Economic Actors in Russian Regional Politics: The Example of the Oil Industry

Abstract

In his analysis of the hindrances to reform of the economic policy of post-Soviet countries, Joel Hellman² begins with the assertion that resistance to further economic reforms did not come from those who stood to lose from such reforms, for example the unemployed or pensioners, but rather from those who first profited from reform, such as financial speculators. They benefited above all from the distortion of competition which characterized the early period of economic reform. During the process of privatization they could win preferential control of enterprises. Banks made considerable profits through speculative deals in unregulated financial markets. Local bureaucracies protected firms from competition in order to receive a share of the earnings from these monopolies. Therefore, according to Hellman, after the first phase of economic reform, the decisive conflict of interests with regards to the continuation of reform did not take place between political decision-makers and the classical losers from reforms, but rather between political decision-makers and those who had benefited from the initial period of reform. In Hellman’s opinion the result of this conflict largely determines further economic development.

I am grateful for the comments on a draft of this article by Christopher Gilley, Heiko Pleines and Hans-Henning Schröder.