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Getting to the Bottom of Things After 1000 Years
In the Soviet Union, so the saying went, it was all about the plan! From 1929 to 1991 the USSR operated under the infamous command economy; Moscow gave orders and set plan targets and for a third of a century of Stalinist rule those targets were either fulfilled, falsified, or people vanished into the Gulag. Unsurprisingly, as a result of this morally and economically ruinous system, accurate economic information was nearly impossible to obtain.
This dilemma held true for local factory foremen and the upper echelons of the Soviet leadership alike, as the narratives of KGB agents learning their country's real gross national product from Western intelligence sources have repeatedly demonstrated. Fiscal transparency was hard to come by, to say the least.
Vladimir Putin's rise to power carries an opportunity to level the playing field, fight corruption and bring budgetary transparency. Russia needed a new mechanism to get to the bottom of its internal financial relations. The EastWest Institute's Moscow Centre conducted one of the most in-depth, comprehensive studies in the history of Russian finance. The Federal Budget and the Regions was produced by EWI in cooperation with a team from Russia's Ministry of Finance, the Central Bank and the Ministry of Federal Affairs and Nationalities. The report was grounded in the values of transparency and objectivity. Funded by the Russell Family Foundation and an anonymous family foundation in New York, The Federal Budget and the Regions analyzed the fiscal flows from Moscow to Russia's other 88 regions (excludes Chechnya where figures were not available) and vice versa. The study provided Russian economists and foreign investors, "a unique source of data for analysis and an inspiration... on the issue of Russia's center-region fiscal relations." The quality of the information gathered drew lofty praise from economists the world over.
A full-length book version was published in English in the fall of 2000 entitled The Fiscal Structure of the Russian Federation and a second, more in-depth volume that analyzes figures from a five-year period shortly followed.
Besides the influential fiscal transparency project, EWI has launched the Russian Regional Report, a weekly publication analyzing economic, political and business developments in Russia's 89 multi-ethnic and geographically diverse regions. In 1998, so as to secure the utmost quality of information and administrative analysis the Institute opened the EWI Moscow Centre. The Moscow Centre staff work to develop initiatives strengthening the management of the federal system, enhance the ability of the regions to influence federal policies, provide a neutral forum for Russians to explore Russian foreign policy and coordinate with leaders from the public and private sectors to develop new approaches to building a successful market economy.
Not a Second to Spare
The tale may well be apocryphal, but as an allegory, it bears repeating. As the democratic revolutionaries led by Vaclav Havel gathered in the Magic Lantern Theater during the November Changes, they recognized that the collapse of the communist regime was as much about inferior economic planning as failed ideology.
Well-stocked shelves and disposable consumer incomes would soon be demanded, and given that the economy was going to get much worse before it got better, the revolutionaries sought out managers to handle the unstable transition. EWI's job in the 1990s was to help develop and network these very people.
In times of extreme change, fortunes can be made overnight and careers explosively ignited. As Lenin himself stated, "Time compresses in revolution." Twenty-seven year old Prime Ministers and thirty-three year old enterprise bosses were not uncommon. As the post-communist transition process was evolving, many at EWI realized that there was a growing discrepancy between the "micro" and "macro" levels of democracy and market economy. Grass-root civic movements had few links to decision-makers at the national and international levels. Macro-economic improvements had little impact on the local economic conditions of average people. In this situation EWI focused on developing "bottom up" approaches to policy-making, empowering local people through community and regional development programs, and driven by local and regional needs. One interesting case was an EWI information technology project requested by Bulgarian Deputy Prime Minister Alexander Bozhkov.
On the direct appeal of the government in Sofia and under the leadership of EWI economist Rado Petkov in New York, the Institute conducted a far-reaching investigation into the practices of American and Israeli corporate technology parks. These inquiries led to study trips to Raleigh-Durham and numerous computer and software centers in California by a Bulgarian delegation. Following a year of work and raising capital, the outcome was the construction of a high technology incubator park in Sofia, employing and developing local computer programmers and software engineers. Other countries in the region have emulated the model. Four years later, one such young software company recruited EWI's Rado Petkov, a Bulgarian, to work in its New York office.
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