Sergei GLAZYEV, one of the most authoritative and irreconcilable critics of the Russian government, deputy of the State Duma and corresponding member of the Russian Academy of Sciences analyses specially for Rossiiskiye Vesti the economic policy of the Russian government
Question: The recent state-of-the-nation address by the Russian President to the Federal Assembly was intended to outline the ways of resolving the problems that remain. Do you think the President coped with this task in his message?
Answer: The main leitmotif of the address is that it is better to be rich and healthy than sick and poor.
However, it failed to give an answer to the main question: how to go over from one state to another? It is not enough to say about the need to create conditions, under which citizens will earn and invest money in the country's development implementing the principle: "when you earn, this brings benefits to you and the country." However, if it were as simple as that, there would not be six and a half million unemployed people in Russia, of whom at least one million are persons with higher education and qualification, who are quite capable of starting up their own business. The problem is that there are no mechanisms for maintaining economic growth, without which the scientific and production potential available in the country works at half-capacity and quickly becomes degraded. The interests that dominate in the process of the formation of economic policy obstruct the creation of such mechanisms.
Question: Has the Russian economic course changed in the Putin era as compared to the Yeltsin era?
Answer: Until the end of the current political cycle it is hardly possible to expect any special changes in the social and economic policy. Authorities will maintain the current status quo: the structure of property and national income distribution formed in the Yeltsin period will remain unchanged and will be further sealed legislatively and institutionally.
"The oligarchic family" needs neither development banks, nor the development budget, nor anti-monopoly policy, nor any measures for investment and innovation policy stimulation limiting its monopoly on appropriating a lion's share of the national income. That is why all the efforts to introduce the obvious mechanisms of restructuring and modernisation of the economy on a modern technological basis proposed many times by the country's leading economic institutes and domestic commodity producers have failed. The concentration of resources in the promising directions of global economic development, required for this purpose, runs across the oligarchs' unwillingness to share the rent of natural resources and restrict the exportation of their capital.
Question: In his address the President stressed the importance of the payment of the foreign debt, even ahead of schedule. However, he did not say a word about the internal debt to Russian citizens. Why?
Answer: Indeed, the savings of citizens lost in the course of reforms have not been restored up to this day in compliance with the legislation that has been adopted. Moreover, the government submitted to the State Duma a bill which cancels the norms of the effective legislation stipulating the right of citizens to demand compensation at Sberbank for their savings devalued because of the authorities' decisions. Meanwhile, the state debt as regards these savings is less than the foreign debt of Russia.
The timely fulfilment of state liabilities with respect for foreign debt and, all the more so, its repayment ahead of schedule means the failure by the state to fulfil actually all its social obligations established by the effective legislation. The state has not been able for several years now to fulfil any norm of the social sphere financing as established by law.
Question: Why does everything happen precisely in this way? On whom do the results of the presidential elections in Russia depend to a larger degree, after all?
Answer: The unconditional fulfilment of obligations to foreign creditors while ignoring the obligations to the population means obvious discrimination of the latter in relation to the former even under the cynical rules of the financial market. In a country that respects itself, all the more so, in a democratic country, such a situation is simply unthinkable.
Question: Do you suggest giving up payments? But in this case our country will be immediately locked in an economic blockade.
Answer: There is an obvious solution to the debt problem, which has been used many times in world practice. We have recommended the President and the government on many occasions to offer creditors to restructure Russian liabilities with the use of the debt for investments scheme. For this purpose it is necessary to recognise Russia's inability, given the current plight of the people, to service the foreign debt in full. This will undoubtfully deal a blow on the reputation of government members as pro-liberal reformers and the West will stop applauding them. However, there will be no other negative consequences of this move. As the elementary logic and international experience suggest, the creditors will be forced to meet us half-way since they are least of all interested in the bankruptcy of such a large borrower.
Question: The President named oil exports, small business and applied science among the potential growth areas. Do you agree with such a choice?
Answer: Russia's first place in oil export is another doubtful achievement of the incumbent government. Whereas previously we were proud of our achievements in the field of space exploration, nuclear energy, science and education, today we have to content with the role of the supplier of raw materials and cheap labour force for foreign customers. The great chemist and economist Dmitry Mendeleyev who cared about the development of the Russian economy based on the introduction of modern technologies of that time said the following: burning oil is tantamount to stoking a stove with bank notes. Exporting oil is tantamount to wasting them.
Question: And what can you say about small business?
