News

Alexey Ulyukaev: We won't fall further, the question is in that, how fast or slowly we will get up. (Head of the Ministry of Economic Development, the hero of the Posner program from 19.10.2015)

19.10.15

What is happening now with the Russian economy? Whether is it in a condition of crisis and how long will it be restored? Is it proper to increase the cost of maintaining of the State Duma in a difficult economic situation? How is it possible to write at the same time economic programs and poetry?

Vladimir Posner's questions are answered by the Minister of Economic Development of the Russian Federation Alexey Ulyukaev.

Alexey Ulyukaev: How do you do, Vladimir Vladimirovich!

V: Thank you very much for coming.

Alexey Ulyukaev: Thank you for your invitation.

V: You know, I rarely invite people who have already been in the program. Well, once and that's it. But in this case the fact that is happening with our economy leaves me personally asking such questions, I would say, anxiety, and it seems to me that your coming is more than justified. And thanks again that you came. And by the way, could you ask your colleagues in the Government, particularly, the Minister of Finance Siluanov and the Deputy Chairman of the Government Olga Golodets, why they are so persistent not to come to this program? I asked them many times. I think viewers would be interested to know their opinion, so if possible, pass them from me this question.

Alexey Ulyukaev: The opportunity will be, I will pass. I think it's interesting to the audience, and it would be useful for them, of course.

V: Yes, it would be nice. So, I still tried to explain myself, and why you so, I would say, readily agree to come? And I thought, probably because still you are a poet. Poets are people, you know, not such, as all. You recently released the third seems to be a collection of your poems, called "Beriberi ". And when you were asked why you are doing this, you replied: "First I wrote poetry, because I believe that the poet of Russia - more than a poet. Then it turned out that it is not so that one could write the economic program and we would be happy. And now I have retrograde motion. It seems to me that the poems are written mostly by misanthropes". Well, I decided to check whether I understand exactly what a misanthrope is, I looked in different dictionaries. The most typical definition of a misanthrope - a person who avoids the company of people, unsociable, suffers or, conversely, enjoys the antihumanism... hatred. This tendency may be the basis or basic philosophy of life. This is right for you?

Alexey Ulyukaev: First of all, the book was a long time ago - almost 3 years ago.

V: And, that's how.

Alexey Ulyukaev: Yes, time is moving quickly. And secondly, probably, here's what you read, this, in my opinion, from some of the Preface of my book. And there it is slightly ironic, slightly self-ironic. But really, I love the definition of the Blues - it is when a good man feels bad. Here it is so expressed in that case. I hope that I'm not a very bad man, and this really gives rise to emotional stress and dissatisfaction. You are talking about dislike of people, especially to the person you see in the mirror when shaving. Here it is the source of these doubts, concerns, discomforts, and alarms. And it breaks and falls on the paper sometimes.

V: When you were in that program and I quoted your poem, addressed to your son, and now I want here other lines to quote: "If the game is worth the candle, // Then only hemorrhoid. // If they have managed to preserve something - // Only stories about the wars. // If they have managed to shape something - // Only heroic epic. // But why do we want to live so much?- // Though it's ridiculous". The impression is that you have a pessimistic view of the situation, about the country, what is happening. This does not prevent you from working as a Minister, who, well, the Minister is a pessimist, perhaps, it can hardly be.

Alexey Ulyukaev: If you read the judgments of newspaper critics, any else, they will say that Ulyukaev is here the duty optimist.

V: Is that right?

Alexey Ulyukaev: Yes. So he has to constantly persuade you, make verbal interventions, everything's fine, that everything will be there, and so on. You see, what the range is here.

V: Perhaps they have not read your poems?

Alexey Ulyukaev: Two parties, like Faust mentioned, "two souls live in my soul". You can't be all the time optimistic. You can't be a pessimist as well.

V: Of course, not.

Alexey Ulyukaev: It is very, very personal. I am, in fact, in such dissatisfaction with myself and the world harmony, that is, right? Here. But it is probably not the way to solve practical problems. You can be an optimist, a pessimist, an agnostic, whatever, but in fact there is a set of practical problems that you must solve. That's all.

V: Well, let us leave poetry; let us see about contemptible prose, the economy. Here I would like to find out such a question. You once, I remember, promised to resign if the economic growth would not exceed 3%. And during the same debate you said so about yourself: I have such a weakness - I always keep promises. Well, are you going to resign?

