#6159
#7
Parlamentskaya Gazeta
No. 51
Marc 2002
[translation from RIA Novosti for personal use only]
POLITICAL FORECAST: WHAT MONEY WILL HELP THE COUNTRY TO ITS FEET?
By Alexei KIVA, political analyst
The new list of the planet's most rich people, including Russians, published again by the Forbes magazine gives much food for thought.
None of the seven Russian legally recognized billionaires, so to speak, has any idea of science-intensive production, to say nothing of simple industrial production. Shadow billionaires whose number is no less in Russia to judge from the funds stolen by them or, to use the official language, illegally brought by them out of the country, all the more so, have nothing to do with advanced technologies, at least the Russian ones.
So, what can we state? The recommendations given by the IMF (which, as it is known, reflects the interests of the Western leading nations and, first of all, of the USA) back in 1991 to the effect that Russia should focus on the expansion of the export of energy products and raw materials have been accurately fulfilled. By sharply curtailing domestic production, Russia has significantly increased the export of raw materials, including by several times with respect for some of their types. Russia has stably become a raw material appendage of the West and, to some extent, even that of some quickly developing countries of the East.
Over the years of his stay in office, Vladimir Putin has managed to do a lot to overcome the hardest legacy left to him in almost all the spheres of life by the country's first President Boris Yeltsin. The State Duma has also passed a lot of laws that are so much needed for the country's successful development. However, the economy continues to be the country's Achilles' heel. It has to be admitted that nothing has been done yet to guarantee its successful development. It is not even the matter of percentage growth, which we like to count. What really matters is the level of development (the level of decline, to be more exact), from which the growth has begun, and also its components and sustainability. What I am preoccupied with, in particular?
President Putin understandably is not an economist. And he needn't be the one. The leaders of the countries that achieved surprising economic results over a short period of time (West Germany, Japan) were not economists either.
However, I see in the circle of the President and the Prime Minister, excuse me for my sincerity, the same notorious radical liberals in charge of economic matters. I also see the same familiar persons who have failed to prove to be competent and who have never given any realistic forecasts on the prospects of the development of the domestic economy. Moreover, they kept mum at the most critical periods for many Russians who were losing their last savings, including at the period of the rampage of financial pyramid fraudulent schemes. While world experts and sober Russian analysts warned long before the August 1998 financial and economic disaster that the financial crisis, which had begun in Asia, would inevitably hit Russia as well, our liberal economists rejected such forecasts. What some of them offer today causes bewilderment, to put it mildly.
Generally speaking, radical liberals as the reformers of such a large and complex country as Russia with its largely state economy is nonsense. A market economy can become liberal only at a high level of development, when it becomes self-regulatory. At the same time, the attempts to build the edifice of the market economy from the upper floors rather than from the foundation destroy both the economy and the entire social system. This is what we can witness today actually everywhere.
Precisely this fact and not anything else should be seen as the main reason for all our misfortunes in recent years - from non-payments, barter operations, delayed wages, the explosions of ammunition depots, the frequent crash of aircraft and helicopters to the sharp decline in public morality, the surge in crime, corruption, the sharp increase in the number of homeless children and mass army desertion. This is also the reason, if you want, for the US military presence in the CIS republics. In practice, the US is realizing the programme, about which former US Secretary of State Madeleine Albright told about in her time: the task of the USA is to govern the consequences of the disintegration of the Soviet empire.
Let me express some considerations, including proceeding from the experience of other countries.
It is extremely important to part as soon as possible with the illusions that as we create a favourable investment climate, direct foreign investments will almost flood Russia. In the foreseeable future this will hardly happen due to economic, political and partly everyday and psychological reasons. In recent years investments have largely been committed to highly developed countries with the highly developed infrastructure and, first of all, to the USA. First and foremost, these investments go to advanced, science-intensive technologies (telecommunications, information technology, biotechnology, etc.) where, apart from other things, it has become possible to secure quick returns on invested capital.
The West, and especially the USA, which guards everywhere and above all its national interests, will not help the revival of Russia as an economically strong state. This is at least because Russia is the sole country in the world which has a nuclear missile potential that is capable of destroying any potential aggressor. On top of that, the rampage of corruption does not contribute to Russia's image. The international scandal about the corruption in the higher echelons of power, including the family of President Boris Yeltsin, has also contributed to creating the negative image of new Russia. Let us say sincerely: so far we have not done anything to testify that we have parted once and for all with the "family business" in the top echelons. Apart from that, we have failed to launch a true struggle against corruption and crime. There have been only talks on that score so far.
So, what capital would like to flow in our country in such conditions?
In general, we should not overestimate the role of foreign borrowings. According to the estimates of serious economists, foreign investments normally do not exceed 10 per cent of domestic investments. And what are our possibilities for large-scale private investments in industry? They are minimal! The bulk of capital has fled the country and works for the development of the economy of Western countries while the remaining capital flows and will continue to flow into the raw material sectors.
It follows from the above that we can't do without state investments, if we do not want to finally ruin our industry, to say nothing of science-intensive industries. It is not my business to give recommendations to authorities on where to find money for investments. Let me only say how some other countries addressed this issue. First of all, they used the savings of the population for this purpose.
Secondly, Russia was the only country that allowed such a mass capital flight. All the attempts to justify this somehow are either incompetent or naive or mercenary-minded. Thirdly, a part of the rent for the use of natural resources goes to the development fund. Natural resources are always considered everywhere as the asset of the nation rather than someone's property. Fourthly, the money seized from high-profile embezzlers of public funds and corrupt officials, who are not treated excessively considerately anywhere in the world for some private or personal reasons, also go to the same fund. The rule that even a high-placed thief must be in prison is strictly complied with.
Finally, wise leaders wisely approach the issue of the foreign debt service so that its payment does not impede development and does not provoke a social explosion.
Apart from that, actually everywhere the state actively and persistently protects its economy from unfair competition. Today much has been said about the development of small and medium- sized business. Indeed, this business plays a large role in many, if not in most, countries of the world. It should be specified, however, that, first of all, only large financial and industrial groups can make a breakthrough into the new quality of the economy. Apart from that, in all the successfully developing transition economies the state created the most favourable conditions for their operation. This applies not to raw materials monopolies but to the producers of industrial and especially high-tech products.
In conclusion I would like to say the following. I believe after all that the President and the government are guided in their work not so much by the advice of radical liberals as by their own understanding of the country's problems, proceeding from common sense and the interests of Russians and Russia.
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