economic information, a collateral casualty of the war in Ukraine

“Any quantification changes the world.” This is how the economist Olivier Martin sums up the political stakes of what he calls “the empire of numbers.”

As the imperial ambitions of power in Russia manifest themselves before us, statistics and economic information escape less and less from the power of politics in this country. This process has very concrete consequences.

USSR: time of secrecy

During the Soviet era, economic planning data was treated like a military secret.

The calculations and forecasts of the National Institute for Economic Forecasting of the Academy of Sciences, one of the most monitored centers by the Politburo, were kept locked in a safe, and only the director of the center had the right to decide how they would be made public. . Any macroeconomic data was published only after tight control by the political authorities. Most often, these data were falsified so that economic difficulties did not manifest themselves in broad daylight.

Passers-by read newspapers displayed in a shop window, Kyiv, October 18, 1975.
Pierre Guyot/AFP

The same phenomenon was repeated to varying degrees in other Soviet-type economies. Moreover, the UN created a special statistical office in its Economic Commission for Europe, one of whose tasks was to correct the most obvious distortions in the data transmitted by the Warsaw Pact countries, with the aim of restoring as close as possible to their real data. economic trajectory. For its part, the CIA did the same.

Opening 1990s

With the collapse of the Soviet Union, organizations involved in the collection of statistical data had to make a real Copernican revolution. Political control over figurine making, already weakened Publicity died out in 1986-1990. Gone were the Marxist categories of classifying the real (for example, “net material product” replaced by the concept of “gross domestic product”), and with them the methodological principles on which they were based.

At the same time, economic reality itself was changing: new actors appeared, and with them new economic behavior that had to be mastered. All this in an unprecedented crisis of human, financial and material resources available for fundraising. The authorities’ response was to seek international technical assistance. Assistance programs provided by multilateral institutions such as the IMF and the World Bank, with the support of national institutions such as INSEE, have orchestrated the transition of these administrations’ methods and practices to international standards.

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Dmitry Sokolov/AFP

Thus, since the 1990s, the collection of economic data has progressed both quantitatively and qualitatively. Admittedly, Rosstat, the Russian equivalent of INSEE, still has room for improvement in many areas, but its website is incomparably more complete than before and much of its data and information is in the public domain, sometimes in English. The Central Bank of Russia has also made significant progress in the dissemination of financial information. These administrations are staffed with technically competent personnel who are interested in ensuring the quality of public services.

2010s: economic debate still possible

On this basis, the think tanks, think tanks, banking economists and consulting firms present in Russia have been able to develop a genuine culture of economic analysis and discussion of ideas.

In the 2010s, as the lights went out one by one in the public debate about the Russian political system, the economic question remained the subject of real freedom of expression, spanning a classic spectrum of opinions and recommendations, from the most statist to the ultra-liberal. Alexei Kudrin, chairman of the Accounts Chamber, did not hesitate to flog the government for its too slow progress in the fight against monopolies and violations of property rights.

For its part, the Institute for National Economic Forecasting openly reviled this same government for being timid in allocating sovereign funds to invest in infrastructure in Russia. The Gaidar Institute hosted an annual international forum, broadcast live on the Internet, that brought together experts, politicians, and academics from several countries to discuss, sometimes in a contentious tone, economic policy options that could lift Russia out of stagnation.

Vladimir Putin himself provoked a competition in 2016 between the Center for Strategic Research, which until 2018 was directed by Alexei Kudrin, and the Stolypin Center, which was directed by Boris Titov, co-chairman of the National Association of Small and Medium Businesses and representative of the president from the business world, to develop options for the country’s long-term development which are likely to be adopted by the executive branch.

With the war in Ukraine, this informational and intellectual world seems to be about to disappear, giving way to a completely different reality.

Return of the mystery

The harbingers of a change in the “political regime of numbers” in Russia date back to the pandemic crisis.

Information on deaths from Covid-19, transferred to the control of Rospotrebnadzor, literally the Consumer Goods Surveillance Agency revived from the Soviet Union, has been systematically truncated in accordance with a process that goes through the entire chain of statistical production, from hospitals to rooms and morgues Deputy Prime Minister – Minister of Health Tatiana Golikova. As of May 2020, it was clear that epidemic-related deaths had been underreported by at least a factor of three.

In hindsight and calculations, but also thanks to the professional conscience of those responsible for Rosstatwho continued to regularly publish mortality data, it can now be stated that the death toll in Russia associated with the epidemic is not 357,000 (the official figure), but almost 1 million, making it the most affected country in the world. pandemic – pending revision of Indian statistics.

The second negative signal is the revision of the calculation of poverty in Russia. From January 2021, the cost of living is determined relative, not absolute. It now corresponds to 44.2% of the median income per capita for the year preceding the reporting period of the study.

This change is important because the transition from an absolute to a relative level usually signals a country’s entry into the group of high-income countries. For low-income countries, calculating the poverty rate on the basis of the relative rate can lead to a strong underestimation of the real poverty rate. Given the average standard of living of Russia’s population, this change in method is premature and risks artificially lowering the country’s poverty in the (probable) hypothesis that the standard of living of the most modest will be lowered by the inflation created by the war.

Russian economy in the wilderness of war

The deterioration of economic information is likely to accelerate. Like any conflict, the war that Vladimir Putin has dragged his country into is an information war. Demonstrating that the sanctions have not hit vital centers of power, praising the economic resilience of the Russian economy, may require accounts to be masked in the short term, especially if the war in Ukraine eventually confirms the stalemate. In this context, the recent announcement of the Central Bank is the most obvious signal of the ongoing changes.

One of his first decisions after the invasion was to ask commercial banks to no longer supply their websites with financial data, but to continue to transfer them directly to the Central Bank. If this measure were extended to non-financial companies, it would soon lead to a conflict of objectives for listed companies, which, by virtue of their status, are subject to strict standards regarding the transparency of accounting data. Gazprom and Rosneft, two strategic energy companies but partly owned by foreign capital, are in this case.

More generally, it is likely that the issue of confidentiality of economic and social data that has been in the public domain so far (concerning, for example, unemployment rates, poverty rates, etc.) will now be on the menu of meetings. management of Rosstat with the relevant ministries. It should also be feared that, with time and a worsening economic situation in Russia, texts reminiscent of recent military information laws will be adopted that punish the dissemination of economic information against the interests of the authorities, hiding, if necessary, behind “trade secrets” or, more openly, behind “national security”.

In any case, it will be increasingly difficult for economists and independent observers, both Russian and Western, to get a clear picture of the economic situation in Russia. Incidentally, those in power will also find it harder to find innovative and effective solutions to the economic problems the country is facing in an intellectual landscape devoid of any controversial debate about options. As a result, policy errors will become more likely. In economic matters, information can indeed change the world, for better or worse.

Appendix:

Central Bank of the Russian Federation / Resolution of March 6, 2022 (author’s translation)

_The Central Bank of Russia has decided to temporarily reduce the distribution of financial statements published by credit institutions on their websites, as well as on the website of the Central Bank of Russia. This was done to limit the risks of credit institutions associated with sanctions imposed by Western countries.

_As of February 2022, banks are no longer required to publish accounting and financial statements (general and consolidated) in accordance with Russian standards, as well as additional information to them.

_At the same time, credit institutions will continue to submit these documents to the Central Bank of the Russian Federation, which will allow them to fully exercise effective control over their activities, as well as to analyze the sector.

In addition, banks will be able to disclose information to their counterparties, if necessary, in the context of day-to-day business relationships..

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