Published: April 22nd, 2016

Bringing Alexei Kudrin to the development of the economic program for Russian President Vladimir Putin has excited many. This means that the continued implementation of the ideas laid down in the Gaidar Forum: to sell all state property and reduce the social sphere, to "tighten the screws" for the industry as much as possible to invest in US government bonds? Although effective anti-crisis measure should be to support the real sector, and examples of the impact of such assistance are many, the authorities are trying to ignore it. Models and strategies, alternative to the  "Kudrinomik", already available on many sites, but this week they've came from such venues as Engineering Union, the Federation Council and the Chamber of Commerce. On the liberal screener and ways out of the economic nosedive told us in an interview the head of the association  "Rosagromash" and "New Commonwealth", co-chairman of the Moscow Economic Forum Konstantin Babkin.

QUECTION: A few days ago you have become a leader of the Council Chamber of Commerce of the Russian Federation on industrial policy and the competitiveness of the Russian economy. What, in your opinion, it was necessary to create a new body for? Do you have any guidance on its future work, what it will focus on?

KONSTANTIN BABKIN: Until now In the CCI lobbying work was based on a sectoral basis – there were the committees on agriculture, automotive, aerospace, etc. It turned out that each branch pulled the blanket, and there was no common view on economic strategy. Leaders of the Chamber came to the conclusion that it is necessary to create a single Industrial Council. It's nice that I was made an offer to lead it. I want to work for the benefit of economic development. Me and members of the Council will do what we  have been doing so far as part of the MEF, "Partia Dela," "Rosagromash". We see that Russia's potential is huge, there is a representation of how to implement it, now we will conduct this work to the next level, and will make decisions on important issues on behalf of the Chamber of Commerce of the Russian Federation.

Kudrin recently headed the Center for Strategic Research Council - think tank under the Russian Government. I do not think that he will suggest something sensible, we must write its development strategy, which will be an important part of our work. We will promote a new perspective on industrialization and technological development.

QUECTION: One of the objectives of the Council of the CCI - the preparation of proposals for the Strategy-2030. As we know, Kudrin are busy with its active development... How to promote the idea of economic development under the current liberal screener?

KONSTANTIN BABKIN: In January, the survey was conducted, which showed that 65% of Russian citizens want to change the economic policy, and this change is associated with the development of the industry. Yes, a barrier from the Liberals is great - they have enough money, they control the major media, occupy key positions in the Government, but it is impossible to stop the implementation of the idea which time has come, and that won over the masses. We think change will happen in spite of all obstacles, as the number of sensible people is growing, and I am speaking on this issue optimistic. 

QUECTION: It is known that the first meeting of the new Council of the Russian Chamber of Commerce will be held on 27 April. How do these ideas of industrial revival will be promoted to the next level? Where are planning to start?

KONSTANTIN BABKIN: The development of non-commodity production should be put at the forefront. This means: lower taxes, cheaper credit, support for the domestic and foreign markets, cheap raw materials, strengthening the link between science, education and production. If the company had survived in inhuman conditions of reign of "hand of the market", then with a sound economic policy, the country will receive enormous growth. It will give the society a lot of opportunities for the solution of social problems. New Industrialization and the steps to be taken for its implementation - this theme we will develop and propose solutions.

QUECTION: Recently, the Congress of the Union of Machine Builders passed, on which you have been elected to the board. The meeting showed again that industrialists aspirations radically at odds with the course of the financial authorities, said that the machine tool can be a "second needle" for the Russian Federation ...

KONSTANTIN BABKIN: The idea was that Russia sits not only on the "oil", but very firmly on the "technology needle". RF has produced 100 thousand machines per year quarter of a century ago, but now - 4.5 thousand. We have dramatically cut machine tools and equipment production, and mainly purchased abroad. This process leads to addiction. At some point, we may be denied the supply of spare parts, software updates, and other troubles can be arranged in our country during the next political tension.

In several speeches at the Congress the necessity to reduce this dependence, strengthen its own production was sounded.

Now continues adherence to benchmarks laid down by Gaidar, Chubais and Yeltsin. The Central Bank is doing everything to stall technological development. Credit rates - unacceptable sizes.

Through the words of the prime minister of the Russian Federation government, we are told that it is not going to include the printing press, and reduces the cost of credit. At a rate of 20% to develop non-primary production, to invest in long-term projects it is impossible to upgrade. Central Bank Policy is the key thing that hinders growth.

QUECTION: Support for non-commodity production just shows what brings substantial returns. For example, the Minister Denis Manturov at a meeting in the State Duma called the growth in agricultural machinery impressive. What does this mean?

KONSTANTIN BABKIN: The situation in agricultural machinery is really good. Last year, the industry has demonstrated growth of 30%, this year, the growth continued, at this stage production is loaded about 25% more than in the past.

As for the reasons, on the one hand, the devaluation boosts our competitiveness, but it is a short-term effect, which will take over for a while. On the growth influenced the emergence of forms of state support. In the first place, a program of subsidizing the purchase of agricultural machinery №1432, which reimburses farmers a quarter of the price when purchasing equipment made in Russia.

QUECTION: And the president on the Union of Machine Builders mentioned the effectiveness of the special investment contracts ... How do you evaluate this mechanism? 

KONSTANTIN BABKIN: Special investment contracts just can destroy achievements of the reasonable policy that encourages investors to produce in the Russian Federation, they will be motivated to invest in for special conditions. If common elements will leave the policy, then we go back to the old days, when we counted losses and made pessimistic forecasts.

The very concept of  special investment contracts has a contradiction. Why are we introducing a special relation to some, mostly Western, companies? For them the income tax is canceled, for this they even going to change the tax code. That means that Russian investors will be paying this tribute, and the Western armed with the state support, cheap financing, will get the privileges? It turns out that all are equal, but some are more equal than others?

If we look at the real special investment contracts, the "hair may stand on end". The state provides some measure of support for the agricultural machinery. To do this, the plants must comply with explicit requirements - have deep localization of production, produce large amounts of redistribution within Russia, have technological competence in the country. There are about 60 enterprises in Russia which satisfy the requirements. They carry risks, improve the economic situation, and then get some kind of state support. And here comes the German company Claas, who complains about our investment climate, and requests special conditions without localization. Oddly enough, this special investment contract is now supported by the Ministry of Agriculture, the Ministry of Industry and is on the high degree of consistency. The emergence of this mechanism is able to destroy all the policies that led to some increase in the industry. Obviously, to be followed by others. Thus the enterprises will be relieved of the need for the production of agricultural machinery in Russia, at the same time the sale of technology will be subsidized . This discourages investors, they will invest more in relationships with government officials, rather than in the modernization of enterprises. This is an urgent topic in our direction.

It is necessary to improve the conditions for all, not to provide a super preferential terms in exchange for promises. We will also engage in promotion of this idea, in all possible areas.

Source: Nakanune