Alexey Ulyukaev: See, I have outlived one of its drawbacks...

(laugh)

Alexey Ulyukaev: ...and broken my promise. You know, as one of my comrade said who occupies a higher position than I, - one must pay one ruble at entrance to come and 3 rubles at exit to leave. Here. Therefore, it means everything for resignations, that's the thing, and therefore, one should clean up behind himself? To work, to do something? So I think that I'll work.

V: The answer is clear. The question is: is the Russian economy, from your point of view, still in crisis or not? And let me give you two points of view. So, recently the head of VTB Andrey Kostin, speaking at the forum "Russia calling!", stated that "there is no crisis in Russia, and those who believe that the crisis is, it is either they have a short memory, or they are too young to remember the 98th and 2008th years." That's when there were real crises. Speaking there, President Putin was much less categorical, I would say even, very gently, gave this assessment: "Of course, we are faced with the crisis. However, still some experts and specialists believe, and I agree with them that the peak of the crisis in general can be considered reached and the economy in general, not saying that in whole, but in general has adapted or is adapting confidently to these changing conditions of economic life". It is pretty rounded. So after all, does the crisis in our economy exist, or has its peak passed? How do you think?

Alexey Ulyukaev: Look, first, briefly, I believe that there is no crisis. Second, was it, will be it, so fundamental like here, since it is painful to tolerate with the crisis. And there it hurts or does not hurt. It hurts. Today, it hurts. Today, it hurts. And the citizens who are suffering from high prices. Today it hurts for producers who do not find outlets for their products. Today it hurts even for bankers who suddenly receive the bad loans. But it seems to me, the point is not in it. A crisis is when there is impairment of the current growth models, here it is depreciated, but instead of it a new model of development arises, which allows you to move forward. Now from the point of view, this is purely statistical. We've reached, if the crisis is measured just by the rate of recession or recovery, a growth of production. In June of this year, we reached a low point. Since June by July - zero growth, August to July - zero, September to August - a 0.3% growth in terms of gross domestic product. Of course, this can be treated in different ways. 0 or 0.3 - very close values, and people certainly don't feel it and the business does not feel it. Only Rosstat may determine it using such a precise instrument, but, nevertheless, my deep conviction that we will not fall further. But the question is how quickly or slowly we will be able to get up. While feeling that we will be going quite slowly. And here economists operate with two concepts: actual output and potential output. Here is now our problem is that the actual output is less than the potential, i.e. we could produce and sell...

V: ...more.

Alexey Ulyukaev: ...more than today. With this task, I am deeply convinced that we in the next and subsequent years will be fine.

V: And that's why we can't produce as much as we could realistically produce?

Alexey Ulyukaev: Because of demand constraints. We live in a market economy. We don't want to produce just for stock, right? We want our products to be bought. Household and business should have the funds, first of all, for this. And secondly, they must have a sense of trust. It is what that in Soviet times was called confidence in the future. Why would I buy something if I'm not sure if I'll have income tomorrow?

V: That's what I understand. And you know, a week ago here in your place there was the economist, the scientist-economist, academician, presidential adviser Mr. Glazyev, who said what you said, in the sense that we could produce more than we produce, but the reasons he was called, of course, completely different. I don't know, you probably don't really watch TV, nevertheless, he said some curious things among which, in particular, the consideration such that the cause of our troubles is actually the economic policies imposed by the IMF, the International Monetary Fund. And that's not even the International Monetary Fund guilty, but the officials who caved, which, so to speak, stand up and salute the International Monetary Fund for a variety of reasons, and with even a hint that that's not quite clear for what, but he did not go further. What would you say in response to that proposition?

Alexey Ulyukaev: You know, I have been acquainted with Sergey Jurevich for 24 years, and we with him, in principle, personally with him are in good relations. And he's a smart man. But he, like many of us, has a fixed idea: “Carthage must be destroyed” - the current policy of the Central Bank, the Ministry of Finance needs to be destroyed. To destroy - it is not very tricky here, and it is important what will be in return. I have quite a bit of criticism regarding the budget and policy, and monetary policy. I with my comrades, the Minister of Finance and Chairman of the Central Bank, often argue. But this does not mean that we need prematurely some fundamental things to touch, to spoil. Not quite sure what will be the result. The point is not we caved in or not caved in. We got rid of financial dependence from the International Monetary Fund in 2001. 14 years have passed. We have no reason to cave in, because we haven't received anything. We only bear the costs, because the costs of aid programs of the IMF, for example, the program of assistance to Ukraine, which the IMF conducts, we also co-finance. This is our commitment, so there are no such things here. But another thing is that the question can be put differently. To what extent we cannot be dogmatic. To what these or other standards, what are called the Washington consensus, the principles of a balanced budget or budget surplus, inflation targeting are sacred cows, can we challenge them? I believe that are not, and may be disputed. But it's such a sensitive area. We're talking very carefully. All the current system is good because it exists. It lives, wheels are turning, products are made. God forbid breaking this complex subordination of these wheels.

