RUSSIA: Government Pushes Reform of Soviet-Era Civil Service
Four days had passed since a new law aimed at easing the bureaucratic burden on Russian businesses took effect. But at the state tax office in Nizhny Novgorod, a leafy, mid-size city about 250 miles east of Moscow, the hurdles to register a company were as high as ever. Posted on the door of every room on Friday, July 5, was a sign: "We do not give out any information. Working days Tuesdays and Thursdays." No one answered a knock on the door of Room 10, the registration unit. In the next room, a woman sat at a table piled with paper. "Didn´t you see the sign on the door?" she demanded when a visitor approached. "We do not give out any information!" The following Tuesday, a tax inspector was planted in the registration office. But for the 10 people seeking help in a waiting room full of broken chairs, she had but one direction. "Read the law." In the two years since he was elected president, Vladimir Putin has shown his government can design comprehensive reforms and push them through the Russian parliament. His administration has passed measures that call for the institution of a flat income tax, a less arbitrary judicial system, fewer inspections of small businesses, better protections of corporate investors and a modern labor code. Now Putin´s team is starting to implement those reforms. But, paradoxically, their success rests on the support of an unreformed Soviet-style bureaucracy of hundreds of thousands of workers who staff offices like the tax inspection unit in Nizhny Novgorod. Transforming them into a modern and effective civil service is one of Russia´s biggest challenges. Aides insist that Putin intends to tackle it next year, and he took an initial step in June by raising salaries of all civil servants by 50 percent. Architects of his plan say the Kremlin next year wants to crack down on conflicts of interest and open up more government deliberations to public scrutiny, among other reforms. Putin´s hope, according to his aides, is to create something Russia has never had: a bureaucracy that helps citizens instead of thwarting them. Accomplishing this, they say, is crucial to economic revival, because venal and oppressive bureaucrats are suffocating growth of the kind of small- and medium-size businesses that jump-started the economies of other post-Communist countries, most notably Poland. The designation "civil service" has always been something of a misnomer in Russia. Since the formation of a centralized state about 800 years ago, bureaucrats have mainly served the country´s leaders, not its people. And they have been anything but civil. Mikhail Dmitriev, the first deputy minister for economic development who is fashioning Putin´s plan for reforming the civil service, traces some traditions of today´s system back to the Mongol invasion of the 13th century. It could take a generation to change that culture, he said. "The administration was never accountable to the general public," he said. "It was never in fact responsible for delivering a high quality of service to society. Ordinary citizens were considered as subjects to be ruled, and who themselves should serve the state. This is . . . the mirror opposite of a modern state." Unlike some of the changes Putin has championed so far, an overhaul of the civil service system is not a priority for the oligarchs who dominate Russia´s economic landscape. To the contrary, it could challenge their interests if, as Putin´s aides predict, it limits the opportunity for making corrupt deals with government ministers and their underlings. Timing is another obstacle. Putin´s command of the State Duma, the lower house of parliament, has allowed him to advance many of his initiatives intact. But with members of the Duma up for reelection in December 2003, lawmakers could be less receptive to a plan that could shake Russia´s bureaucracy to its roots. Prodded by the World Bank and the International Monetary Fund, Putin´s government already has tried to ease the bureaucratic burden on business with new legislation that simplifies Russia´s maze of licensing and registration requirements. But that by itself may accomplish little if the attitude of bureaucrats remains the same. Christof Ruehl, chief economist for the World Bank in Moscow, said he visited some of Putin´s aides after the red tape bill passed, and found them surprisingly despondent. "We may have succeeded in reducing the number of inspections from 100 to 10," he said one told him. "But what if every inspection takes 10 times as long?" As it is, Russia´s civil servants have little incentive to perform. In economic terms, the last decade has left them behind. Many of the most effective state workers left for better-paying jobs in the private sector, especially in Moscow. What remains is a cadre of 1.1 million people who independent analysts said are as corrupt as any bureaucracy in the world´s poorest countries, according to Dmitriev. In a World Bank study of government wages in 17 industrialized nations, many of them in Europe, Russia came in second to last, after Hungary. China and Chile paid their civil servants more as a per capita percentage of the nation´s wealth than Russia. Russia´s average state salary is $113 a month, less than a third of the typical salary of an ordinary citizen in Moscow. By