The Economics of the Russian Victory

NEW – March 18, 2022

We need a powerful initiating impulse in the accelerated formation of a new technological paradigm

In his rousing article “Ideology of the Russian Victory” Aleksandr Prokhanov stated that “Russia is being eaten away from the inside by pockets of darkness: a culture of desecration is flourishing, when the seals are torn from all forbidden chests, all Pandora’s boxes are opened, and demonic energy extinguishes eternal fires…” Among today’s protectors, he counts “statesmen who preach service, not money-grabbing.” However, for a successful defence and, especially, for Victory, it is not enough to preach – it’s necessary to act. In the current situation of a global hybrid war, it is necessary to act quickly and effectively, without regard to the cliched rebukes of money-grubbing opponents and, even more so, to the hostile forces that have shown themselves, who have built a layered line of resistance to the forces of creation of Russia on a new technological and new-old ideological and worldview basis, which presupposes a convergent development model – a synthesis of economic achievements of the imperial and Soviet periods, multiplied by the experience of overcoming acute phases of development of modern Russian history.

This approach is the basis of the idea proposed by the President of the Russian Federation to form the Greater Eurasian Partnership (GEP). A partnership, if implemented according to its original design, shuns the “suzerain-vassal” philosophy of escalation and oppositions with the system of international economic relations built in this spirit; it is initially guided by the premise of the possibility of harmonious coexistence, and in economic terms – about the participation of partners in economic growth without prejudice to each other’s interests. Of course, the classical ideas about the limits of the division of labour within the framework of emerging technological trajectories and, more broadly, technological zones are not an anachronism, but the practical tools of the GEP are not aimed at confrontation and redistribution of spheres of influence, but at how to create a trusting atmosphere of cooperation in Eurasia by purely economic means, search for and find consensus even where the interests of, say, the EAEU and the Regional Comprehensive Economic Partnership diverge. In other words, the GEP is a universal assembly model with a clear concept, strategy, and defined long-term priorities. It sets clear guidelines and makes it possible to formulate and refine national development strategies. For Russia, this is the program of advanced development proposed by the academic community (and widely reviewed by expert circles) on the basis of the accelerated development of industries of a new technological paradigm and the formation of institutions of a new world economic paradigm “Social Justice and economic growth”.

The program, which has also become a doctrinal one within the framework of the economic section of the World Russian People’s Council, provides for a transition from the policy of artificially prolonged status quo (or inertia scenario) to a mobilisation scenario based on multiple projects of the Izborsk Club and scientists of the Russian Academy of Sciences.

Goals, what they should be

In the context of the emerging Integrated world economic paradigm, based on integration processes that unite different nations in networked unions — the EAEU, the EU, ASEAN, MERCOSUR, etc. – we need to set clear, super-intensive, but balanced and feasible goals that correspond to the main trends of the 21st century, and develop algorithms for achieving them. Based on the external background undergoing dynamic changes (replacement of technological and world economic structures, coupled with the need for internal restructuring according to the mobilisation scenario), the goals of long-term economic development are formulated as follows::

– maintaining annual GDP growth at the level of at least 10% in the next 5 years (with an outstripping twofold increase in investment in fixed assets) and at least 7% in the future – based on the full use of existing production capacities, increasing labor productivity, increasing the competitiveness of the production of goods and services, stimulating innovation activity and scientific and technological progress, and creating a favourable investment and entrepreneurial climate. This will triple Russia’s GDP by 2050;

– bringing the average life expectancy to 80-85 years, so that Russia can reach the level of advanced countries in this statistic;

– bringing the volume of housing construction to 1 square meter per person, which will double the housing stock of Russia and fully provide housing for the entire population of Russia;

– improving the level and quality of life of the people and bringing them to the level of the advanced countries of the world in real terms;

– fully mastering the technologies of the fifth and sixth technical specifications, ensuring world-leading scientific and technological development and competitiveness of the production of goods and services.

The targets in the policy of the social state for the foreseeable future should be:

– increase the average life expectancy of Russian citizens to the best global indicators;

– by 2050, the average per capita income of the population will exceed the level existing in developed countries (this means that it will need to be tripled due to economic growth with a faster increase in wages, the share of which in the structure of the distribution of national income should be at least 70% compared to the current 50%); Russia will reach the level of the European Union in terms of the human development index;

– overcoming forced unemployment (especially among young people) as a result of faster growth in the production of goods and services with a high share of added value through credit and tax incentives for creating new jobs; developing higher and secondary specialised education, deploying a system of advanced training, retraining and employment of the unemployed; organising public work;

– elimination of poverty and overcoming social anomie: compliance with legally approved minimum social standards for consumption of basic food products, housing and energy supply, free medical care; provision of those in need at the expense of the federal budget according to annually established standards, as well as the adoption of a program of emergency measures, including the free standardised distribution of food and basic necessities among children, the elderly, the disabled, and other groups in need;

