We could have developed at a record pace, but “they made a cash cow out of Russia.” Sergei Glazyev spoke with Yuri Pronko on the air of the First Russian about the problems of the economy and the breakthrough that the country is capable of.
The domestic economy is experiencing serious difficulties. The situation has worsened, and almost 8% of economic activity is created by migrants. But this is not the worst thing, says academician Sergei Glazyev.
The academician of the Russian Academy of Sciences said about his fears during the meeting of the Council of the Chamber of Commerce and Industry, which took place on September 27:
We see that collateral raiding has acquired colossal proportions. Since protection of property rights is recorded in the National Security Strategy, it would be nice to pay attention to the fact that the institution of bankruptcies in our country is so criminalized that, unlike other countries, where about half of enterprises are undergoing financial recovery, 98% of enterprises in our country go under the hammer. , assets are taken away, enterprises cease to exist. The most important reason for bankruptcies is monetary policy. This is an ugly phenomenon, the apotheosis of which was the seizure of our aluminum industry by the Americans. The domestic aluminum industry is commanded by the US Treasury.
Of course, in some sectors of the Russian economy there is a rapid growth, noted Yuri Pronko. But this applies to less than 10% of the country’s population. 60% are in a situation of stagnation and poverty, which sounds depressing against the background of the monetary policy pursued by the domestic liberal financial authorities. These serious problems were discussed by the observer of “The First Russian” on the air of the “Constantinople. Main” program with the famous economist, academician of the Russian Academy of Sciences Sergei Glazyev.
The Americans also have the national property in their hands
Yuri Pronko: The topic of our conversation is not very kind. It turns out that we have under external control entire assets and areas of the industry. And this is in addition to the fact that inside the country there is criminalization and raider seizures. Can you explain in more detail what situation we all found ourselves in?
Sergey Glazyev: What I talked about at the meeting is only the tip of the iceberg, but it is the most odious, because the Americans tell us: you need to privatize, look for an effective owner.
We had an efficient owner, a private company RUSAL. It was very well quoted, it had excellent reporting, it would seem, why capture it? But American lawmakers wanted to take this company away from a private owner, or from a group of private owners.
And now this company has been nationalized, but not nationalized by the Russian authorities, but by the United States. The American Treasury appoints the board of directors of the company, which has as its facilities not only factories built in Soviet times at the expense of the state, but also hydroelectric power plants, together with reservoirs, which are our national property.
There is something to think about from the point of view of the National Security Strategy. However, unfortunately, these issues are not fully reflected in the document that we discussed. But the president spoke about this many times – about the offshorization of the economy, about capital flight – and set the task of stopping offshoring.
– What forces, in your opinion, torpedo all this?
– Firstly, our oligarchy has grown like a comprador one: it receives income here, and stores assets, more precisely, the rights to these assets, there.
– But it was believed that they were rolled. No?
– Let’s turn to statistics. If you look at the structure of property rights in our industry, then almost 53% are offshore, that is, in the Anglo-Saxon jurisdiction. But we understand that it was our oligarchy who took property rights abroad, hid them there. This was done, among other things, for tax evasion, because offshore jurisdictions are always tax havens. The export of property rights abroad was made possible by the liberalization of foreign exchange regulation, which ended in the 2000s.
By the way, I do not agree with the opinion that we have too much money. On the contrary, we have very few of them, especially credit ones.
They took out as much money as they wanted, and the monetary authorities condoned it
– Yes, we have an under-monetized economy.
– It is under-monetised at times: there is not enough money for the working capital of enterprises, investments are at an extremely low level, because there is no investment lending. That is, when we talk about different components of monetary aggregates, we must understand that foreign exchange reserves, which are really excessive in terms of all standards for ensuring foreign trade, are our assets abroad. But from the point of view of our monetary policy, this is the basis for which we form the money supply.
And if in other countries for one unit of foreign currency in reserves there are somewhere 3-4 of their own, in our country the opposite is true. Here the volume of the monetary base, that is, the number of rubles in the economy, is three times less than the volume of reserves.
This means that the Central Bank can set any exchange rate for the ruble, make it fixed and keep it at a reasonable level for as long as it wants. This will ensure macroeconomic stability and give investors the opportunity to plan projects for 10-15 years ahead.
– But what about the interests of the oligarchy, the interests of the currency speculators of the Moscow Exchange, and so on?
