Przeczytal pan? A ja nie.
SB
----- Original Message -----
From: "roman kafel" <[EMAIL PROTECTED]>
To: "Multiple recipients of list prawica" <[EMAIL PROTECTED]>
Sent: Tuesday, March 06, 2001 4:03 AM
Subject: Prawica: Plan Iszajewa-Glazijewa
> Przesylam Panstwu!
> Dyskutowany w kregach politycznych Rosji gotowy plan rekonstrukcji
> gospodarki, prosze o zapoznanie sie z glownymi zalozeniami planu. Plan
> jeszcze nie publikowany.
>
> _ The Ishayev Report: An Economic Mobilization Plan for Russia. There
> presently exist, at the highest level of the Russian government, at least
> two, widely divergent economic programs for the coming decade. The first
is
> the program drawn up by Minister of Trade and Economic Development German
> Gref, which has been revised and amended countless times over the last
year,
> but never given explicit approval by Russian President Vladimir Putin. The
> second was authored last year, at the request of Putin, by a group of
> leading Russian economists under the auspices of Khabarovsk Gov. Viktor
> Ishayev and presented by Ishayev on Nov. 22 at the first full meeting of
> President Putin's newly formed State Council, a top-level policy body
> bringing together representatives of the central and regional governments
of
> Russia. The Ishayev program is summarized in a 100-page document entitled
> "Strategy for Development of the State to the Year 2010." This document,
> although widely circulated in Russia and the subject of heated
> behind-the-scenes debates, remains unpublished, and very little of
substance
> has been written about it in the West until now. Given its obvious
> importance, and the likelihood that it will exert a significant influence
on
> the economic policies of the Russian government in the coming period, we
> present below a fairly thorough summary of its key points, followed by
some
> comments from our side; at the end of our article we provide extensive
> excerpts from the original <2809ishayevreport.html>, in our translation.
The
> Ishayev Program vs. Gref's Officially, Ishayev's program is supposed to
> "complement" but not contradict the Gref program, which at least pretends
to
> represent current government policy. In its introduction, the Ishayev
paper
> characterizes itself as "an important supplement, and a new basis, for the
> current and medium-term macroeconomic program, which the federal
government
> is developing and carrying out in practice." In reality, the axiomatic
> principles underlying the Ishayev document, are fundamentally and
> irreconcilably opposed to those embodied by Gref and the rest of the
> neo-liberal group dominating the government of Prime Minister Mikhail
> Kasyanov. This fact was emphasized in public by one of the main
contributors
> to the Ishayev program, the noted opposition economist and head of the
State
> Duma (lower house of Parliament) Committee on Economic Policy, Sergei
> Glazyev. Where the Ishayev report bases itself implicitly on a notion of
the
> "general welfare" of the Russian population, Gref's outline emphasizes
"the
> rights of property." In the former, the state has the immediate
> responsibility to launch a forced recovery of physical production and
> consumption, mobilizing the resources of the nation to that purpose, and
> channelling investment in a dirigistic fashion into infrastructure,
> agriculture, and industry. The latter, on the contrary, would degrade the
> state to the status of legal arbiter, setting and enforcing rules of
> competition among private businesses and leaving the rest to the supposed
> magic of the "invisible hand." The Gref program is oriented toward
> attracting foreign investment, the Ishayev program toward expanding the
> nation's own productive forces. In a word, Gref's conceptions embody the
> axiomatics of the "British System," while the Ishayev document reflects,
in
> a certain approximation, the standpoint of what the great 19th-Century
> economist Friedrich List termed the "American System"--a tradition
> historically best represented in Russia by Sergei Witte's Lectures on
> National Economy. That said, the Ishayev program does not address issues
of
> principle per se, but rather sets forth a series of concrete policy
criteria
> and practical measures to be implemented by the Russian government,
starting
> at the earliest possible moment, in order to realize an economic
> mobilization of the country over the years immediately ahead. With this
> limitation, it is doubtless the most competent document of its kind to
have
> emerged so far in the internal economic debate in Russia. The document has
> particular significance, not only for its intrinsic merits and for the
> obviously considerable support it now enjoys--including, notably, among
many
> liberal circles in the country--but also because it reflects the problems
> and viewpoints of Russia's vast regions. The latter aspect is exemplified
in
> the person of Ishayev himself, who represents a strategically important
> region bordering on China along the Trans-Siberian Railroad, and who has
> been associated with efforts to develop the Eurasian Land-Bridge system of
> infrastructure corridors stretching from Europe through Russia to the
> Pacific. Ishayev's presentation to the November 2000 State Council
meeting,
> presided over by Putin personally, occurred in the wake of several
> breakthroughs in Russian's eastern diplomacy, including the President's
> visits to China, India, and Japan. It was these and related developments,
> coming in the context of the growing evidence of an ongoing collapse of
the
> Anglo-American-centered world financial system, that provided the context
> for Putin to, publicly at least, entertain the possibility of a radical
> shift in economic policy in Russia. Unfortunately, according to press
> reports, President Putin has now called for the Gref and Ishayev programs
to
> be "harmonized" into one--an axiomatic impossibility!--reflecting once
again
> Putin's well-known tendency to maintain ambiguity and avoid decisive
actions
> as long as possible. But time is running out for Russia. The catastrophic
> collapse of energy and other infrastructure in the Far East and other
> regions of Russia, leaving tens of thousands of Russians to freeze in
their
> homes, is one of many signals, that the country might not survive another
> year of vacillation. The time has come for an all-out economic
mobilization.
