No one wants to invest in shadow economy

The North Caucasus Federal District authorities believe that Khloponin needs real projects, not payoffs.
In his first months in the post of presidential representative in the NCFD, Alexander Khloponin has been studying the economic potential of the region, putting political issues on the back burner. Among the region's advantages, Khloponin mentioned factors which were previously considered as obstacles to its development - cultural diversification and workforce potential. Indeed, national and cultural diversity created many contradictions and conflict situations, and high levels of unemployment have deepened social unrest. But judging by the courageous attitude of the deputy representative these disadvantages could easily be turned into advantages. The experience of recent years has shown that uncontrollable budget financing of the North Caucasus doesn't solve any problems - quite the opposite, it complicates the situation. The unending scramble of local clans for budget funds is one of the most serious factors of disruption. From now on, apparently, local authorities have to change their strategy, since they had assured themselves that Khloponin needs real projects, not payoffs. What matters more is professionalism. Every project has to be developed and implemented. Moreover, the envoy is going to examine every project and match them to his vision of the region's needs. During a working trip around the NCFD he has researched the investment, scientific and labor force potential, concluding that all local projects have to be combined into a joint regional development strategy. Probably all the resources of the district will be focused on implementing the strategy, which will be introduced to the federal government in July.

Currently there is only a preliminary plan of the four federal projects. They will be carried out according to sectorial principle - energy and energy-saving, tourism, science and education, high-tech industry and agriculture. But implementation of this program could take years, while social problems need urgent solutions. In Khloponin's view, the problem of unemployment can be solved through developing the spheres of tourism and education. He considers developing of the tourism infrastructure can provide more job vacancies, including ones which do not require high-professional skills, primarily in construction. The district can carry out a project of highway reconstruction and installation of video monitoring. Governmental control and direct contracts with constructors will keep corruption to a minimum. Increase in traffic capacity, security, and reduction of road posts will provide better access to resorts. The experience of Azerbaijan can be a good example - here a network of four-lane roads is under construction. More than $200 million has been allotted for the project of the neighbouring state by the European Bank of Reconstruction.

There is a similar situation in the sphere of education. There is no need for any unique projects to build kindergartens and schools. It is enough not to steal money. The state guarantees free comprehensive education, but in Dagestan, for example, many kids do not attend schools, many school buildings are in a state of disrepair, and some young teachers need better education themselves. It is obvious that conditions for infrastructural development should be provided by the state. But nowadays local authorities are far from using the methods of a free market economy - there are proposals to
bring big business to responsibility, make oligarchs operate at a loss and entice investors to finance marginal spheres. Meanwhile, experts share the opinion that the authorities should provide conditions for developing small business and investing. Khloponin's team has to define the obstacles to developing a free trade market and fix them. As it is, Dagestani business prefers to invest in the economies of other regions.

The authorities of the North Caucasus speak about bringing in investments, but at the same time keep their money abroad. It is indispensable to find out what causes finance leakage abroad. It is not due to the crime situation that the region is not attractive to investors, but due to pay-offs, protection rackets and bribes. The authorities propose perfect investment projects, but do not take in account corruption expenses, which make any business unprofitable. The situation is the same in the sphere of crediting. Officially, the rate of interest is really low, but entrepreneurs can't afford it due to high pay-offs.

Musa Musaev, Makhachkala. Exclusively for VK.