A Return to the Russia of Five-Year Plans? At Least in the North Caucasus

July 3, 2014
Soviet-era Poster: "Oil Workers! More Oil for the Motherland! Let's Fulfill the 5-Year Plan in 4 Years!"

Staunton, July 3 – Yesterday, Izvestiya reported that Vladimir Putin has signed a law under the terms of which the government will engage in strategic planning in five-year intervals to promote “improving the standard of living of the population, the growth of the Russian economy and the guaranteeing of the security of the country”.

This immediately sparked widespread speculation that the Kremlin is planning to return to the notorious five-year plans of Soviet times and equally widespread denials that the current Russian government is doing anything of the kind or indeed anything that different from many other countries and.

But as often happens, the truth appears to be somewhere in between, and the clearest indication of that has been provided by an article on Kavpolit.com titled “Soviet Recipes for Caucasian Industry” in which Filipp Gromyko describes a partial return to Soviet-style planning there.

On Tuesday, the government commission on the social-economic development of the North Caucasus Federal District met for the first time since Sergey Melikov became presidential plenipotentiary. The Vladikavkaz meeting led to the airing of a serious split between those who have guided industrial development up to now and the new Putin representative.

The Moscow officials in the industrial and trade ministry proposed continuing to rely on the funds from private investors, arguing that such people have been behind the recent and not unimpressive improvements in the North Caucasus. But Melikov said that this approach wasn’t working and that the government and especially government corporations must get more directly involved in both planning and funding.

To the extent that Melikov’s approach is introduced – and he is in the driver’s seat on this issue at least in the North Caucasus — Gromyko said, it would “in fact” represent “the rebirth of Soviet methods of industrialization,” including central planning with its five-year plans.

Speaking in support of moving in that direction, Gromyko says, “unexpectedly” was Lev Kuznetsov, the new minister for North Caucasian affairs. He said that in his view “the main investor” in the region must be “major Russian companies” and especially “corporations in which the government is involved.”

This shift would result, the journalist continues, in “a return to the principles of industrial policy of Soviet times when industrial enterprises, as part of long production chains were established in the national republics” by the decision of Moscow rather than as a result of independent economic activity.

Perhaps the most important reason for concluding that things are going in this direction, Gromyko says, was that Russian Prime Minister Dmitry Medvedev who spoke at the meeting suggested that the industrial development of the North Caucasus must be part of Moscow’s import-substitution and defense industry expansion in the wake of events in Ukraine.