What is the future of civil society in Russia after the financial collapse? Has a stifling Soviet bureaucracy simply been replaced by a new bureaucracy, with large companies and large NGOs clearly linked to the government and leaving little room for small-scale private initiatives? Olga Alexeeva talked to Irina Khakamada, former government minister.

What in your opinion is the current state of civil society in Russia? Does it have a future?

If we mean by ‘civil society’ groups that represent individual interests (non-political, not on the basis of profession), such groups are at a very early stage of development in our country. Any development of public association depends on the political situation and the structure of the economy. In Russia we can see both positive and negative tendencies in economic and political life that affect the growth of civil society.

First trend: the Russian government welcomes so-called ‘market autocracy’ where large pro-governmental corporations take the lead and suppress any genuine forms of competition. A monopolistic, bureaucratic economy simply does not leave any room for private individual initiative. At the same time we can see that ever more individual associations and small private companies are being created. Somehow tough and direct bureaucracy stimulates people to reject such a style, to abandon any hopes that the state can solve their problems. People give up on state support and place their hopes for a better future on themselves alone.

Second trend: in comparison with the beginning of the nineties, Russia does have a legal basis for the development of a non-profit sector. There are the federal laws ‘On Non-Profit Organizations’, ‘On Charitable Activity and Charitable Organizations’ and others. But unfortunately there are no effective mechanisms for implementation of these laws. Nor are tax reliefs well developed in the field of civil initiatives. Moreover, proposed changes in the Tax Code could make the situation worse. The suggestion is that profit tax would be levied on donations and VAT charged for free services (!). But at least we have a basis for the development of legal civic institutions.

What about public attitudes? Are they conducive to individual private initiatives?

Public opinion surveys carried out since the crisis show that about 50 per cent of the population, in response to the question ‘Where do you place your hopes for improving your life?’, answer that they must make their own future themselves without support from the state. The slogan ‘Leave us alone! Do not disturb!’ sums up the attitude of half the nation towards the state. People want a minimum of bureaucracy on the local level in starting up their business — registering, getting licences and other matters. The same applies to non-profit activities.

Surprisingly this ‘Leave me alone!’ approach is not very new. Surveys carried out three years ago show almost the same percentage (40 per cent) wanting to get on with their own lives without intervention by the state. Now the figure is 50 per cent. So we can see that the crisis has not killed private initiative. In fact it has strengthened people’s feeling that they can no longer rely on the state for their future well-being.

Yet we do not see any mass involvement in civic initiatives, especially in the non-profit field. Why not?

I mentioned earlier that there are positive and negative trends. If we look at what is hindering the development of civil society in Russia, we can see many obstacles that have not been overcome yet.

Among those factors that ‘freeze’ public activism in Russia the first is our Soviet mentality that dictates a wish to join a large strong group, our fear of taking individual risky steps towards success. It is easier to use existing resources, to choose a simple way to quick profit without getting involved in a company or an NGO policy. Nor should we forget that the Soviet system was designed to destroy families, souls, business habits — and did so very successfully for many years.

Second, our economy is generally very monopolistic. The market is not effective in economic terms. It has been dominated by large corporations with government participation or with strong ties to the government. The crisis has demonstrated their ineffectiveness. We can see the same trend in the non-profit sector, with large NGOs (GONGOs – government-organized NGOs — as they are often called), some created with Soviet money, with huge staff and sometimes political ambitions. Small groups and associations cannot compete with such monsters for government money or donations from large corporates. There is the agricultural lobby, the banking lobby, the industrial lobby. Their style is direct pressure – though they borrow the slogans and language of civil society activists when it suits them. The Association of Russian Banks, for example, has since the crisis become very protective of the rights of small and medium-size banks, starting to talk about open and equal competition in the financial market. But before the crisis the Association mainly lobbied for the interests of large financial corporations.

Finally, most civic groups, as well as governmental bodies, lack management skills and experience. They do not know the legislation very well, they have no experience of campaigning and lobbying. Civic associations do not yet know how, with very limited resources, to make the state listen to them.

What is your assessment of technical assistance programmes supported and implemented by foreign organizations? What role do they play in civil society development in Russia?

First of all, I should say that foreign support has been the main resource for the development of training programmes, consulting companies and organizations, organizations like the Association of Private Press or the National Press Institute, and other civic institutions.

