Curious hybrid of west and east

Russia

Posted by PILLZ (Monday, May 03, 1999)
Curious hybrid of west and east

Mayor Yuri Luzhkov aspires to establish Moscow as a European city, playing up its rich cultural traditions. Russian politicians have traditionally been divided between westernisers and Slavophiles, between those who want to integrate their country with the rest of Europe and those who want to pursue a uniquely national path. But, according to one political observer, Yuri Luzhkov, Moscow's rumbustious mayor, is that most rare phenomenon: a nationalist westerniser. Of Russia's leaders, perhaps only the 18th century tsar, Peter the Great, who aggressively expanded the Imperial empire while founding St Petersburg as Russia's "window on the west", could be similarly labelled. In Moscow, Mr Luzhkov has created a curious hybrid of west and east, which, nonetheless, has immense popular appeal. In 1996, Mr Luzhkov was re-elected mayor with 90 per cent of the vote, establishing him as one of Russia's strongest regional leaders and a promising presidential contender - in spite of his repeated denials that he has any designs on the Kremlin. Mr Luzhkov clearly aspires to establish Moscow as a European city, playing up its rich cultural traditions and vibrant commercial history while touring western capitals to attract foreign investment. But Mr Luzhkov also celebrates Moscow's unique history as the "Third Rome", the heart of the Russian nation and the soul of the Orthodox faith. On some occasions, Mr Luzhkov can sound the model of liberal democracy and international respectability. On others, he can strike a worryingly demagogic tone, condemning Ukraine's occupation of Crimea and Latvia's treatment of its minority Russian population. Human rights groups complain about Mr Luzhkov's rough-handed treatment of Moscow's own minority groups. In spite of Russia's financial crisis, Moscow still impresses the visitor with the buzz of its commercial activity, its well-stocked shops, and its vast building projects. The critical question is whether the "Moscow miracle" can last long enough to help catapult Mr Luzhkov into the Kremlin. Some economists argue that Moscow's success has largely been built on the country's economic failure and cannot last indefinitely. Russia's resources have been sucked out of the regions and concentrated in the capital turning Moscow into one "vast off-shore zone". The financial crisis is now hitting the city harder than many other regions, given Moscow's dependence on financial services and retail trade. Before the crisis 80 per cent of Russian banking activity was conducted in Moscow. Now little more remains of the banking sector than an empty shell. The flood of foreign capital into the city has evaporated. The shrinkage of tax revenue (in US dollar terms) will force Moscow to restructure its foreign debts if it is to avoid a default. Moscow's opaque and incestuous variant of capitalism will leave it ill-equipped to face a modern, and increasingly competitive world. Alexei Ulyukaev, deputy director of the Institute for the Economy in Transition, says Mr Luzhkov cannot possibly replicate Moscow's success on a national scale. "He can't do it. The Moscow government has been getting Rbs123bn every year from big companies that have their headquarters in the capital," he says. "If he becomes president, where is all the extra money going to come from?" But Sergei Yastrzhembsky, the silver-tongued former presidential press spokesman who is now a deputy chairman of the Moscow city government, rejects such criticisms presenting a forceful defence of his master's achievements. Mr Yastrzhembsky admits Moscow has many objective advantages as the centre of the country's government, science, transport, and finance. But he attacks the various "myths" that have grown up around Moscow's welfare as resulting from the deliberate disinformation of Mr Luzhkov's jealous rivals, the city's lingering reputation as the shop window of Communism, and sheer ignorance. He argues there are many reasons for Moscow's success and these stem from the administrative talents of Mr Luzhkov and his team. "It is absolutely clear that Luzhkov created an economic model from his personal experience," he says. "But this experience is not only applicable to Moscow. It is experience that can be used on a national scale - although other regions have their specific factors which must be taken into account." First, Mr Yastrzhembsky argues, Moscow appreciated the importance of developing small- and medium-sized businesses, which would create economic growth, jobs, and taxes. "Luzhkov created the conditions for the development of entrepreneurship. There are more than 200,000 small- and medium-sized businesses, one third of all those in Russia, providing between 30 per cent and 50 per cent of the Moscow budget," he says. Second, Moscow privatised its municipal assets in a very different way from the rest of the country selling individual companies on a case-by-case basis rather than in a mass give-away. "Moscow did not sell assets for symbolic prices. The enormous property owned by Moscow is gradually being sold by tenders for real prices, providing 15 per cent to 16 per cent of the city budget every year," he says. But Mr Yastrzhembsky accepts the financial crisis is having a severe effect on Moscow curtailing economic growth, undermining the city's credit rating, boosting unemployment, and scuppering several prestige building projects, such as the development of a Moscow Disneyland. However, he argues that Moscow has a plumper economic "cushion" softening social distress. The next few months will prove vital for Moscow's fragile economy and Mr Luzhkov's chances of attaining higher office. Even though Mr Yastrzhembsky reiterates that Mr Luzhkov is not a presidential candidate, he does suggest Moscow's mayor is capable of playing a greater national role, accepting the description of him as a patriotic westerniser. "Luzhkov does not hide the fact that Europe is the natural ally of Russia, a natural partner," Mr Yastrzhembsky says. "He is a patriot who believes in Russian traditions based in western values."

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