By Vestnik Kavkaza
Moscow is holding the fourth Gaidar Forum 2013 - "Russia and the World: Challenges of Integration.
Dmitry Medvedev, Prime Minister of the Russian Federation
Today we are witnessing significant changes under way in the global economy - I mean technological, social and intellectual changes. This is a serious challenge. On the one hand, any government today must maintain social and political stability. We need to understand this. Everyone needs to understand it. We must curb unemployment, and, by the way, we are doing well in succeeding in this. On the other hand, we need to stimulate the modernization of the economy and structural reforms. These approaches are not easy to combine, especially at the level of practical politics, believe me. It very much depends on the ability of the authorities to adequately perceive the challenges and to respond to these challenges and, in the end - on the effectiveness of economic and political institutions, on their flexibility and at the same time on their stability. What will the post-crisis configurations eventually be? We do not know this. The discussion continues. The future positions of individual countries, individual regions, the balance of power are discussed using a variety of terms, including the term G2 or Chimerica proposed by Mr. Ferguson. There are other possible combinations. In any case, for us at least, to my understanding, the preferable concept is that of a single economic and humanitarian space from the Atlantic to the Pacific. A positive outlook of the BRICS alliance is also obvious to me. But we are not closed to any processes. It is important that Russia has the potential to become one of the key links in the global integration processes.
Alexei Ulyukayev, first deputy chairman of the Central Bank of Russia
What is the crisis? The crisis is the result of the previous development, which turned out to be very successful and very good. This is a result of the accumulation of imbalances. Global imbalances - what are they? It is usually said that the imbalance is between accumulation and consumption on the one pole and savings on the other. What is the source of this imbalance? There are different economies: there are regions with a greater rate of development, there are regions with a lower rate of development. That is, I think, the root of the problem is a phenomenon of catch-up. A group of states, which have long remained in the category of developing, underdeveloped economies, accepted the challenge and began to develop rapidly. What can make you develop at an accelerated pace? You cannot develop at the expense of domestic demand, because it is limited. Investment demand is also limited, because there is no investment and no resources. The only source of rapid growth is net exports. This means a massive increase in trade surplus. Generally speaking, we do know this very well from our own 1920s, when mass exports under the slogan "do not consume it, export it!" meant no orientation toward the domestic market and total orientation toward global demand and net exports. Now we see this in most regions which are catching up. Therefore, in developed economies there was accelerated development of consumption, drawing other trends of low production costs in the rapid development, and in the countries of the catching-up regions there were big savings, high savings rates and the need for investment. This gives rise to powerful cross-border capital flows, and there is an acceleration of imports and exports of capital. Generally speaking, I want to address this topic today - cross-border capital flows. I want to say that in many respects, of course, it is politicized and ideologized. We are very focused on a simple number - the net outflow or inflow of foreign private capital. This simple figure speaks for itself and does not say anything. Like any integral index, it is too complicated to use it every time to explain our economic reality. Generally speaking, I would prefer to use the terms "export" and "import", "export of capital" and "capital imports." In this sense, as a person who has received an education in Marxist economics, I remember the work by Lenin "Imperialism, the Highest Stage of Capitalism," in which he pointed out to us that in the period of imperialism export of capital, distinguished from the export of goods, begins to take on the utmost importance. Why are we so excited when trade turnover and commodity exports are growing, and why are we so indignant when exports of capital are growing? There is a simple political explanation: the export of goods is the creation of new jobs in the country, an increase in the country's tax base and therefore an increase in wealth. The export of capital increases welfare in other countries, which in any case is not the purpose of the political elite of the country.
Anton Siluanov, Minister of Finance of the Russian Federation
Today the whole world is discussing the situation in the world economy, the situation in the financial sector, looking for recipes to get out recession on to the path of stabilization and economic growth, for ways to attract investment, which has decreased in recent years in the global economy, and we must use the current resources to invest in the economy in order to stimulate investment demand and the global economy. Certainly, I think the main lesson is that living in debt is wrong and dangerous. Before, a few years ago, we were assured, "What is a public debt of 50%, 60% or 70% of GDP? It's okay! All countries are living in debt. Let's try it." This is a reference to the Russian Federation. "Let's also increase budget deficits." We have an absolutely insignificant, small debt - only 11% of GDP. Why should we always carry out a surplus policy? Let's see how the whole world lives! But it turned out to be not so, not so simple, because even a number of countries, which until the crisis had debts of 0.25% of GDP, after the crisis had 70%, 80% and even 100%. The point is that all this is quite vulnerable. What is debt? This is the provision of the commitments that the government has gained in recent years and their financing through borrowing. During a crisis, a recession, when revenues decline, then funding sources of financing the budget deficit disappear, providing that amount of expenditure commitments is not easy. We see that a number of governments have not been going to reduce their costs, because budgets are indeed becoming more and more social, cutting costs in this part is very difficult, because you need to have strong political will and authority among the population. We see that a number of countries have chosen to mitigate fiscal policy and monetary policy. As a result, debt is growing, deficits are growing, and it is difficult to get out of this situation. Therefore, the thesis of the first lesson of the crisis is as follows: living in debt, in our opinion, is wrong and impossible. The second conclusion is the need for financial regulation. One of the conditions of the crisis was the large number of financial instruments, derivatives, which have not been settled, there was no system of tracing those derivative liabilities issued by companies and not secured by real assets. So, the issue of financial regulation, not only in one country, but also, perhaps, a wider view, global financial regulation, the identification of the dangers that lurk in a country is the task that faces today's financiers. Therefore, the issues discussed in the international financial institutions, the International Monetary Fund, the G20 are, of course, the issues of strengthening financial regulation and conduct of global financial regulation, tracking financial processes in the world. The subsequent conclusion to be drawn, especially in relation to Russia: it is necessary to have a certain margin of safety, especially for those countries that are truly dependent on external economic conditions. We really could get through the period of the crisis thanks to the fact that we have gained a considerable amount of reserves - the Stabilization Fund, the Reserve Fund, the National Welfare Fund. Alexei Kudrin just conducted the policies, often criticized by a number of economists and experts, but, as shown by the crisis, it was absolutely correct. Therefore, the availability of these kinds of stabilization resources, reserves, in our opinion, is absolutely correct within the theme "Lessons of the Global Crisis."
Alexei Kudrin, the chairman of the Board of Trustees of the Gaidar Institute for Economic Policy, on the accession of Kyrgyzstan and Tajikistan to the Eurasian Customs Union
The probability of the accession is quite high - due to political decisions taken in this regard. But from the point of view of the mechanism of accession, this is a complex mechanism, because Kyrgyzstan is a member of the WTO and has already committed itself to rates that are several times lower than ours. The accession of Kyrgyzstan to the Customs Union would be subject to such tariff plans that exist in Kyrgyzstan, if they are not revised as a result of the new round of WTO agreements with Kyrgyzstan. This process would be long-term, not just for one year, so we are not talking about a rapid accession. If, however, this is entry on the terms of Kyrgyzstan, so that we just open our market, and our pricing policey which we protect in the process of the accession to the WTO would be worthless - we will live with the tariffs of Kyrgyzstan. I want to warn against such a move.
