Medvedev Looks to Cut Bureaucracy by 20%

President Dmitry Medvedev on Tuesday ordered the government to draft a proposal on reducing the federal bureaucracy by 20 percent, a politically risky idea floated by the Finance Ministry to help patch the budget deficit.

A decision will only be made after a final proposal has been submitted and studied, Medvedev said at a government meeting on federal targeted programs.

Any downsizing of Russia's sprawling bureaucracy — traditionally a strong voting bloc — could have major implications for the 2012 presidential elections. Medvedev and Prime Minister Vladimir Putin have both left open the possibility that they could seek the post.

"I know that this has already been partially discussed in the government. We need to see a final proposal and only then make a decision," Medvedev said, according to transcript posted on the Kremlin web site.

Finance Minister Alexei Kudrin mentioned the idea on Monday, he said.

"It is, of course, a fairly severe measure, which could help solve a whole series of problems," Medvedev said. "At the same time, these cannot be knee-jerk decisions or based exclusively on financial considerations.

"First of all, these are people's fates, and secondly, I'd like to understand ultimately what we could achieve," he said.

The comments suggested that Medvedev wanted a say on the politically touchy subject of budget politics, which is generally handled by the Cabinet.

Vedomosti reported on Tuesday that the Finance Ministry wanted to reduce the number of officials by 20 percent because the federal government can no longer afford to support a bloated bureaucracy.

The suggestion was made to Putin at a government meeting last week, the newspaper reported, citing a government source and an official in the Finance Ministry.

Putin heard out the proposal but indicated that he would make a decision later, the government source told Vedomosti. The Finance Ministry wants to raise the remaining state workers' salaries in line with inflation, rather than using the freed up funds to raise wages further.

The government has raised the amount of funds available to pay federal employees by 30 percent since December 2008, creating a key safety net to shelter state workers from the effects of the global economic crisis.

Putin — while not publicly taking a stance on the Finance Ministry's proposal — did tell a meeting with labor union officials last week that the government would consider raising pensions and budget workers' salaries in the fall if the economic situation allows.

That would appear to put him at odds with Kudrin, who warned last week that Russia could have a budget fall of between 5 percent and 5.9 percent this year. The federal budget had a shortfall of 5.9 percent in 2009.

Medvedev also said Tuesday that he would make an address on the state of the budget at the end of the month after the government settles some final issues.

"Given that we have a budget deficit, we need to optimize expenses as thoroughly as possible," he said. "That is the government's most important task."

According to the State Statistics Service, some 800,000 people are employed as federal officials, a categorization that does not include the military or other security services. That would suggest a reduction of 160,000 positions.

Yelena Panfilova, head of Transparency International's Moscow office, said the number of officials could be cut by up to 25 percent without endangering the quality of services rendered.

"This is realistic, not just to achieve budget cuts and to reduce corruption, but also because the country is increasingly introducing e-government services," Panfilova told The Moscow Times.

The most formidable task, she said, would be identifying which functions would have to go. "I strongly suspect that nobody has a clear idea of how to do that," she said.

Panfilova also warned that while big bureaucracies do encourage corruption, reducing staff does not automatically reduce the problem.

Medvedev in December ordered an anti-corruption housecleaning at the Interior Ministry that would cut its 1.4 million-member work force by 20 percent by 2012 and provide raises to remaining staff.

Firing tens of thousands of federal officials could undermine electoral support for the current leaders, said Dmitry Orlov, director of the Agency for Political and Economic Communications, a think tank.

“Officials are a very substantial part of the power base for any country's leaders,” he said. “They have a wide social network.”

Orlov estimated that about 20 percent of Russia's officials are not comfortable with technology, have poor analytical skills or are “inert.” Russia should get rid of such public servants even if it isn't planning to reduce the bureaucracy, he said.

Staff writers Anatoly Medetsky and Nikolaus von Twickel contributed to this report.