Doctor of Economics, Chairman of the Russian Economic Society. Sharapova, in an interview with a correspondent, commented on the recent personnel changes in the Government of the country, as well as economic and constitutional reforms announced by the President in his message to the Federal Assembly on January 15, 2020.
Could you have assumed at the very beginning of the year that large-scale changes would take place in the composition of the Russian Government, in our entire political system? And by the way, in your opinion, should these changes be considered deep and serious?
Valentin Katasonov: For now, I want to refrain from harsh assessments and will focus on what was not stated in the media and in the President's message to the Federal Assembly on January 15. I was very surprised that not a word was spoken from the high rostrum about the Central Bank of the Russian Federation, about its economic policy. In Article 75 of the current Constitution, the status of the Central Bank is not very clearly defined, although a simple deductive method leads us to the conclusion that the Central Bank is de facto an organ of state power. Over the years, not only me, but many other experts continue to remind: it is necessary to make clear wordings in the Constitution so that it is clear what this office is. According to the official website of the Central Bank, today it is an institution independent of the state. Which, by the way, already contradicts Art. 75 of the Constitution.
In September 2013, when Elvira Nabiullina took the helm of the Central Bank, literally 2-3 months later he received the status of a financial mega-regulator. I remember what euphoria was among a part of our expert community. One of the HSE professors even exclaimed in joy: "Well, if we have such a mega-regulator, why do we need a government at all?" Freudian slip, but very precise.
So I directly write in my books that the Central Bank is actually a separate branch of government, which is not reflected in the Constitution of the Russian Federation. It is surprising that no one intends to put him in his place - i.e. make it an executive branch of government. So it was in the USSR, the same is today with the People's Bank of China in the PRC. For example, in the current set of amendments to the Constitution of the Russian Federation, the powers of the prosecutor's office have been strengthened. I would like to believe that they will finally pay attention to chronic and gross violations of the Central Bank of the Constitution. In particular, we cannot ignore the key function of this office, according to Nabiullina herself, inflation targeting. The guys weren't even too lazy to somehow Russify this formulation - in fact, it was taken directly from the documents of the "Washington Consensus". But in our Constitution, among the main tasks of the Central Bank, there is not a word about inflation targeting! Then I expressed hope that the Prosecutor General's Office and the Constitutional Court will finally pay attention to the gross violation of our laws, but this did not happen.
As for the new Prime Minister Mishustin, he can be called a professional tax collector who is good at collecting taxes, and at the same time promotes the "digital economy". He will de facto oversee the digitization and accounting of the income of the entire Russian society under the pretext of "increasing tax discipline." Many entrepreneurs and household members with whom I spoke are concerned about falling under the hood of the tax office. In addition, now the State Duma is considering a bill that gives the collectors the right to knock out debts for housing and communal services from citizens, i.e. the powers of such semi-bandit organizations will be expanded. All this reminds me of an application for the completion of an electronic banking concentration camp in the Russian Federation.
Let's talk more about the personality of the new prime minister. It is known from open data that he is a systems engineer, in the 90s he was the head of the International Computer Club - the oldest Russian IT organization that held festivals and established contacts between our techies and Silicon Valley engineers. In 2008-2010, Mishustin worked in a private investment company UFG Capital Management, which was co-founded by the ex-Minister of Finance of the RSFSR and the Russian Federation Boris Fedorov. Fedorov, in turn, managed to work at the European Bank for Reconstruction and Development in the early 1990s, and also served as the executive director for Russia on the World Bank's board of directors. That is, you can deduce a direct connection between Mishustin's activities and the structures of the Rothschilds. And if we add to this that he is extremely partial to the issue of "digital transformation" of the country,is there any reason for concern here?
V. K.: Indeed, Mishustin could not help but come into contact with very serious people, and people who do not play on the side of Russia. I also met with the head of the EBRD, Jacques Attali, talked with the leadership of the World Bank, but I perceived it more as reconnaissance in force, as an acquaintance with the camp of our "respected partners". Let's not rush to conclusions that such an experience casts a shadow on Mishustin and automatically makes him a "sent Cossack". No, I believe that he will receive directives directly from Putin and try to fulfill them regularly.
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What kind of instructions do you think they will be?
V. K.: This is the biggest mystery. Our President is a much less open person than Mr. Mishustin.
If you evaluate the amendments proposed by the President to the Constitution, which, by the way, have already been adopted by the State Duma in the first reading in the marathon mode, do you have the feeling that the theses from Putin's FS message have not been fully implemented and are rather cosmetic, declarative?
V. K.: To be honest, from the very beginning I was disappointed with the format in which the resignation of the Government was shown to us. After Putin's speech, Prime Minister Medvedev makes a statement: "In connection with the new tasks set by the President, in connection with the new amendments to the Constitution, we are resigning …" That is, the option of resigning the Cabinet on its own initiative, without any criticism from outside was implemented President. Although it would be much more advantageous for Putin to do it by his own order, fortunately, the Constitution (Article 117, paragraph 2) provides such an opportunity. All this reminded me of some kind of low-quality vaudeville, in which the director did not really bother with the plot. Alas, the authorities are not used to talking directly and to the point with the people.
But do you have any hopes for the best in connection with personnel changes in power?
V. K.: I don't see yet how Mishustin could revive the economy. He has already mentioned two or three times that he will be in charge of the national digitalization project - yes, here he is strong. At the same time, being a fiscal, he may well bring taxpayers to a complete inability to produce and consume anything. Of course, First Deputy Prime Minister Andrei Belousov is a professional, experienced economist in the second generation, he certainly counts on increased government intervention in macroeconomics, he is not alien to the Soviet experience of public administration. We remember very well how he tried to shake about half a trillion rubles from state corporations. But if Putin does not intervene, I believe that Mishustin can put down Belousov. Whatever one may do, but our President was and remains a liberal in the economy, which he himself has repeatedly admitted. And this is very sad.
