The National Projects: From Stability to Development
// Abridged Translation
Exclusive to Kommersant
Public discussion of the three-year (2007-2009) budget for the national projects began yesterday during the “administration hour” in the Russian State Duma. First Deputy Prime Minister Dmitry Medvedev has written an article on the beginning of the implementation of that state doctrine especially for Kommersant. The following is a slightly abbreviated translation of that article.
The high-priority national projects have become an important phenomenon in the life of the Russia Federation without any exaggeration. In 2006, not only federal, regional and local institutions were involved their implementation, but a significant part of society as well.
It can be said of the scale and sweep of the national projects that the idea of them goes far beyond individual government programs, even very large ones. These changes are reflected and will be reflected in the socio-economic, psychological, social and, in the final analysis, political aspects of the country's development, which is no less important than the achievement of individual targets. And it must also be taken into account.
Another Country
The possibility for the implementation of the high-priority national projects arose thanks to the formation of qualitatively new conditions for development. By 2006, Russia had become another country. In the time since the financial crisis of 1998, the most pressing problems of security and national sovereignty had been solved. Russia's international position had been reinforced and domestic stability had been achieved, substantially improving the macroeconomic situation.
For the first time in recent decades, Russia had the resources for development. In the summer of 2006, a signal event occurred. Russia turned from a debtor state into a creditor state. The uncontrolled economic collapse of the 1990s had been stopped and the consequences of the crisis were largely overcome.
In my view, 2006 was a turning point. Society and government discussed, conceived and decided problems not of stability, but of development. Here is a typical example. The production of building materials increased by 14 percent in 2006. That was not, however, enough to keep up with the growth of construction, and there is a shortage of several construction materials. Is that a problem? Yes. But it's a problem of the growth, not the degradation, of that sector.
How to invest and not simply spend? What methods and technologies will work for us? What to do first? The idea of the national projects is the answer to those questions. It is obvious that the time to for the modernization of Russia, without which it cannot hold its own in world competition, has come.
International and domestic experience has shown that only investment in people can help move from an economy of resources and industry to an economy of knowledge founded on the individual efforts of active, healthy and educated citizens. The development of personal potential directly depends on access to high-quality education, healthcare, information, communications, and so on. The understand of those tasks and the attempt to find the most effective ways of fulfilling them led to the project approach.
That idea was taken from business experience and it has proven its viability. That methodology has allowed us reduce the time between a decision and its implementation, including legislatively.
The problems of education, healthcare, agriculture and housing construction were at the center of attention in the government every day and at all levels in 2006. Our efforts were backed up with serious political, administrative and financial resources. That is extremely important. Supplemental payments to doctors and teachers alone led to higher income for 1.5 million families.
Work on the projects had led and will continue to lead to a wide variety of benefits. Our huge country has gone into action thanks to the projects. The regional leaders are actively engaged in the national projects. They had been engaged in the same issues before, but without support. Now they see that a solution is at hand. Patches of social development had existed in a few regions already. Now, the high-priority national projects have encompassed the whole country.
There is one more important result of the national projects. Social optimism has risen. Between October 2005 and October 2006, the number of citizens who thought that they would live worse in the future fell to 12 percent, and the number of optimists remained steadily over 30 percent. That too has to be valued.
Basic Links
Basic attention was paid last year to the formation of the basic links for the implementation of the priority projects. That meant in the Healthcare project, for instance, investment in primary medical care. The local health service must provide preventative care, prompt diagnosis and early treatment. Providing personnel for local healthcare was until very recently one of the biggest problems in Russian healthcare. That situation has been turned around. The number of local doctors increased by 3500. Young medical school graduates have gone to work in local healthcare.
In 2006, 13,500 doctors received additional training, twice the number planned for. Another 160,000 medical workers beyond the initial plan received salary increases. More than 5500 medical facilities received new diagnostic equipment and ambulances. Nothing like that had happened for decades, and the results can already be seen. The average wait for diagnostic procedures has been reduced from ten to seven days, and emergency medical care arrives on average ten minutes faster than it did a year ago. Those ten minutes are the difference between life and death for many people.