– implementation of measures to fully support the family, motherhood and childhood, including bringing the amount of child care allowance to the subsistence minimum, restoring and developing a network of children’s educational, creative and sports organizations, protecting family values and stopping propaganda of violence and debauchery in the media;

– restoration of the state’s obligations in the social sphere at the legislative level and compliance with social guarantees;

– inclusion of state obligations stipulated by the federal Law “On the Restoration and Protection of Savings of Citizens of the Russian Federation” in the composition of domestic debt and implementation of a program of measures for its servicing and repayment based on the provision of goods and services of domestic production to the population as a credit for the debt;

– overcoming the stratification of society according to the level of welfare, exemption from taxation of income below twice the subsistence minimum per family member, restoration of the progressive scale of taxation of income exceeding this value by more than five times;

– restoration of the right of citizens to heated and electrified housing with all amenities; preservation of the rights to actually occupied housing without paying property tax on privatised apartments and rent for the use of state-owned apartments provided before 1992; deployment of a system of preferential mortgage lending for housing construction with a loan for a period of at least 10 years with a zero real interest rate; restoration of mass housing construction programs for families in need with free provision of apartments for indefinite rent; repeal of legislative norms that provide for the forced eviction of people from apartments for non-payment of utility bills; introduction of an automatic system for providing targeted subsidies for utility bills-based on the fact that the cost of these purposes should not exceed 10% of the total income of family members.

These goals can be achieved only if the economy develops in a balanced and planned manner, based on a mixed strategy of advanced development, taking into account the capabilities of the new technological and creating institutions of a new world economic paradigm.

Helmsmen of stagnation

However, until we, as Aleksandr Prokhanov says in the article mentioned above, “clear our state institutions of garbage, expel money-grubbers, rapists and traitors from them”, this program cannot be implemented. The imitation of violent activity and the incessant reproduction of simulacra with their preparation for public consciousness as goodness was very convenient for money-grubbers and traitors, and not for ascetics and heroes. Passionaries who were ready to create were marginalised, squeezed out, subjected to massive defamation and information repression. The strain on the mental strength and professional qualities of conscientious civil servants was neutralised by the hangers-on who pleased their superiors, who slipped through lies and flattery to the heights of state power.

The most clearly prevailing qualities in the Russian elite were manifested in the economic policy pursued by a part of it, which, as is well known, is always and everywhere the result of economic interests. No matter how sophisticated its proponents were, presenting the policy as objectively conditioned, based on knowledge and pursuing the public goals of increasing production and prosperity, in reality they were protecting the interests of that part of the ruling elite that benefited from the policy, regardless of its consequences for the people and the national economy. The minions of the new rentiers who are on their payroll, hiding behind scientific dogma, were supposed to disguise their policy in such a way that the precariat would not suspect anything, and even better, thank them for stability in the face of global uncertainty.

Any dysfunction in the Russian economy by those responsible for the macroeconomic state was explained solely by the impact of external shocks in an open market, and not by man-made domestic policies that torpedoed the growth of production, investment, and real disposable incomes of citizens. If we are encouraged to accept external explanations for systemic failures, they are based on the defeat of the financial and economic authorities by cognitive weapons from outside, which ultimately leads to excessive external economic dependence and exposure of the Russian economy to the slightest fluctuations. If it were not for this defeat of a part of the elite at the ideological, worldview, and mental level, then politics would have been conducted according to different patterns, based on different ideas and approaches to stimulating economic growth. And in a situation where collective liberals saw their alter ego in the IMF, taking the organisation’s assessments at face value and blindly following its recommendations, they could not expect anything else: the economy was in a vicious circle, which can only be broken by a change in the development paradigm.

The obsequiousness of a significant stratum of quasi-national elites and international institutions doomed the Russian economy to an inescapable lag in the long run, while political goal-setting rightly dictates the need to ensure growth rates above the global average. The accumulated damage from this servility, according to the most conservative estimates, has already exceeded 30 trillion rubles of under-produced products on a cumulative basis since 2014. And that’s just the tip of the iceberg.

The previous weak-willed adherence to the IMF’s guidelines is following the Washington consensus’ imposed policy, which always and everywhere amounts to a system of dogmas that are destructive for the national economy: rejection of currency restrictions for unhindered cross-border capital movement; rejection of sovereign monetary policy and linking the issue of national currency to the growth of foreign exchange reserves; privatisation of property, including natural resources, without restrictions for foreign capital; abandoning price regulation and planning, leaving the domestic market at the disposal of global monopolies.

READ:  The Strategic Plan of the Kremlin for Ukraine

The implementation of these dogmas in our country led to the degradation and primitivisation of the economy, which annually lost more than $100 billion in an unequal foreign economic exchange in the interests of the US financial system — in fact, a colossus on clay legs, the limits of which are outlined by the hegemony of the final decline of the world economic paradigm, based on boundless emissions and military sanctions club, and the formation of a new integrated world economic paradigm based on a diametrically opposite approach-building equal and non-discriminatory partnerships both at the interstate and interregional levels.