V: You know, the Americans say: if the machine is working, do not fix it. I understand it perfectly.

Alexey Ulyukaev: Absolutely.

V: But still you say that Sergei Glazyev has a fixed idea. Do you have one?

Alexey Ulyukaev: I guess I also have. I still in that Soviet life, probably in the 1988th, wrote an article called "Freedom as a direct productive force". It seems to me that we still too restrict our business. And when I say that we have a relatively small gap between actual output and potential, this means that, if demand is expected to recede slightly, we can increase the production volume. How? Percent for 2, 3. Growth like this is possible. Well, it's not bad, it's not bad, it's growth, then increasing income is moderate, but at this rate of growth is less than the global growth rate of 3%, and 3, maybe a little more. Probably, it is some kind of lagging development. There is the term "catching-up development", and in this case it would be lagging development. So you need to think about how to change the potential, to raise the ceiling. Here growing to the ceiling - a thing simple enough, but how to raise the ceiling? That's what these are very significant reforms that are related to withdrawal of restrictions that we have imposed on business. Now you have to be very brave. Sometimes, reckless brave man to open his business because of huge regulation...

V: And why are doing all this to the business? You, the Government...

Alexey Ulyukaev: It means that we are doing wrong, trying to be better. Here, for example…

V: Trying?

Alexey Ulyukaev: The Prime Minister made the decision and gave appropriate instructions regarding all kinds of non-tax burdens, and tax burdens we have undertaken for three years in any case not to increase…

V: Not to touch.

Alexey Ulyukaev: Yes. The same should be done with non-tax encumbrances. What is this non-tax encumbrances? These are environmental various fees, the requirements of veterinary, technical regulation. It is here, for example, for an additional fee from 12-ton vehicles, so they do not destroy the road surface. Because each of these requirements is also true. We want to drive on good roads, and these 12-ton vehicles destroy it much more than our cars. We want to live in a clean environment, so solid waste should be disposed of, destroyed, water discharges must be decreased. You have to understand that business should be overburdened.

V: Are you familiar with this American writer Ayn Rand?

Alexey Ulyukaev: "Atlanta shrugged"? Yes, I am.

A: She is no longer living, but, in general, it is an icon of non-interference of the state in the market that the market itself will do and the most talented, the most daring, the most willing to innovate people are there and leave them alone, let them work. Say, it is point of view, most likely, of Glazyev, though I do not want to ascribe to him the things which do exist, but what the state is obliged in some cases quite a lot, one way or another, to intervene. You don't think that in our case the state intervenes too much, do you?

Alexey Ulyukaev: Yes and no. Generally, of course...

V: It cannot be yes and no at the same time.

Alexey Ulyukaev: It can. This is called dialectics. The principle “leissez-faire, leissez passer” for 3 centuries it is a very respectable and serious in economic science. The invisible hand of the market, according to Adam Smith...

V: Really?

Alexey Ulyukaev: It is capable to understand the economic situation. I believe that, of course, and not just me, there are powerful institutional schools in the modern economy, economic science, which believes that the role of the state is more. But what should it be? In the formation of institutions, rules, orders, common to all. A single frame of tax requirements, a single frame of requirements in the field of customs clearance of goods, a simple frame, the formation of economic culture and responsibility. What is economic growth? Economic growth is investment. What is investment? It is trust. I have to trust my Government, its promises and obligations in the field of taxation.

V: Yes, Yes.

Alexey Ulyukaev: I have to trust my counterpart. I have to trust the entire system of relations. The trust is producing relevant public institutions: the court, advocacy, system consulting, system credit liability and so on. Here, it is the task of the state - to impose these institutions.