> We now turn to the content of the Ishayev report. People First The
> introduction to the paper emphasizes the need to define not only the
> quantitative but also the qualitative characteristics of economic growth.
> The criterion for growth is improvement in the concrete well-being of the
> population--an implicit polemic against the use of merely nominal or
> monetary measures of growth by the so-called liberal reformers. The key to
> high rates of real growth is investment in the technological modernization
> of the economy. The first chapter, on "Social Consolidation as the Basis
for
> the State's Development," is a thoroughly worked-out argument to the
effect
> that the consolidation of a strong Russian state--a declared goal and
> evidently main policy criterion in the mind of President Putin--is
possible
> only on the basis of an economic policy which guarantees the well-being of
> the majority of the population, and not simply a minority class of
> entrepreneurs and businessmen. The paper notes the growing split within
> Russian society, not only in terms of income and living standards, but
also
> in values and perceptions. This gap is undermining the very basis of the
> state. Russia has taken on a "two-tier" social structure, typical of a
Third
> World country. A large part of the population is now living in permanent
> poverty and without motivation. Without a strong middle class, there can
be
> no basis for stability. Two approaches to resolving the problem of the
> two-tier social structure are reviewed. The first is basically for the
state
> to increase overall social expenditures in order to alleviate the hardship
> of the population. But even apart from the scarcity of budget resources,
> this by itself would hardly eliminate mass poverty. The second approach
> (favored by Gref et al.) is for the state to cut back on many categories
of
> social expenditures, concentrating on ensuring a bare existence for the
most
> needy, and leaving it to the citizens to pay the rest themselves. But this
> approach is illusory, the paper points out, because there is no broad
middle
> class able to pay for the services now covered by the state. Echoing the
> concept of "harmony of interests" put forward by Abraham Lincoln's
economic
> adviser Henry Carey, the Ishayev paper proposes still another alternative:
> the realization of high rates of real economic growth oriented toward
> improving the life of the majority of the population, creating a "mass
> middle class," as a new basis for social solidarity. This requires close
> cooperation among the citizenry, the state, and entrepreneurs. As opposed
to
> the idea of a minimum, subsistence level of existence, this means to
ensure
> that a majority of the population can achieve a normal or standard
> consumption level corresponding to decent living conditions, including
> quality housing, consumer durables, the traditional summer cottage, an
> automobile, education, and health care. Making such a living standard
> attainable by the majority would provide a major stimulant for the
economy,
> as well as an urgently needed increase in the motivation of the labor
force.
> Reaching the proposed level of consumption, however, dictates the need for
> high rates of growth of the real, productive sector of the economy, which
in
> turn depends on achieving a "break-out" in terms of investment. This means
a
> "forced increase in capital investment" on the order of 8-9% growth per
> year, as well as state support for key sectors, including agriculture and
> infrastructure areas such as electricity, which are not able to generate
the
> required rates of investment themselves. The key to high rates of real
> growth, the paper emphasizes, is the domestic capital goods
> (machine-building) sector. A Three-Stage Economic Mobilization In a
chapter
> on "The Concept of Development," the Ishayev paper makes very clear, that
> the modernization and development of domestic manufacturing and processing
> industries are the key to the nation's future--and not the mere export of
> energy and raw materials. Only the development of industry can provide a
> decisive improvement in the life of the citizenry. Not raw materials, but
> the manufacturing sector, including the export-oriented branches of
> industry, constitutes the most important material resource of Russia.
> Especially important, in a period of economic recovery, is a mobilization
of
> existing technological potentials in industry, construction, and
transport.
> Besides exploiting those potentials in full, it is crucial to stem the
flow
> of capital out of the country, estimated at $15-20 billion per year, and
to
> recycle all available capital in a mode of expanded reproduction of the
> economy as a whole. The paper goes on to "inventory" the potentials still
> existing in the country, which could be tapped in an economic
mobilization.
> These include: Unused production capacities, especially machine tools and
> infrastructure, which could be brought on line as soon as demand is
created.
