Putin’s article on the economy

Economic experts have analyzed the latest article by Russian Prime Minister Vladimir Putin that touches upon the prospects of economic development and forms the third part of Putin’s election program.

Expert Yakov Mirkin, the head of the international capital department of the International Economic Institute of the Russian Academy of Sciences pointed out that a number of problems, merely touched upon by the article, should have been in its prime focus: quality of life, average life expectancy, development of the middle-class, etc.

Nevertheless, the expert found it to be very important that Putin addressed the middle-class as the nucleus of future economic policy. The expert pointed out that the average life expectancy in Russia is only 70 years, i.e. lower than in Libya. Egypt, Palestine and China.

The Institute of Social Studies has recently published a book ’20 years of Reforms Through the Eyes of Russians’, which depicts the values of Russian people. In 1994, 16% of Russians saw the full restoration of state control over the economy as the most acceptable model for Russia’s economic development, and in 2011 the figure increased to 28%. Yakov Mirkin stipulated that the 20 years of reforms resulted in people not being ready to take up economic risks for themselves.

As for the property issue, Yakov Mirkin said that this is the key question for the middle-class, but Putin failed to address it explicitly in his article. Even 20 years after the end of Soviet rule, half of our economy is state-run, and it is necessary to get rid of this burden. Russian private investors have to start investing in property.

Vladimir Putin suggested that it is necessary to achieve macro-economic stability in order to address all other economic issues. However, Mr Mirkin disagreed with this thesis, as a raw-material export-dependent economy can’t be stable by definition. Nevertheless, the expert appreciated the fact that Putin’s article finally acknowledges the fact of systematic corruption – which is also connected to the imminent instability of Russia’s economy and the high tax pressure. According to Mirkin, the problem is that the Russian middle-class is almost deprived of property, which is concentrated in the hands of the state, so all businessmen try to transfer all their income abroad.

General director of the Managing Company of the Russian Fund of Direct Investments, Kirill Dmitriyev

Putin’s article emphasizes two important issues.

The first issue touches on the competitiveness of Russia in the world. European countries are paralyzed by the crisis and cannot make any decisions. The American economist Tom Friedman published the book called “That were we” which says that the United States got behind China, while using opportunities, which the US have always had, is impossible. In this pessimistic context, Russia has a series of important responses, which other countries lack. First of all, it is wide opportunities for growth. Mc Kinsey says the middle class of Russia has increased trice for recent five years, from 10% up to 30% of population. Secondly, it is an opportunity for growth in regions. At last, it is a low rate of unemployment. Today Russia has a real chance to become stronger on this background.

Another important issue touched by the article is the investment potential of Russia. Investment is a fuel for establishing working places. It is important to think the problem over. Russia’s potential is high. A part of internal resources can be spent for establishing of a long-term internal investor. On the other hand, attention should be paid for long-term foreign investors, who effectively invest money into economy of the country.

General director of the Institute of Regional Problems, Dmitry Zhuravlyev

One of the main aspects touched on by the article is modernization of the state as a system of government and the anti-corruption fight as a key moment of the modernization. Corruption is mostly systemic in all ethnic republics, including the North Caucasian ones, as elites there are more consolidated. Instruments of the anti-corruption fight include repressions against corrupt officials and development of the legislative base, including adoption of all articles of the International convention on corruption. Moreover, stabilization of a bureaucrat’s position is needed. Today his stability is not guaranteed. In Russia it is proper to be rich, despite the fact where money came from. In the West you can grow rich thanks corruption only once, but you will never be accepted by the society again. The mechanism of reputational capital should be launched in Russia.

Director of the Institute of the Globalization Problems, Mikhail Delyagin

The first half of the article is devoted to innovations and modernization. The content of the article can be considered as withdrawal from the policy of liberalism, which has been ruining our country for 20 years. The article states that the country should support major infrastructure projects, first of all in the sphere of transport. For the first time since 2004 the idea of the industrial policy was reanimated.

Moreover, Premier pays attention to necessity of supporting agriculture, launching of sumptuary tax, recognition of dishonesty of privatization of the 1990s. All these moments mark withdrawal from liberal dogma, which is a reaction at mass social protests. However, Putin maintains positive values of liberalism.