The imitation game

A vivid example of the imitative nature of the previous management system was the results of the implementation of the Concept of Long-term Socio-economic Development up to 2020, which was adopted with great fanfare in 2008. But, like everything generated in a mode of imitation, it turned out to be a failure. Instead of achieving the goal of an annual GDP growth of 6.5% – the average annual rate is below 2%, instead of increasing the real disposable income of the population by 64-72% compared to 2012 – their continuous negative dynamics since 2014. The goal of reducing the absolute poverty level by half, from 13.4% in 2007 to 6-7%, as a result of the implementation of the concept, failed: for the period 2008-2012, the share of the population with incomes below the subsistence minimum fell to 10.7%, then the number of poor people began to grow again and at the end of 2016 amounted to 13.3%, and according to official statistics, more than 18 million people live below the poverty line in Russia. The reallocation of the budget system in favour of spending on human development from 8.6% of GDP in 2007 to 11.7% of GDP in 2020 has led to their reduction: on education — from 4% to 3.7%, on health-from 3.6% to 2.9% of GDP.

To justify an afront of this magnitude (with its regular repetition in the framework of the implementation of presidential decrees on development goals), imitators pointed out various force majeure circumstances: the global financial crisis, the coup d’etat in Ukraine in 2014, US-European sanctions, and the pandemic. But all these external disasters, if desired, could be expertly turned into benefits for Russia and stimulate its economic growth. We will show how traitors and money-grubbers did not allow this to be done.

As we have stated, the global financial crisis could have been used to implement the strategy of rapid development of the Russian economy if the monetary authorities had stopped the capital outflow and provided unlimited low-interest long-term lending to investments in the creation and expansion of a new technological paradigm, the widespread use of its basic innovations, the implementation of the above-mentioned Concept of Long-term Development and other strategic planning documents. This was not done either in 2009 or in 2014, when Russia was hit by financial sanctions imposed by the United States and its satellites.

To avoid a collapse, and with the introduction of sanctions and the collapse of the ruble in 2014, the crisis firmly plunged the Russian economy into a state of stagflation, the Bank of Russia would have to quickly deploy long-term refinancing mechanisms to compensate for the credit embargo on Russian borrowers. These mechanisms should be similar to European and American ones, which provide unlimited refinancing of Western banks and corporations on a long-term basis at a symbolic percentage — after all, in a modern economy without credit, not only extended, but even simple reproduction is impossible.

As was shown in numerous studies, monetary factors of inflation in modern Russian conditions are not the main ones; theoretically and empirically, it is proved that attempts to suppress inflation by quantifying money issuance or increasing the cost of credit do not give the desired result in a modern economy with its complex feedbacks, nonlinear dependencies, and imperfect competition. Moreover, these attempts have been counterproductive for two decades: instead of reducing inflation, the production and supply of goods are always falling and, as a result, prices are rising. In the quantitative theory of money, from which the monetary authorities proceeded, the production process has no place at all, as well as scientific and technological progress, monopolies, external competition and other factors of the real economy.

As is known, economic policy is not neutral in relation to economic interests, it is conducted in the interests of dominant groups of influence that are alien to public interests and deeply affiliated with international capital. This, as shown in John Perkins’ non-fiction book Confessions of an Economic Hitman, is the fate of developing countries or countries with economies in transition that are leashed by the Washington consensus, whose pseudo-elite is integrated into the Western one as a colonial satrap. But being ardent adherents of the local values, they put up with vassalage in exchange for imaginary guarantees of preservation of the exported capital and withdrawn assets.

Allowing obsequious dogmatists to continue to sabotage the clear political instructions of the Russian leadership is tantamount to a crime. Allowing this to happen is the same as if, after June 1941, the Soviet leadership continued to supply the Third Reich with Soviet raw materials for Reichsmark and gave it loans for the production of military equipment. How such a policy would have ended at that time is clear. It is also clear that the monetary policy pursued earlier naturally entailed the dollarisation of the financial system, its contraction due to the export of capital and restrictive monetary policy, a drop in investment and production, a decline in living standards with obvious opportunities for rapid economic recovery. In the 90s, this could still be justified: the United States patronised the Russian leadership, creating a favourable foreign policy background for the self-destruction of the Russian economy and its exsanguination. Today, they, along with their European minions, are waging a war with Russia, and the main thing in this war is the economic front, the desire to prevent Russia’s economic self and the rise of the Eurasian Economic Union. Therefore, it is here that the mobilisation scenario should be developed with a radical revision of the direction of the quality of economic policy.