> Energy supplies, metals, raw materials, and transport capacity will not
> present major bottlenecks for an economic mobilization. The only really
> serious limitation is insufficient amounts of qualified labor, especially
in
> the manufacturing sector. Industry has lost a major part of its workforce
as
> a result of the last ten years' economic collapse. Recovering the labor
> force will take resources and time. The increased income in some
> traditional export sectors of the Russian economy (for example, petroleum
> and military technology). The main task of economic policy is to assemble
> these growth factors. With proper policy, the physical output of the
Russian
> economy could be increased by 25-30% in the next two to three years alone.
> There are also limitations, however. These include insufficient internal
> demand, and the extreme scarcity of financial resources in the real
sector.
> Furthermore, the increased income of export-oriented sectors over the last
> year has mainly fed into the capital flight. A large percentage of
companies
> in the real sector operate at very low (or negative) profit. Apart from
the
> issue of foreign debt, there are serious internal obstacles standing in
the
> way of rapid expansion of investment. Chief among these is the loss of
> strategic development orientation in most branches of production, which
have
> been forced to operate in a mere "survival mode," at best, over the last
ten
> years. The worst affected is the technological core of the
machine-building
> and capital-goods industries, and agriculture. In addition, large amounts
of
> resources are not readily available for internal development, because they
> are "tied up" in the consumption and investment cycle of the exporting
> sector, which, because of the crisis, has a structure unfavorable to the
> development of Russia's economy. All of this means that in an economic
> mobilization, the scope for expansion of production without large-scale
> capital investment is limited to the first two to three years; after that,
> available margins of unused productive capacity will have been exhausted.
> The mobilization could not be continued, at that point, without
large-scale
> investment, above all in the capital-goods sector. Only the state is
capable
> of initiating the required investment process, on the basis of a long-term
> program. One aspect of this is the necessity of state regulation of prices
> charged by the "natural monopolies" (including energy). The Ishayev paper
> states in no uncertain terms, that the task of these companies (including
> Gazprom) is to "provide a foundation for the economy of the Russian
> Federation"; their right to profits is a function of fulfilling that task.
> In other words, the natural monopolies have no right to loot Russia's
> economy; instead, their interests must be subservient to those of the
> national economy as a whole. A key bottleneck for increasing investment in
> the real economy, according to the Ishayev paper, is the lack of
development
> of the financial sector. The financial system of the country must be built
> anew, it states. More broadly, it is necessary to restore the basis of
> trust, which is needed in financial and other agreements, including
> guarantees on bank deposits and measures to ensure the honoring of
> contracts. (These aspects are developed more extensively below.) Provided
> the required policies are implemented, an economic recovery in Russia will
> occur in three successive stages. In the first stage, existing idle
> production capacity would be brought on line and fully mobilized. During
> this stage, lasting not more than three years, a yearly growth of 8-10%
will
> be realized. Decisive for the success of economic recovery, is to set into
> motion, parallel with the mobilization of idle capacities, a huge wave of
> new capital investment into the productive sector of the economy. The
> second, transitional stage is marked by the exhaustion of margins to
> increase production on the basis of existing capacities. Emphasis shifts
> toward developing new capacities. Nominal growth slows to 2-4% per year,
but
> the quality of the growth improves with the influx of higher levels of
> technology. Provided the investment process has already been properly
> initiated during the first phase, the second stage should last two to
three
> years. The third stage, which might begin in 2005, is a transition to a
> "steady trajectory" with solidly sustained growth of 5% per year. The
> Responsibility of the State The Ishayev report puts forward an axiomatic
> standpoint directly opposed to that of the Gref program and the so-called
> liberal reforms of the 1990s. Noting the disastrous effects of the
> "illusions of the 1990s" concerning the supposed benefits of deregulation
> and privatization, the report lays out the urgent requirements for
> intensifying and expanding the scope of state intervention into the
economy
> and social spheres, as the precondition not only for the economic recovery
> of Russia, but also for the creation of any truly functional market
> structures. The key areas of intervention must include not only
> "traditional" spheres such as defense, education and scientific research,
> essential social services, etc., but also an increase in the scope of
state
> responsibility for the economy as a whole. This includes exclusive state
> responsibility for the military-industrial complex, and the agricultural
and
> infrastructure sectors. Notable is the emphasis on state support for the
> development of "dual-use" technologies (i.e., technologies with important
> civilian as well as military application), including "new means of
> transport" in the context of state support for a thorough modernization of
> the military-industrial complex. Development of basic physical-productive
> infrastructure--heating and electricity, pipelines, electricity, road and
> railroad transport, water transport--should be the central focus of the
> attention of the state. The rights of the population to essential
> infrastructural services and the basic unity of Russia's vast territory
must
> not be sacrificed to irresponsible plans for privatization of
