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Is Modernisation in Russia Possible?

Interview with Grigory Yavlinsky and Boris Titov by Yury Pronko, "The Real Time" programme, Radio Finam
May 12, 2010



Pronko: It is 19:06 in the Russian capital. I am Yury Pronko. You are listening to the Finam FM, The Real Time. Good evening, ladies and gentlemen. I would like to congratulate all of us myself and all of you, dear listeners, - with the two year anniversary of our programme. Two years has flied by, but we are still at the radiofrequency 99.6 band. But as I am a very economical person, as well as thrifty and cynical, then let us directly pass to the theme of our today's programme. "Modernisation is impossible without policy changes," "Business should actively participate in the discussion of modernisation of the country", "All the discussions of how to conduct modernisation are pure fantasies". These are only some of the remarks from my todays interlocutors at maybe already the most hackneyed topic in our country. Of course, well speak about modernisation. We have somehow always concentrate on either Skolkovo or the Silicon Valley, somehow we have been always trying to snitch the name Silicon Valley from the Americans, or we start speaking about Anatoly Chubais looks like that we have only these two options when discussing modernisation. If we speak about innovation and modernisation, we always focus on Skolkovo and Chubais and his Rosnano corporation. But it seems to me, that the topic is in fact more serious, and we shall discuss it in The Real Time with Grigory Yavlinsky, Co-Chairman of the Board "ZaModernizatsiyu.Ru", the first Chair of the YABLOKO party. Grigory Alexeyevich, good evening.

Yavlinsky: Good evening.

Pronko: And Boris Titov, Co-Chairman of The Right Cause party and the leader of the Business Russia movement. Boris Yuriyevich, good evening.

Titov: Good evening and happy birthday.

Pronko: Thank you, thank you. The number of our multi-channel phone is 730-73-70, and finam.fm is our web site. Dear listeners, you can use all these means of communication and ask your questions or express your views and concerns. Now let me formulate the topic of the programme: "Enforcing structural changes. Is such modernisation possible in Russia?" Please express your opinion, our phone and website are at your disposal. Boris Yuriyevich, tell me please, what all of this is all about and why? I do not mean here why the President said that we should conduct modernisation and restructure Russias economy, but I am interested why you are in this, what for? All are discussing this day and night.

Titov: Why do we need this? But we are business. I am first of all a businessman, I represent Business Russia - that business which is engaged in the raw [exports], which lost in the crisis more than any other sector... The manufacturing sector has lost almost 3% of our total GDP last year. That is why we understand that without modernisation of the economy, without changing its structure - from raw material dependence to a diversified economy - there is no future for us. And economic modernisation should not be reduced to... Of course, innovation is also a very important process, we said as early as in 2004, that we needed a project such as the Silicon Valley or something like Bangalore, we wrote about this in Business Russias report. So, this is very important, and we agree with this. But in addition to all of this, in additions to innovative technologies, we need basic technologies. Today our country seems to transfer to the pre-industrial status, to say nothing of the post-industrial stage. We are not even an industrial country. Therefore, today we need basic technologies, we should import them and adapt them, we should learn to grow bread in a new way and produce canned food, and, naturally, manufacture machinery products of a completely different quality level. Therefore, in this broad sense, we understand modernisation but how to conduct it we do not know yet, we do not have any strategy here yet. But we realise that we need modernisation, our country leaders also realise very well at least, in all the statements and their rhetoric that this is needed. But yet we have not seen any narrow proposals, there has been no system view.

Pronko: Perhaps the reason is different?

Titov: That's why we gathered so that to think how to develop it, we wanted to join together the best economic minds in order to understand what measures the system approach should envisage. We are now opening a web-site, it is not even a web-site, it is a portal, an Internet resource, where people will be able to discuss and then propose [the solutions], and do many things via this web-site, it will be a social network for information management. So, we have identified 22 key problems, the main vectors of modernisation, which we should follow: from change of accounting to the new policy in the field of mining and raw exports, to Russias position in the world. So, streamlining all of this as of different directions, we shall launch a discussion on every direction, and we shall determine what to do to make the country different.