The bad thing about foundations is their conservativeness. They often have a small list of intermediaries whom they trust to implement their technical assistance programmes, with the result that narrow groups of NGOs receive support from foundations on a regular basis. The system is almost closed to outsiders, the world of grants, proposals and tenders for technical assistance projects inaccessible to small regional NGOs. Sometimes foundations do provide grants for small initiatives, but many small groups give up at the very initial stage of writing a proposal when they see the application requirements and the complexity of submitting a proposal. A select group of so-called ‘experts’ fly from one foundation to another making good money out of offering advice.

In addition, many funders are very suspicious of new ideas. Two years or more can pass between the introduction of a new idea to a funder and an actual grant transfer. During that two-year period the idea can become old and out of date, and the conditions for its implementation can change dramatically.

So we can see that there is a barrier between small individual civic initiatives and the foundations that support them.

There is another problem. Many foundations stick to particular methods of project implementation. Very often they support very similar projects in their field without looking at the particularities of different regions or the situation in Russia as a whole.

How do you see the future of foreign aid in Russia?

I think it is vital to start a wide and serious dialogue about the role of foreign aid in Russia, its future potential and strategy. If funders are to be effective, it is essential for them to know more about the country and local projects. They cannot be successful if they base their knowledge entirely on advice from a select group of ‘experts’.

What are the chances for survival of small and medium-size businesses in Russia? Do foreign agencies need to continue to develop projects to support small enterprises?

Small and medium-size businesses will have a chance of survival only if the government accepts that a competitive economy must be the basis for their growth, if it enshrines as a cornerstone of its policy the interests of the individual rather than the interests of bureaucracy, if future governments can formulate a clear economic strategy rather than a policy based on lobbying from different monopolies and political interests. In short, if the government will stop being a large corporation itself, small enterprise will have a chance to survive. During the crisis large corporations in fact collapsed more quickly than small companies, many of which managed to survive because of their size and flexibility.

How can small enterprises best be supported?

I would say that one of the most important fields is training in new technologies of business operation and financial technologies like credit unions. Company managers should learn how to manage company assets better. At the same time I think that basic business training should be offered not to those who just want to set up ‘something’ but to those who have already established their business operation and managed to survive for a year or two. Those people have already learned a lot and answered some basic questions themselves. They need support for further development in order to make the jump, for example, from simply reselling Turkish clothes to a production or chain service company or a more sophisticated trading company. Clearly focused technical assistance programmes would help small companies develop better strategies for the future and possibly transform them into middle-size businesses.

How effective is the support currently being offered?

That’s hard to answer, because there seems to be a great lack of feedback from technical assistance programmes. There is often no serious analysis of their long-term effectiveness, no long-term monitoring. But it is essential to evaluate not only how many seminars have been delivered by a grantee or how many lectures given but what long-term impact this has had on participating organizations or government policies.

I see huge amounts being spent on so-called ‘technical assistance’ where nobody assesses the outcomes of such expenditure. I once came across a project to develop a strategic plan for the reform of a particular industry. The project budget was $5 million, but it later emerged that the effectiveness of the project was almost zero.

Do you think the British experience in creating credit unions, building societies and other economic models has any relevance for Russia?

The British experience is unique and very useful. It is much more applicable to Russia than many other models. What is particularly interesting is the British experience of involving companies and NGOs in restructuring and reforming regional economies in areas where depression or other obstacles have slowed economic development. I can see that in the UK civic initiatives are really supported and encouraged and their potential used to bring to normal life whole geographical areas.

If we look more carefully at this experience, and if the different foundations supporting civil society in Russia will concentrate on helping those who have already achieved something and need only a little help in taking the next step, I believe that civil society in Russia will become more than just a dream of foreign foundation executives.                                      

Irina Khakamada was elected a Moscow Deputy of the Russian State Duma in 1993, and again in 1996. In 1998 she served as a minister of the federal government of the Russian Federation and as Chairman of the Committee on Small Business Development. She is currently a member of the Committee of Budget, Taxes, Banks and Finances. She is also a member of the Political Advisory Board on Foreign and Defence Policy of the President of the Russian Federation.

Irina Khakamada has always taken an active part in public and political activities. In 1994 she founded the parliamentary group ‘Liberal Democratic Union December 12th’. She is co-chairman of the Russian Foreign Policy Foundation, chairman of the Youth Liberal Union and chairman of the advisory board of the Foundation Disarmament for Development. In 1998 she joined the advisory board of CAF Russia. Time magazine called her a twenty-first century politician.