> infrastructure. State financial support for rural electrification,
> gasification, road-building, and education and medical facilities is
> proposed as a key method to promote the rural economy which involves
> one-third of Russia's population. In addition, it is necessary to draw up
an
> appropriate strategy for developing the state sector itself, which
includes
> much strategic industry and infrastructure. The state sector is crucially
> important, not only because of the commercial goods it produces, but above
> all for its role in the formation of strategic markets, in generating
> employment, and expanding the tax base. At present, it is important to
make
> an inventory of the state sector and to draw up strategic investment plans
> for its development. In this context, the state is a very special sort of
> investor. It judges investment projects not only in terms of their direct
> profit, but in terms of the overall benefits of their realization for the
> economy as a whole. For this reason the state has a special interest in
> projects for development of infrastructure. This point is further
developed
> in another section of the paper. The report also calls for the formation
of
> a "civilized market for land" (at present, sale of most land is
prohibited),
> but only once a broad infrastructure of land banks under state patronage
has
> been created in the country. Productive Investment Under the heading
"Basic
> Elements of Economic Policy," the Ishayev paper addresses a number of
basic
> problems affecting the productive sector of the Russian economy, which
must
> be resolved if the economic recovery policy is to be successful. A key
> problem is the lack of a financial and investment structure able to meet
the
> needs of large-scale industrial development. Industrial investment is
> crippled by the crisis of confidence in the economy, and by the
excessively
> high risks in the investment cycle, especially in the science-intensive
> branches of industry. It is proposed that the state create several new
> financial institutions and instruments, including institutions for
> evaluation of debt quality and of investment projects. These would have
the
> included function of reducing financial and economic risks of investment
and
> increasing the reliability of cooperative agreements; mediating between
> entities participating in the investment cycle; providing banking,
> insurance, and commercial information and technological support needed to
> reduce the losses in investment and production in the real sector of the
> economy; and restoring a "system of confidence" in the economy. The legal
> system has a major role to play in restoring confidence in business
> agreements, including by providing for appropriate sanctions in case of
> non-fulfillment of contractual obligations. This can only be effective,
> however, if the state itself provides a positive, rather than a negative
> example. Unfortunately, through its too-close-to-direct involvement in
> business activity (in plain words, corruption), the state has become a
major
> violator of business ethics and responsibilities. Therefore, restoring
> confidence must begin with the state itself, including meeting budget
> obligations. The state also has a crucial role to play vis-`-vis the
entire
> investment cycle of the economy. The Ishayev paper emphasizes that there
is
> at present no way to achieve a real increase in investment activity in the
> productive sector, without state intervention to reduce risks in the basic
> sectors of investment. In particular, the large amount of excess liquidity
> which has accumulated in the banking sector, cannot be channelled into
> project investments without active participation of the state. In addition
> to the unused surplus liquidity, another major source of financial
resources
> would be provided by a further reduction of capital flight, which could be
> realized by strengthening the role of the Ministry of Taxes, in close
> coordination with the Central Bank, in the domain of capital control and
> liquidation of fictitious banking operations. On the one side, companies
> must be pushed to initiate suitable investment projects. On the other
side,
> big banks are in principle ready to finance projects in the productive
> sector, but are held back by lack of mechanisms for searching out and
> evaluating suitable projects. This is particularly the case for Sberbank,
> the state Savings Bank, which holds 75% of the savings of the population
and
> is ideologically oriented toward supplying credit to the real sector. But
of
> the 80 billion rubles of savings deposits held by the Central Bank,
> three-quarters belong to Sberbank, which is not able to use them. In the
> past, pressure by the government on banks to provide credit to the real
> economy has led, in the opinion of some banking experts, to a significant
> worsening of the quality of bank assets, particularly those of large banks
> with state participation, including Sberbank. No mechanisms are
functioning
> to channel excess liquidity into economic activity. The main cause of lack
> of credits to the real sector is the high level of micro- and
macroeconomic
> risk. The main reason for the high investment risk is overall lack of
> confidence in the economy and in the state, as well as in potential
business
> partners. Thus, supplying confidence in the future is key to everything
> else. These risks must be reduced by intervention of the state. The state
> must take upon itself directly a part of the investment risk, while at the
> same time increasing investor confidence through suitable institutional
> measures. The Ishayev paper elaborates its case for developing the banking
> system, as opposed to capital markets, as the main vehicle for supplying
> credit to the productive sector. Two alternative types of credit systems
are
> compared: one employing financial markets as the main sources of credit,
as
> prevails in the United States today, and the other, a system based on the
> dominant role of banking, as exemplified by the French or Japanese models.
> The latter is judged more suitable for Russia under present conditions.