Pronko: Grigory Alexeyevich, perhaps it is not the time yet? Boris Titov has been saying that we can not live like this any more. Probably we can. Market prices on raw materials, the key Russias exports are more than comfortable, the situation is not bad. Maybe that's why there have been words only and no definite solutions?

Yavlinsky: Well, its correct. You can live like this, and live like this for a long time. Or not so long, it depends. Approximately 25% of the population of our country are satisfied with the situation, and will be satisfied. The economic system created in the country is a stable system, a self-reproducing system with its social support, and it should be noted, with a strong public support, the key feature of this system which is that people who live in this system and use it do not wish to part with it, because this would worsen their situation very rapidly. [Our] people are mostly well-educated, intelligent, they understand that such a system will not last long in a strategic sense, but to part with it at present, today would mean worsening of their situation today and tomorrow. Therefore, they do not want this. The system has shown for the past ten years, that if the situation on the world markets is more or less favourable, than the system will be functioning and provide good growth rates. And even when crises occur in the world, this system, in spite of the fact that it is peripheral for the world economy, but in general [it functions]...

Pronko: So one can survive in it.



Yavlinsky: You can survive. But 75% of people do not have any prospects under this system. Absolutely no prospects. Neither from the point of view of skilled labour, nor in terms of education or quality of life, or anything else. This system does not offer anything. Secondly, the system creates a very peculiar middle class, which different developed countries do not have. Even in the Soviet Union, which was considered a developed country, however, it fell under the second category of such countries, what people could belong to the middle class? They were teachers, doctors, engineers, military officers, as you all well know. And in the West this category of people also includes entrepreneurs, businessmen and employees of the financial sector. And we at present have a very different middle class, here the middle class includes all who provide services in the field of redistribution of income from the raw exports.

Pronko: [The are] bureaucrats.

Yavlinsky: Bureaucrats, employees of restaurants and casinos. Well, as one of my very talented friends says, restaurant, taxi and girls makes the formula of the middle class.

Pronko: In the present Russia.

Yavlinsky: In the present Russia. This is already a different Russia. Different in a sense that it is an entirely different country compared with what we normally thought it was. This is the second argument. Now here comes the third consideration: I think that such an economic system will not have enough capacity so that to keep our eastern territories.

Pronko: So, does it mean that you even question the integrity of the country?

Yavlinsky: Yes, I question the ability to protect our sovereignty beyond the Urals, at the Far East and in Siberia, because, as we have already discussed, this economic system can function, but it has not enough power. And have the longest borders with the most unstable regions of the world, with absolutely unpredictable regions from the point of view what may happen, and what changes may take place there. Or we can put it like this: if changes do take place there, how they can affect us? And they are absolutely unpredictable for us. They are East, the South, and the Caucasus. Now we have a predictable border with Belarus. Belarus, Ukraine in some sense, and no one knows what can happen with all other regions. The situation has radically changed. So the question is how we shall look at all of this, and what should we do with it - to agree to that? I think that is wrong.

Pronko: But, nevertheless, you say that and I just go back to the first thesis - that 25% of smart, literate and, as I understand, very influential Russians are well aware that they do not need any modernisation because it will affect the basis they are standing on.

Yavlinsky: Not quite. They need it, and they know that it is needed.

Pronko: So they think it is needed?

Yavlinsky: When in the evening they are drinking their expensive whiskey, sitting together and talking what do you think they may talk about? They say: "Well, it's impossible!" And then discuss their affairs, what they were doing all day long, but it's so impossible. "How far could we move, how could I have developed my production if I was not afraid so much! How well I could invest, and all would be different. Why should I conceal my assets, transfer them to offshores, loose money on all this and even face the prospects of loosing my property? Why should I do all this? I'm a citizen of this country, I live here, this is all mine - why should I act like this?" Everyone discusses this. But in the morning they go to work and listen to the Finam radio, which I also congratulate with a birthday. And they realise that they have discussed all this and thats it, here is the real life, and they have to make decisions, they need to arrange for different meetings and talk to different people. And if they do not do this, then their real present life will take a different shape.

PART 3 - to be continued

See also:

Here you can listen to and watch the programme

May 12, 2010