern development model is better for Russia, as the difference is shrinking due to globalization.

  • Vaclav Klaus is very skeptical about the future of the European Union and does not view it as a model for Russia. The EU has too many of its own problems to solve and the cosmetic changes that are being implemented now are insufficient. Politicians will most likely postpone the changes and stagnation will last for a long time. However, Europe is rich enough to muddle through. Mr Klaus does not expect any dramatic events in Europe but he thinks the EU’s positions in the world will decline relatively. Europe expects political and economic stability from Russia, and the Russian market will become more important to Europe as growth there stagnates. Russia plays a very important role in the stabilization and democratization of unstable regions in the Caucasus and Asia. Mr Klaus said that it is not enough to just give people an education; a system of effectively utilizing well-educated people must be created.

  • Alexei Kudrin is very worried by the debt problems in the developed world, noting that debt/GDP exceeds 100% in the US and 80% in Europe. At the same time, there is a very high level of inequity, both between these countries and within the countries themselves, and poles of borrowers and creditors have formed. However, he expects this inequity to subside in the future, aided by economic growth in China and elsewhere in Asia, as well as by technological progress. Mr Kudrin believes that Russia badly needs to strengthen its legislative system, while the developed world badly needs to reduce its debt. He highlights that the aim of borrowing is to improve the life of future generations,
    but the government does not know the needs of the future generation and may make a mistake. He also believes that there is no special development path for Russia. The only way that he sees as viable is to develop the country’s institutions. China and India are already doing this.

  • Li Zhaoxing, ex-Foreign Minister of China, discussed China’s development, stressing that despite having the second largest GDP in the world (after the U.S.), the country’s GDP per capita is only 10% of the U.S.’s level. The country is also facing a problem due to its aging population: 170 mln people are more than 60 years old. In his view, China has more challenges than Russia. Ecological problems should come into focus for government policy. He also believes that China should strive to integrate itself in the international community.

  • Colin Powell thinks that economic development is the most powerful tool in fighting inequity worldwide. He expects industrialization to continue on the back of more effective energy usage and believes that education should be a priority for the state if it intends to fight inequity. In his view, the world economy is becoming global. In this sense, the conception of ‘the West’ or ‘the East’ loses importance.

  • Charles Wyplosz believes that economic growth is able to support social peace. He sees huge mistakes in economic policy that have been made in the past, with financial instruments becoming so complicated that supervisory functions failed. He believes that economic policy needs to be reformed. He does not see an alternative to the dollar, as the euro will be unable to substitute the greenback without a financial market in the Eurozone. China is only beginning its path into the developed world and the yuan is not currently able to compete with the dollar. Mr Wyplosz believes that the “confiscation” of deposits in Cyprus in order to support the banking system may be tolerated. In his view, it was unfair when taxpayers financed the bailout of banks in Greece, Spain and Ireland: deposit holders should be involved in the process, too.

  • Richard Pipes formulated the idea that the traditional problem for Russia was insufficient rule of law, providing several historical examples from the 19th century to illustrate that this is a very old problem. As a result, Russians do not trust the government; this is a fundamental issue that slows the country’s development. Charles Wyplosz supported this idea, highlighting for the audience that Russia’s GDP per capita has remained at 30% of the US level for more than a century, while other countries have managed to reduce this gap.

  • In his concluding words, Herman Gref mentioned that Russia’s 20th century history was full of dramatic change, revolution and war. He said that the price paid by Russia for these past choices was too high, from both the demographic and economic points of view, and that this may explain the conservatism of Russia’s population nowadays. In his view, Russia does not need to find its own way; the recipe for prosperity is known.