Russia Takes Advantage of Economic Crisis

To most economies around the world, the financial crisis has come as a severe blow. However, to Arkady Dvorkovich, assistant to the Russian President for economic affairs, the crisis might actually be a boon in disguise for Russia.

“The crisis came at the right time, at the right place. We have the chance to develop a new Russian economy,” Dvorkovich said during the keynote talk of the first annual Stanford-U.S. Russia Forum, a conference that brought journalists, businessmen, and faculty to campus to discuss Russian relations with the United States.

In his opening address, Dvorkovich expressed optimism for the growth potential of the Russian economy, emphasizing that modern Russia is different from the Soviet Union and will pursue different policies. He invited the help of other countries, such as the United States, Germany, and France. His outreach is reminiscent of the Westernization policies of Peter the Great and Alexander II, who recognized backwardness in their country and modernized a society reluctant to change.

“It worked once, and it could work again,” said Dvorkovich. “The gap between the rest of the world will increase if we don’t [reform] right now. We want [Russia] to become a comfortable place to live and study and raise kids. If we lose this chance, we will not forgive ourselves.”

Dvorkovich explained the need to involve the new generation in reform efforts. With a quick look at the Stanford students in his audience, he noted that the future depends on young people.

“We certainly hope that some of you can join our effort,” Dvorkovich urged.

The internet will be crucial to brainstorming reforms. President Medvedev has a blog and makes new posts daily. According to Dvorkovich, the president bases some of his instructions to his advisors on advice he receives from his blog. The government now encourages regional governors to keep blogs, and expects civilians to become active in politics. True freedom of speech, said Dvorkovich, will come only with universal internet access.

The recent terrorist attacks on the Moscow underground illustrated the extent to which the internet has helped unite a country.

“It was the first time ever people from around the world started sending me condolences directly to my e-mail,” Dvorkovich shared. “It’s a change in attitude.”

It is this ‘change in attitude’ that is of central importance to Dvorkovich, especially as it concerns reforming the economic structure of Russia.

“The idea is not to push modernization and innovation onto us by state decisions and administrative power. We will not succeed if we do so. The idea is to create the right mood in society.”

However, despite his optimism, Dvorkovich recognized that there are formidable obstacles to reform. Corruption is rampant, especially in small businesses. People want money, but are being hurt by a corrupt system.

For example, many Russians wonder why the government spends such a large portion of funds on innovation while its civilians still suffer from unsatisfactory roads. The sad reality is that of all state funds allocated to construction, fifty percent is stolen. In Dvorkovich’s eyes, Russia can accomplish more by spending one billion dollars on education and innovation than by spending one billion dollars on roads.

Dvorkovich insisted that young people such as Stanford students should be excited about working and living in Russia.

“There is a thirteen percent income tax. You will be rich if you go to Russia.”

There are more career options there, too, he added, reminding audience members that he became Deputy Minister of the Economy at twenty-nine years old. For risk-takers, Russia is perfect.

“You can always find a reason not to love Russia,” he said. “But there is a real reason why you should think twice.”