V: I don't know if you read… recently published results of the poll of "Levada Centre" just about confidence. It turned out that the people most trust directly to the President. Slightly more than half trust the Orthodox Church: the Orthodox Church does not interfere in anything, you can safely trust it. Slightly more than half trusts the army. Everything else is less than half. That is, generally there is general mistrust to everything: to justice, to police, to the parties. However, there were not asked about the media, but I think that confidence is not high. Here the government has clearly not succeeded.

Alexey Ulyukaev: Clearly not succeeded, I would have left aside the army and the Church. If you take, for example, the economic bloc of the Government, my Ministry, close to me, perhaps, we have not succeeded. Perhaps, we have not sowed in small business confidence and trust that we, in fact, for three years won't bother it with unnecessary checks, will allow to create new production and release in the next 2 years from tax burdens.

V: Understand.

Alexey Ulyukaev: They expect us some guile.

V: Accused.. Yes, Yes, Yes.

Alexey Ulyukaev: We're on a stage like this, and behind the scenes that way, and so on.

V: Yes, Yes, Yes.

Alexey Ulyukaev: the Confidence comes only from frequent repetition of one and the same. If you said, then it turned out that things went wrong, as you said, and not once, not three times but many times.

V: And, incidentally, if even then 1 time say and do not do that, trust disappears instantly. That is, it disappears much faster than it occurs.

Alexey Ulyukaev: “Once lied, who will believe you”, the Scripture said.

V: We met 2 years ago, and then you talked about the impending crisis. Called many reasons, mainly of an economic nature, and, primarily, the decline in investment. That time was not yet for the reason that is called Ukraine and Crimea. Then they were not. Now, if we consider all other reasons for our current crisis because it still occurred, and here is the one about which I have just said, the Crimea and Ukraine in general. What is the ratio?

Alexey Ulyukaev: I think that Crimea and Ukraine - is in an economic sense ripple on the water.

V: ripple?

Alexey Ulyukaev: ripple on the water. In an economic sense. The real problems of our economy, of course, are much deeper. It is its structure. It is that producing savings for about a quarter of GDP, we invest only 17-18%, the rest 7-8% somewhere flow away between the fingers. This certain lack of trust between economic entities, between the subject and the state. This is a weighted economic structure, monospecialty and so on.

V: so the sanctions, in your opinion, in this sense, play a very superficial role?

Alexey Ulyukaev: It is from my point of view is superficial and it is actually uneven. In the sense that we have been denied from the first quarter of last year the access to world capital markets. In that sense it was a good service for our companies. Starting this year, all developing countries have negative, for the first time in a quarter century, they have a negative balance on capital account. That is, it flows away from them more than inflows. 25 years was not like this. And we were warned for a year roughly speaking. Thanks to our overseas and European friends, that so rudely, but be warned.

V: Friends do not say, only the partners. Now the budget is being passed for next year, and, so to say, a lot of things have been cut. Pensions will be indexed only by 4% with a vague hint of a possible second phase of indexing, “depending on its economic success”. Maternity capital will not be increased at all. And, it would seem that all will suffer, but no - not all.

The allowance of the State Duma will grow by 40%, the Federation Council - by 35%, and the salary of MPs by almost half. The Government meeting, which discussed the budget, made one more amendment to the document- to increase defense spending. On defense - 170 billion rubles. Returning to the allowance of the State Duma and so on. Don't you think it is a little unseemly, considering how everything else is cut, except for military spending, people that are generally having a pretty good life, still so serious to add allowance?

Alexey Ulyukaev: To be precise there were two amendments: 165 billion rubles of Defense Department spending and 10 billion rubles is housing for veterans. This amendment was accepted as well.

V: Well.

Alexey Ulyukaev: The second. As our colleagues say, that the increase in wages in the State Duma, the Federation Council is a catching increase, there for 2 years had been no increases. And it is compensation for it. The third, there is, of course, the moral element. I think now we are deciding that we should dismiss 10% of the nominal number of state employees, state apparatus and our costs for this, I believe that we are doing the right thing. We have, indeed, here to be careful.

V: In general, it seemed to me that the people representing our interests, elected to the authorities by us, would have to be the first to express their willingness to hunker down, since they are responsible for how we live today. This is their errors and possible deficiencies. Well, You know, what I'm saying, right? In this case, I'd like to hear, although, perhaps, it in me too, apparently, poetry speaks, a statement that in connection and we don't want and so on. Well, I can hardly wait. I don't know, what are you waiting for, dear audience, but the advertisement you certainly will receive.

