New tool for development or for rent-seeking?

Andrei Yakovlev,
HSE Institute for Industrial and Market Studies,
Moscow, Russia

School of Politics and Governance, Faculty of Social Sciences, HSE University,
Moscow, Russia

Last August, the attention of many experts was drawn to the speech delivered by Russian Defense Minister Sergei Shoigu at the Siberian Branch of the Russian Academy of Sciences where he said that 3 to 5 new science and industry centers, each with a million-strong population, should be built in Siberia in the next few years. This speech could be perceived as a PR-action during State Duma election campaign (as Shoigu was heading United Russia’s federal election list). However, after the elections the idea gained momentum. On September 23, Parlamenskaya Gazeta, the official journal of the State Duma, published an article “The Time of Big Projects” authored by Andrei Ilnitsky, adviser of Shoigu at the Defense Ministry (

The main idea of the article boils down to the need to launch “Big Projects” (within the logic of “Great Construction Projects of Communism” in the 1930–50s) in order to protect Russia from the consequences of “collapse of the global world order.” To achieve this end, it is proposed to rely on a strategic planning as a key instrument of domestic economic recovery; subordinate the financial system to economic growth objectives providing the economy with cheap and long money; give up the policy of metropolitan urban development and turn Russia into a an evenly populated and developed low-rise country; ensure uniform living standards across the entire territory of Russia prioritizing the growth in the population’s real incomes (rather than GDP growth) and the rise of population. It is also postulated that the Russian army and the defense industry shall be the centers of economic mobilization and recovery, including the principles of control and planning based on the defense procurement, whereas geosocial policy should be tightly connected with the military-territorial arrangement and national security considerations.

These ideas are not new. Since 2012 they have been presented in reports of the Izborsk Club uniting conservatively minded patriotic experts (including many military retirees). These ideas were highly criticized as non-relevant for 21st century. However first time these ideas have been made public by an acting high-ranking official and they were published in the official journal of the parliament where the party headed by Sergei Shoigu has just won the majority of seats. Another novelty for documents of this sort is the direct mention of the leading role of the army and defense industry in national development.

It should be mentioned that the article by Andrei Ilnitsky was preceded by Sergei Shoigu’s responses to RBC’s questions about the planned construction of new cities in Siberia published on September 6th. Shoigu emphasized, in particular, that the new cities “should become new gravity centers both for the population of Russia and for numerous compatriots from countries of the CIS and beyond the boundaries of the former Soviet Union.” He also said that Russian Geographical Society for a long time worked on economic aspects of this project and Vladimir Putin instructed the Government to prepare proposals for implementing this program.

All this prompts the assumption that Ilnitsky’s article provides ideological background for Russia’s development strategy that certain elite groups promote in the halls of power and in public mind. Whose primary interests does this strategy reflect and who can become its support base? There is apparent interest of the Defense Ministry and State Corporations connected with the defense industry (Rostec and Rosatom). These ideas can be supported by representatives of the economic bloc of the Government (except the Ministry of Finance) advocating the strategic planning. Support of such initiatives by the regions is also probable (relevant comments have already been published by the media). It is also clear that the Ministry of Finance and the Central Bank are likely to oppose these proposals as their implementation requires huge state investments and “unsealing” the National Wealth Fund, but despite all the flaring declarations there is no convincing rationale for any effect of these investments. It is also worth mentioning that the roles of Rosneft, Gazprom or the Presidential Administration are unclear in this respect. Moreover, in spite of the stated security priorities, there is an impression that the army and defense industry are striving to push the security services from the leading position in the existing ruling coalition.

In other words, Andrei Ilnitsky’s policy article together with Sergei Shoigu’s public declarations can be regarded as a bid for a change in the balance of forces within the elites. Whether this bid will materialize, we will see from the appointments to be made in the next few months.

Expert article 3011

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