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Friday, June 16, 2017

The trouble with these reforms

And not just because the authorities don’t know much about what to do to overcome the economic crisis. Even if it would be the opposite, and requires more understanding of what reforms may be necessary but not sufficient.

To begin with, and why do we need some reforms. That, without them, no way? Let’s be honest, often I want to do without any change. And it is clear why there is such a desire. Just a bit too heavy there are in our country these same reforms. And economic reforms of the early 90-ies of the last century was generally nitrilase. It is therefore not surprising that associations there are many is simple: if reform means it will be difficult.

Reforms inevitably become heavy when the authorities miss the time for decision making, simply put, retarded. Then even the most that neither is correct reforms are significant socio-economic impact. And if reform is still not quite right, then all is sadness, the people paying, that is, on full.

Today we have all heard that we need structural reforms. Heard? Heard, of course. What are structural reforms?

An answer like “we need structural reforms because we have a structural economic crisis,” does not satisfy us. Nevertheless, to go in search of the right answer it is necessary from a creature, the nature of the crisis.

The current economic crisis really is structural in nature. This is when the economy has accumulated a lot of imbalances and structural inequalities, with the result that economic growth rates are falling, incomes are falling. What is the structural imbalances? Today in the Russian economy abound. Almost the most obvious one is that our economy is an economy of raw type, we live primarily by the sale of raw materials. The share of manufacturing industries we have a relatively small. Of course, a small proportion of truly high-tech industries. While oil prices were high, they lived quite think of anything. Prices have fallen, life has become harder, and the consequences of this structural imbalances manifested itself in full.

Or here’s another obvious disproportion: a small share of small business in the economy — about 20% of GDP, which is 2.5–3 times less in comparison with what we have in developed countries.

These structural inconsistencies can enumerate and list. At the same time arise a natural question: why, after more than a dozen favorable years (we remember how high was the price of oil) did not correct these imbalances? Yes, over the years, from the country candy could be done. Did not…

So, for the solution of structural problems need structural reforms. Agreed.

The need for such reforms, we lately have heard many times. What needs reform? Here to answer this question the authorities are in big trouble. That is, they already recognize that the crisis is of a structural nature, they are even already talking about the need for corresponding reforms, but they have little idea of what exactly needs to be done. That is why “suddenly” revived the work of the Presidium of the Economic Council under the President of the country. Yeah, after the country descended into full-blown economic crisis.

Moreover, it seems that even turns and work on the preparation of the reform program (needs to be ready for the presidential elections 2018).

Agree that is unfolding very slowly so this did not even work on structural reform of the economy, not fix the most notorious imbalances and it’s only to determine what to do. I want to say: guys, we have no time to lose. You can say any number that the crisis was over, that the bottom of this crisis, we were (note: several times), but the crisis is still here — he is here he is. The economy is falling, real incomes are falling, pensions ndondakusuka, and to working pensioners, as you know, nothing added. But if we take into account the freezing of salaries, cuts in benefits for the disabled, etc., the picture and all is bleak.

However, as it was announced only at about the middle of next year should be ready reform program. So, as I already said, slowly.

So by the middle of 2017, the country will finally start to really climb out of that hole in which we find ourselves?

Again, my answer is: no. And here’s why. Suppose to exit from the structural crisis finally developed a reform program. And let it be it is those reforms that are needed. But will they be enough?

To answer this question let us return to the merits of the current economic crisis. This is not just a structural crisis — a crisis, burdened by sanctions and falling oil prices.

The negative effect of low oil prices (even the current $ 50 per barrel is low, the price of oil) can be neutralized by swiping the same structural reforms. But the sanctions do not succeed.

Attempts to present the case so that sanctions can thrive, is a big mistake. It would be fair to say, with sanctions, counter-sanctions, because from the last good either.

I might want to pay attention to these sanctions and be confident that it is unpleasant, but no more. Alas, exist with the sanctions you can grow — no. No catch-up development in the conditions of the sanctions war will not work. Don’t need to convince myself of the opposite.

The West, incidentally, also made a mistake with these sanctions. The Russian economy has not been and will not be “torn to shreds” because of the sanctions. So if the economy is really bad, it will not be because of sanctions, but because of ourselves. It turns out that they overestimate the negative impact of sanctions, and we underestimate.

And the experience of other countries, fully confirms the correctness of these conclusions. Here you go, Iran. There was a policy of opposition to sanctions, she was very clearly formulated: a policy of “economic resistance.” What? And the fact that nothing she failed, Iran had to agree on the lifting of sanctions.

And Cuba? Well, she lasted more than half a century. And let’s be honest, primarily due to the huge economic assistance from the Soviet Union. Cuba eventually also almost agreed on the lifting of sanctions. And where our tens of billions of dollars? They are not forgiven. But we are not Cuba — us so no one will not help.

China, contrary to popular belief, in recent decades, and was not burdened with any really heavy economic sanctions. Including why he has so rapidly developed.

It is the lifting of sanctions, the cessation of the sanctions war is the condition for the transformation of structural reforms in our country of necessary and sufficient. No, you can certainly try to prove that it is not, but it would just be a waste of time and threatens even more severe consequences of the current economic crisis, and the above foreign experience confirms this.

Sanctions are not terrible in themselves, not because we lost the ability to borrow money on international capital markets etc. They are nasty because needed structural reforms will not be sufficient.

Unfortunately, even close to understanding this yet. We have heard estimates of the type: sanctions are not our problem, we didn’t start this, not we will come up with suggestions to cancel them.

Okay, it was only words. Let’s see what happens today.

Whatever our it is unpleasant, but the European Union again wants to extend sanctions against Russia by six months or a year. We simultaneously declare that the Russian anti-sanctions will be extended until the end of 2017, i.e. six years. Are ahead of the curve? Measured sanctions? It turns out that not only the official Russian rhetoric, but the action really say that the belief of the authorities in the success in the war of sanctions continues.

Not encouraging, and the fact that representatives of economic departments and close to the top experts elementary afraid to admit that sanctions, no development is possible. On the contrary, they assent and produce the desired forecasts. But then they have to realize that they are no less responsible for the continuing economic crisis.

Economists did not ask, when you started all this geopolitical mess. Here and today they do not have to think how politicians will take care of it myself. Economists just have to say, than it threatens the economy. The work to end the sanctions war is not a “trade of sovereignty”. That, dear politicians, show all their skills so it was so.

In the meantime, we start talking that the economy has adapted to the crisis etc But at the same time we hear that “no money…”? Why come to? We adapted to it? We all are the peak of the crisis passed?..

So the reforms we really are in trouble. And although, as you know, it’s hard to live in an era of change, but necessary. Just really would like to see from these changes was good.

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