Yekaterina Barabash
Should the Government further ignore protest moods in society?
On December 19, Vladimir Putin will have another meeting with heads of the Russian auto companies. They will meet at a KamAZ plant to discuss ways of supporting the automotive sector in crisis conditions. It is expected that car manufacturers will ask the Prime Minister to take urgent measures for stimulating demand and providing funds on easy terms. The previous meeting, which was held in May, initiated the decision to raise customs duties on car imports to 35%.
Today's meeting will take place against the backdrop of thousands-strong protests held all across the country, from Kaliningrad to Vladivostok. Auto dealers and car users demand that prohibitive duties be cancelled, as their application in the Primorye Territory alone will leave about 80,000 people without jobs. On November 14, about 13,000 people participated in a protest rally in Vladivostok demanding Government resignation. However, according to the Interior Ministry, the protesters numbered no more than 200.
The day after the rally, deputies of the Primorye Territory's legislature approved appeals to the State Duma, the President, and the Prime Minister to cancel the rise in duty rates. However, local car users said that people did not trust the authorities, and therefore would continue their protests.
Why is it that the Government's noble striving to support the national automotive industry and protect foreign investors' interests meets with misunderstanding? The answer is simple: people think that this is not fair. They have started their businesses, created jobs, and paid taxes to the budget. Why should they give it up now, in these uneasy times, in order to save the national and foreign car makers?
In analysing the Government's behaviour, one might think that the consequences of the crisis have affected only state corporations and natural monopolies, while Russians' living standards have substantially improved. Perhaps objective information on the situation in the country does not reach the Government, as it was in the case of massive protests. Meanwhile, the crisis has hit everybody. A fall in consumer demand and a lack of liquidity, coupled with more expensive loans, have affected both major producers and minor car dealers.
Quite soon, the consequences of the crisis and the anti-crisis measures will directly affect every Russian wanting to buy a car. The market situation forced Avtoframos to suspend the assembly of Renault-Logan cars on December 12. In January 2009, the Ford plant in Vsevolozhsk will cut daily production from 500 to 300 cars. Toyota, Volkswagen Rus, AvtoVAZ, and GM-AvtoVAZ have also announced their intention to cut production. One does not have to be an expert to understand that cuts in production coupled with higher customs duties will inevitably lead to a rise in car prices in the near future. This is not likely to coincide with pay rises or lower interest on loans.
Unlike major car manufacturers, Far Eastern car dealers are not going to ask the authorities for any protective measures in the form of easy-term loans and budget subsidies. Not that they do not need them. No one asks them whether or not they need them, as no meetings with car dealers are arranged. There is no one to lobby their interests. Therefore, they are ready to work in conditions offered by the market, provided that the Government does not create additional obstacles to them while protecting the interests of state corporations and overseas investors.
Participants in protest rallies in the Primorye Territory and Kaliningrad are preparing their next action. If the decision on the introduction of prohibitive customs duties is not revised by the end of the week, they promise to take to the streets on Sunday and even block the Trans-Siberian Railway. Car users from Sakhalin to Moscow have announced their readiness to join the action. If the Government wants to heed the voice of the people, this is the time to do so, to recall the rail wars of the 1990s and make proper conclusions.