***

V: Well, let's go back to December of last year. Here then describing the economic situation in Russia, you said this: "I guess we hit the perfect storm, well, the name of the American film, caught in a perfect storm. And perhaps it is no coincidence, because in a sense, this storm we are prepared. This is how the Marquez’s “Chronicle of a death foretold”, chronicle of a declared crisis. We ourselves each time, making some movements, prepared the crisis." From your words it turns out that largely we ourselves have arranged our troubles. But how, can you tell me? What exactly we did that led to those troubles that we have experienced at least a year ago?

Alexey Ulyukaev: In particular, we were not able to find the answers to the questions posed by life. How have been we developing for over 8 years? We extracted oil, oil rose in price, the funds received were partially spent on the development of the economy, partially on the growth of the social status of citizens, they raised additional demand for the products and all went on. You know what they say, while the music is playing, a dancer is dancing. But the music stopped playing and the dancer doesn't know what to do, because we are unable to create the mechanisms which transfer national savings into national investment. Here is our main mistake or fault or whatever you want. Here several circumstances, fiscal circumstances are related to this as well. We are increasing non-productive expenditure, reducing productive expenditures, public investment. One may have different attitude to this. Private would be better, but when there is no private, it would be nice to have at least state ones. They are, like shagreen skin, reduced year by year. In the 2009th year, do you know how we responded to the crisis? We increased spending on road construction by 370 billion rubles. And in the 2014th year we did the opposite - we have reduced them. This orientation of the budget to non-manufacturing costs means that we want to live at a short distance, today, to fulfill current obligations and ready to fulfill future obligations. That is what we said in the first part of the transmission. Additional burdens for business. It is also our error...

V: Is it possible, so to say, more rude, perhaps, to say that we, in general, do not see beyond our noses? Because, I think it is, what you say, in principle, obvious things. And there is even such American expression "you cannot put all your eggs in one basket". Like we did with oil in particular. It's certain people talked about it, different economists. Why it was ignored? How can it be explained? The powerful oil lobby, pressing and demanding, and proving: just see how good it is. It is folly, unprofessionalism, isn’t? What is it?

Alexey Ulyukaev: you know, in economy there is such a law, it's called preference of current benefits to benefits to future.

V: Is this a law?

Alexey Ulyukaev: This is a kind of economic law. And unfortunately, it takes great foresight and will, and sometimes even luck for that chain to break. Now regarding lobbying... Here I am now, for example, is a lobbyist for the oil industry, because I believe that the intention to increase taxation of the industry through royalties or through the export duty, they are harmful for the industry and for our budget in future periods. So here there is probably a little of everything. There is lobbying, there is vision, there is excessive concentration on current operational issues. All of us - and my colleagues-Ministers, and other people - there are a huge number of current problems of today. We are patching holes, we are trying to keep the ends and often produce a strategy.

V: So, I understand that we have entered, again, from your point of view, we have entered a new period, when there will be no rapid economic growth? You even once said that I, at least, just will not live to those times, because everything has changed. And now here like this, so to say... a 2.5-3% is fine, to expect more is not necessary. But then, in December, you said that the implementation of the May Decrees of President Putin is possible only with increasing economic growth rate to 5.3%. It means that the implementation of the May Decrees - it is the distant future? Or even unlikely, if this increase of 5.3, that's a big increase, is not expected, does not it?

Alexey Ulyukaev: So, first, when I say that I will not live to those times, it is said in the context of the global economy. I am deeply convinced that the pace of the global economy has seriously declined and fell a very long time. It's what economists call the new normal. First. Second, there is the goal setting. Here, in order to achieve something, for example, to reach the level of productivity at a pace higher than the growth of wages, or to get on the pace of economic growth higher than the world one, or pull the level that allows fulfilling in full the May Decrees of the President. For this it just has to be calculated. To achieve this kind of growth of industrial production, so-and-so agricultural, so-and-so gross domestic product.

V: Understand. Yes.

Alexey Ulyukaev: We, along with the basic forecast, which underlies the budget, it's more cautious, more conservative, have also formed the so-called target prediction. It says: in order to enter these parameters, a growth rate above world one and performance in full of these obligations, we need so-and-so, such-and-such. That is, first of all...

V: so-and-so , what is it?

Alexey Ulyukaev: It means that the growth of investment we need to have each year is 7-9%.