Threat to the Russian world

The fatal events of February 2014, with the coup d’etat in Ukraine and widespread chaos, were just the final chord of a major special operation, the key goal of which was to establish the anti-Russia platform in Ukraine, in the spirit of the already textbook narratives. In the historically determined field of conflict and aggression of the West against Russia, moving its “Drang nach Osten”, Ukraine has always been given the title role. Bismarck expressed the most vivid attitude of the West towards Ukraine, saying: “Russia’s power can only be undermined by the separation of Ukraine from it… it is necessary not only to tear off, but also to oppose Ukraine to Russia. To do this, you just need to find and nurture traitors among the national elite and with their help change the self-consciousness of one part of the great people to such an extent that they will hate everything Russian, hate their kind, without realising it. Everything else is just a matter of time” (Bismarck O. Thoughts and memories. Moscow: Association of State Books and Magazines. SOTSEKGIZ, 1940). Following the Prussian Chancellor, Zbigniew Brzezinski expressed the West’s concentrated attitude towards Ukraine in his book “The Grand Chessboard”, writing that “without Ukraine, Russia ceases to be a Euro-Asian empire” (Bzezinski Z. The grand chessboard: American primacy and its geostrategic imperatives — New York: Basic books, October 1997).

The Chancellor of the German Empire was accurate, pointing out the technology of tearing Ukraine out of the Russian womb by contrasting, in essence, two principles of a single whole. It is unlikely that Leonid Kuchma, who was considered quite pro-Russian, knew about Bismarck’s productions when, in the absence of any need, he put forward the opposition “Ukraine is not Russia” in the title of his book, which predetermined the slide of the post-Soviet republic leading in terms of growth to the last place in Europe in terms of poverty, plunging it into the abyss of a fratricidal civil war and leading to the restoration of the ugliest forms of nation-building.

The puppet Nazi regime is fully practicing the format of Ukraine as anti-Russia. We must pay tribute to the sequence of architects of the current image of Ukraine, which has completely lost its subjectivity and maintains its existence

– radical Russophobia and Nazi ideology;

– total anti-Russian propaganda combined with repressions against dissidents;

– complete dependence on the American intelligence agencies, whose agents actually run the Ukrainian government;

– a political dictatorship with the violent suppression of all opposition forces;

– the dominance of a pro-Western oligarchy in business, closely linked to the political elite.

It was delusion and naivety to believe that Ukraine will not go anywhere from Russia because the level of economic interpenetration is so high that it would be suicidal to renounce thousands of cooperative ties and joint projects. But it was precisely these ties and the fear of close economic integration that motivated the West and its agents in the Ukrainian leadership to take decisive actions to torpedo the formation of a single economic space with Ukraine’s participation. The trigger for the preparation of the 2014 coup d’etat was the belated decision of the Kiev authorities to delay the signing of the Association Agreement with the EU, unequal and discriminatory for the Ukrainian economy.

With the entry into force of the Association Agreement with the EU, Ukraine lost its sovereignty and submitted to the EU’s trade, economic, foreign and defense policies. By signing this agreement, Ukraine pledged to participate under the EU leadership in the settlement of regional armed conflicts. At the same time, Ukraine itself became “charged” with a military conflict with Russia. As was written: Ukraine is anti-Russia.

If it were not for the nature of the Ukrainian government and the dominance of the Western line in Kiev’s key decisions, as well as the long-term inaction of Moscow’s emissaries (“to where will it go away from us”), the choice would most likely have been made in favour of integration into the customs and economic union with Russia, which would have opened up huge development prospects for the Ukrainian economy and a large market for a wide range of high-tech goods produced within the framework of traditional and newly formed cooperative ties. Eurasian integration in the absence of Ukraine among the members of the Union also loses significantly, since its further development is entirely associated with the implementation of large-scale joint projects, which are difficult in the absence of technological convergence zones and interfaced industries (if to not take into account the Russia-Belarus pair). According to scientists of the Russian Academy of Sciences and the National Academy of Sciences, Ukraine’s withdrawal from the UES – the Unified Economic Space initiated by it back in 2003 – led to the loss of about a third of the total economic potential of the EAEU, which was caught in the grip of an inertial development scenario.

“Lock step”

As in the illustrative examples with the conductors of the implemented model of monetary regulation within the framework of the mandate issued by Western institutions and with tacit consent to the destruction of the self-valuable Russian-Ukrainian industrial cooperation on the eve of the 2014 coup d’etat, the “horsemen of the fight against the apocalypse” meticulously played their prescribed role in the initially seemingly innocent scenario modelling of the D. Rockefeller Foundation – as B. Gates is a well-known “philanthropist” who sponsors the ideas of world government as a necessary tool for saving humanity from the threats of overpopulation and pollution of the Earth. It is worth recalling that at the previous critical stage of technical and economic development, when the world economy plunged into a crisis due to the completion of the life cycle of the 4th technological paradigm, he initiated the creation of the Club of Rome, which delivered the report “The Limits to Growth” (Published in 1972, it contains the results of modelling the growth of the human population and the depletion of natural resources. Donella Meadows, Dennis Meadows, Jorgen Randers, and William Behrens III contributed to this report”).

