Conversations on the edge

Published: March 11th, 2015

The third Moscow economic forum will take place at the MSU on 25-26 March. For the third year in a row ideologists of Russian industry revival gather in its frameworks. But the current MEF is different from previous ones, because its essence is not in theoretical disputes. According to official statistics, accumulated during "fat years" the reserves we have will be enough for, at best, a couple of years. So, there is no more time to talk.

 Unhealed disease

 The current government believes that it successfully coped with the crisis of 2008-2009, the first Deputy Chairman of the State Duma Committee on budget and taxes Oksana Dmitrieva noted on an anti-crisis MEF section. But in a number of manufacturing industries pre-crisis production volumes are not still restored. Russia has experienced the last crisis heavier than any of the countries of the Group of Twenty: the most significant decline in GDP, the biggest inflation, the highest share of the costs for overcoming the crisis.

 "85% of the support funds was then thrown in the financial-banking field, - Dmitrieva reminded. – And those 15% that were left to support the real economy, reached it very late. Now, in contrast to 2009, the global economy is on the rise. As for commodity export subjects, prices fell only on oil. And what we call the crisis at ourselves is a decline in oil prices and a sharp devaluation of the rouble. Moreover, devaluation, in fact, can be turned into a benefit, under certain conditions, but the government does not do it".

 The government has made a number of mistakes today, Oksana Dmitrieva states. It introduced a tax maneuver, shifting a burden of 800 billion roubles from exporters of raw materials to domestic producers and consumers. It prepares to spend about one and a half trillion roubles on additional capitalization of banks. "So that no one has any doubt what money it is, I will say that it is the budget surplus in 2014," – Dmitrieva underlined. – For non-professionals there is a version that it is government bonds, but it is a budget surplus". It introduced a trading fee that would reflect badly not only on a petty trade, but also on small and medium-size domestic manufacturers, who have difficulties with obtaining access to large retailers.

 The government is preparing to make new mistakes, Dmitrieva reckons.

 

Reduction of budget expenses will reduce both the effective demand of the population and the state investment demand. All measures of state support of the real economy are expected to be implemented through long chains of banking intermediaries, taking into account that it is unlikely to succeed to oblige them to spend these funds on the industry. The adoption of a more or less coherent programs of import substitution – the most important thing to do right now – is postponed on the summer-autumn.

 Anti-crisis measures of the government do not turn away a blow even from the “Holy of holies” – from the defense order, the first Deputy Chairman of the State Duma Committee on industry Vladimir Gutenev warns.

 

"In the frameworks of the state program of technical re-equipment, on which three trillion roubles were designated, a purchase of new machinery and equipment for the enterprises of the military-industrial complex was paid in advance," - he reminded. - Now this equipment is manufactured, it's time to pay the rest, but it is clear that due to the weakening of the ruble, we are confronted with the fact that there is not enough money. The budget does not resolve this problem yet. We see that the budget mainly deals with and focuses on the banking sphere.

 It seems that the Government has decided to wait it through and wait for the return of high oil prices, but not to modify the contours of our industry development."

Industry is the savior of morality

 "The main problem of the Russian production and industry is the accelerated growth of costs in comparison with the main competitors in the WTO, - the first Deputy Chairman of State Duma Committee on industry Valeriy Gartung stated. - From January 2009 to January 2014, prior to the devaluation, costs of Russian producers have increased by 60%.

 It is necessary to stop the rising of costs and to fix the effect from the rouble devaluation. To do this, it is necessary either to impose customs duties, or to cancel the VAT return for raw materials producers for the export of raw materials. Differentiated VAT return has successfully been used in China for the last 30 years. The lower the redistribution of export products is, the more VAT you pay. The higher the workability of the product is, the less VAT you pay, moreover, the state pays you later."

 Second. Of course, it is necessary to reduce VAT and introduce investment preferences, because it is obvious with falling economy, falling industry. VAT is, first of all, a value-added tax. The more high-tech products, the more added value you produce, the more the tax burden is. The oil tycoons, as we know, do not have it, moreover, after the export of raw materials we return them everything. If you find out how much VAT is collected from the economy and how much is returned to the oil tycoons, you will see that they actually collect back all previously collected VAT from the export of raw materials. That is, manufacturing branches subsidize oil tycoons through the current VAT system. With such a system, we will only sit on the oil. And we are talking about just the opposite".

 "We have before us the example of Ukraine, a country that has weakened very much its non-commodity production, especially the industry," – the President of the Industrial Union "New Commonwealth", co-chair of the MEF Konstantin Babkin stated. – In the end this country lost millions of working places, and when millions of people do not have employment and not feel essential, the society becomes an object of manipulation experiments that we can observe.

 Developed economy gives authority to the society and the country. If Russia was an economically, industrially, agriculturally developed country, it would offer a partnership to many enterprises in Ukraine, and anti-Russian in all senses sentiments would have much less soil in our brotherly country.

 Probably, there are countries that may exist due to trade, banking sector, service sector, but in Russia it is necessary to develop production. It brings people together, creates wealth, absorbs innovations like a sponge, i.e. makes popular science and education. When people feel essential, they are drawn to self-improvement, feel themselves and are perceived not idlers and hangers-on, but creators. Accordingly, the moral condition of society improves, the culture develops".

Not to stop halfway

 Professor of international finance MGIMO Valentin Katasonov has brought concern about the domestic manufacturer to an ideologically correct and slightly frightening end.

 "Even Shuvalov in Davos, as mantras, talked about the fact that we in no event, under no circumstances would not impose limitations on cross-border capital flows, - the economist complained. - A few days later, the Bank of Russia announced that net capital outflows in 2014 amounted to $ 151 billion dollars. Here is the price for not just a passive policy, but a conscious, let's say, phlebotomy for Russian economy".

 "Deoffshorisation of the economy is an obvious thing, not so much economic as political, because owners of offshore assets, owners of offshore accounts is the fifth column," – Katasonov believes. – They are even more dangerous business representatives than just foreign investors. And everything is clear with them.

A moratorium on repayment of foreign debts is necessary. There is an economic war against Russia, and the first people of the state declare that we will continue to fulfill our obligations in full. We either participate in the economic war, or we simply turn into a target and an object of this economic war."

 "But in strategic terms it is, of course, a mobilization model of the economy, - the head of the Russian economic society named after Sharapov summed up. – And instead of a thesis about the import substitution I offer to return our friendly to Russian people word "industrialization". Learning our own experience, not European, American, or Asian experience, we see that the society can have an effective and strong economy, only when this society sets above-economic objectives."

 Sergey Vasiliev

 Publication source: klerk.ru

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