V: From whom? From whom these investments should come? From the West?

Alexey Ulyukaev: No, no. Look, they have to come primarily from our business. Economic results of work of business are very good. For 8 months - from January to August of this year - our business have profit by 40% more than it was a year ago. For a variety of reasons: devaluation, reduction of costs and so on. However, it has the resources. Just see how the business deposits in commercial banks are growing...

V: But you yourself said that you don't trust much...

Alexey Ulyukaev: ...and public funds too. The same is true - the deposits are growing. But why don't they turn into really investment? Because they do not trust. First of all - the company’s self funding. The company has a surplus it seems to be used for investments, instead, many companies forward to dividends, that is, roughly speaking, they divide, monetize the business and divide the result of this monetization between the shareholders. So, banks...

V: That is, they think about today, about tomorrow maximally?

Alexey Ulyukaev: They think about today. We do not sow in them the confidence that tomorrow there will be a demand for their products that they will work and that business conditions will be comfortable for them. After all the investment is correct, it is a rational choice.

Irrational choice is there to spend on prestigious consumption, for example. Marx said that the capitalist is a rational treasure hunter and treasure hunter is a crazy capitalist. And in this sense I am a Marxist, it is an absolutely correct maxim. Hence, reasonable behavior for business is to invest in production. It is a machine for inserting money into production. If something prevents it from doing it, so the machine is broken. It means that you need to remedy this situation. We should help them to make rational choices. But again, as we have already said, that is confidence, that is trust.

V: This summer you gave an interview to the program "HARDtalk" on BBC. It is an interesting program, a bit similar to the one in which you now participate. And there you said the following: "Even when you're trying to poison flies, at first, for them it is very serious, but then they adapt to survive even in the poisonous political atmosphere, so there are short-term results from sanctions and long-term results from sanctions. One of the long-term results is the more positive dynamics of the national currency. First, we have falling oil prices, and then the sanctions. Together they become the reason of devaluation of the national currency, but in the short term they create more problems. But in the long term for the Russian companies it improves the ratio of production costs. They become lower". Now, I want to ask you something: today, we are still under the influence of the short-term effects, that is, the flies are still feel bad, or we, the flies, have already adapted and have started to move out of this state, a few poisoned?

Alexey Ulyukaev: You, Vladimir Vladimirovich, have very much dirt material on me.

V: It's not dirt, it's a brilliant interview.

Alexey Ulyukaev: It means that someone has a very long tongue. Seriously... Look, really, I am convinced that there are short-term and long-term consequences.

V: Absolutely.

Alexey Ulyukaev: The long-term consequences are the reduction of costs. Our problem was that we entered a spiral of rising costs on labor, for payment of tariffs of natural monopolies, bank interest and so on. Business cannot last long in this atmosphere. It needs to have a source of return on equity; the return on equity is a reasonable cost. And in this sense, of course, the sanctions mechanism, devaluation change in exchange rate ratios have rendered good service to the Russian producers. But we cannot think that now we need to bless this situation and to reap its fruits. Actually, after all, it is clear that, if you get an additional competitive advantage, I don't know, piece of something, for example, in sausages production, and you won the competition against imports, but if the more you were administratively helped to win this competition, then all good. This does not mean that you will be able to increase production on the same equipment. After all, there comes a time of full production download. You need to invest. Still need to create a new production, of course. Now there can be no other growth except the investment one. You can't work for domestic consumption. You can't work on export without it.

V: I would like to quote your words from this same interview, which made on me strong impression. You say, "Really, economically Russia is not a superpower because we have the ratio of GDP to the global economy of 3.3%, which is 9 times lower than that of USA or China. We need at least 50 years of continuous growth, to get into the club of these economic superpowers. For us it is the big question, are we going to come on this road leading into the club of superpowers of the 21st century, or not. We are now at a crossroads. At the moment, Russia looks quite modest in economic terms. I would say that our economic level is much lower than our ambitions". At the crossroads? What determines the choice of the right path to at least 50 years to join the club of economic superpowers? 50 years is a lot...

Alexey Ulyukaev: it is clear that...

V: ...to human life.

Alexey Ulyukaev: it is clear that 50 is a metaphor. However...

V: Is this a metaphor?

