5 Obstacles to our Proposal

5.1 General obstacles

The historical structure of power in Russia has been the root cause of the country’s lag of development, innovation and welfare when compared to other nations. Russia is filled with natural resources —being home to 20% of the world’s forest resources, having the largest natural gas reserves and the 8th largest oil reserves (World Bank, 2019)— but its institutions have not allowed wealth to returns for the people.

One of the main difficulties we face when proposing a reform of political and economical institutions is the fact that in Russia the president controls both executive and legislative branches of power. These reforms are routed to increase personal welfare in Russia, rising living standards and allowing more people to live the lives they choose to live, but implementing them would necessarily mean a reduction in central power. As the Russian President has shown over his 16 years of ruling, political power is his priority, even when compared to people’s welfare; since he has control over both executive and legislative branches, there are a plethora of ways in which he can overcome the popular interest to retain his authority.

5.2 Technical obstacles

1) Increasing trade openness: Russia’s historical ideology has been anti-capitalist. Even though there has been some progress in allowing a free market economy to emerge, the transition has not been complete. This fact, combined with Russia’s rivalry with the United States —currently the strongest economy in the world—make it difficult for the country to fully integrate itself to international trade.

2) Increase incentives to create SMEs: Even if this has proven to be a successful proposal in Austria, Russian oligarchs would oppose to this kind governmental policies as they would reduce their market shares. For these oligarchs, a reduction of market shares would translate into a reduction of their economic power and their political influence. Since they have been know to have direct links to the presidency, and the president has control over the legislative branch, it is easy for these multimillionaires to lobby for the blocking of these laws.

5.3 Necessary Changes

There is a fundamental problem in Russia that prevents our suggestions to be implemented, namely corruption and concentration of power. This characteristic is very hard to overcome as it is an institutional problem whose only solution would be a reform.

Reforms are usually achieved through two ways: (1) a president/governor decides that previous institutions do not serve the country anymore or (2) the people decide that previous institutions do not serve the country anymore, the latter we usually call “revolution”. Since Putin is the one who built Russia’s current institutions there are very few probabilities that he himself will want to change them. It is for this reason that we believe the only way our recommendations could be implemented is if the people defy the power of their governor Vladimir Putin.