The basic links in education are schools and teachers. Eight thousand schools received educational supplies and equipment for the teaching of physics, chemistry and biology, and 3500 new school buses were acquired. Three thousand innovative schools and 10,000 of the best teachers received grants. Much more remains to be done. The salary increases for almost 900,000 teachers is just a first step in increasing the prestige of their work.
The national project for agriculture has given impetus to the growth of small farms. During 2006, 36.5 billion rubles in credit were given to more than 100,000 recipients (as compared to 3.4 billion rubles in credit to 2500 borrowers in 2005). Traditional farms and personal plots play an important role in the sector, providing more than 87 percent of all production.
Consumer cooperatives will receive support within the project as well in order to increase the produce sales. About 970 cooperates were formed in 2006, twice the number planned.
The social aspect cannot be overlooked here. Everyone – employees of large agricultural operations, farmers and individual producers – should have the opportunity to make a fit living. There is no doubt that small agriculture should be of great concern to the government.
Overcoming Disproportion
One of the pressing problems in Russia is the disproportion in the development of individual regions. Experts say that personal incomes vary by tens of times across the regions, consumption by 20 to 30 times and investment by hundreds of times.
That disproportion is not an economic or social problems. It is a problem of national security. That economic inequality tears at the fabric of the country. That is why the high-priority projects are considered an instrument of regional development and socio-economic leveling.
Two problems have to be solved at once. Increased federal attention has to be devoted to local problems without redistribution of authority, and regional authorities have to stimulated to action and given the opportunity to show initiative. That is to say that all aspects of state management have to be reinforced, and that has been successful as a whole.
The efforts of the center were greeted with an active response by the majority of regions. In the Urals Federal District, for example, 2.8 billion rubles from the federal budget were spent in 2006 on the implementation of the national projects, while 15.5 billion rubles came from the budgets of the subjects of the federation and 2.5 billion rubles came from local budgets. Another billion rubles came from private sources.
In Krasnoyarsk Territory, territorial national projects were set up. In Chelyabinsk Region, additional funds were allotted under the Education project to remodel schools and retrain teachers. That not only solved social problems, it contributed to the revitalization of the economic life of the whole region.
The Economics of Knowledge
It is clear today that one of the most important development tasks should be the creation of an economy of knowledge, where not individual sectors develop through technological creativity, but all economic life is structured around an intellectual base.
As I wrote above, the basis for the foundation of a new economy and new society lies in personal potential. That potential is produced through accessible high-quality education, healthcare, information, communications, science and culture.
He success of the whole country depends on the success of the individual in realizing his or her talents. But the state must guarantee the conditions for that realization. That is a long and complex process. The psychology of a people in whom personal activism, independence and enterprise were intentionally discouraged cannot be changed in a single moment. Dependence on state paternalism did not end with the collapse of communist ideology. Its roots lie in feudal society.
In developed countries, investment in education, science, culture and healthcare is much greater than in vehicles, equipment and buildings and national wealth is judged by the quality of life and conditions for the development of personal potential. That logic is pursued in the 2007 federal budget, which includes significantly larger outlays for the implementation of the national projects. But investment alone will not create an economy of knowledge. Institutional reforms are required in the economy and society as a whole. The entirety of Russian society and the Russian economy has to be placed on the path of innovation.
Within the national projects systemic measures are being taken to increase the activeness of individuals and public organizations and to provide structure for their efforts. It would be appropriate here to mention the law on endowments, the targeted use of private capital, passed at the end of last year. Business has had no transparent, clear mechanism for investment in education, science and noncommercial and philanthropic organizations. Business now has the opportunity to be active in a variety of social spheres. The foundation of two business schools is an example of this.
Counting on Leaders
Leadership is a key element in the concept of the national projects, and one that is very important for changing the social ecology. It is the leaders who will receive support for their efforts. The most important task of the Education project is stimulating the most capable teachers and students and introducing innovative teaching methods. Ten thousand of the best teachers, chosen competitively, were awarded presidential prizes of 100,000 rubles. Collectives of 3000 schools that developed innovative teaching programs received 1 million rubes each. Winners of student competitions received 5350 prizes. Seventeen of the best innovative Russian universities received grants totaling 5 billion rubles.
It is important that those 17 institutions were chosen from more than 200. More importantly, about 400 institutions plan to participate this year. The number of subjects of the federation participating in the competition is increasing as well. In the Southern and Siberian Federal Districts, two national universities were formed from several smaller institutions to create education institutions of the 21st century that can provide their regions with modern specialists.