Alexey Ulyukaev: It's a metaphor, sure enough, is an inaccurate estimate. However, we have here some estimate elements? What are they? That is the ratio between the average global growth and Russian growth. To boost our GDP from 3 percent to 7-8 percent we need that in the number of years our economic growth exceed the global economic growth by per cent at 2, 2.5, and 3. It's the implementation of the target scenario, target prediction, which I mentioned at the beginning. And really here you need to take political decisions, fundamental decisions on the reorganization of the budget, its much more reorientation to manufacturing costs, investment in human capital, i.e. education, health. These manufacturing costs to support the economy, on investment, on reformatting the whole system of business regulation, creation of comfortable conditions for it. After all, it's competition. We live in an open economy in the open market. We have to give better conditions than others. And look, others give really good conditions.

V: Then tell me such a thing. That's all you say, personally I think this is absolutely correct and great. But this is the voice of one crying in the wilderness, is it? Does the Government share your point of view? And the economic bloc, what exactly so they should do? This is because it is drastic things, it is not only to move from here to there. If they share, why we don't see it? Why is there no sense that there are going these dramatic changes? Or actually you are there, say, not in majority?

Alexey Ulyukaev: No, no. It is far from me to consider myself some kind that the holder of the ultimate truth. I think that in Government there is a general understanding of the fundamental problems. As they say, "the devil sits in details". My colleagues and I argue about practical implementation of some things at a fundamental level, about which there is consent. This applies, for example, to that there should be given any preferences to new businesses or not. Here my colleagues and I argue. I believe that should, because it is a new business, and it has not yet created anything. And getting or non-getting taxes by it, especially, depends on the fact the whether it is born or not. So, on this basis, I believe that we need to provide tax benefits. It will recover feet, become overgrown with wool, and we will cut them. But before this it cannot be done. Here I do not agree with colleagues, for example, the Ministry of Finance. Or with colleagues in the social bloc. In order to provide a high volume of redistribution, we must first have a high volume of creation of the cost that will be redistributed, so, accordingly, the transfer to the Pension Fund or other social funds must somehow be related to the size of the budget. There may not be such a situation in which these very important areas of spending are indexed in one way, by 10%, 12% and are protected items, and expenses on the investments, the economy are not indexed at all or even decreased. It will come to undermining the bases of performance of social obligations in future periods. Here we argue, really, and a lot.

V: You said that for the first time since the 1999th we saw a decreased real income. Actually, if you look at the history of Russia's development, so rough, people lived poorly and began to live better. There were recessions and war, but everyone knew that a war such a thing and ruin, it was justified, that they began to live worse. Then again went, went. Well, already, later, of the Brezhnev times - somehow it has stuck, and people started to complain. Then everything turned upside down, again began to decline, and then again grew, grew, grew, and quite significantly increased. Now, you say, for the first time since 1999, the year real incomes fell. Does the Government have any worrying about the fact that people can express their dissatisfaction not only swearing in the kitchen or somewhere else?

Alexey Ulyukaev: The Problem is not in what form the discontent of the people will manifest.

V: Really?

Alexey Ulyukaev: The problem is that it has a real basis. In fact, we interrupted the steady growth of real income, this is an extremely unfortunate circumstance in social, political, and purely economic sense. And here the reason, sure enough, is a sharp increase in inflation. The inflation jump in 15-16% is, really, extremely high. I am convinced that bringing order to the situation with inflation is this issue of low quarters, that is already from the 2nd quarter of next year inflation will be straightforward, less than 10%, and somewhere towards the end of 2016

will fall in approximately 7 percent.

V: We have recorded it again.

Alexey Ulyukaev: This is the base for real incomes ceased to decline and began to raise slowly.

V: You insist that you need to raise the retirement age?

Alexey Ulyukaev: I insist that no other way. Having considered all options, we come to that other is impossible.

V: For how long?

Alexey Ulyukaev: This is under discussion, but in principle, the sooner we accept this decision, the less radical it will be.

V: I'm not about it. But as soon as you say exactly what I got, this on the basis that we have 125 working people for 100 pensioners. Than it is easily to calculate as evolving, so to speak, that part of our problem. And you can say that obviously, we need to increase the retirement age of women up to such age, and men - up to such. May be you do not want to call this number?

Alexey Ulyukaev: I'll mention, although I am against saying that it is obvious. This is the question of possible discussions. But my opinion is - 63 years of age equal for men and women.

V: Same and those and these. People sure enough do not want that, you know.