Answer: State support is undoubtfully necessary for it, including the provision of credits on easy terms, simpler and lower taxes, and access to production resources. It is possible to agree with the President's position that the conditions for the operation of small business have deteriorated due to its double taxation after the introduction of the single social tax. At the same time, it is strange to hear reproaches addressed to the Federal Assembly to the effect that while discussing the tax legislation the deputies allegedly revised the government's proposals. All the tax innovations without any exception were offered by the government and the presidential administration and were adopted by the State Duma majority controlled by them.
Question: Do you also agree with the President's assessments that the country's scientific and technical potential holds good prospects but is not used sufficiently?
Answer: Yes, of course. Scientific and technical progress as the main factor of economic development does not work in our economy. Whereas in developed countries the introduction of new technologies accounts for up to 90 per cent of the growth of the gross domestic product, in this country this figure is hardly more than 5%. This is due to the absence of the mechanisms for promoting scientific and technical developments in production, which was emphasised by the President. Such specific mechanisms - from development banks and targeted federal programmes to the methods of innovation activity financing at the micro-level have long been offered by the People's Patriotic Union of Russia. The reproach for the insufficient introduction of new technologies can be addressed to the officials of the Finance Ministry and the State Duma majority who obstruct the adoption of our legislative initiatives for innovation activity stimulation.
I hope that it will be possible in the near future to remedy one of the strategic mistakes of the tax reform and restore the financing of sectoral scientific and technical funds, which were previously formed through corporate 1.5% voluntary deductions, accounted for in the prime cost of products. Today this is the only real mechanism of external financing for the introduction of the achievements of science and technology into production. Such funds used to accumulate up to 20 billion roubles which were used by enterprises to assimilate new technologies.
Question: Whence the corruption of the state apparatus, about which the President spoke as a disaster in his address?
Answer: It is generated by the combination of irresponsibility and incompetence. For example, to whom does a federal minister answer for his work? Whatever the talks about a law-governed state, under the Constitution he answers only to the President. In the absence of any control over the activity of the executive branch, the latter begins to work according to the principle of collective cover-up when no one bears personal responsibility for anything. Hence the personnel policy principle: to employ only persons with kinship, ethnic, etc. ties or those who display personal loyalty. This inevitably means hushing up all their abuses. The powers that be are thus turning into a privileged caste which only services its corporate and private interests.
To do away with the inefficiency of the state apparatus, it is necessary to begin the notorious administrative reform from the federal government. Many posts in it are held by the people who do not even have special education in the sphere of their competence. There are clearly not enough professionals in key economic ministries and departments where corruption has become the talk of the town.
Question: Is it possible to overcome this "basic instinct"?
Answer: It is necessary to ensure society's control over the authorities and the principle of personal responsibility for the results of the work of any state official. The former can be realised in the form of parliamentary control over the activity of the government and the President, which implies the considerable expansion of the rights of the State Duma to appoint federal ministers and more explicit legal grounds for assessing the work of the government and the President. These issues are addressed in our amendments to the Constitution and the bill on the government, and also in a draft law on the citizens' right to a worthy life, which I introduced quite recently and in compliance with which the government must annually report on the fulfilment of social obligations.
The second principle, the principle of personal responsibility, must be sealed in the criminal legislation.
In particular, I submitted on many occasions amendments to the Criminal Code specifying the responsibility of state officials for budget spending, state property management and the fulfilment of other norms of legislation. However, all of them were rejected.
Question: Are you an optimist or a pessimist? Will Russia be able to overcome all its problems?
Answer: I am an optimist and on any occasion I see an opportunity to remedy the situation. The programme of economic growth prepared by the leading scientists of the Russian Academy of Sciences with my participation on the basis of fundamental research into the regularities of modern economic development makes it possible to ensure a quick and sustainable development of the Russian economy at a rate of no less than 8-10 per cent of the growth of production and the incomes of the population per year on the basis of the active use of the country's available scientific, technical and human potential. However, knowledge is not enough for this purpose - political opportunities are also necessary. I am confident that these will be available as well. This is because we have little choice: either to implement our programme of economic restructuring on a modern technological basis using the respective instruments of state stimulation of investment and innovation activity growth or to stay for long on the margins of the world market as a source of raw materials and cheap labour force.
Those who justify today's policy rejoicing at Russia's first places in oil export, capital flight or cheap labour force are in fact pessimists who do not see any other perspective for our country but to follow passively the path of degradation, the loss of national sovereignty and the ability for independent development.
(Interviewed by Igor DMITRIYEV.)