The Accessible and Comfortable Housing for the Citizens of Russia project mainly supports municipalities and subjects of the Russian Federation that are prepared to invest their own resources as well in the solution of that problem. The emphasis is on mortgage crediting. With 108 billion rubles budgeted for this year, about 200 billion rubles of credit are expected to be drawn. Down payments and interest rates are being lowered. Credit can be obtained for 11-percent annual interest today, which is an average of 2-4 percent lower than a year ago.
Other tasks include the acquisition of housing by young families and subsidization of the construction of infrastructure, especially for large-scale construction of low-rise housing.
In Ekaterinburg, 9 million sq. m. of housing will be built for 325,000 residents. Large projects are underway in Krasnogrosk and Domodedovo in Moscow Region and are planned for the outlaying areas of St. Petersburg. New cities will be built as well. A new living environment will be created for millions of Russians.
Under the Development of the Agro-Industrial Complex project, advantageous crediting was provided for the construction of large-scale livestock complexes. That support goes to those who are prepared for long-term investment. About 50 billion rubles were given out in eight-year loans (20 percent more than planned). More than 1240 livestock complexes are being built or rebuilt with those credits. About 50,000 head of high-production breeds of cattle and equipment to keep 185,000 head have been leased out.
The changes in agriculture due to reconstruction are impressive. It is, if you will, and different work culture ad a different philosophy of life in the village.
The Systemic Effect
The development of education, healthcare, agriculture and housing construction will lead to breakthroughs in other sectors. Implementation of the national projects required long-term planning and budgeting, which is extremely important for steady economic development. More importantly, the strategy of effective investment in the person, in rising quality of life, is logically developed in the budget-planning process.
The introduction of modern technology is another important aspect of the implementation of the national projects. All Russian schools have been equipped with wideband Internet access in the last two years, creating new opportunities even in the most isolated regions. The village school's Internet will be useful for the local doctor and agricultural specialists as well and will help attract investment. New technology requires better management and that is also being seen in many regions.
The question of oversight requires special comment. It was decided at the very beginning to operate with maximum openness. The accounts of ministries and agencies should all be available to the public. The Ministry of IT and Communications requires that schools confirm their connection to the Internet by providing digital photographs of a computer class with the number of the school. Those photographs are posted on a publicly-accessible site. Attempts can be made to forge almost any document but, if money was not received and there are no computers in a school, it is impossible to prevent the outcry of students or their parents if the information on the Internet does not correspond with reality. That is called public oversight.
Those methods, along with electronic monitoring systems, bring maximum openness to the national projects, something that is odious to unscrupulous bureaucrat. They will also lead to social activism on the part of citizens, without which social development is impossible.
What Next?
The national projects have created a good pace of systemic social development. That momentum must not be lost. This year, pilot healthcare projects will be begun in 17 regions of the country. Financing and salary structures will be reformed.
Beginning this year, subjects of the Russian Federation will receive government support for modernization projects in education. There will be 20 experimental regions to begin with. A new financing system will be developed based on the number of students and the quality of education.
Leaders in education will continue to receive support. Innovative schools will be centers improving teaching qualifications. Serious attention will be given to institutions of elementary and intermediate professional education.
Subsidies and state guarantees have been worked out for builders and utilities providers, with special emphasis on low-rise housing construction. Large regional projects for housing construction will receive support and local governments will begin using land as collateral to receive credit for the construction of infrastructure.
Are there problems with the implementation of the national projects? There are many. Imperfect mechanisms of implementation and unequal distribution of support are among them. There are purely managerial and administrative problems as well. The should be solved this year without delaying the implementation of plans.
To end this article, I would like to give an example of the scale and systemic nature of the work we have begun. At one of the weekly meetings of the president with the members of the government, I read a report on the solution of the problem of school buses. The president responded by saying that buses are good, but they won't last if the roads are not maintained. That sums up everything I have said above about a systemic approach, cumulative effect and tying basic links to larger changes. It is our vision of the future, the road we all have to build together if we are to go on.
Dmitry Medvedev, First Deputy Prime Minister of Russia
All the Article in Russian as of Jan. 25, 2007
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