Alexey Ulyukaev: I myself do not want it, but there is no other way.

V: Well, okay, yeah, nowhere to go, it's true. I just appreciate one of your sayings, maybe above all. You said: "From the situation, there are 2 way outs - realistic and fantastic. Realistic, if the Martians arrive and do everything for us. And fantastic, if we get down to it". Is this is actually so? You do realize that there are no Martians, don’t you? So that's it?

Alexey Ulyukaev: It means, we will still have to implement fantasy. Ourselves.

V: But why is it fantasy to do it ourselves? Are we not capable, not smart enough, lazy, well, some explanation should be for this, should not it?

Alexey Ulyukaev: Actually, any of these are explained incorrectly. Sure enough, we are talented, smart enough. Not enough, as if to say, are pragmatism, dedication, perseverance, bringing to the end the transformations that we begin. This inconsistency in action, this sequence is not enough, I think.

V: Is it an innate thing or something, and how is it?

Alexey Ulyukaev: Well, it is necessary to ask about it someone cleverer, than I. It seems to me that this is a stand that is somewhat an element of national culture. Like any other element of national culture, it is formed, increases, wanes and, in the end, may cease to play such an important role.

V: Well, thank you very much. When you were at that time, you answered Mr. Proust, so the second time no one answers, except for Proust who did it at 15 and then at 20. But I won't ask. But you know the question I ask at the end to all: When you find yourself before the Almighty, what will you say? I thought about it and would like to turn it around and ask you this: when you find yourself before the Almighty that you wish he told you?

Alexey Ulyukaev: Go and sin no more.

V: Well, okay. It's not the end of the program, but, as you say, some picture of who we're dealing with is made. Tell me, really, when we could rely on, I understand that the forecasts - it is risky, but you have been drafted some kind of a nice perspective. Inflation is no more than 10%, inflation is no more than 7%. This is one side of the case. How successful do you think can be this one, the trend, which is called substitution?

Alexey Ulyukaev: It is already quite successful. The only industry that we have, excluding mining, is developing well, this is the food industry. Here we have a constantly positive growth.

V: Is this agriculture?

Alexey Ulyukaev: Agriculture and processing, food industry, i.e. meat, dairy, confectionery, flour and so on. And it's pretty good growth. And I think we all in for five years, very strongly feel that not in statistics, but physically - in your fridge, on your table, in your diet. This is extremely important. Slightly worse is the case in other positions, such as, for example, household chemicals, care for the home, furniture and so on. But I think it is largely a matter, again, of investment. Now we were concentrated on investment, first of all, in the branch related to agriculture and food industry. Then we will expand the zone a little bit. We have now established a good mechanism, called the mechanism of project financing, which is based on the principle of risk sharing. This risk is the lack of confidence in the future - we must help the business to take on this risk. For this, a part of the risk is assumed by the bank, and a part of the risk is assumed the budget, the Government in the form of guarantees through the Central Bank in the form of a preferential system of funding, we should gradually start to work. We now have already launched 31 projects, they are working in the field of import. And I am counting on the results in future.

V: Definitely, I will put you now in a not very pleasant situation, but it's my job. Here was the Minister of Agriculture Tkachev, who is very tough, no, confidently say that in 5, maximum 7 years, we feed the country. That is, for the first time, we can say, in the history of Russia actually, all will be fed. I allowed myself to doubt. But it's my job. Journalists always somewhat skeptical about the statements of a representative of authority. Well, you think so, don’t you?

Alexey Ulyukaev: I think that this is largely so. In the sense that in 5 years we certainly, in retail, i.e. in stores the share of domestic products will be much more than now. We have now an import, in my opinion, about 38% is in the range of retail trade. I am deeply convinced that these are the standard things like all kinds of meat, basic vegetables - cucumbers, tomatoes, and basic fruits - apples, for example, - would be virtually 100% Russian. By all means, there are huge niches, where it is not needed and wrong, and you have to believe in the theory of production costs, and that tropical fruits should be grown where the costs of production are low. Slightly more complicated business with milk. There's just a very long period of investment. Perhaps in 5 years we will not achieve an actual result, it needs a slightly longer term.

V: Well, thank you very much. As always, it was very interesting to talk to you. Remind you, it was the Minister of Economic Development. By the way, we have economic development, haven’t we?

Alexey Ulyukaev: We have economic development, and we have, I would say, failures in economic development. And they both are.

Documents