#16
Parlamentskaya Gazeta
Nos. 8, 9
[translation from RIA Novosti for personal use only]
WHO HOLDS THE REINS OF THE RUSSIAN ECONOMY

Tatyana KORYAGINA, D.Sc. (Economics), full member of the Academy of Natural Sciences Economic issues seem to interest one and all now. People want to know about the state of economic affairs in this country and prospects for the Russian economy. Our interlocutor today is Tatyana Koryagina, D.Sc. (Economics).

Question: Let us start with the most topical questions of whether economic growth has started in this country and how weighty it is.

Answer: The state of the modern Russian economy is a very complex and unique phenomenon that should be thoroughly investigated. I cannot agree with the optimistic assertions that everything is all right here and the economy is coming closer to stable growth.

Question: Do you believe there is no real growth?

Answer: Economic growth in a state where the main driving forces are resource sectors and the export of raw material resources, accompanied with a complete neglect of the manufacturing industry and the social sphere, is malignant growth. On the other hand, I don't agree with those of my colleagues who criticise everything in modern Russia. I think this is explained by a lack of knowledge of the depth of current processes, or a purely political approach. There are some successes but the growth rates are not so high as they should be.

Question: What's the problem then?

Answer: Studying the processes occurring in our economy, I can say that the Russian economy today is a phenomenon on a much greater scale than that covered by statistics. Using the international methodology, the State Statistics Committee officially makes adjustments to the shadow constituent within the framework of settlements in the system of national accounts; however, they take account of just 21-25 percent of gross domestic product (GDP). By my estimates, another 15 to 17 percent should be added to them. It seems that nothing will change if we ignore the 17 percent of GDP falling on shadow capital. It is shadow capital in any case. However, this distorts the entire picture. These figures show that there is a great "economic pillow," a large section of economic life remaining in the shadow.

It is not taken into account, but it does exist, with shadow money flows formed within the framework of its activity, the circulation of capital and changes in families' incomes. A larger part of this shadow capital - some 20-26 billion dollars a year - is taken abroad.

Question: What is shadow capital? Where does it come from?

Answer: According to the international methodology of national accounting, the shadow economy has three components. The first one is the informal economy which includes household work and small-scale craftsmanship. The second one is hidden production, with medium-sized and big enterprises concealing part of the products they produce. The third one is the criminal sector. By using my methods, it is not so difficult to find that capitals circulating in the criminal sector are far greater in their absolute volume than those circulating in the first two sectors of the shadow economy. The question is how we could take account of the criminal sector. It includes prostitution and drug trafficking, underground production of weapons and their underground sale, and illegal financial operations, i.e., all that is banned by law and punishable under the Criminal Code as economic crimes. However, criminals who obtained their money illegally, as well as their clans and families, use their "dirty" money to take part in the "clean" economy. The problem is that there is a criminal element here and that the criminal money is working.

Question: How could the criminal constituent in our economy be reduced?

Answer: Certain phenomena occurring in the Russian economy today can change a great deal in our country's economic development.

Young, very active people have come on to the surface. At present, they are still supporting the top echelon of managers of the older generation who have found the present situation more familiar because informal economic relations, or the shadow economy, existed before as well.

At the turn of the 1990s, the shadow economy accounted for 10-15 percent of GDP. Besides, the older generation looks at our estimates concerning the shadow sector with greater understanding than the middle-aged and younger generations. Young businessmen represent a new economic potential, they are not so eager to work under criminals.

Question: Is there any way to help these businessmen?

Answer: Money goes into the shadow because of high taxes, and though income tax is the lowest in this country (13 percent), we have very high social taxes. If you have a legally registered workforce and legally pay wages to your employees, it is very difficult to add to what you pay another 36 percent or so as a single social tax (ESN).

However, taxes are not the only thing. A favourable institutional environment is needed to get capitals out of shadow. Our state, even if it wanted to improve the situation, is restricted in its activities since the reins of power in the economy have been seized by organised crime. Criminal structures have a real advantage, because when the state is just going to restrict them, they are ready to violate the law. They do not have any scruples with regard to society; they bribe those state management structures which can and must find and punish them, and they go unpunished concealing huge money flows which are circulated there.

Question: Does this mean that they should be forgiven and legalised?

Answer: Many people say this today: since we cannot combat this, since we are helpless in this case, let us do what the criminal structures want us to do, that is, give them complete freedom.