We also have a new Minister of Economic Development, Maxim Reshetnikov, a native of Perm, an economist-mathematician who has long been included in the first hundred of Russia's personnel reserve, who became a member of Sergei Sobyanin's team in the Presidential Administration, who managed to steer the economy of Moscow and the whole Perm Territory …
VK: This is already a representative of the younger generation who studied the Economics textbooks. The ideology of economic liberalism was mainly driven into their heads. I confess that I absolutely do not know him, and I have not studied his biography in detail. As for his predecessor and namesake Oreshkin, he is sent to the Presidential Administration as an assistant to Putin. Here I have the hope that Oreshkin and Belousov will unite on the basis of rejection of the activities of the Central Bank. Oreshkin has recently openly criticized Ms. Nabiullina, and she also got it from Belousov for refusing to cut the key rate.
In general, we need to rely on the experience of mature managers - veterans in the social and economic sectors, if, of course, the country wants to have a future. Specialists still remain, but 10 years will pass - and this old guard will leave the scene. The new generation of officials should absorb their knowledge, and not engage in blind imitation of globalists.
Let's go over the key economic theses from Putin's January message. The President noted that the federal budget has again become surplus, the state reserves are confidently covering the total external debt. He also said that price stabilization was the result of the good work of the Government and the Bank of Russia. That is, prices have risen, but inflation has not exceeded 3%. And then Putin talks about the need, first of all, to increase the real incomes of citizens, for which we need foreign investments like air. The President called for "launching a new investment cycle" that will create new jobs. How do you like the proposed economic model in general?
VK.: Everything that you have quoted proves once again that Putin is an economic liberal. The constant talk about attracting foreign investment is a dangerous liberal mantra. I will step aside a little from our topic and talk about the end of the next round of negotiations between the United States and China on resolving trade conflicts. The Americans managed to push on China and obtained consent for American financial companies to enter the financial market of the Middle Kingdom. Until recently, the Chinese did not open their market at all to major foreign investors. They are well aware that foreign investments are speculators who come here, loot, and then take their profits out of the country. And a new cycle of robbery begins with the removal of all barriers to cross-border capital movement. This is ultra-liberalism in the spirit of the Washington Consensus. Note that in the BRICS countries, Russia is the only state that has lifted any restrictions on the export of capital abroad. Today we have more signs of a colony than China, India and even South Africa.
As for the satisfaction of the President with a large budget surplus, I will tell you a terrible secret that financiers and bankers do not like to voice. They never need a balanced budget - only a surplus or a deficit. There is close, undisclosed collaboration between finance officials and banks. If the budget is in deficit, banks provide loans and earn money from the state. If there is a surplus, then the surplus funds are placed on bank deposits and strengthen their resource base. It really isn't hard to get the budget balanced. But kleptomaniacs in the Ministry of Finance and the banking community interfere with this. Here's a simple truth. And I see a corruption component in those surpluses that the current leadership boasts.
The accumulation of gigantic foreign exchange reserves by us is also, sorry, a performance, it's just a shame to talk about it. On the one hand, foreign exchange reserves are formed to serve Western economies - we all perfectly understand that these are investments by our monetary authorities in financial instruments issued by foreign states, sometimes even by non-state institutions. As for the debts that Russia has, this is a form of financial tribute paid by our companies, banks and the country as a whole to the West. In fact, it would be possible to do without debts and without foreign exchange reserves, the creation of which is in every possible way encouraged by the IMF doctrine. It is clear that these reserves are needed, first of all, by the issuing countries. They issue securities, and they are acquired, for example, by Russia, which today has approached $ 600 billion in savings and is going to a new record. The IMF recommends that countries have reserves equivalent to 3-month imports. Today I just calculated what our reserves are - they correspond to the volume of imports in 2.5 years. Do you feel what an overfulfillment?
So all these statements of the President do not please me at all. It turns out that the main figure in this power vertical is an ultraliberal in the economic sphere. Against this background, the discussion of other details is no longer so important and fundamental.
It turns out that the essence of the changes in public administration proposed by the President in January are nothing more than intra-elite perturbations?
V. K.: In fact, yes. Although young people often appear, let's remember that Putin has already experimented with appointing representatives of the younger generation of technocrats as governors of a number of regions. These "creatives", to put it mildly, did not live up to their hopes. So I think that our new young ministers, who have already gone through the brainwashing procedure in institutions like the HSE, will hardly surprise us with anything. They just don't have a sovereign economic mindset. Well, what do you want from the same Nabiullina, who has undergone a "retraining" at Yale University?
And I believe that having said "a" about the need for civil servants to have no foreign citizenship / residence permit, the President should have immediately said "b": they also should not have assets abroad, should not undergo internships. I would not entrust such cadres even with positions in the department of the ministry - in the USSR it was so, and this is absolutely correct. Those in high positions throughout their civil service should be prohibited from traveling abroad altogether. I remember very well from my Soviet experience of business trips abroad - people are openly recruited there.
Can you draw something positive from the changes that have taken place in the country?
V. K.: Just recently I talked with entrepreneurs and saw how maturely, without illusions, they learned to assess the current moment, this is an invaluable school of life for them. Many citizens are now losing the veil from their eyes, they are beginning to realize in what world and country they live. And how exactly this internal coup will take place - on the barricades with bloodshed or peacefully and constitutionally - it's hard for me to say. I am not a prophet or a political scientist.