READ:  There Is No War

Today, the topic of the self-restriction of resource consumption by developing countries is once again being updated and supplemented by the threat of the self-destruction of humanity by unprecedented viruses bursting out of the remains of wild nature and thawing permafrost.

The Rockefeller Foundation’s forecast of a viral pandemic, prepared ten years ago, is striking in its accuracy of coincidence with the current situation. In 2010, the report of the Foundation and the Global Business Network entitled “Scenarios for the Future of Technology and International Development” (The Rockfeller Foundation, Global Business Network. May 2010) was published.

In one of the scenarios of the report with the title in the spirit of special operations of the US intelligence agencies from Hollywood blockbusters – “Lock Step” – in fact, a simulation of global destabilisation through a virus pandemic is presented. It says: “During the pandemic, national leaders around the world flexed their authority and imposed airtight rules and restrictions <…> Even after the pandemic faded, this more authoritarian control and oversight of citizens and their activities stuck and even
intensified. In order to protect themselves from the spread of increasingly global problems—from pandemics and transnational terrorism to environmental crises and rising poverty—leaders around the world took a firmer grip on power.” 
At the same time, the inevitability of the emergence of authoritarian regimes stated in the report is not an accidental statement, but an “attack” command to global capital written between the lines for an uncompromising struggle against “undemocratic” regimes that do not get along with the liberal commonwealth of nations. In order to make this expansion look at least somewhat respectable, the international agenda is carefully saturated with false goals and objectives, such as the need to coordinate global efforts to combat climate change, under which, in turn, profitable projects are made up, for example, the European carbon tax, which is fraught with multibillion-dollar costs for Russia’s largest exporters of fuel and energy, chemical and metallurgical.

It should be assumed that Ukraine, in order to confirm its status as an anti-Russian and Russophobic outpost of the United States and NATO, was assigned a significant (if not decisive) role under the “Lock Step” scenario. Otherwise, it would not have hosted a dozen biological laboratories that “study” pathogens, including coronavirus infections, anthrax and other particularly dangerous infectious diseases. The recognition by the US official authorities of the existence of such laboratories and confirmation of this fact by appropriate funding from the defence department leaves no doubt about the premeditation of such “innocent” experiments in the immediate vicinity of the densely populated European part of Russia.

The “Lock Step” scenario and its derivatives, in contrast to institutions that harmonise broad international collaboration and cooperation, form a different kind of new world economic order and, in fact, presuppose a continuation of the trend of liberal globalisation, supplemented by technologies of total control over the population of countries deprived of national sovereignty. A global system of institutions that regulate the reproduction of not only the world economy, but also the entire humanity through modern information, financial and bioengineering technologies is being built under this approach. The main problem of such a political system is its complete irresponsibility and immorality, the adherence of its hereditary ruling elite to Malthusian, racist and misanthropic views. Under the obvious cover of a fig leaf of liberal values, which, as can be seen from the experience of the reforms of modern Russia and other regions of the active presence of the “luminaries” of liberalism, have degenerated into extreme forms, called “liberal fascism”.

Vladimir Pantin defined it as follows: “This is an unlimited power, the dictatorship of the largest multinational corporations (including IT corporations), global financial structures and criminal mafia organisations, which are served by armies of corrupt and unprincipled politicians, journalists, bloggers, show business ‘stars’, along with detachments of terrorist militants and ‘cannon fodder’ in the form of zombified, uneducated and processed youth in social networks. This ‘soft’ global dictatorship, imperceptibly ‘enveloping’ the consciousness of people, seeks to impose its own, common values for all countries and nations, common norms of behaviour, common laws, common standards, common rules of life. And for violating these common values, norms and rules, the dictatorship already punishes and will continue to punish all those who disagree – by de facto expulsion from the public space and politics, prisons, ‘re-education’ in correctional camps, the use of moral and physical terror up to extermination.” (V. Pantin “Liberal fascism in the modern world: lessons for Russia”). Russia’s preemptive special operation to demilitarise and, most importantly, denazify Ukraine fully confirms the fact that Western liberal fascism and the ethnocide they actually commit (the same laboratory developments on targeting viruses on representatives of certain races and peoples) using the Ukrainian territory and population as an experimental training ground, obliged to shoot at everything Russian at the moment agreed by Western curators, is ready to make any sacrifices in order to finally complete the failed mission to dismember and destroy Russia.

The danger of this phenomenon is that it leaves behind a false trail: a complete lack of freedom even in thoughts and feelings under the guise of “complete freedom”. And as is known, there is no more lasting and all-encompassing, total slavery, if the slave is convinced that they are free.

One of the geopolitical goals of sectarian liberal expansion – and its agents from the national pseudo-elite camp, in fact, do not hide it – is the dismemberment and destruction of Russia, which, despite its economic failures, managed to stand in the vanguard of resistance. However, until an anti-war coalition of countries advocating a peaceful transition to a new world economic paradigm is formed, our position is shaky and can only be strengthened by nationalising the elite, eliminating systemic dysfunctions in the management system and moving to a mobilisation scenario of economic development.