One
> reason is, that an economy based on bank financing provides much greater
> scope for regulation and--provided the Central Bank is actively involved
as
> a "creditor of last resort"--places no limit on the mobilization of
> resources. However, the Russian banking system in its present form is not
> able to perform the necessary functions, and the positive economic
> tendencies of 1999-2000 have been based essentially on self-financing of
> real-sector companies, under conditions of chronic under-financing of the
> productive economy in general. A key problem is the high systemic risk in
> banking operations, which has led to interest rates that are beyond the
> reach of the real sector of the economy. Eliminating the systemic risks is
> therefore a crucial task for the state, which has so far exploited only a
> small part of the many instruments potentially available to that end.
These
> include a series of institutional measures to restructure the debt
> obligations by the productive sector, and to increase the quality of
> real-sector debt; creation of a system of guarantees, including state
> guarantees, to limit credit risks; and use of refinancing by the Central
> Bank to offset the risks of liquidity imbalances. A particularly important
> role is seen for the creation of new institutions for financial and credit
> rating, with active participation by the state. A crucial proposed element
> would be an institution to provide expert evaluation of commercial
projects,
> which might operate as a hierarchically structured network including
> licensed financial experts in banks and other institutions. This
institution
> would play a key role in the investment cycle. The Flow of Credit to the
> Real Economy At present, an array of factors impedes the flow of credit
into
> the real economy, including excessive interest rates, lack of an adequate
> repertoire of ruble-based financial instruments, companies' low revenues,
> speculation, lack of adequate refinancing of commercial bank loans by the
> Central Bank, high systemic risks, and lack of cooperation between banks
and
> clients. These problems cannot be solved locally. However, a fully
workable
> approach does exist at the level of the banking system as a whole, with
the
> active participation of the Central Bank, and large commercial banks under
> state control. Among the measures proposed are, most notably: expansion of
> refinancing of commercial banks; providing credit to the productive sector
> through a system of discounting and rediscounting of promissory notes and
> bills of exchange by companies included on a Central Bank list of those
with
> the highest credit rating; reduction of interest rates to levels not
> exceeding the real rate of profitability of the economy; and creation of
> channels to direct the flow of monetary emission into the needs of
> production. These measures are to be combined with the overall process of
> restoring the role of money in the economy, reducing that of non-monetary
> payments and transactions (i.e., barter and payment with goods) which have
> become rampant in the crisis-torn economy. The suggested approach is
> essentially as follows: The state, through the Central Bank, allocates a
> portion of the surplus reserves, to be given out as credit via commercial
> banks to companies in the real sector on the basis of a system of "credit
> auctions." Companies submit business plans and projects to the commercial
> banks, which choose the most viable proposals for submission to the
> "auction," which in turn provides for a competition among the business
> plans. The result should be, that the most viable projects win out.
Interest
> rates for such credits should be regulated in accordance with overall
> economic policy, taking account of inflation and the expected rate of
return
> for the projects. While emphasizing the role of banking credits, the
Ishayev
> paper also calls for developing the capital markets, including a market
for
> corporate bonds. It notes the ironic fact, that precisely the so-called
> market reforms have failed to create the kinds of healthy, regulated
markets
> needed to service real economic growth. In this context, the popular talk
> about deregulation is misplaced. What Russia needs is debureaucratization,
> not deregulation. For example, in Russia there is no effective market for
> commercial credit. Without state intervention, there is no way to get such
> markets functioning in the short term. The state should ensure a
> concentration process of capital markets, from small, dispersed
investments
> characterizing the present-day pattern, to large-scale projects, thereby
> increasing the efficiency of investment. The state should further
stimulate
> the creation of investment banks and investment funds, as well as
developing
> the insurance market. Raising Wage Levels and Demand in the Economy State
> policies to stimulate end-product demand in the economy are regarded as a
> key instrument for the economic recovery of Russia. Without more demand,
> production will remain on dead center. A priority for government economic
> policy is to increase the scope of possibilities to expand and direct
final
> demand, which are presently quite limited and restricted mainly to the
> purchasing powers of the state itself. The experience of developed
countries
> shows the ways they influence the consumption demand of households and the
> investment demand of corporations. Special attention is given in the
Ishayev
> paper to a state-controlled increase in wage-levels as an instrument to
> expand demand. It is noted that the setting of minimum (or normative)
wages
> provides a means to exert a "soft" influence on the entire income scale
and
> to influence household demand. Such an approach is different from an
> artificial pumping of monetary demand, but rather provides a mechanism to
> distribute already created surplus value. Besides this, it is well-known
> that the present low general level of wages presents a major barrier to
> raising the competitiveness of industry. A healthy market economy is only
> possible when the worker values his employment. The state must dictate to
> the private businesses that level of wages, which is judged suitable from
> the standpoint of society as a whole. This cannot be a mere subsistence
> minimum, but rather a standard wage providing an appropriate living for a
> worker of standard qualification. However, given the enormous differential
> of income of the population between different regions of Russia, it is
> practically impossible to define a uniform standard of real income (i.e.,
in
> terms of consumer market baskets). Under present conditions, a reasonable
> approach is to define standards for a given region and branch of the
> economy. Naturally it is not possible to raise wages suddenly overnight,
> without bankrupting companies. The state must synchronize the raising of
> wage levels with the rate of economic growth. Consumer credit is another
> major instrument to improve the material standard of living of the
> population and stimulate demand. The paper proposes a major development of
> consumer credit to households, particularly for purchase of domestically
> produced, long-lived household goods, automobiles, and housing. This will
> generate demand and additional income in the economy, and stimulate the
> motivation and growth of productivity of labor. It is proposed that the
> Central Bank open a special credit line to Sberbank for this purpose. At
> first, a major role would be played by guarantees provided by employers of
> persons receiving consumer credits. Companies and local entities could be
> tapped as additional resources for credit to purchase automobiles and
homes.
