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Moscow Economic Forum puts Russian Government Through the Wringer

Moscow 

There is keen interest in Russia for alternative policies to address the economic turmoil the country is enduring. This was demonstrated by the large number of participants at the Moscow Economic Forum which took place at Moscow State University on March 23 and 24.”

Scientists, entrepreneurs, politicians and students crowded into lavish halls of a new wing of the famous university. Sharp criticism of the Russian ruling class was frequently voiced by speakers and audience members. Said to be “separated from the people”, influencing the decisions of the top economic elite in Russia was said to be “virtually impossible”.

A “new feudalism” has arisen

Such harshly critical words were last heard in Moscow at anti-Putin demonstrations during the winter of 2011/12. On March 24, renewed criticism was voiced at the forum session titled ‘A third political force’. No one in attendance disagreed.

Tough criticism of the government was also aired during the plenary session. No one was arrested. There were no police to be seen. The reason? The criticisms came this time not by liberal critics planning to overthrow Putin but from left economists and entrepreneurs who are demanding more patriotism in the economic policy of the Russian government.

Two factions of the business class

The Moscow Economic Forum was sponsored by Konstantin Babkin. His company, ‘Novoye Sodrushestvo’ is located in Rostov-on-Don and includes the Rostselmash factory that manufactures agricultural combines.

As an entrepreneur and politician, Babkin says he is interested in a strengthening of the Russian internal market. He thus differs sharply from many other entrepreneurs and oligarchs in the last fifteen years who became rich through the export of raw materials. Many of them hope eagerly for a rapprochement between Moscow and Brussels and a lifting of EU sanctions against Russia.

Babkin, on the other hand, is counting on the protection and strengthening of the Russian internal market.

Revenues from the vast sales of Russian natural resource commodities during the past 15 years have not been used in the development of Russia’s own non-commodity related industries, one discussant told the forum. Economic disaster for the country can only be averted if the central bank lowers its interest rate – currently at 11 percent –and supports domestic producers with loans.

The deputy chairman of the Duma Committee on Budget and Taxes, Oksana Dmitrieva, demanded that the government and central bank make a 180-degree turn. “We need a cheap ruble and an interest rate of five to six per cent.”

She said the state must assume a role as investor rather than waiting for the “virtual sector” – meaning the banks – to provide impetus to the economy.

The left-patriotic economist Sergei Glasew, a member of the economic consulting team around Vladimir Putin, said that the current crisis is similar to the crisis of 1998 when there was high inflation and a sharp decline of the ruble. At that time, he told the forum, the crisis was resolved by the actions of Prime Minister Yevgeny Primakov and Industry Minister and Communist Party member Yuri Masljukow. Interest rates were lowered, there were no bureaucratic barriers to loans to enterprises, and attempts by economic monopolies to raise prices were blocked. This policy could lead to success today, Glasew argued.

It is wrong for the EU to impose models on Russia, a celebrity guest told the forum – former head of the IMF, Dominique Strauss-Kahn. He said that Europeans have tried to install market-based mechanisms, but in some countries such standard methods have proven ineffective. Russia must “find its own business strategy,” Strauss said.

Can China be a positive example for Russia?

In the working group “freedom, justice, solidarity, development”, there were speakers from the academic left spectrum. One of them was the well-known Moscow anarcho-communist and historian, Vadim Damier. He argued that social solidarity cannot function if it is enforced and if there is a hierarchy of rules to be followed. Instead of striving for “justice”, it would be better to seek “equality”, that is, to strive for “equal opportunities in the use of goods” and “equal opportunities to participate in the decision of general questions”.

A hot discussion took place in the working group on the question of whether China could serve as a model for Russia. Some panelists argued that the current Chinese economic policy is similar to the New Economic Policy of the Russian government led by Lenin in the mid-1920s. Damier argued that with its large number of worker strikes, China shows it is creating a “pure capitalism”.

On his Facebook page, Damier summarized his views in saying he is disappointed that whereas the majority of left-wing intellectuals in Russia are Leninists “in one way or another ” and claim to know “how to seize power”, they wouldn’t know “what to do” with power. Specifically, Damier said, “they do not know how to create a free society”.

The left economist Vasily Koltashov, head of the center for economic research at the Institute of Globalization and Social Movements, said the Moscow Economic Forum is an important place to discuss and debate economic approaches. However, the proposals presented to the forum for the mass of the population are incomprehensible and, in some cases, plain wrong.

For example, the printing of more rubles, as urged by Sergei Glasew, could only raise the rate of inflation, said Koltashov. The financial reserves of Russia should be used for specific projects such as housing and the construction of railways and roads, instead of putting banks and companies back on their feet. Such spending would also lead to a spurt in demand and growth.

Criticisms of the current strong loss of income suffered by ordinary people, Koltashov emphasized, are not directed against President Putin but against the Russian government and the liberal economists advising it.

The initiative for the annual Moscow Economic Forum, now into its fourth year, came from the faculty of economics at Moscow State University. The faculty has long been a left-wing antithesis to the Higher School of Economics in Moscow. The latter hosted a major conference recently in the form of the annual ‘Gaidar Forum’. The forum takes its name from the former Russian Prime Minister and economic shock therapist Yegor Gaidar, who continues to have many followers in the Russian elite. [The final, plenary session of the Moscow Economic Forum, with English voiceover, can be viewed here at the Forum website.]

Among the best known representatives of the neo-liberal direction for Russia today are former Finance Minister Alexei Kudrin, who is still active politically, and German Gref , the head of Russia’s largest bank, Sperbank.