Economic tools of the Russian victory

The ideology of the Russian Victory proclaimed by Aleksandr Prokhanov gets bogged down on the sidelines of economic departments. Their management thinks in other categories: market equilibrium, comparative competitive advantages, current economic rationality. The macroeconomic policy carried out in these coordinates condemns the country to a deliberate loss in geo-economic competition with other powers and, consequently, to defeat in the world hybrid war of annihilation being waged against us. And it cannot be otherwise, if the contours of economic reproduction are set up for beneficiaries outside the Russian jurisdiction, and the agents of financial and economic policy are in a long-standing deep and conscious emigration.

If our tsars had thought this way, there would have been no Trans-Siberian Railway or the Russian economic miracle at the beginning of the last century. Russia would remain a backward agricultural and forest country. If the Soviet leadership had thought so, we would not have run through in 10 years, at Stalin’s call, the economic development segment that our competitors have covered in a century, and we would have died in the war with European-German fascism.

We need a powerful initiating impulse in the accelerated formation of a new technological order and the formation of institutions of a new world economic order. But first of all, it is necessary to purge the state management system from the irresponsibility of officials and from criminalising a number of the most important institutions of its regulation.

Despite the sanctions imposed, the Russian economy remains capable of rapid development. The existing production, scientific, technical, resource and intellectual potential allows us to expect annual GDP growth of 5-10% with an increase in investment of 10-15%. This requires addressing the gaps in our economic security system and bringing our macroeconomic policies in line with our national socio-economic development goals.

After the introduction of anti-Russian sanctions in 2014, scientists of the Russian Academy of Sciences repeatedly warned the management of the Bank of Russia about the need to abandon the use of the dollar, euro and pound, as well as assets denominated in them, as part of foreign exchange reserves in the context of a hybrid war being waged against Russia by the countries issuing these currencies. Dozens of analytical notes and reports on this topic were written and sent to the monetary authorities. But instead of implementing these proposals and replacing these assets with gold, the Central Bank’s management continued to increase them until recently, limiting the share of gold in gold and foreign exchange reserves to a small amount (20%). To make matters worse, Russian banks, including state-owned ones, have taken more than 500 tons of gold abroad in recent years, selling it for the now-useless currency that is seized in their foreign accounts.

As a result of the policy pursued by the Bank of Russia, our foreign exchange reserves, private capital turnover through offshore zones, and the Moscow Exchange are under the control of the NATO countries; they are provided with methodological guidance by the Bank of Russia.

In order to overcome these dysfunctions and put the Russian economy on the path of advanced development, it is necessary to introduce a cross-cutting mechanism of institutional and personal responsibility at all levels of economic development management.

We need a systematic mobilisation policy for the development of the Russian economy, which should be built as a mixed strategy of outstripping the growth of the new technological paradigm, a dynamic catch-up in areas with a slight technological lag, and catching up in hopelessly lagging industries. This requires the adoption of the following set of measures to concentrate resources in key areas of forming a new technological order, activating the existing scientific and technical potential, and importing advanced technologies to overcome the technological gap.

The priority development policy should include:

1.1. The development and implementation of a target program for advanced economic development based on a new technological paradigm that provides for measures to increase investment in the development of its constituent production and technological complexes up to 25% per year, and the formation of appropriate institutions and management contours.

1.2. The creation of a strategic planning system that includes setting priorities for economic, scientific and technological development and forming indicative plans and programs for their implementation.

1.3. The subordination of the activities of all macroeconomic regulatory bodies, including the Central Bank and the Ministry of Finance, as well as state corporations to the tasks of modernisation and economic growth and the full opening of its scientific and technical potential. This requires indicative planning of joint activities of the state and enterprises on the basis of investment contracts that provide for procedures of mutual responsibility for achieving the goals set. It is necessary to set targets for the performance of state development institutions, banks, corporations and agencies in their areas of activity and introduce mechanisms for real responsibility for their timely achievement.

1.4. The reduction of interest rates to 2-4% and the creation of mechanisms for refinancing investment and innovation activities by means of targeted monetary issuance against the obligations of the government, state development institutions, enterprises stipulated by federal and regional investment programs, projects of development institutions, and special investment contracts.

1.5. The exemption from taxation of income of enterprises allocated for investments in production development, R&D and the development of new technologies and the introduction of accelerated depreciation schemes for fixed assets while monitoring the intended use of depreciation charges.

1.6. A twofold increase in R&D funding, the deployment of a system of targeted scientific and technical programs that provide state support for innovation activity in promising areas of economic development.

