Decades of tranquility
Prime Minister Vladimir Putin reported on the Government's 2010 performance to the State Duma. As promised in early April, his report contained specific results, as well as new plans for the economy, the social sector and the state administration system. However, only those who have slumbered away the entire previous "decade of stability" could refer to these plans as "new."
The main point of the Prime Minister's speech is that the country needs decades of sustained and calm national development without getting distracted or ill-conceived experiments based on unjustified liberalism or social demagoguery. This statement drew a wild applause from the audience.
The rest of the report, a highly politicised document in comparison with the 2008 and 2009 speeches, merely confirmed a striving to retain the current guidelines of national development. The document contained some additional social obligations typical of election campaigns. As before, Putin emphasised the defence industry. "I climbed inside a tank," the Prime Minister reminded his audience. Moreover, the report contained some points which are usually seen as the prerogative of President Dmitry Medvedev.
The Prime Minister focused on modernisation, mentioning this word 21 times. This is quite impressive because last year's report mentioned it just four times. His speech noted the need to build an innovation economy, to expand the non-commodity sector and to prioritise top-quality investment and high business activity.
Vladimir Putin suggested a need for a public discussion of all socially important Government bills. Such documents should be posted online. Moreover, those involved in discussions should be able to vote for the most detailed and reasonable concepts. Putin said active civil work should be promoted in line with the recommendations of the so-called independent public experts. Such words obviously run counter to the practical work of the past decade when Government activities became less transparent, and when the media, primarily television, became increasingly more accountable to the Government.
The tandemocracy mentioned in Putin's speech is called on to preserve the present-day configuration, in which the Prime Minister's plans provide a "basis" for tranquility, while the ideas of President Medvedev supposedly set the direction of development look like a hastily attached "superstructure." The Prime Minister has a rather unusual opinion of modernisation that imply sustained development, rather than qualitative changes.
Budgetary methods for fighting "viruses"
The Prime Minister, who is obviously concerned that some "virus" is trying to destabilie something which would result in a nationwide "influenza" outbreak, avoided any "social demagoguery" in his absolutely down-to-the-point report.
Vladimir Putin reminded that the wages and salaries of public sector workers be indexed by 6.5% starting June 1, 2011. The rather meager salaries of librarians and museum attendants will increase somewhat more, and the stipends for interns and ordinators will more than double reaching the 6,367 rouble minimum subsistence level.
Teachers will be happier some time later. The average teacher salary is now 8,500-10,000 roubles. But their payroll fund will increase by an average of 30% on September 1 under a new project to support Russian schools. In the next two years, teachers' salaries are to reach levels, which are average for their respective regions. The payroll fund for medical personnel is to increase 30-35% over the same period.
Military personnel won't be overlooked either. The Government has repeatedly discussed the upcoming two-step increase in their pay grades, Putin noted, adding the increase was quite substantial. In reality, their pay grades were to have been raised three-fold.
There are also plans to index pensions and benefits, to support young families in rural areas, to provide housing to all armed service members and to 55,000 World War II veterans out of the 180,000 veterans who had applied for housing after March 1, 2005. The Government will even see to it that the veterans get their apartments faster. The Prime Minister said 13.7 billion roubles will be needed to expedite this process, in addition to the ten billion roubles previously specified the 2011 budget. This is an impressive sum, especially if we compare it with the incomes of ordinary Russians. But this is not enough, if we compare it with the 100 billion-plus roubles received in 2010 by Gennady Timchenko, a member of the NOVATEK Board and an old friend of Vladimir Putin, to quote Forbes magazine. Timchenko only ranks 26th on the Russian billionaires list.
As usual, Vladimir Putin noted that the Government must resist the temptation to eat away at the huge proceeds generated by high fuel and energy prices. "We have to avoid spending the new revenues falling from the sky for additional expenditure items. What will happen if prices suddenly fall?" the Prime Minister said. However, the very next day, the Government examined amendments to the 2011 budget, whose spending volumes are to increase by 364 billion roubles.
At the same time, Putin promised almost nothing specific to the business community. "We will search for options to reduce the fiscal burden on insurance premiums. We shouldn't fall back on simple and linear decisions and must not shift the problems from the business community onto ordinary citizens," Putin stressed.
The sources of innovation
The Prime Minister said the fuel and energy sector promote social stability and could also served as a source of innovation. "In the next three years, Russian energy, oil and gas producing companies will spend 8.5 trillion roubles, including 3.2 trillion roubles on modern equipment. We will do everything possible to award these contracts to the Russian industry," Putin noted.
Increasingly greater state defence contracts are another instrument for modernising the entire Russian economy. In all, 20 trillion roubles will be spent on the arms procurement programme until 2020. Putin said the disbursement of these trillions was currently being discussed. He is convinced that the national defence industry can provide the army and the navy with modern weapons. This conviction is bolstered by three trillion roubles for the modernisation of the defence industry itself, as well as by nearly 200 billion roubles on advanced defensive R&D projects annually.
The Prime Minister hopes that the emerging Russian Agency
for the Insurance of Export Loans and Investment will assist high-tech companies entering foreign markets, and that the Direct Investment Fund, recently proposed by President Medvedev, will facilitate the creation of production alliances with leading foreign partners. All this should boost direct annual foreign investment in Russia from $40 billion to $60-70 billion. But this amount is absolutely insufficient to accomplish another strategic objective and to increase fixed capital investment volumes from 20% of Russia's GDP to 30-40% of the GDP.
Well-informed optimism
Putin behaved rather optimistically in the State Duma and noted that corporate profits had soared by over 40% in 2010. He said fixed capital investment had increased 6%, with industrial output rising 8.2%. Putin noted that the processing sectors grew by almost 12%, with the engineering industry posting 25% growth. He said the GDP had increased by 4%, and that it will swell by another 4.2% this year. In early 2010, they predicted that Russia would face all-out stagnation or even a second wave of the crisis, Putin noted. He said all these gloomy forecasts have still failed to materialise. "Thank God, nothing of the kind has happened for the time being," Putin said.
"For the time being" is a key word of the day. The Prime Minister did say that pre-crisis levels would only be attained, and that the economy was expected to completely compensate crisis-incurred losses in full only by early 2012. It appears that the Government House still fears the future. Investment, the only economic growth factor, has failed to increase in the past few months and even tends to be sliding.
The Prime Minister is convinced that the economy does not owe its recovery to skyrocketing oil prices. "The economy has proved that it can develop even in tough and sometimes extreme conditions," Putin noted. But even his colleagues do not share such optimism. The forecast of the Ministry of Economic Development, submitted to the government for consideration, implies that, under a worst-case scenario, oil prices would plunge to $70 per barrel and would allow only 1.1-2.5% GDP growth, in other words stagnation.
Nadezhda Petrova