Khodorkovsky: Modernization in Russia possible but country keeps to state capitalism course

A bigger part of Russia may come close to Canadian living standards and labor productivity in 15 years under certain circumstances, but that scenario is unattainable so far, incarcerated former Yukos CEO Mikhail Khodorkovsky said in an interview with the Forbes magazine, published on the website of his press center.

"It is quite possible to reach the social and communal level and labor productivity close to the Canadian's in 10 or 15 years in 8-10 percent of "growth centers" (300-400-kilometer agglomerations) where more than a half of the national population will live. The rest of Russia, especially ethnic republics, may have the possibility of slower and more gradual development," he said.

"The president may set the modernization vector and create modernization institutes within five or six years. But in doing so he will have to undercut his popularity rating, open ways for new personalities and assume responsibility for the unavoidable discontent of conservative circles," he said.

The positive scenario is possible only if President Vladimir Putin slowly recesses from power "through the reconstruction of genuine state institutions (a full-value parliament, independent courts and financially independent local self-government), competition as a transformation engine and dialogue with the society," Khodorkovsky said.

Then it will be possible to revitalize local business, to curb down greedy bureaucrats, to remote bureaucratic barriers, to bolster the development of cities with the population of five to ten million and universities, to draw direct foreign investments and "carriers" of knowledge and technologies without fearing "total looting" and to invest national reserves (if any are left) or development loans into these projects.

Khodorkovsky said he was skeptical about the possibility of that scenario because the incumbent authorities preferred state capitalism. "The set of measures approved by [Putin] has that objective," he said.

State capitalism in Russia means primitivization of the economy and the return to the idea of "industrial giants," the ex-businessman said. "The consequences include low growth rates, lagging behind China and other emerging markets, not to mention the West, in the spheres of infrastructure, science and social affairs, and growing public tensions," he said.

If the current policy continues, Russia will be comparable with present-day Venezuela in five or six years, he said.

"Nothing special will happen in these five to six years. We will build several dozens of slightly obsolete industrial plants, lose a number of leftover academic schools, restore 10 to 15 defense production lines and so on… That is sad but we still can live on it," Khodorkovsky concluded.

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