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Published: March 2nd, 2015

The President of the Association Rosagromash Konstantin Babkin participated in two governmental meetings and left in his blog a devastating record – "there will be a crysis", the Cabinet of Ministers does not cope the situation, the economy will face hard times with such leaders. We had a talk with Konstantin Babkin to find out what impressed the famous entrepreneur so much and what should be done.

WHAT IS THE SOLUTION?

- Is that right that all the Ministers are not good?

- Industry Minister Denis Manturov has reasonable ideas, Deputy Prime Minister Arkady Dvorkovich sometimes says sensible things about the support of the agriculture and real production. But in general, if we look at the government and the Central Bank, I don't believe that this team can offer a real alternative to the existing course and find a way out of the crisis.

- So do you think that the Central Bank is still independent from the executive power?

- The position of the Central Bank’s head Elvira Nabiullina is really strong, and I do not believe that the Prime Minister can give her direct orders. Both formal and informal. But the President is able to control her. The Central Bank is not hanging in vacuum, real people work there, so the President could improve the policy of the Central Bank if he had a will.

If Manturov and Dvorkovich are trying to save the situation, who ruins the economy?

I have never heard warm words addressed to producers from Deputy Prime Minister Igor Shuvalov, I have never heard reasonable things about the support of industry from the Ministry of Finance. The Central Bank itself has a non-constructive position. Those who call themselves liberals, old “Gaidar followers” – they do not understand why Russia needs real economy, and they take an appropriate position.

Once you mentioned Shuvalov, what is your opinion about his statement in Davos, saying that times will be tough, but we are still not giving up?

He said that the pressure from outside – sanctions, "color" revolutions - wouldl not lead to the change of power in the country. Here I agree with him: Russia shrinks under pressure from the outside, becomes more solid and cohesive.

THE POLICY OF THE MINISTRY OF AGRICULTURE IS INCOMPREHENSIBLE

- You did not mention the name of the Minister of agriculture Nikolay Fedorov. The impression is that the Ministry of agriculture does not exist?

- Builders of agricultural machinery have a strange relationship with the Ministry of Ugriculture. Fedorov is the Minister from 2.5 years, during this time he has not held a single meeting on agricultural engineering and its interaction with agriculture. He repeatedly said that he is not responsible for agricultural machinery. This is a strange position from my point of view, because about 40% of the success of agriculture depends of the level of village mechanization. Such detachment is harmful, especially because the Ministry of agriculture still makes decisions concerning agricultural machinery. His opinion is asked before allocation of subsidies, loans, for regulation of foreign trade. I do not approve and understand the policy of the Ministry of agriculture.

EXORBITANT RATE

- Well, what do you say as a manufacturer about raising of the key rate?

- If I were the Central Bank I would reset the key rate. This would improve the economic situation. And when the credits are 30% per annum, what now is offered to industry - well, it actually stops life. We have nowhere in the real sector a profit of 30%. I think it is a completely inadequate step. This is the main claim to the Central Bank, and the second is that they keep money abroad. They accumulate huge gold and exchange currency reserves, reserve funds, stabilization funds... this money should be returned to Russia. And the practice of... how it is called, not castration, oh, I remembered the practice of economy sterilization (sterilization is storage of reserves outside the country. - Ed.) when extra money is immediately displayed abroad, this practice should be stopped.

- Well, what about advertised support measures that will enable farmers to borrow at 10%, as if nothing terrible happened in the economy?

I was at that meeting with Medvedev, where Dvorkovich said: We will give money, subsidize everything, and you will get credits at 10%. This would be a positive step. But it is not very clear what for the interest rate is lifted up, if it is poured in money then. It is not very logical. And then at the same meeting, Nabiullina said: “I don't understand, where we will take all this money, I don’t see this money, the budget is formed, do not count much on it. Later the same idea was developed by Finance Minister Anton Siluanov: “The budget is formed money for agriculture is allocated, 20 or 40 additional billions, take this. But this is not enough to subsidize all interests on loans, to reduce the real rate to 10%. So as I have understood, the words of Dvorkovich, are not the a governmental decision, are not a programme of action.

You wrote in your blog that you will reduce production. How exactly?

There was a plan for this year to produce 4200 combines, the production plan was shortened for 500 combines. This is because the agricultural market stands now. 30% loans, embargo on grain exports, and uncertainty of what will happen next - all these shocked peasants, there are no sales, so we reduce the production.

- You have a plant in Canada, does it rescue you?

There is also difficult times now. Subsidies are also cut, the price for wheat and corn is quite low, and there is also a downturn in the market for a few months. Well, we do not practice a flow of money from Russia to Canada or from Canada to Russia, that is the money that the company earns is invested there, in the same countries. The manufacture of agricultural machinery is difficult everywhere now, there is a survival period everywhere now.

WHAT IS NEXT

So what will be with the Homeland and with us this year?

- There are two options. This government remains and acts as it acts. It means that it would be a severe crisis, because it is impossible to develop with such rates, it is impossible even to produce anything. It will be very bad for all of us, we will live in poverty, but not for a long. The second option, as in 1998, when President Boris Yeltsin decided to change the government after the crisis. Professionals came, Primakov, Maslyukov, Gerashchenko, the people with understanding, with experience in the real sector. And six months later the country overcame the crisis, and a period of development began. Unfortunately, a short period, because the government existed only 9 months, but it still laid positive foundations. I hope that Putin will let new people in the government now, four months is enough time to make key decisions on the way out of the crisis. Tax cuts, changes in the policy of the Central Bank, reverse tax reform, which will result in cheaper resources. And six months later economic growth will start. I see these two options.

Who do you see as an ideal Prime Minister?

"Well I'm not ready to say... who I would like to see... A lot of people could cope with this role. The potential is in the country, and not in the person, it is like a compressed spring. Any director of a plant would cope with this role better.

FROM THE DOSSIER OF "THE KOMSOMOLSKAYA PRAVDA"

Konstantin Anatolyevich BABKIN. Born in 1971 in the Chelyabinsk region. He graduated from Moscow Institute of Physics and Technology. Since early 90's he worked as a top manager in large companies. Since 2005 – the President of a CJSC "New Commonwealth". The company brings together 20 enterprises in Russia, Kazakhstan, Canada and the USA. Annual turnover is $600 millions. A member of the Russian Union of Industrialists and Entrepreneurs and one of the founders of the movement "Agrarian Russia”. Married with five children.

ANOTHER OPINION

Maxim ZHAROV, political analyst:

Do not put a cross on this Cabinet

- I would not put a cross on this government. Now it offers a standard set of solutions that worked well during the crises in 1998 and 2008. But then there was another foreign political environment and there were no sanctions. It seems to me that the government does not enough take into account the factor of sanctions in its work now. I hope that there will be non-standard and fresh steps. Or may be the concept of government will somehow change. But I would not think that the entire Cabinet should resign. It copes quite well.

Publication source: Komsomolskaya Pravda

Source: Komsomolskaya Pravda