READ:  Russian Truth: A Brief History of Russia and the USSR

1.7. The creation of a modern information and digital infrastructure for research and business activities.

2. A systematic policy of ensuring accelerated economic growth is impossible without stabilising the ruble exchange rate, achieving the stability of the national monetary and financial system, and stopping capital outflows. It involves the implementation of the following set of measures:

2.1. Stopping the speculative “vortex” by stopping lending to currency and financial speculation at the expense of the Central Bank, the state budget and state banks, as well as stopping collusions to manipulate the foreign exchange market.

2.2. The reduction of leverage with the restoration of state control over the Moscow Exchange. Introduction of a tax on speculative currency and financial transactions (Tobin tax) and the export of capital.

2.3. Prohibition to direct funds received by banks and enterprises through targeted refinancing channels to speculative operations. The use of digital technologies to control the movement of money issued in a targeted way.

2.4. The establishment of an increased reserve of funds on foreign currency accounts; in case of a threat of “freezing” of foreign currency assets of Russian individuals and legal entities – up to 100%. The introduction of control over cross-border capital operations through open licensing.

2.5. To ensure the stability of the ruble exchange rate, expand the instruments for regulating the supply and demand of foreign currency, providing for the possibility of levying export duties in foreign currency with its accumulation in foreign currency accounts of the government in a situation of oversupply of foreign currency and introducing a rule by the Bank of Russia for the mandatory full or partial sale of foreign currency earnings of exporters in the domestic market in case of insufficient supply.

2.6. Allow borrowers to apply force majeure to loans granted from countries that impose a financial embargo against Russia. For the duration of the sanctions measures, prohibit subsidiaries of American and European banks from raising new funds from Russian individuals and legal entities.

2.7. The termination of the provision of loans to non-financial organisations in foreign currency by Russian banks. Legislative prohibition of loans from non-financial organisations denominated and provided in foreign currency.

2.8. Exclusion from foreign exchange reserves of debt obligations of countries participating in sanctions against Russia. Exclusion of deposits denominated in these currencies from the deposit insurance system. At the same time – liberalising the turnover of cash gold and silver as a long-term means of saving. The abolition of VAT on the purchase of bank bullion, which has already been done, and the introduction of a tax on the export of gold and silver abroad.

2.9. In order to deoffshorise the economy:

– provide access to mineral resources and other natural resources, state orders, state programs, state subsidies, loans, concessions, property ownership and management of real estate, housing and infrastructure construction, operations with savings of the population, as well as other strategically important for the state and sensitive for society activities only to national companies and Russian citizens-residents;

– clarify the legal definition of the term “national company” that meets the following requirements: registration, tax residency and main business activities in Russia, belonging to Russian residents who are not affiliated with foreign entities and jurisdictions;

– oblige the ultimate owners of shares of Russian strategic enterprises to register their ownership rights in them with Russian registrars, leaving the offshore “shadow”;

– conclude agreements on the exchange of tax information with offshore companies, denounce existing agreements with them on the avoidance of double taxation;

– legally prohibit the transfer of assets to offshore jurisdictions with which there is no agreement on the exchange of tax information under the transparency model developed by the OECD;

– maintain demands for offshore companies owned by Russian residents to comply with Russian legislation on providing information about the company’s participants (shareholders, depositors, beneficiaries), as well as on disclosing tax information for the purposes of taxation in Russia of all income received from Russian sources under the threat of imposing a 30% tax on any operations.

2.10. Adopt a set of measures to reduce tax losses from the unauthorised export of capital: 1) refund of VAT to exporters only after receipt of export revenue; 2) collection of VAT advance payments by authorised banks when transferring import advances to non-resident suppliers; 3) introduction of penalties for overdue accounts receivable under import contracts; 4) termination of inclusion of bad debts of non-residents to Russian enterprises in non-operating expenses.

2.11. Introduce restrictions on the volume of off-balance sheet foreign assets and liabilities to non-residents on derivatives of Russian organisations, limit investments of Russian enterprises in foreign securities, including government bonds of the United States and other foreign countries with a high budget deficit or public debt.

3. Increase the potential and security of the Russian monetary system and strengthen its position in the global economy, giving the ruble the functions of an international reserve currency.

3.1. Encourage switching in mutual settlements in the EAEU and CIS to rubles, in settlements with the EU – to rubles and euros, with China – to rubles and yuan. Recommend that business entities switch to settlements in rubles for exported and imported goods and services. Provide for the allocation of linked ruble-denominated loans to importing countries of Russian products to maintain trade turnover, and use credit and currency swaps for this purpose.

3.2. Radically expand the system of servicing payments in national currencies between enterprises of the EAEU and CIS states through the CIS Interstate Bank, and with other states – using international financial organisations controlled by Russia (IBEC, IIB, EDB, etc.).

Create a payment and settlement system in the national currencies of the EAEU member states with its own system for exchanging banking information, assessing credit risks, and quoting currency exchange rates. Develop and implement its own independent system of international settlements in the EAEU, SCO and BRICS, which could eliminate critical dependence on the US-controlled SWIFT system.