> Tax and Fiscal Policy Here we merely note some of the most important
points.
> The tax burden on the real productive sector is today so heavy, that it
does
> not even permit simple reproduction. Furthermore, a substantial part of
the
> economy, especially the shadow economy and financial sector, essentially
> does not pay tax at all. The tax rates for productive businesses must be
> reduced to a level which allows for expanded reproduction of the real
> sector. The paper notes that a well-planned and executed reduction of
taxes
> can lead to an increase in tax revenues not only in the future, but also
> immediately, through reducing the extent of non-collection and non-payment
> of tax. In the case of reinvestment of profits into fixed and working
> capital, investment tax credits and exemptions should be granted, having
the
> effect of reducing the tax rate to zero. These provisions should be
> maintained for at least two years. Another important proposal is to
exploit
> state contracting and requisitions of goods and services as an instrument
of
> economic policy. State contracting should include not only quantity, but
> also the prices and the qualitative characteristics of the products to be
> purchased by the state. The fixing of the price level of government
> contracting will be a most crucial stabilizing factor limiting
inflationary
> expectations. The state must dictate prices to the suppliers, and not the
> other way around. On the other hand, this will work only if the state
meets
> its obligations to pay suppliers. Overcoming Regional Inequalities A
chapter
> on "Regional Structures" focusses on how to address the growing gaps in
> income and economic development among the regions of Russia. At present,
10%
> of Russia's regions account for 48% of GDP. The effect of increasing
> impoverishment and emigration out of the poorer regions, is to turn these
> increasingly into economically "empty spaces"--a process which is
dangerous
> for such a huge country as Russia and could ultimately lead to its
> disintegration. At the same time, the different regions practice very
> different economic policies, a fact which undermines relations between the
> regions. The paper notes, that some liberal economists are pointing to the
> lack of economic competitiveness of strategically crucial regions, such as
> the Far North, the Far East, and parts of Siberia, as an argument against
> trying to develop them as integrated economies. But "commercial arguments
> are not a sufficient criterion for state policy." The state must take an
> active role in promoting development of these regions to reduce the income
> gaps. Only a regulated market can ensure a redistribution of non-fixed
> resources between the regions, whereas "globalization" and "open
> competition" between regions (in the world market) would have disastrous
> consequences for many regions and accelerate the centrifugal tendencies in
> the country. This dictates the need for a special policy, permitting
regions
> to achieve a certain degree of economic self-sufficiency, while at the
same
> time intensifying the economic interactions between the regions. Foreign
> Debt The paper sets forward a principled position on Russia's external
debt.
> To pay the present obligations as presently structured would mean an
outlay
> of $16 billion per year for ten years. This could only be achieved at the
> cost of a stagnation of production and a further drop in living standards.
> There are only two ways out for Russia and its creditors: restructuring of
> debt, or a default, the latter being in the interest of neither side. The
> paper emphasizes that renegotiation of the debt (and writing off of half
of
> the debt carried over from the former Soviet Union) should take account of
> the facts that 1) the Russian economy itself is liquid and viable, having
a
> positive trade balance of $50-60 billion per year; 2) the stopping of
> capital flight would greatly enhance the payment potential of the Russian
> state; 3) Russia's creditors have no interest in a conflict with a country
> that represents an enormous future market. It is proposed that Russia
> negotiate a solution, by which one-half of the former Soviet debt would be
> written off, and for the next three years Russia would pay a total of $8
> billion per year on its external debt. It is also proposed that the
portion
> of the state debt, which originated in credits that were granted for
purely
> political reasons, rather than commercial ones, should be written off.