presidential decree, Putin raised the wages of every state employee last month by 50 percent, according to Dmitri Kozak, deputy head of the presidential administration. Even so, Kozak, a lawyer with 17 years of government experience and one of Putin´s top aides, will earn just $450 a month. Putin´s own salary will be $2,004 a month. "Here, we are in a kind of vicious circle: On the one hand . . . as long as there are ill-qualified state employees, the country´s economic possibilities remain small," Kozak said. "And as long as the economy´s possibilities remain small, we are not able to substantially raise state employees´ salaries." While pay is a huge problem, according to Dmitriev, inefficiency is a bigger one. He cites an example from his own ministry: At any given moment two or three employees from subordinate offices are traveling around Moscow carrying documents that require a signature by an official from a different ministry. Electronic signatures are prohibited. "There is a huge burden of excessive paperwork," he said. "An enormous volume of time and resources is just wasted. Efficiency and effectiveness is the real problem, not the amount of funds spent on public administration." Aides said Putin´s plan calls in part for what are known in the United States as sunshine laws, designed to give citizens a more accurate picture of their government. At the moment, Dmitriev said, Russian officials have far too much leeway to classify government documents as secret. In practice, he said, the only officials who are reprimanded for misclassifying documents are those who reveal too much, not too little. Also in the works, Dmitriev said, are stronger conflict-of-interest rules and new ethics commissions for every ministry, staffed in part by members of the public and governed by a central commission that will handle complaints about ministers themselves. The reformers hope to limit the incestuous relationships between officials and businesses. Although there are strict penalties for taking bribes, nothing prevents state officials from making decisions that affect their own business interests, Dmitriev said. Two recent high-level cases illustrate that problem. Yevgeny Adamov, who was Russia´s atomic energy minister, resigned under pressure last year after a Duma committee questioned whether a company he had established had profited from U.S. government contracts to improve the safety of Russia´s nuclear plants. Adamov denied any impropriety. Nikolai Aksyonenko, Russia´s railways minister, was fired in January after the Duma´s audit chamber reported that his ministry juggled freight rates to benefit companies owned by his son and nephew, among other irregularities. Aksyonenko has said he was the victim of a political vendetta. The Indem Fund, a social research organization, estimates that corruption costs Russian businesses $33 billion in bribes every year. In a survey of Russians published in March by the fund, nearly half of respondents said bribery is either a necessity or makes life easier. "The problem is to create an environment that is hostile in its very nature to the corruption which is now the norm and the reality of Russian civil service," Dmitriev said. Like most other changes that Putin has advanced, civil service reform has a history of failure. An attempt in 1997 to overhaul the civil service under former president Boris Yeltsin went nowhere. Still, Dmitriev argues, creating a service-oriented bureaucracy is the one reform on Putin´s list with solid popular appeal. "This is a novel concept in Russia, and many Russians I am sure will be pleased with the idea of a civil service that serves them," he said. He would get no argument from accountants, lawyers and business owners who tried to comply over the last week with the new small-business law, which among other things is meant to simplify registration of new companies. At three different tax inspection offices visited by Russian researchers who gathered information for this article, people were frustrated and stymied. In Murmansk, a city on the Barents Sea in Russia´s far northwest, a visitor politely asked a tax inspector how to register a company. "We are not an information service here," the inspector retorted. The inspector pointed to the corridor, where there were half-printed, half-handwritten instructions but no application forms. Arsen Arsenovich, the tax inspector at Moscow´s office No. 7, was much friendlier, patiently answering every question. But he had no application forms, either. He told people they could either try the central tax inspection office, miles away, or find a computer and print the form from the Internet. Few Russians can afford computers, and less than 3 percent use the Internet regularly. "You must be kidding," a businesswoman told Arsenovich angrily. "Are you trying to say I am supposed to fill out forms that no one has?" Only one person, a middle-aged woman, managed to secure a form. She got it by wheedling and pleading in a manner that smacked of long experience in Soviet-era lines. "Hey, I am your client; you know me," she told Arsenovich with a big smile. "We met before, right? I know you. Please give me just one form, I really need it; I know you have those forms!" "This is the last copy," Arsenovich told her, handing one over. "The very last copy. Only for you."