#6005
[Second Issue of the Day]
#11
Moskovsky Komsomolets
January 4, 2002
CHAOS AT A PEAK
Experts comment on the current situation in Russia
Author: Marina Ozerova, Alexei Borisov, Lyuba Shariy
[from WPS Monitoring Agency, www.wps.ru/e_index.html]
WE HAVE ASKED EXPERTS IN CERTAIN FIELDS TO ASSESS THE SITUATION IN RUSSIA, ITS ECONOMY AND OTHER IMPORTANT ISSUES. ECONOMIC REFORMS, FOREIGN DEBT, OIL PRICES: WHILE RUSSIA WAS ON THE RISE IN 1999, NOW THE SITUATION IS DIFFERENT, AND THE CONSEQUENCES IN 2002 COULD BE SERIOUS.
If we were to compare the economic situation in Russia now and in 1999 - has it changed? And can we say that the government has an overall plan for reforming the economy? We asked two experts - an official and an unofficial one - to answer these questions.
Alexander Pochinok, Labor and Social Security Minister: the economic situation in Russia has improved: there is no budget deficit, pensions have risen, minimum wages has increased up to 450 rubles. The social situation has calmed down - the number of strikes has reduced 17 times. And what can be a better sign of economic development than the unemployment rate? In 1999 it was almost 10 million people, and today it is less than 5 million. Obviously, next year the tendency toward economic growth in Russia will only strengthen.
As for the global economic reform - it consists of several parts. For example, now we are driving a taxation reform, a budget and a pension reforms. Businessmen have to get less permissive signatures than before. Natural monopolies will undergo changes too. However, this year nobody will be able to see the final results of the reforms: a lot more time is needed for that. Nevertheless, I hope that in a year's time, living standards in Russia will be close to those in Hungary - one of the most stable and highest in Eastern Europe.
Mikhail Delyagin, director of the Globalization Institute: In 1999 Russia was on the rise. The ruble had been devalued almost four- fold, and Russian industry livened up; oil prices rose considerably. But the state did not take advantage of these factors, and opportunities of spontaneous development of economy have exhausted themselves. If in 1999 Russia was "going to market", now it is coming back from it, carrying its spent economic growth...
The government, having tried to work out comprehensive economic reform, abandoned the idea at last. And its tried to support interests of big business and monopolies. But their interests do not coincide with interests of the society! What will the result be? A system economic crisis, turning into a political one. At best, we will manage to overcome it, at worst - we will face chaos. When? Spontaneous devaluation of the ruble is expected in 2003-04. However, it is not likely that the state will be able to do something about it. And we needed the state social-economic program and a program for developing producing forces of the country yesterday! Roosevelt did it, and the United States not only managed to survive after the Great Depression, but became a hyper-state...
What is being done to reduce the dependence of our economy on oil prices? And what should be done?
Sergei Ivanenko, deputy head of the Yabloko faction in the Duma: Russian economy heavily depends on world oil prices and other products of slaughtering - aluminum, for example. This dependence was formed in Soviet times, and still remains. There is only one way out of this: we should earn money selling our resources, but we should not spend it straight away, we should invest it in developing the industry. First of all, those branches, which are connected with oil production and oil transportation, for example, production of drilling rigs, pipes, transport infrastructure. Increase in population income will elad to increase in demand for consumer goods - and a good stimulus for developing other industries will come into being. At that, investments can be done only by private business, and we should not hope on the state to do so. The state should secure such conditions, which would make it profitable for raw materials producers to invest money in Russia. Why is all capital leaving Russia now? Because the legislature is unacceptable, the power of bureaucrats is total...
Unfortunately, we are losing time again. Oil prices have been on quite a high level for more than a year. For more than a year our raw materials companies were getting huge incomes, but they did not want to invest anything in some big projects. And the matter does not concern personal qualities of their directors, but the conditions in the country. It means that the conditions are not very good yet. And what if the situation in world markets gets worse?
I would not like us to treat "oil" money the way they treated it in the USSR. The Soviet Union spent the money mostly on achieving military supremacy, arms race. It would be a pity if now the state spent the money on something stupid, instead of creating normal conditions for business and investments.
"GREEN" AGAINST MULTI-COLORED
Will the euro replace the dollar for Russians?
Alexander Zhukov, chairman of the Duma Committee on budget and taxation: I believe that the euro will not replace the dollar as a means of money saving. Only people going abroad, to Europe will buy this currency. In the long-term perspective if the European currency grows better than the dollar, if its rate of exchange toward the dollar consolidates - maybe, there will be more savings in the euro.
The introduction of the new currency will not influence Russian economy. It is important for the economy what rate of exchange the euro will have toward the dollar overall. A big part of our foreign debt is expressed in European currencies, and now it will be repaid in the euro. And sums of repayment will depend on the euro rate of exchange.
How much should we repay the West?
Finance Minister Alexei Kudrin has recently summed up the "debt" totals. It turned out that the state debt of Russia will be reduced to 55-60% of the GDP. For comparison: under Yeltsin in 1992-99 our debt amounted to 140% of the GDP.
This year, we will have to pay our creditors $13.75 billion, including $1.448 billion to the International Monetary Fund. After these payments Russia will owe to the IMF another $7.69 billion. Now Russia is among the countries with "manageable volume of debt", and the debt situation in Russia corresponds to the standards of the European community.
MISSILE FAIR
Which branches of Russian industry, apart from raw materials, are competitive in world markets?
Andrei Kokoshin, deputy chairman of the Duma Committee on industry, building and high technologies, the Fatherland All Russia faction: Among the most perspective are such branches as information science: building Russian super-computers for modeling complicated physical processes, neuro-computers and so on. Civil aviation - the project of an AN-70 plane may interest foreign customers. Another competitive product is missile technologies, carrier rockets for launching satellites, and, of course, space systems - connection, navigation, emergencies... Nuclear energy and nuclear safety, means of ultrahigh frequency, laser and biotechnologies...
We have achieved specific domestic success in all these industries, there are constructors' schools of world level. What we really need is realization of big national programs in these spheres. But in contrast to former, purely state programs, private enterprises should also participate, and we should define where to invest money, reckoning with political factors, which have always played a special role for high technologies.
What consequences for our economy could there be from a real union between Russia and Belarus?
Georgy Boos, deputy speaker of the Duma, the Fatherland All Russia faction: Everything depends on the principles of the union. If a common Central Bank is established, a common currency is introduced, common customs regulations and common requirements for the budget then there will be no negative consequences for the Russian economy. There will be only positive ones: both Russian and Belarussian industries will get access to new markets, resume certain economic contacts, which existed in the Soviet era, and were lost. Of course, over the past decade many of such contacts have been destroyed, but it is not so bad: if there is profit, money will flow in, and if one businessman does not understand where the profit is, the other will, and he will profit by it.
Apart from all this, the spirits of our people will rise - both Russians and Belarussians. Improving the economy by 6% or even 15% will not be felt at once, while increase in morale will happen much sooner and is more effective.
But while integration in economy is a slow process. Right now there is a customs border between Russia and Belarus. Of course, it creates barriers for trade and hinders integration...
(Translated by Daria Brunova)
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