– The liberalization of foreign economic activity ultimately led to the fact that it was possible to export as much money as you want. Moreover, the monetary authorities, one might say, condoned this, because it was believed that we had a lot of foreign exchange earnings from high oil prices. And in order to accept this foreign exchange earnings, a lot of money had to be printed.
But in the recommendations of the IMF from Washington it was said that your money supply is growing too quickly, so it is necessary to stop issuing money against this foreign exchange earnings. Accordingly, a stabilization fund was formed.
And instead of investing these super-profits inside the country, we took oil dollars abroad and invested in American debt obligations. As a result, we fed the whole world, the capital flight was, and still is, tens of billions of dollars.
– Yes, it continues.
– We lose on average about one hundred billion dollars a year. That is, they made a cash cow from Russia, this money is dissolved through offshores, leaves without taxes, only half of this money is returned under the guise of foreign investment.
But foreign investors are provided with preferential conditions, so investments are exempt from taxes. At the same time, the monetary policy is designed in such a way that it is impossible for an enterprise to take a long-term loan.
And how to get it, if the interest rate is high, besides, it constantly jumps. The ruble exchange rate has been destabilized for a long time. It is one of the most volatile in the world, although with such reserves, as I said, we could keep it stable for many years. And, if you look at the assets of our commercial banks, they stopped lending investments long ago. The share of investment loans is not more than 5%.
– But they say: business is not invested, why should we invest.
– No, they just make money on something else: they rip off the consumer at the expense of a commission that is 10 times higher than in Europe or America. On this, our banks are inflated, receive huge profits. At the same time, the main function of banks – to transform savings into investments – is not being fulfilled. Therefore, our solvent borrowers, who have foreign exchange earnings, go abroad and take loans there, which, moreover, are many times cheaper and can be borrowed for a long time.
It turns out that the state, on the one hand, created the legal conditions for capital flight, that is, it allowed the export of money. On the other hand, monetary policy simply forces us to take efficient loans abroad. They take loans there, bring foreign currency here, exchange it for rubles.
From a monetary point of view, this is the same thing: that you create rubles yourself, that you accept foreign currency and print your own for it. From the point of view of the interaction of the commodity-money supply, the effect is the same, so this does not affect inflation in any way.
But in order to take loans abroad, you need to provide collateral. And for this, ownership must be registered there. And it turns out that the entire macroeconomic policy squeezes solvent businesses into foreign jurisdictions.
– And then what is the intent of those people who pursue such a policy?
– They express the interests of this business, which is already used to working this way. Look at the oligarchy that grew up in the 90s. This is a typical picture: they receive gigantic revenues from oil, from metals, from chemical raw materials here. The source of these super-profits is the natural rent.
And this will continue until we build a harmonious system for equalizing normal profits in different industries. In a normal economy, this superprofit should be redistributed to other sectors, first of all, to the science-intensive industry, to finance innovations and investments. And the banking system should do it. She doesn’t.
In the 90s, when the planning horizon of this business, which grew up on privatization, was very short, people were engaged in squeezing income from enterprises, taking them to offshores, and accumulating them abroad. They also transported their families there, bought real estate. This is a typical picture.
US is trying to roll Russia into a ram’s horn with sanctions
– So, nothing has changed?
– Thanks to the sanctions, something has changed, but not due to some changes in our macroeconomic policy. The attitude towards us in the West has changed due to the fact that Russian President Vladimir Putin has begun to pursue an independent foreign policy, defending our national interests.
In response, we received sanctions. America is losing its leadership today, losing the competition with China, so it seeks to bend Russia into a ram’s horn in order to strengthen its competitive advantages and regain control over our economy. They are striving everywhere to achieve the same that they did with our aluminum industry, in order to then use the resource base of Russia in their own interests. This is a very simple geopolitics from the US side.
The situation has indeed changed dramatically, because an economic war is being waged against us, but not to weaken Russia. It is customary to say that they are trying to restrain us. But we are already developing slowly, even, one might say, we are marking time.
The President says many times: let us bring the rates of economic development higher than the world ones. It is not difficult to do this if we introduce the same instruments to stimulate long-term investment, targeted monetary policy. If we saturate the real sector of the economy with money, long-term loans, then we can double the volume of production on the existing production base and on the basis of idle production facilities.
But half of our economy is idle because there is not enough money for lending and working capital for modernization through loans.
The full version of the interview is available in video format, here is also the first part of the conversation between Sergei Glazyev and Yuri Pronko – wait for the second part on the site of the “First Russian” in the near future.