About industrial policy of the state

Many new people have appeared on important governmental posts over the last two years. But no considerable changes have occurred in the sphere of ideas, that is not correlated with the manpower policy. We still address well-known people, who are considered to be good experts, for answers to pressing problems. Yury Maslyukov, the chairman of the Duma’s committee for industry, construction and high-end technologies is one of such people. PRAVDA.Ru correspondent Anatoly Baranov interviewed Yury Maslyukov.

- Yury Dmitrievich, it looks as though the situation in development of the domestic economy is still the same as in 1991: it is still discussed, where to go and what is to be done, just exactly the way it had been done ten years ago. Do not you think, the consideration process is too long?

Indeed, some common strategies are being discussed now. It is really very important now, but it looks not so much constructive. However, together with the discussion on macroeconomic strategy some urgent, well outlined tasks do exist. If the problems are settled now, they will make for economic growth in the nearest future. Participation of the state is to be very active in solution of the strategic development problems, as even perfectly developed market economies can not settle problems independently. First of all, Russia is to develop a strategy for the industry’s upgrade. Today it is impossible to replace the main industrial capacities, 70-80% of them are already out-of-date. There is only one way out in the situation: it is necessary to modernize the industry by implementation of modern controlling systems for management of technological processes. All related scientific and technical problems are practically settled in the sphere already. The measures will reduce the pressure on the budget and create more opportunities for import substitution.

- Once you have mentioned, a special program for productive capacities’ development is to become an important part of the modernization strategy. What kind of the program is it going to be?

I would like to mention regional and branch aspects of the problem. State control measures are to be applied in the spheres where activity of the business itself is not enough for complex modernization. This may be export stimulation and direct state guarantees.

A program for productive capacities’ development is to be the core of Russia’s industrial policy. Creation of the program is essential for Russia’s incorporation into WTO. The program will help the state to understand, which industries are to be especially protected. For this very purpose, a technological policy is also to become a part of the industrial policy, it will determine a range of technologies that are to be developed, created or imported. No noncompetitive technologies will be developed at that. This, in its turn, will produce effect on all economic spheres, starting with mining and procession of raw materials and including science and education. Objective guiding line will be defined for the trading policy at that as well.

- We should keep in mind the problem of natural monopolies. General rules can not be applied to them.

Today the strategy for monopolies’ development makes up the basis of the economy. Natural monopolies are to be oriented at usage of domestic equipment and machines, instead of import purchases. It is the state only that can solve the problem now. Well-balanced usage of the capacities we have got plus modernization will increase their effectiveness by 60-70%, that may make for improvement of macroeconomic showings, employment and earnings of the population.

- Under such conditions the state is to become a large investor as well. Subjective and objective problems appear at that.

State policy in the sphere of capital governmental investments is to be oriented at increase of production volumes and speeding-up of the economic growth. This is the basic principle. Insufficient financing of capital governmental investments in the budget increases their cost. The state is to use them maximally. Organization of the budgetary process is to be improved for a better policy in the sphere of state capital investments. Today’s budgetary planning mechanisms in Russia are not suitable for implementation of important long-term programs, as they are mostly oriented at current financing. First of all, all capital spending is to be placed in one budgetary section. This will demonstrate Russia’s financial opportunities as concerning capital spending for the current year. Second, control over purposeful spending of finance can be strengthened at that.

It is also important to go to medium-term investment planning, when budgetary powers are calculated for several next years. This will make for realization of the Development Budget idea, fixed in the Budgetary Code, and will make the investment policy a long-term one, increase stability and improve investment climate.

- What could you say about branches’ problems?

The base of raw materials and road economy in Russia are the two key spheres, where the problem of state capital investments is to be settled urgently within the nearest time. Transition to a steady innovation and technological development can be done at the expense of finance obtained from exploitation of fuel, mineral and raw resources.

- Is it possible to create private structures or smaller structures in large companies for mineral exploration?

It is only the state that is authorized to explore strategic raw stuff. The amount of oil produced every year is two times as much as the replenishment of the explored resources. Geology needs considerable state support; this may be governmental contractual work or obligation of companies to increase explored raw stuff resources in the bowls of the earth. It is the only way out.

