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Russian Industrial Policy, Industrial Lobbying, Vehicle Industry Blueprint Eyed

CEP20021230000323 Moscow Vedomosti in Russian 30 Dec 02

[Article by Vladimir Fedorin: "Commonplace Lobbying" -- taken from HTML version of source provided by ISP]

[FBIS Translated Text]
The half-forgotten phrase "industrial policy" has risen from the ashes this year.   Despite its illiberal flavor, the phrase has taken root and has even acquired a respectability that it lacked in the reckless Yeltsin years.

Kasyanov's tact must be given its due.   Regardless of pressure from propagandists of industrial policy, the premier has not taken these words into his vocabulary.   And so has saved himself and ministers from a lobby drift in the form of hare-brained schemes of "how to boost industrial sector x for a billion dollars of budget money (or from tax breaks or another way)."

So industrial policy has remained an instrument for internal use -- by ministers themselves and the oligarchs in with them.   Two poles of gravity (excluding the Agriculture Ministry) for lobbyists have formed in the government.   The needy and burdened -- vehicle manufacturers, machine-tool builders, and weavers -- mainly congregate at the Ministry for Industry and Science.   Although it is true that entirely solvent clients have appeared this year too -- metallurgists (the government passed a blueprint for the development of the sector this summer) and timber enterprises (the cabinet passed their blueprint in fall).

The second pole is the Ministry for Economic Development.   Sturdier lobbyists come to German Gref's department -- retail oligarchs counting on cracking down on foreign competitors with the liberals' help and blue-chip companies that want to save money on dividend payments but present authorship of the amendments to the law on the joint-stock company to young ministry whiz kids.

The oligarchs' trade union even devised its own blueprint for industrial policy this year in order to take individual lobbying under the aegis of industrial policy down a unified path.   To the RUIE's [Russian Union of Industrialists and Entrepreneurs] honor, the document balances indecent proposals to the state (like supporting not individual sectors but individual companies) with prescriptions of an opposite nature (that individual concessions not be given in any circumstances).   So the RUIE seems to have simply given its most insistent members an opportunity to play at industrial policy with the state independently.

There is a hope that the results of the first truly big game will serve as a good lesson to the oligarchs.   Bureaucrats and vehicle lobbyists spilt so much ink over the blueprint for developing the vehicle industry with its idea that is as simple as ABC -- protecting Zhiguli and GAZ [Gorkiy Motor Vehicle Plant] vehicles from foreign competition.   And what has it resulted in?   They have adopted the blueprint and raised duty on old foreign-made vehicles but our vehicle industry is seeing in the New Year with halted production lines -- VAZ [Volga Motor Vehicle Plant], GAZ, and Izhmash are at a standstill.   So it is better not to spend money on investments and human capital (bureaucrats).   Invest better in the main thing, like the zinc plating of the chassis, for example.

[Description of Source: Moscow Vedomosti in Russian -- daily business paper published jointly with The Wall Street Journal and Financial Times; reportedly friendly with Kremlin]




Postponement of Economic Reforms Until Second Half of 2004 Seen

CEP20021227000121 Moscow Nezavisimaya Gazeta in Russian 26 Dec 02 PP1, 3

[Article by Natalya Melikova: "A Commercial Break is Declared in the Economy -- Structural Reforms in 2003 Will Be Replaced by Campaign PR" -- taken from HTML version of source provided by ISP provider]

[FBIS Translated Text]
    The authorities are temporarily abandoning implementation of large-scale economic reorganization. NG's sources in the Kremlin and the government confirm that structural reforms in the economy will be postponed -- at least until the completion of parliamentary and presidential elections. This means that the authorities are opting for immediate political tasks while putting aside ambitions with regard to an economic breakthrough.

    The main content of the state's economic policy in 2003 will be not reforms but PR for itself. The famous thesis that the economy in our country is half advertising is destined to be implemented to its fullest next year.

    Life will not stop in the country for this period, of course. The Duma will continue work on economic laws. Several substantial draft laws are to be considered during the spring session (for example, "On the Regulation of Foreign Currency" and "On Nationalization"). And in the summer the deputies will smoothly proceed to the last draft (for this Duma) of the budget. The 1999-2003 version of the lower house of the parliament will not take up key issues for the country's economy -- the reforms of the natural monopolies and of housing and municipal services.

    The reforms of the natural monopolies are too broad to influence the country's economy alone. They affect the vital interests of the political and economic elite. The reform of the energy industry, for example, is in general more of a political issue than an economic one. If Chubays loses the confrontation, it will be reflected not so much in the RAO as in his own image as a heretofore successful manager and lobbyist. This, of course, can only hurt the party of which he is cochairman.

    The housing and municipal-services reform may, in general, detonate a social explosion. Any changes in this area could destabilize the situation in the country if they cause too much pain to the poorest segment of the population. No one is likely during the election season to run the risk of possibly wrecking whatever social stability there is, even if the price of stability is the conservation of stagnant phenomena in the country's economy.

    The authorities have no chance left for economic innovations and experiments in 2003. Nevertheless, they must offer something to voters as an economic policy. In so doing, they will have to tout not so much achievements (let's be honest, there aren't any special ones) as their work to fulfill large-scale and ambitious tasks.

    The theme of the economic part of the election campaigning conducted by the party of power will most likely be the fight against bureaucracy and corruption. This topic should prove to be the most beneficial. After all, using Chechnya as an campaigning ram for the second time in a row will not work. But bureaucrats can be blamed for, among other things, the economic stagnation, whose signs are more and more evident as the new year approaches.

    This vector of the authorities' activities was graphically evident already this year. Recall how the president berated the government for its tardiness in paying wages to budget-covered employees, and recently, against the background of an air traffic controllers' strike, he again harshly criticized the Cabinet for not being overly meticulous in fulfilling social commitments. It is worth recalling both the Kremlin's initiatives to protect citizens against dishonest bureaucrats, which the Human Rights Commission, in particular, will deal with, and the opportunity afforded to small and medium-level businessmen to complain (true, through the Internet), but still to the presidential administration.

    In addition, the authorities will traditionally demonstrate their efforts in improving people's living standards. For example, if one believes sociological polls, the low level of wages in Russia is the No. 1 problem for the vast majority of the country's population. As NG has already written, the authorities hold the trump they need up their sleeve: at the end of 2003 wages for budget-covered employees will be increased by 30 percent.

    While the media start reporting on the fight against bureaucrats, work will proceed in government offices and the major economic centers on a future economic strategy for the country's development. The time is approaching for the scholarly economic elite to build plans for the post-election future.

    The international and domestic background for a new attempt to carry out structural reforms, however, will be much worse than it was for the Kasyanov government. A favorable oil market is highly unlikely, and all of the economy's internal diseases will become even more chronic.

    The starting point for a new attempt to begin large-scale reforms, analysts believe, will be the second half of 2004. After that it will be too late. The election campaigns of 2007-2008, when the elite will face the serious problem of transferring power to a successor, will loom on the horizon. Besides, Vladimir Putin himself is most likely not too interested in stepping down as a president of "unfulfilled hopes."

    Then again, according to a NG source in the government, only a powerful jolt can make the economic elite carry out reforms that are radical but essential for the country. This jolt could be either an economic crisis or a resignation by the government.

[Description of Source: Moscow Nezavisimaya Gazeta in Russian -- Daily Moscow newspaper aimed at an elite audience and controlled by Boris Berezovskiy.]



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