> Short-Term Measures for Economic Expansion In a section on the priorities
> for economic policy in the short term, the Ishayev paper begins with an
> analysis of developments in the Russian economy over the period following
> the August 1998 financial collapse. Several factors (which will not be
> summarized here) contributed to a substantial recovery of industrial
> production and household income during October 1998-October 2000, albeit
> from the very low level reached as a result of the disastrous so-called
> liberal "reforms." However, from the middle of 2000 onward, the growth of
> output slowed dramatically, and the economy threatened to go into
stagnation
> or worse. Investment stopped growing, inventories began to be run down,
and
> the physical volume of exports stagnated. The perspective of launching a
new
> wave of growth in the immediate period ahead is closely linked to the
> restoration of money's role in the economy, reducing the relative
importance
> of barter in the settling of inter-business accounts, which had taken on
> huge proportions in the regime of "survivalism" of the last ten years. Up
to
> now, the re-monetization of the economy has mostly been linked to foreign
> export activities, via the activity of the Bank of Russia, which emitted
> rubles to purchase foreign reserves earned by exporting companies. The
> banking system must now play a crucial role in continuing the restoration
of
> the function of money. Several policy parameters are identified as key to
a
> resumption of strong physical growth in the short term (one year ahead),
> including: mobilizing existing capital reserves, above all the surplus
> reserves of businesses and the savings of the population for reinvestment
> into the productive sector; reducing prices on other products and services
> of the natural monopolies; restoring the practice of businesses making
> payments in money; and, increasing the volume of bank credits to
> non-financial companies. Naturally, the injection of financial liquidity
> into the economy can have inflationary effects. The state has the task of
> channelling financial flows in such a way, that the effect on economic
> growth is maximized, while inflation remains under control. Practically
> speaking, this means organizing the flow of financial resources into the
> real sector, which in turn depends on the extent to which the state
reduces
> the systemic risks of investment. The instruments described above,
> particularly the new institutions for structuring and increasing the
quality
> of credit obligations by the real sector (mainly to the banking sector),
> should provide adequate means for reducing the risks. Import-Export Policy
> Under present conditions, the technological modernization of Russian
> industry and infrastructure, whose fixed capital equipment has been
> dangerously run down, requires substantial imports of high-technology
> capital goods. Present trade and tariff policies, which impede imports of
> capital equipment and stimulate imports of consumer goods, must therefore
be
> reversed. Capital equipment, which is either not produced at all in
Russia,
> or only in small quantities, should be freed from import duties. At the
same
> time, duties should be shifted to exports of raw materials and imports of
> consumer goods, thereby increasing the demand for consumer goods and
> facilitating the expansion of domestic consumer goods production. In this
> context, the paper notes that the volume and structural quality of
Russia's
> trade could be greatly increased, if means were created to mobilize
existing
> surplus and "frozen" foreign currency reserves in the country. In
> particular, it is proposed that a portion of surplus currency be
channelled
> into the banking system, to be recirculated as credit, above all to
support
> the export operations of domestic manufacturing industries and
agriculture,
> and for the purchase of high-technology equipment from abroad, by domestic
> firms. Major state-controlled commercial banks (Foreign Trade Bank,
> Sberbank, Russian Development Bank, Russian Agricultural Bank) would be
the
> chief channels for the lending of foreign currency, to be deposited in
them
> by the Central Bank and the Ministry of Finance for this purpose. By these
> means, imports of high-technology capital goods for basic capital
investment
> in the Russian economy could be expanded by $8-12 billion per year, and
> overall investment activity boosted by 20%. It is furthermore proposed to
> increase state investment into the Russian Development Bank, the Russian
> Agricultural Bank, and the Credit Organizations Restructuring Agency, for
> the included purpose of intensifying investment in infrastructure,
industry
> (including conversion of military industry), and agriculture. To overcome
> the present ineffectiveness of Sberbank, which has the potential to become
a
> very major lender to the productive sector, the Ishayev paper proposes to
> utilize intermediate institutions--specialized banks or investment
> companies--which would mediate between the Sberbank and potential lenders.
