Sep 7, 2022
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Has the chance for a new industrialization of Russia been missed?

Back in mid-March, the Council of the Chamber of Commerce and Industry for Industrial Development and Competitiveness of the Russian Economy accumulated proposals from all industries in order to provide the country with an import lead, and the main message was a simple idea: a new industrialization is possible now or never. And indeed, the wave of sanctions, on the one hand, cut off many opportunities that used to work and were familiar, but on the other hand, opened a window of opportunity for the development of its economy, the production and replacement of those goods and components, machine tools and technologies that were actively imported from – abroad.

Almost half a year has passed since then, during this time we learned that nails are not produced in the country, because it is unprofitable, buttons, bearings, and even citric acid and much more. On the other hand, “parallel imports” and the replacement of suppliers from Western to Eastern seem to smooth the situation and create the impression that nothing has happened. Speaker of the Federation Council Valentina Matvienko admitted that this is the very import substitution – the replacement of some importers by others. Now a new industrialization is impossible? Konstantin Babkin, a well-known industrialist and chairman of the Chamber of Commerce Council, told about this in an interview with Nakanune.RU.

– In your opinion, has something changed in the economy over the past six months? Have any conclusions been drawn?

— Objective conditions are still pushing us to build an independent economy, develop our own real sector, produce components, and move towards new industrialization. But has the government taken any steps in this direction? No, nothing has been done – not a single tax has been reduced, duties on the export of metal have not been introduced, it is still unreasonably expensive within the country, the Central Bank is still pursuing a crazy policy. And what we talked about at the Chamber of Commerce and Industry, about new industrialization and a change in the vector of economic policy, the government also showed no interest in this.

We are still wasting time.

For example, we in the agricultural machinery industry, at Rostselmash, see that we have a responsibility, that we need to provide agriculture with equipment, although the supply of components from Western countries, which have flowed like a river for 30 years, has now been stopped, so we need to start producing our own.

And although these investment projects have accelerated, nevertheless, they are not always active and large enough, they have to be done “by force”, because the fact that components produced in Russia are often 30% more expensive than the same components , which previously could be bought in Germany, and now in China. And the understanding comes that one cannot become dependent on the West, but also on the friendly East, too. Let it be 30% more expensive, but we need our own. All this goes through a certain “violence” – not according to the laws of capitalism – less profitable, but let’s do our own thing.

– Is it possible to imagine what effect the measures proposed by the Council of the Chamber of Commerce and Industry would have had now if the government had listened to them back then?

– Now there would be an active stage of development, many would find production sites for their projects, it would be possible to take inexpensive loans for business, investors could purchase equipment, start building premises and place orders for equipment in order to produce certain goods, which used to be more efficient to bring from abroad. And companies could work with universities so that universities, colleges and vocational schools would produce those specialists who are really needed, and not recommended and looking for by the Higher School of Economics.

If now there was a reasonable, adequate economic policy, then in Russia it would be much more profitable to produce products than in other countries, and there would be a rapid process of economic development.

– And now the bet is made on “parallel imports”?

– It is difficult to say what the government is betting on. We still have a huge budget surplus, Russia still sells far more goods abroad than it imports. The government has a huge “surplus” of money – 3 trillion rubles has been formed over the past six months, it does not invest it in the economy, it still adds up somewhere in foreign accounts. And where it is developing – again somewhere in the West or flowing to China – they do not tell us this.

But at the same time, they tell us about parallel imports – they say, let’s somehow “quietly” import these Western “miracle goods”. I don’t see a clear strategy. Perhaps they simply rely on the fact that they need to endure this period somehow, and then we will live “in the old way”. But I do not see a reasonable and intelligible strategy.

– You said six months ago: it’s time to understand that friendship with the West is an expensive thing. Do you think the government understood this?

– Apparently, the Ministry of Industry and Trade understands this, but they do not influence tax policy, the cost of loans, and those who are responsible for this do not understand this. For them, friendship with the West is all that is needed and possible, only in this way, and if it is otherwise, it is horror and a nightmare. Therefore, money is again sent there, and metal is sent there, and parallel imports are sent from there, everything is tied in the West. I do not see that the government is somehow homogeneous and lives by one understandable ideology.

The left hand does one thing, the right hand does another.

In the politics of culture, we are still waiting for the return of Urgant and Pugacheva, in education and science – the same thing. Therefore, I think that there is no clear understanding that now there is still a chance for us and it is time to get down to business.

– So there is still a chance for a new industrialization?

— The chance remains, but what is happening cannot be called a new industrialization. There is some kind of sluggish import substitution, but not as a new historical stage of economic development – this is definitely not the case, because the government lives in a fantasy world and still proceeds from the fact that Russia is not a self-sufficient economy in tax, monetary and foreign trade policy , but someone’s appendage.

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