“Common Sense” and Russian Communists

I never thought I’d find myself agreeing with the Russian Communist Party but I guess times have changed. On 31 March, the Russian Interfax news agency carried a story about how the Russian Communist Party “believes that the targets set by President Dmitriy Medvedev at a meeting of the commission for the modernization of the economy are correct, but the party regrets that words are still not followed up by actions.”
I think the article makes a lot of sense. What do you think? Here’s what Interfax reported, verbatim:
“The fact that President Dmitriy Medvedev insists on raising these issues (modernization) publicly and they are widely discussed is very good. Better that than nothing. However, society can not be content with a consolation prize. But this is what happens when important issues are not provided with the necessary tools,” first deputy chairman of the Communist Party Central Committee and deputy speaker of the State Duma Ivan Melnikov told Interfax.
He stressed that at the moment not only there is no inflow of investment from domestic and foreign businessmen into Russia’s economy, but Russian capital is fleeing the country increasingly faster.
“According to official figures, the amount of money that left Russia in January alone is already almost half of the amount that was taken out of the country last year,” Melnikov said.
He was confident that, in order to curb this trend, it is necessary “not to preach to oligarchic clans - this is useless, because they are not interested in the prosperity of their country, but to take tough economic measures”.
Similar measures should be taken to improve the fight against corruption, the Communist MP said.
“Yesterday at the commission meeting, they discussed paper-based mechanisms, and the fact that soon one can see in the internet how a complaint against a potentially corrupt official is being considered. But today the fight against corruption concerns only those who have no protection. Until it concerns everyone, there will be no point and the scale of corruption will not diminish,” Melnikov said. He also stressed the unresolved problem with the execution of decisions.
“We all see that the government has financed only 33 per cent of the initiatives put forward by the modernization commission in October last year,” Melnikov said. He added that “if you take everything into account, you will see that all good ideas are getting emasculated”.
Speaking of his personal interest in the meeting of the modernization commission, Melnikov said he had been attracted by the discussion of the problems of primary, secondary and vocational education..
“However, the mechanisms that have been offered to restore the level of education are significantly inferior to the programme which the Communist Party published at its recent plenum. After all, we want to promote education on the basis of inter-related measures, and the president’s advisors are telling him again and again that the problems in one area should be resolved at the expense of another area, and this destroys the latter,” the MP said.
Deputy speaker of the State Duma Aleksandr Babakov (A Just Russia) also spoke about the need to support the measures proposed by the president, RIA Novosti reported on 31 March. In Babakov’s view, the investment climate in Russia, if not worsened, then certainly has not much improved, and it must be changed radically.
“We are talking about changes in how the state controls market relations, and this applies not only to representatives of the state in private companies, but also such initiatives as reducing social taxes and thus reducing the burden on business, which at a certain stage can inhibit progress,” Babakov told RIA Novosti.
He noted that “investment resources”, which can go to various countries, including Russia, are huge. “And this is a matter of not only technologically advanced industries or interesting projects, but also such topics as intellectual property, intellectual property on the market and capitalization of intellectual property,” Babakov said.
“All this can create conditions highly favourable for the arrival of investors, but they must understand that this is not just about protecting their rights and property, but also about removing barriers and opening ways for their investment in the economy,” the MP said.
He said corruption is not a purely Russian phenomenon and many other countries are struggling with it.
“The scale of this phenomenon is minimized depending on our efforts, and if society is mobilized, successes are obvious - the more transparent relations between the state, society, business and individuals are, the more progress can be achieved,” the deputy speaker said.
Fewer state and bureaucratic obstacles for domestic and foreign businesses will mean that the fight against corruption is really under way, Babakov said.
He believes that a turning point in improving the investment climate could come quite soon. At the same time the deputy recalled that Deng Xiaoping started his reforms in China 25 years ago.
“For large-scale reforms, 10-15 years (for a visible effect) is a realistic period of time,” the MP said.