> Another area for expanded operations of Sberbank would be a program for
> medium- and long-term consumer credit. A last, important point of the
paper,
> to be mentioned here, concerns the energy sector. The paper notes that
> stable economic growth is impossible without reliable "life support
> systems," such as electricity, gas supplies, and so on. But today, major
> bottlenecks, or worse, have emerged in the supply of vital necessities to
> the Northern and other regions, and intense conflicts are occurring, both
> between the major energy monopolies (especially Gazprom and Anatoli
> Chubais's United Energy Systems), and between these and the regional
> governments. The proposed way out is to drastically increase the powers of
> the Energy Ministry, giving it the right to determine the energy policy of
> the country and to realize that policy. This would, in effect, be a major
> step toward loosening the strangulating grip of the infamous "oligarchs"
> over the life-lines of the nation. This completes our condensed review of
> the Ishayev program. Some Final Comments Apart from technical aspects of
> secondary importance, I do not that think there could be competent
> objections to the essential approach, outlined by the Ishayev document, as
> far as it goes. It is also clear, that Russia would be in an incomparably
> happier situation today, had something like the indicated approach--some
> elements of which were already on the road to being implemented, when
> Yevgeni Primakov was removed as Prime Minister in May 1999--been adopted
by
> Putin from the very beginning. In the meantime, a great deal of precious
> time has been lost. The problem, from our standpoint, is not what the
> Ishayev document says, but rather, what it does not say--at least, not in
> the version which has been widely circulated and discussed since the end
of
> last year. Let me give some examples. First, it is not sufficient, in
> Russia's present situation, to merely insist that investment be channelled
> into the productive sector--infrastructure, industry, and agriculture. A
> successful economic mobilization must be developed around certain key
> strategic tasks, which define a least-action pathway of successive
> breakthroughs in rates of development of the economy as a whole. A focus
on
> selected, breakthrough areas, including specific areas of technological
> development, provides an instrument by which the state can drive the
entire
> economic process forward. It is necessary to go beyond mere macroeconomic
> generalities, and to identify such areas in a precise manner. One such,
very
> obvious example is the role of nuclear energy. Without a large-scale use
of
> nuclear energy in advanced forms, there is no possibility that Russia can
> attain the levels of overall productivity needed to reverse the effects of
> the ten-year economic collapse and rebuild the economy over the medium
term.
> In particular, nuclear energy--for electricity, district heating, and
> industrial process heat applications--is key to the future of vast regions
> of Siberia, the Far North, and Far East of Russia. At the same time, the
> design and production of advanced nuclear energy systems provides an ideal
> context in which to mobilize the capabilities of the military-industrial
> sector, and to rebuild crucial machine-tool and machine-building sectors.
> Furthermore, with adequate development of suitable technologies such as
> modular high-temperature reactors (HTRs), the export potential of Russian
> nuclear technology to China, India, Iran, and other developing nations of
> the world, could be multiplied many times over. By the same token, even a
> relatively short-term economic program for Russia, must locate Russia's
> development in the context of the future of Eurasia as a whole--a context
in
> which Russia is destined to play a decisive role. The necessary parameters
> for Eurasian development, including most emphatically the
Russia-India-China
> "Strategic Triangle," the pivotal role of Central Asia as well as Russia's
> relations to Western Europe, are very precisely defined; they center on
the
> necessity of large-scale infrastructure development, including such things
> as transcontinental high-speed rail and maglev systems, energy systems,
> water systems (canals, irrigation systems, flood control), and so on, in
the
> course of the coming decades. The essential parameters have been set forth
> in the strategic conception of the Eurasian Land-Bridge, put forward by
> Lyndon LaRouche and his collaborators. This leads us to a more profound
> point, which we can only hint at here. To conduct an economic
mobilization,
> to uplift Russia out of the depths of economic and social disintegration
> into which it has fallen during the last ten years, requires more than
> merely "objective" economic measures. It is not a purely technical issue,
> but depends on the ability of national leaders to mobilize the population
> around an appropriate set of ideas--ideas that must center on a notion of
> the national mission of Russia in the world as a whole (see Lyndon H.
> LaRouche, Jr., "The U.S. Strategic Interest in Russia," EIR, Dec. 15,
2000).
> That mission is defined, among other things, by the urgent requirements of
> the vast populations of Asia, for the kinds of scientific and
technological
> developments which Russia is uniquely situated to supply. But Russia's
> mission has a more universal aspect, which is perhaps best identified by
> reference to the great Vladimir Vernadsky's notion of the novsphere. The
> universe, as Vernadsky showed, is governed by three absolutely distinct
sets
> of physical principles--principles of non-living or inorganic nature, the
> principles of living processes, and the higher principles manifested in
> human Reason. The demonstrable, hierarchical relationship of those three
> domains, demonstrates the existence of a universal principle of
creativity,
> subsuming all three. Thus, man and the novsphere did not emerge out of the
> biosphere by virtue of the principles of living processes; rather, the
> universal principle acted, already before the emergence of man, to bring
> about, in advance, the conditions under which man's existence became
> possible. The reflection of that universal principle of creativity into
the
> economic process, which is the subject of LaRouche's Science of Physical
> Economy, cannot be properly ignored in the context of projecting an
economic
> mobilization such as that which Russia must accomplish now. The
> intrinsically nonlinear character of such processes, and the apparent
"time
> reversal" which is a leading feature of them, cannot be mastered in any
> lesser terms.
>
> _________________________________________________________________
> Get your FREE download of MSN Explorer at http://explorer.msn.com
>
--
