Twilight of the machines

The non-export pipe economy continues to fall, and the government is not going to help it

The Duma has not forgotten about Clean Water. This is a program that speaker Boris Gryzlov is actively lobbying for and which should solve all water problems in Russia by 2020. The price is 15 trillion rubles. This is more than one and a half budget. In the draft budget, adopted by the Duma last Wednesday in the second reading, there was no place for this utopian draft, but the deputies do not lose heart. They pointed out in a special resolution that if next year oil costs more than $58 per barrel expected by the Ministry of Finance, money for Clean Water will have to be found. The deputies radiate optimism. They think things are going well.

Perhaps they are wrong. At the beginning of last week, the Ministry of Economic Development reported that the industrial growth that began in the summer has stopped: production has lost 1% compared to September, seasonally adjusted. I would like to attribute this drop to a statistical error, but not everything is so simple.

A strange thing happened: oil rose in price in October, while production fell. It immediately became clear that the industry consists of two parts and their lives are different. Against the background of talk about modernization, protozoa survive. Not bad for exporters - in October, mining increased by 2.9%, but industries oriented to domestic demand, according to Deputy Economic Development Minister Andrei Klepach, sank by 4.3%.

Manufacturers of tractors, turbines and cement still have no one to sell their goods to. “In fact, we never got out of the recession,” says Alexander Murychev, vice president of the Russian Union of Industrialists and Entrepreneurs (RSPP). The Ministry of Economic Development warned that the way out of the crisis would not be smooth and there might be stops along the way. But it is one thing to warn, and another to encounter in practice. Now it will become more difficult for ministers to report to the president and prime minister that Russia is recovering. The Russian economy is increasingly reminiscent of a car with a burned-out clutch: downhill - while prices for raw materials are rising - it rolls, but it does not go.

DO NOT BELIEVE IN DEMAND

The main problem is the same - domestic demand. Because of this, production hangs at the bottom. And no light is visible. It is not worth counting on the generosity of consumers, warns the leading economist of the Development Center Valery Mironov. The fall in incomes of citizens has not yet ended. Revenue in Russian business, Mironov points out, fell by an average of 15%, while the payroll fell by only 5%. There is delayed unemployment in Russia, entrepreneurs say: the government did not allow them to lay off people during the crisis, but they still have to do it.

Despite Prime Minister Putin's menacing calls, banks are still in no hurry to lend to businesses. Vladimir Putin did not even let the main state bankers go on vacation, but this helped only a limited circle of large companies. “If you have a government order, you can still count [on a loan], but the rest of you will not see the money,” Anton Danilov-Danilyan, head of the Delovaya Rossiya expert council, believes. But the state order does not always save. “The loan is closed for us. Measures proposed by the government, such as interest rate subsidies or guarantees, do not work,” admits the head of one of the major defense industry companies. Banks slow down with loans for the same reason - they do not believe in demand.

The Central Bank has already reduced the refinancing rate eight times this year, brought it to 9.5%, and this week it may announce a reduction again. But the Central Bank admits that this policy has not yet affected lending to the real sector. First Deputy Chairman of the Central Bank Alexei Ulyukaev says that if the volume of loans issued increased in October, then "within the limits of statistical error." Banks are guided not so much by the Central Bank as by the state of potential borrowers. If a company has been in crisis for a year now and cannot restore sales, then there is a great chance that it will not return the loan either. It turns out a vicious circle.

Of course, in a year or a year and a half, if the price of oil remains at a consistently high level, people's incomes will grow, the appearance of well-being will return, and with it self-confidence, and people will start spending and buying again. Then the banks will become kinder, but there will be no one to lend to - there will be fewer players in the real sector. On the one hand, this is good: the bankruptcy of inefficient companies is a positive factor for the market. But practice shows that such people will be helped. The government prefers to conduct separate rescue operations, although it could improve conditions for all.

Some manufacturers are in favor of devaluation. A weak ruble makes domestic goods cheaper than imported goods and helps win the market. But now it's too strong a medicine. Useful devaluation remained in the last century. Russian companies, and not only large ones, are burdened with foreign currency debts, which will only become more expensive from the fall of the ruble. Yes, and imports are not only consumer goods, but also components and equipment. Without them, no modernization can be carried out.

However, devaluation in any case does not threaten. Due to expensive oil, the ruble is strengthening, and the Central Bank can only restrain this process. This is the maximum that can be done for manufacturers with the help of the course. “It is impossible to strengthen further,” Danilov-Danilyan is sure.

In fact, the government does not have many options. Recipes are offered by the business itself. At the height of the crisis, the Higher School of Economics conducted a survey of managers of 752 companies in all major industries. Three out of four said they expected the government to cut taxes. You can no longer dream about this: the tax burden, on the contrary, will grow. Although President Medvedev promised innovative companies a transitional period with increased payments to social funds, he has not yet formulated the selection criteria, so it is not clear who will be lucky.

TARIFF GRID

The government has another tool, and it is also unlikely to use it. 53% of HSE respondents demanded to freeze the tariffs of natural monopolies. At least for a year. This idea also brings to mind the past crisis - in 1999, growth in the industry began, in particular, because the cabinet of Yevgeny Primakov forbade raising prices for the services of Gazprom, RAO UES and railway workers. Due to the jump in inflation, tariffs actually became lower. Manufacturers have become more comfortable. “After that, raising monopoly tariffs ahead of inflation was justified,” says Evgeny Yasin, HSE Academic Supervisor. “It was necessary to equalize prices.”

To freeze tariffs today would be quite a reasonable measure, Yasin believes. This would help industrialists not only directly, but also indirectly - through a reduction in inflation, which also leads to a reduction in lending rates. But the government, at best, is ready for half-measures. For example, last summer Gazprom was allowed to raise tariffs by 19.6% this year, and this year, with the crisis, they lowered the bar to 15.6%. Next year, power engineers will be able to raise tariffs by 5%, RZD freight transportation will rise in price by 9.4%, and gas - again by 15%.

The monopolies wanted more. They have a powerful argument - they need to finance investment programs. Gazprom needs to explore new fields, Russian Railways needs to renew its fleet of locomotives. But the vice-president of the RSPP, Alexander Murychev, points out that the state could help its companies directly from the budget.

Instead of introducing a new business tax in the form of higher rates, you can spend some of the ones already collected. For example, the 2010 budget provides for a state contribution to the authorized capital of Russian Railways of almost 60 billion rubles - the money will be used to build Olympic railways around Sochi. True, the monopolies have programs not for tens, but for hundreds of billions of rubles. The state may not have that kind of money, and then the monopolies will have to weed out not the most necessary projects. Why not save money, especially if the situation is still difficult?

Monopolies don't want to save money. At the end of October, Gazprom's board discussed plans for 2011. The company is already trying to convince the government that from now on, deliveries to the domestic market should be carried out at world prices, only with the deduction of gas transportation costs. Today, this is a very realistic scenario. Tariffs for gas, electricity and transportation will continue to rise, and the Russian economy will recover more slowly than it could.