- There are also several problems concerning military, technical policy and defense establishment management. Executive authorities touch upon the problems just casually. It looks as though the problems do not concern the whole of the country’s population.

The present system for defense establishment management is not effective from a financial, as well as a management points of view. A single coordinating authority is to be created for control over realization of the State armament program, including creation of double-purpose techniques and technologies. They are to be used in the sphere of modern technologies, in military and technical co-operation. A governmental commission attached to the RF government is to be created for this purpose. If it is created, we will have a management system consisting of two sections – a state commission and holdings.

Military and technical co-operation is an example of state monopoly with all lacks of the present-day system: excessive centralization and much paper work. This entails reduction of competitiveness, hampers effective military and technical co-operation. These problems can be settled through holdings authorized for independent operations on the foreign market, still with preservation of the state commission’s control. – Who is to be responsible for solution of the problems?

I think, some problems from the sphere of military and technical policy and defense establishment management are to be considered by the president personally. First of all, because the present-day budgetary process does not allow to carry out effective control over large long-term programs designed for creation of nigh-end armament and military technique. The federal budget is designed for one year only. That is why the industry itself and the customers have to adjust their programs to the time limits – they are obligatory to be concluded by December 31, in order to get further financing from the budget. That is why management and financing of long-term programs is to be applied at every development stage: development – creation – preparation for the production line – launching in the production – exploitation in the military sphere – recycling.

Second, we have no financial resources for immediate launching of production in any spheres of armament or equipment production, where the terms of production are of the greatest importance.

We have no executive authority now responsible for making military and technical policy of the state and realization of the policy. The authority is necessary for analysis of the armament and military equipment of the world arsenals and comparison with the analogous Russian equipment. The department is also to estimate, when and how technique similar to that one used by foreign armies will be created for the Russian army as well.

- State Council of the Russian Federation considered several problems concerning the state policy in the sphere of raw stuffs and usage of natural resources. However, some problems of the complex of raw materials, that are also connected with globalization, are not mentioned in the State Council’s documents.

Over the last ten years none of the world investments designed for the base of raw stuff was received in Russia. About $70 billion has been invested in the projects for mining of gold, copper, plumbum and zinc in foreign countries over the same period. Thus, Russia’s natural resources are not used on the world market. As a result, even if the national mining and metallurgical complex is strengthened, this will coincide with the production increase at foreign enterprises. This, in its turn, will negatively influence Russia’s export of raw stuff. The recent processes on the world markets of oil and metals are not favorable for Russia and demonstrate the mentioned above situation.

- At the same time, we can say for sure that the complex of minerals and raw stuffs is developing and integrating in the world economic system.

I think, for steady development of Russia’s complex of raw stuff under the competitive conditions on the world markets we should settle problems connected with the inter-branch balance of raw stuffs consumption by the national power industry and manufacturing industry. We should consider prospective necessities of the industries and examine possibilities for their quickest re-orientation to the domestic consumption. An institutional sphere for attraction of foreign investments to the mining industries is to be created. These can be foreign companies with good interests on the world markets of raw materials.

- Do you think measures can be taken on the legislative level for solution of the problem? Or does the problem turn again on the political will of the president and the government?

At development of amendments to the RF law “On natural resources” now the very system of natural resources’ management can be changed. The responsibility is to be distributed between the Russian Federation and RF subjects; strategic mineral resources are to be defined in the law, federal executive authorities are to be in charge of usage of such resources. The right of the RF subjects to control licensing of natural resources usage is to be preserved for the subjects. They will also get a part of revenues transferred for exploitation of fields with the resources.

A draft federal law “On efficient exploitation of oil and gas fields” is to be worked out within the shortest terms, as Russia is the only oil-producing state in the world that has no special oil legislation of its own.

Work on a draft federal law “On concessive agreements concluded with Russian and foreign investors” is to be concluded, as it is really very important for implementation in different economic spheres.

Yury Maslyukov was interviewed by Anatoly Baranov PRAVDA.Ru

Translated by Maria Gousseva

Read the original in Russian: http://www.pravda.ru/main/2002/03/27/38885.html

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