Head of the Federation Council Committee for Financial Markets and Currency Circulation Dmitriy Ananyev also supported Medvedev’s initiatives to improve the investment climate in the country, but believes that ministers and deputy prime ministers should be gradually withdrawn from the boards of directors of state companies.
“The president’s initiative about their withdrawal is 100-per-cent correct, but first professionals with impeccable reputation must be elected to boards of directors and only then officials should gradually be withdrawn,” Ananyev told RIA Novosti.
According to the senator, this scheme will make it possible to avoid the loss of capitalization of companies which is possible after the departure of senior government officials.
Noting that he supported all the initiatives voiced by the president, Ananyev said, however, that legislative changes in the economy in recent years had often been inconsistent. “Sometimes completely opposite decisions are made - first we break things with one hand, and then we begin to mend them,” Ananyev said.
Ananyev said methods to implement the president’s initiatives should be carefully thought through.
Co-chairman of the Right Cause party Georgiy Bovt believes that Medvedev’s speech at the modernization commission’s meeting shows the president’s determination to improve the investment climate in the country and his consistency in this matter, RIA Novosti reported.
“I think the most important thing is that he has shown his commitment to dramatically improve the investment climate in the country. The president shows his consistency in insisting on fulfilling the promises given in 2008 about the presence of state officials on the boards of directors of companies,” told RIA Novosti.
Bovt also thought that the president’s “anticorruption part” was very interesting. According to the co-chairman of the Right Cause, all this “shows the president’s determination to put things in order in these matters”.
“In addition, these measures show that the president knows what he is talking about - he listens to businesses’ complaints and is ready to quickly respond to them,” Bovt said.
Medvedev’s willingness to quickly revise an increase in insurance premium is the most vivid example of this, Bovt said.
“The president has seen that business’s response is generally negative, and he’s ready to take quite extraordinary measures and reduce the premium,” Bovt said.
“Overall, this shows that there is a clear intention. It is obvious that the implementation of these ideas will depend largely on the government’s work,” Bovt said.
Leader of the Yabloko party Sergey Mitrokhin described the president’s proposals as “correct statements” but said that “they must be more precise and be followed up with a clear mechanism for their implementation”.
“There must be deadlines and those responsible for these initiatives. Harmful innovations, which the president himself condemned in his speech, must be assessed, for example, increasing the tax burden on businesses up to 34 per cent. This mistake should be corrected immediately, and measure should be taken against those who made ??it,” he said.
Mitrokhin also put forward his own proposals about boards of directors.
“They are correct, but I would expand them. I would ban not only high-ranking officials representing the government from the boards of directors but all officials. This is fertile ground for corruption and lobbying a company’s interests,” the Yabloko leader said.
Medvedev’s proposals on how to improve the investment climate in the country are very important because they will help increase the potential of Russian business and purge a lot of companies of corruption schemes, member of the Public Chamber and editor-in-chief of the Ekspert magazine Valeriy Fadeyev told RIA Novosti.
“There is some misunderstanding on the issue of investment: usually people talk about attracting foreign investment, as if Russia does not have its own business. Well, Russian business has its hands tied and even feet too. The potential of Russian business is huge, I’m sure, and the challenge is to realize this potential. Therefore, the president’s proposals about state-owned companies, corruption, and reducing the costs of large state-owned companies, especially monopolies, are very important,” Fadeyev told RIA Novosti.
Many large Russian companies are steeped in corruption, he said. “These companies deal mostly with medium-size Russian companies, and they get involved in corrupt schemes and become ineffective and uncompetitive. This is very dangerous,” he added.
Fadeyev also noted that in the context of improving the investment climate in Russia one should not forget about another important issue - house construction. “House construction is still not developing. We need to change things about house construction and house prices. This is something we need to pay attention to. This is an extremely important social issue, because without it it is impossible to talk about the growth of the middle class. If this problem is not resolved within the next 10 years, social tension will increase in the country,” the expert said.

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