This is what the liberals demand of us. However, it should be realised that criminal structures do not legalise their activities because their capital is criminal and destructive by definition. It will never express state interests. True, a great many individual and corporate producers would like to work honestly today because they do not think like criminals do. However, they cannot work honestly because the criminal structures have already created a specific environment.

Question: Is there no way out of this situation?

Answer: The way out should be, primarily, political rather than economic. It is impossible to oust organised crime from "below" when over the past ten years people with the gangster mentality and close ties with organised crime have come to the top. They are creations of organised crime both in spirit and in terms of direct guidance. So the "cleansing" should be started from the top, and the main thing is not to have these people at the helm.

This is our key problem. Today, many people ask themselves: who is Putin, whom does he side with? Russian people place all their hopes on the president today, and I also hope that he'll be able to end this confrontation.

Question: What level has organised crime reached today?

Answer: It exists in the government, at least there is its influence there, and this influence is already total. The thing is that the existing mechanism of economic policy allows organised crime to feel fine today. To prevent organised crime from feeling comfortable today, the government must pursue economic policy accompanied by stringent state control. However, this requires a different state model, and a different economic, industrial and social policy.

Question: Does this mean that the confrontation is still there?

Answer: There can be no peace between thieves and the people. If some persons think that they will overcome this problem by investing more money in the formation of ideology suitable for criminal structures and creating an image of an attractive gangster in the media, they are mistaken.

Question: Today some economists say that the state is being destroyed...

Answer: True, the destruction process is under way, and this is a historical moment for Putin to step in. If the president demonstrates the great-power position, people will understand him at the level of intuition, and I believe that the Nord-Ost events were indicative in this case. The media threw mud at Putin as was the case with the Kursk submarine, but people sided with him. All this looked like a coup attempt, an attempt to remove Putin from power.

Question: Who is behind all this?

Answer: This isn't a simple question. They could be called a "third force", a force that destroyed the Soviet Union and is now destroying Russia.

This behind-the-scene force has a wide range of interests: it is fighting for a new world order, and it doesn't need a strong state; what it needs is chaos and power. This covert force was behind the September 11 attack as well. It has its "soldiers," they are numerous and occupy suprastate positions.

Question: Where may the attack come from?

Answer: I believe that the strike will be aimed at the stock and currency market and the energy market, and later at the oil market. Stock indices will go up and down, as well as oil prices, there'll be chaos in the currency sphere. This will result in economic chaos, including that in the United States. Meanwhile, the United States is getting ready for this: multicoloured dollars have already been printed and stocked in banks, and the United States believes that the new dollar will become the main world currency.

Question: What is to happen to the present "green" dollars?

Answer: The whole amount of them will be "cut off" and people will be told: "That's the end of it, we have other dollars now." Therefore, my advice for those who keep dollars is not to take the risk and keep their savings in roubles in the Savings Bank.

Question: The thing is that the people fear the repetition of the default and the devaluation of their savings.

Answer: Inflation under Gaidar was a different kind of problem. There won't be another case of total inflation, when all the Soviet people were deprived of their money. However, this is my personal point of view, and I don't want to impose it on anybody.

Question: Today there's much talk at all levels about construction of a civil society. What kind of society should it be?

Answer: The Western model of "every man for himself" is not for us, not for Russians or Moslems. Why have Russians always lived side by side with Moslems? Because they are collectivist and communal people at the genetic level. Surely, there are a great many strong personalities among Russians, we've always had rebels who became trailblazers later. Such people can do a lot. If you want to become a farmer, do this, a cooperator - why not? This is another paradigm, another system of views. However, civil society in Russia can develop successfully only through the improvement of the system of common interests.

Question: What about the multinational composition of the Russian state? The Russian Orthodox Party proposes that the House (formerly Soviet) of Nationalities be restored and a treaty signed between Russians and other peoples.

Answer: This should be done by all means. Such a thing was regarded as positive phenomenon in the Soviet Union. It will be difficult to do this today, when all our enemies are seeking to set our peoples at loggerheads and deride the very idea of their unification. However, Russia needs this very system of civil society, within the framework of its archetypes. The House of Nationalities could embody this idea at the parliamentary level.

(Tatyana KORYAGINA was interviewed by Pyotr ZHULYA)