3.3. The Bank of Russia should carry out targeted refinancing of commercial banks for ruble-denominated lending to export-import operations at reasonable rates on a long-term basis, and also take into account in the main directions of monetary policy the additional demand for rubles due to the expansion of foreign trade turnover in domestic currency and the formation of foreign ruble reserves of foreign states and banks.

3.4. Organise exchange trading in oil, petroleum products, timber, mineral fertilisers, metals, and other raw materials in rubles; in order to ensure market pricing and prevent the use of transfer prices for tax evasion, oblige producers of exchange-traded goods to sell at least half of their products, including those supplied for export, through exchanges registered by the Russian government.

3.5. Limit the borrowing of state-controlled banks and corporations abroad; gradually replace foreign currency loans of state-controlled companies with ruble loans of state-owned commercial banks due to their targeted refinancing by the Central Bank at the appropriate interest rate.

3.6. Organise a Moscow club of lenders and investors to coordinate the credit and investment policies of Russian banks and funds abroad, procedures for repaying bad loans, and develop a common position in relation to defaulted borrowing countries.

4. Make amendments and additions to the Law “On the Central Bank”.

4.1. Expound Article 3 of the Federal Law in the following wording:

“The objectives of the Bank of Russia’s activities are:

– promote high employment and sustainable economic growth by ensuring a sufficient level of monetisation of the economy and affordable interest rates;

– protecting and ensuring the stability of the ruble;

– ensuring the development and sustainability of the banking system of the Russian Federation;

– ensuring the development and stable functioning of the national payment system;

– ensuring stable development of the financial market of the Russian Federation.

Making a profit is not the goal of the Bank of Russia’s activities.”

4.2. Expound Article 34.1 of the Federal Law in the following wording:

“The main objective of the Bank of Russia’s monetary policy is to protect and ensure the stability of the ruble, including its exchange rate; promote high employment and sustainable economic growth by ensuring a sufficient level of monetisation of the economy and affordable interest rates; organise lending to the development of the Russian economy, ensure the growth of investment and business activity, create conditions for the growth of production and incomes of the population; maintain a balanced budget system of the Russian Federation.”

5. Increase the competitiveness of enterprises by involving workers in their management system.

5.1. Legislatively establish the rights of the labour collective, specialists and managers to create their own collegial bodies (Employees’ Council, Scientific and Engineering Council, Board of Governors) and to elect their representatives to the supreme strategic management body (Board of Directors), which ensures that the interests of all participants in the enterprise’s activities are taken into account in combination with the interests of the development of the enterprise itself as an economic entity.

5.2. Establishing standards of responsibility for the actions of all participants in industrial relations: managers – for the negative consequences of decisions made in conditions of conflict of interests, specialists – for violation of technical standards and regulations, employees – for violation of industrial discipline. The degree of civil, administrative and criminal liability should correspond to the amount of damage caused to the enterprise and the level of authority of the guilty employees. Owners should also bear their share of responsibility if they directly interfere with the company’s activities or dispose of property rights to the detriment of the company’s interests (stealing profits and assets, forcing fictitious operations, malicious bankruptcy, raiding, etc.).

5.3. Conduct a census of enterprises that will fill in the existing gaps in the identification of owners, management, and employees of enterprises, and restore correspondence between economic entities and legal entities. It is necessary to expand the practice of providing enterprises with so-called integrated reporting, which makes it possible to comprehensively assess not only the current state, but also the prospects for the functioning of an enterprise in a changing environment by a wide range of indicators of its activity.

5.4. In order to collect, accumulate, analyse and summarise statistical, survey, phenomenological and other information about the state of domestic enterprises, it is recommended to create a Center for monitoring the activities of enterprises.

5.5. Encourage the expansion of the number of cooperative and national enterprises based on proven foreign experience, as well as best domestic practices.

6. Subordination of state policy to the goals of making a breakthrough in economic development.

6.1. Creation of a state extra-budgetary investment and credit fund at the expense of a target credit issue in the amount of money withdrawn by the Central Bank from the economy (up to 8 trillion rubles).

6.2. Taking into account the importance of the strategic planning system and the fact that the government of the Russian Federation, as a central executive body, is burdened with current tasks and cannot formulate strategic goals and monitor their achievement, it is proposed to create a State Committee for Strategic Planning under the President of the Russian Federation, giving it appropriate powers.

6.3. In order to implement a systematic approach to the management of scientific and technological progress and end-to-end and all-round stimulation of innovation activity, it is advisable to create a supra-departmental federal body responsible for developing state scientific, technical and innovation policy, coordinating the activities of sectoral ministries and departments in its implementation – the State Committee for Scientific and Technical Development of the Russian Federation under the President of Russia.

6.4. Create a unified information system of currency and tax control containing electronic declaration of transaction passports with their transfer to the databases of all such control bodies.


Sergey Glazyev

Copyright © 2022. All Rights Reserved.

Tags: