Politics versus Policy: Technocratic Traps of Post-Soviet Reforms

1. Politics versus Policy:Technocratic Traps of Post-Soviet Reforms Vladimir Gel’man FiDiPro Conference, University of Helsinki, 2 June 2017

2. Technocratic Traps of Post-Soviet Reforms • “The main question of every evolution is constraining political power: how to provide competent decision-making, which will depend upon knowledge and experience but not upon voting results, and how to achieve a “regime of non-interference” of politics in other spheres of public life” (Ulyukaev, 1995: 8). • Many (if not most) of policy experts in Russia and beyond would endorse Ulyukaev’s statement – they would like to exclude or, at least, limit the influence of politics on policy-making; • a “regime of non-interference” – technocratic model of governance (Easterly, 2014) as opposed to political model

3. Technocratic Traps of Post-Soviet Reforms • Most of policy reforms in global history were technocratic by their nature (political model of governance is a relatively recent phenomenon); • But in the modern world technocratic policy reforms rarely bring major breakthrough successes (some exceptions more or less prove the rule, especially in authoritarian political context); • Easterly (2014) – the major critique of technocratic model, which was driven by the Cold War due to political stances of international organizations (such as the World Bank) and powerful intellectuals (normative approach); • The question of this paper – how technocratic model really works in Russia and post-Soviet Eurasia (towards a positive analysis)

4. Technocratic Traps of Post-Soviet Reforms • Controversial effects of technocratic model of policy reforms in various post-Soviet countries: • Russia – a major conflict between politics and policyin the 1990s, a partial policy success of technocrats in the 2000s, the dead end of policy changes in the 2010s; • Georgia – the formation of broad coalition for policy reforms after the Rose revolution, later on – politically-driven ”saturation point” (Bolkvadze, 2017); • Ukraine – policy as a hostage of politics at all stages of post-Soviet evolution of the country; • Why policy outcomes are so controversial and why technocratic reforms works in some cases but not in others?

5. Technocratic Traps of Post-Soviet Reforms • Argument in brief: • Rent-seeking nature of governance inhibited technocratic policy changes due to resistance and/or distortions by bureaucracy and/or interest groups as formal and informal veto players; • Limited opportunities for building of ”broad” pro-reform policy coalitions of various actors; • The major source of policy reforms is their priority support by political leaders – this support is unsustainable and by definition related only to a limited number of policy directions

6. Technocratic Traps of Post-Soviet Reforms • Why political leaders need technocratic reformers? • Response to domestic and international challenges – they forced to hire well-qualified experts in economic policy and state governance (technocrats are similar to crisis managers in companies); • Political leaders gave certain autonomy to technocrats, able to insulate some of their policies from influence of public opinion and interest groups, and keep monopoly on decision-making and policy evaluation; • BUT! – principal-agent problems are inevitable (leaders are now always able to evaluate policy outcomes properly)

7. Technocratic Traps of Post-Soviet Reforms • Loyalty vs. efficiency dilemma – dictators and their viziers (Egorov, Sonin, 2011); • Technocrats may switch sides toward the camp of regime’s rivals or even become leaders of opposition to the regime – the cases of Saakashvili in Georgia before the Rose Revolution or Yushchenko before the Orange Revolution; • Threats to political leaders from both successful and unsuccessful technocrats; • Resolving principal-agent problems: competition between agents (”divide and rule”) and limited discretion of technocrats under the patronage of political leaders (”pockets of efficiency” ); • BUT! – problems are not limited to disloyalty of technocrats

8. Technocratic Traps of Post-Soviet Reforms • Resistance to policy reforms from the state bureaucracy and interest groups of rent seekers (effects of ”state capture from within”); • Political isolation of technocrats – fragile ”narrow” coalitions for policy reforms, which may bring unexpected and unpredictable outcomes; • ”Technocratic trap” – the role of technocrats in policy-making diminished over time but they can’t change major ”rules of the game”, and policy programs implemented partially and became less meaningful – the cases of Russian policy programs ”Strategy 2010” and ”Strategy 2020” (viziers may turn into eunuchs?)

