Mikhail Delyagin: “To be honest, the Russian economy looks terrible”
Despite the good recovery of the economies of a number of leading states after lifting of “coronavirus” restrictions, these states may again face difficulties by the end of the year if they do not receive state support measures. This is the conclusion reached by a number of international economic experts recently interviewed by Bloomberg. How likely a new wave of economic crisis is and whether Russia can withstand it — read in the interview of Realnoe Vremya with famous Russian economist Mikhail Delyagin.
“A crisis is highly possible”
Mr Delyagin, world economists believe that if state support for the economies of leading countries weakens, the world will again face a crisis. Do you agree with this point?
Indeed, a crisis is highly possible — at least because it passed into an open phase at the beginning of 2020: let me remind you that the economic downturn in the US exceeded 32,9%, in the UK it exceeded 20%, the decline in the European Union — 15%, and if someone considers this decline insufficient, then, excuse me, what does he consider a crisis and what crisis is he talking about?
Do you share the opinion that Russia is experiencing a decline in the economy better than the major powers?
Of course, Russia against this background, according to official figures from Rosstat, looks great — we have an official economic decline of 8% in the second quarter of this year, but these data should be treated as we usually treat Russian statistics: in other words, when they say that we have inflation of, for example, 3%, we need to multiply it by two or two and a half, when they talk about the real subsistence minimum, it should also be multiplied by two. And Bloomberg this summer just wrote that in Russia in the second quarter of 2020 the economic decline was 16%, that is, even slightly more than in the European Union.
Frankly speaking, the Russian economy looks terrible according to these data — we are the only country that has not provided serious, or rather significant, support to its citizens and businesses. Yes, indeed, there were deferred payments of taxes and contributions to businesses, there were payments to the families of 10,000 rubles per child, but 10,000 is not even a subsistence minimum, and we should not forget that the family could include adults who had been deprived of livelihood, but it is not due to the depth of an economic crisis but with the deep of a socio-political crisis — to be precise, with a certain hostility of the state to the citizens.
As for oil prices, probably it is oil companies and financial speculators who should worry about it. But for people, there is money
“Even if a barrel of oil is slapped in the face, we will be fine for a while”
Let's go back to the global economy. Bloomberg fears that it will go down again — they say that the heads of the states may weaken the support of businesses and citizens. Do you share the concerns about the weakening of these measures by China and the United States, since you said at the beginning about the likelihood of a crisis?
The United States always prints money to support its citizens and businesses because they are economically sovereign. A sign of economic sovereignty is when a state issues money according to the needs of its economy, and the United States will do this. The European Union is also economically sovereign, and it will also issue money, but Russia does not have sovereignty in economic terms, and therefore cannot print money according to the needs of the economy. The United States, European Union, and China are principled in taking care of their citizens, so they will support their economies, yes, maybe on a smaller scale, but there will be support.
But what remains for our people in the coming years, if the crisis drags on — to pray that Russian oil does not fall below the plinth, so as not to lose what many now have?
I'm sorry, but even if a barrel of oil is slapped in the face, everything will be fine for a while — as of August 1, the country's National Welfare Fund (NWF) was almost 13 trillion rubles, and if you limit corruption a little, you can still live on this money for about a year for sure. But this is not all budget reserves, but only part of them, and we will find out what reserves we have in general next week, when the ministry of finance submits the next report on state revenues. Therefore, everything is great in Russia in financial terms, and when they say that there is no money, it is all a lie, and even when Dmitry Medvedev told Crimean pensioners that there was no money to raise pensions, it was not true — the National Welfare Fund had 7,3 trillion rubles at that time. And now everything is all right with the money.
As for oil prices, probably it is oil companies and financial speculators who should worry about it. But there is money for people, and when Golikova says that it is necessary to find 60 billion dollars for sick children now and funds from the “tax for the rich” (personal income tax of 15 per cent — editor's note) will be used for this purpose, these problems have long been gone — and for this purpose there is money in the same National Welfare Fund.
The ruble and its strength are derived from the quality of governance: when we are run by wild liberals who serve financial speculators, it is not surprising
Can the ruble be counted on as a financial instrument now?
Maybe the ruble was supported before the vote — after all, it had political significance for the country's leadership, but the ruble and its strength are derived from the quality of management: when we are run by wild liberals who serve financial speculators, it is not surprising. Although the ruble sometimes strengthened last week, in general, the Russian currency will weaken because the state blocks the effective development of the country's economy, and in this situation, a devaluation of the ruble is way to replenish the budget and somehow support, so our financial authorities will weaken the ruble.
“Managers believe statistics too much, they really believe that everything is great in the economy”
How can we unblock the development of the economy and make the word “crisis” sound less and less from the lips of citizens and authorities? Are the measures understandable to you?
The measures have been suggested since March of this year — they are extremely simple and extremely obvious and primitive, and I would note that these measures were effectively applied in a number of other regions in the 1990s, under a different leadership of the country. First of all, we need to implement the declarative nature of granting benefits, that is, if you do not have money, then you write an application with a request to give you a real (I emphasize — real) living wage, and in fact, you are expected to be issued two official living wages, because the real living wage in Russia, as I said, is about half as low.
The next measure should be lending to businesses — small and medium-sized — also in the application mode (at the request of a businessman to replenish working capital — in the amount of at least a quarter of last year's annual turnover at no more than 3 per cent per annum). Next, it is important to decide on loan repayment, utility and tax holidays for those who do not have funds. Certainly, it is important to limit the arbitrariness of monopolies in a difficult period, so that prices in retail chains are not inflated at times. And finally, the restriction of financial speculation, so that the means of state support for businesses and citizens do not collapse the currency markets. Without these measures, Russia's existence seems uncertain to me.
Will the authorities take any of these measures in the coming year if the economy does not “move”?
They will not — if the authorities in the person of Glazyev talk about rogue feudalism, then with this system there is no support for the economy. How do you imagine D'artagnan who would support landlord Bonacieux? We, the citizens, are Bonacieux for the authorities, but on the other hand, the leaders believe too much in statistics, they really believe that everything is fine in the economy, but for me, this is some kind of madness, just madness, because you can't optimise, for example, medicine in a pandemic, but it continues.
If the country's authorities raised the retirement age two years ago, having previously promised that this would not happen, then what questions can there be for ordinary citizens: when people buy buckwheat and salt, this is a normal reaction
What should citizens do in such conditions?
Citizens, I think, have long been well aware of everything, and they understand that you do not need to rely heavily on the state — they do not see in state policy that the state is a friend for citizens. What should they do? Remember the difficult periods of history — even the period of war, occupation, and just do not lose heart. Therefore, it should not surprise anyone if a person goes and buys salt, pasta, cereals, soap and all other necessities, creating a stock for themselves.
If the country's authorities raised the retirement age two years ago, having previously promised that this would not happen, then what questions can there be for ordinary citizens: when people buy buckwheat and salt, this is a normal reaction. And it is better not to keep any of your savings in rubles, because now the ruble is a problem for the country's leadership. For a short time, until mid-October, people should keep money in dollars, and then, due to that in the United States after the presidential election a civil war may well start, it is better to convert the money in euros before the end of the year. But there is another option — these are gold coins, but you need to hide them so that they can not be found.
Does the time ahead alarm you?
It is already alarming.