Russian "sistema" and its potential reform: modernization versus evolution

Different Perspectives on Institutional Change. Acts of Individual Greed or a System? Corruption in Numbers. Coalition as an instrument for evolution. The Durability of External Management. The material base of voluntary insiders for modernizing sistema.

Рубрика Международные отношения и мировая экономика
Вид дипломная работа
Язык английский
Дата добавления 02.09.2018
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The thesis summarizes and complements the notion of nature and essential characteristics and practices of sistema, the reasons behind its persistence, as well as the possibility and means that are required for its bottom-up profound change, i.e. the coalition of the `unwilling' forces within it. The analysis of the mechanisms of its reproduction, the material base of insiders pushing against any real change of it, and requirements for its evolution, allows us to create a holistic view of the phenomenon of the informal system of governance in modern Russia and can be used in the course of further study of sistema. Yet, for making broader conclusions about the probability of the endogenous bottom-up evolution of the Russian informal political system, there needs to be a further investigation into its drivers and obstacles. In particular, the intention should be paid to the free rider problem, which is an economic phenomenon that manifests itself in the fact that the consumer of the public good tries to avoid paying it (Olson, 1965). The problem arises when an individual consciously does not want to pay for the public good, expecting to receive benefits without any payment (ibid.). In the context of the struggle for changing Russian informal power networks, free riders may not only undermine the collaboration of the involuntary and voluntary-frustrated insiders, but also underestimate the value of its such a change. Eventually, it may lead to a situation when no member of sistema would want to participate in the struggle, thus making it impossible. In other words, even though the `unwilling' forces within the informal political system are interested in its change, nobody wants to pay for it. Hence, a further research is needed to analyze the scope of the problem and the potential solutions to it, e.g. the role of informal standards of honesty, trust, and moral obligation to cooperate, as well as the potential of additional benefits for those who contribute to the common cause.

It is also important to analyze whether there is a link between both the internal and external developments of sistema and the broader political arena beyond the borders of the country. A study of external political and economic factors affecting Russia and their potential effect on its internal developments is important. The increasing political isolation, accompanied by economic sanctions after the Ukrainian crisis, negatively affect not only the country's economy, but also the key Russian businessman and oligarchs, who belong to sistema. There has been a serious outflow of foreign investment, which, according to preliminary data, amounts to approximately 70 billion dollars (Samedova, 2017). The effect of sanctions has been especially prominent in the banking system and foreign accounts. Restrained measures were introduced against Russian banks, and were accompanied by freezing of accounts of Russian private investors and state companies (ibid.). Given the already existing lack of trust to the Russian judiciary system, and an increasing outflow of capital from the RF, external pressure on the country may undermine and destabilize the informal political system by affecting the voluntary insiders, including business elites, who are directly suffering from it. For instance, the US sanctions against 38 Russian businessmen, politicians and companies that were introduced on the 6 April 2018 have led to their substantial material losses (Russak, 2018). Oleg Deripaska has suffered most from these sanctions, whose impact was felt by En + holding, US Rusal, and his six oligarchic associates (ibid.). According to data posted on 9 April 2018, Deripaska's financial position fell by $ 1.3 billion (ibid.). On the same day Deputy Prime Minister of the Russian Federation Arkady Dvorkovich said that the government will help companies that have come under US sanctions (Krechetova, 2018). Thus, even though sistema tries to prevent any internal unrest of various interest groups in the light of the economic and political sanctions, which directly affect them, the durability and the effectiveness of such `peacekeeping' is questionable and needs to be further researched.

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