9. Technocratic Traps of Post-Soviet Reforms • Dependency from ”regime cycles” – political leaders and technocrats prioritize those policy changes, which may bring quick returns at the expense of long-term developmental plans (the case of tax vs. pension reforms in Russia in the 2000s); • Weakness of state apparatus – lack of control of policy reformers and poor coordination of various agencies (why financial policy is better coordinated than social policies); • Privatization of gains and socialization of losses as an effect of disbalance among interest groups and increasing influence of rent-seekers; • The spiral of overregulation as a side effect of struggle of policy reformers against resistance of state bureaucracy; • BUT! – technocrats remains indispensable because of needs of political leaders in fool-proofing (especially in financial, tax, and banking policy areas)

10. Technocratic Traps of Post-Soviet Reforms • Origins of post-Soviet technocracy: • ”Soviet legacy” – peripheral role of expertise in the late Soviet Union; • Post-Soviet choices in favor of technocratic model of policy-making (was there a realist alternative)?; • Triumph of technocracy in the early 2000s turned into disillusionments in the 2010s; • What are the major vices of technocratic reforms in post-Soviet countries?

11. Technocratic Traps of Post-Soviet Reforms • Dilemma of technocrats: • Long preparation of policy changes; public discussions, agreements of major stakeholders, consistent step-by-step implementation, and subsequent embedding; • or • Relatively quick imposition of major changes from above in a format of ”secret operation” (often without taking into account positions of major stakeholders); • High risks in both instances – either unworkable compromise (pension reform in Russia) or turn to counter-reforms (privatization of enterprises or introduction of the Unified State Exam in Russia)

12. Technocratic Traps of Post-Soviet Reforms ”Success stories” of major policy reforms – exceptions that prove the rule? (tax reform of the early 2000s in Russia and some other post-Soviet countries): incentives to launch changes, which brought quick positive results; Alternative scenarios: Police reform in Russia (Taylor, 2014) – policy changes became cosmetic because bureaucracy has no incentives to reform itself from within; Introduction of Unified State Exam (Starodubtsev, 2017) – choice between distorted incentives for bureaucrats within the ”power vertical” and recognition of poor quality of school education; “Doing Business” as case study – Russia insisted on changes in methodology of World Bank’s global ranking and elevated in 2015 up to 62th place… (from 120th in 2012) but business conditions as such deteriorated at the same time amid economic recession 

13. Technocratic Traps of Post-Soviet Reforms • Policy reform strategies – ”borrowing” and ”growing” of good institutions (Kuzminov et al., 2005) – mechanisms of outwitting of rent-seekers and implementing of new ”rules of the game”; • ”borrowing” of institutions – transfer of effective mechanisms onto post-Soviet soil: risks of their ”shitization” (Zaostrovtsev, 2009); • ”Open government” in Russia (aka e-government): not complementary but substitutive vis-a-vis democratic accountability – barrier to unwanted public initiatives and tool of manipulations for imposition of state-directed projects (the case of ”Active citizen” project in Moscow);

14. Technocratic Traps of Post-Soviet Reforms • ”Growing” of institutions – making a limited number of ”pockets of efficiency” under patronage of political leaders (a long history from ”toy army” of Peter the Great to Soviet nuclear and space programs with Beria-Kurchatov and Khrushchev-Korolev alliances); • Limited effects of patronage (Skolkovo project did not survive after the end of Medvedev’s presidency); • The spread of new institutions beyond ”pockets of efficiency” faced with major resistance of rent-seekers; • The logic of institutional isomorphism (Di Maggio, Powell, 1983) – unfriendly environment may change ”pockets of efficiency” and adjust them to general ”rules of the game”, not vice versa

15. Technocratic Traps of Post-Soviet Reforms • Support of technocratic reforms – a necessary yet insufficient condition: • Risks of revisions of policy priorities of political leaders (or of leaders themselves): ”modernization” program in Russia after Medvedev, turn from economic development to geopolitics in Russia after the annexation of Crimea; • Powerful interest groups may turn down programs of policy reforms despite the good will of political leaders (the case of police reforms in Russia); • … and policy reforms as such may went too far and cause certain challenges to political leaders in terms of their survival in power struggle (”saturation” effect) …

16. Technocratic Traps of Post-Soviet Reforms • The case of Ulyukaev – accusation in bribery, resignation and home arrest (November 2016); • Privatization of stakes of Rosneft – ”decision-making… depend upon knowledge and experience but not upon voting results” (exactly as Ulyukaev suggests in 1995); • … but the knowledge and expertise of rent-seekers were much more important for decision-making than knowledge and expertise of Ulyukaev and other Russian technocrats… • Is technocratic medicine worse than the decease?

17. Technocratic Traps of Post-Soviet Reforms • Thanks for your questions and comments! (Vladimir.gelman@helsinki.fi)