Gaidar Economic Forum: Memorable quotes from economic pundits

The WTO chief did not assess the results of the first six months of Russia’s membership in the Organization, saying that it was premature to judge. “Russia is not so different from any other country that joined the WTO during the past decade,” he said. Lamy added that any new WTO member needs time to start running smoothly and meet all of the WTO rules and standards.

First published in Russian in RIA Novosti.

Depardieu was granted Russian citizenship during the New Year’s holiday; President Vladimir Putin personally presented Depardieu with his new passport on Jan. 6.

Depardieu decided to renounce French citizenship after the French president announced plans to impose a 75 percent income tax on individuals making more than one million euros a year. The actor did not change his plans, even after the French authorities gave up on theirs.

The Federal Tax Service explained that Gerard Depardieu would only become a taxpayer in Russia if he chose to live in the country for more than 180 days per calendar year, or, if he registered a business in Russia.

“Gerard is an example of those people who not only discuss low tax rates but are also interested in the predictability and transparency of the Russian tax system,” Mishustin said. He also said that the number of people sharing this opinion was constantly growing.

According to the chief of the Federal Tax Service, Russia built up its tax system on the basis of international standards and the OECD model tax convention. “We feel confident when competing with other tax administrations in the world,” said Mishustin.

First published in Russian in RIA Novosti.

Commenting on the minister’s statement, Sberbank CEO Herman Gref suggested changing the name of Abyzov’s department to the “Ministry for Propaganda,” if that was what the minister wanted to be doing."

“You can call it the Ministry for Propaganda, the Ministry for Clarification, but this is our key task,” Abyzov said in response.

The minister went on to discuss transformations in Rusnano, which prompted its chief, Anatoly Chubais, to offer the minister his help in the propaganda efforts.

“The only thing that requires help is propaganda in your Ministry,” Chubais said.

The project for a new and essentially bicameral configuration of the government was put forward by Dmitry Medvedev in the fall of 2011, during his presidential term. The traditional Cabinet is supposed to be reinforced by an open government, which would include representatives of civil society. In May 2012, Abyzov was appointed minister for open government. The Ministry for Open Government is expected to become fully operational in 2013, when 3-5 pilot projects are scheduled to begin.

First published in Russian in RIA Novosti.

According to the CEO, there is an obvious contradiction between the positive situation in the macroeconomic segment and the situation outside of it.

Chubais explained that, in order to build an innovative economy in Russia — the kind of economy on which the future of the entire country will depend — it was crucial to build on the accumulated intellectual capital. Furthermore, business fails to provide active support for the advancement of innovation, because it trips on non-economic factors, according to the Rusnano CEO.

Chubais noted that he was referring primarily to corruption and the defective judicial system in Russia: two problems that needed to be tackled.

“Non-economic challenges are much more serious than the economic ones. In order to enjoy a warmer economic climate, we should first improve the non-economic climate,” the Chubais said.

First published in Russian in RIA Novosti.

He reminded reporters that the Economic Development Ministry expected the national economy to grow at less than 5 percent over the next three years; more pessimistic forecasts give more discouraging figures, including 2 percent growth.

“If I understood the prime minister correctly, he said we should aim for 5 percent growth. This doesn’t mean, though, that we have grounds for planning this expansion. Such growth will only be possible if successful reforms are introduced in many sectors of the economy,” Kudrin said.

According to him, the average growth potential of the Russian economy is between 3.5 percent and 4 percent; this forecast applies to quite a long period of five to seven years. “It may last longer unless we change something; but, even if we launched reforms today, this potential wouldn’t grow substantially for the next five years,” the former minister said.

First published in Russian in RIA Novosti. 

Following the crisis of 2008-2009, Russia has been showing a steady reduction in quarterly capital outflow figures. The only exceptions were the fourth quarter of 2011 and the first quarter of 2012, which were the result of global challenges, including the U.S. sovereign rating downgrade and the European credit crunch. Starting from the second quarter of 2012, the capital outflow has remained within $10 billion on a quarterly basis.

According to Ulyukaev, a serious modification has been taking place in the process of cross-border capital movements in Russia, amid amendments to the macroeconomic policy and global trends. He mentioned three major factors that shaped this process. The first was the global financial crisis, which limited access for Russian companies and banks to foreign loans, thus encouraging capital outflow.

Also contributing to this process were the abolition of capital control and the gradual change to the floating rate of the rouble, which prevented effective carry trade and stopped Russia from attracting additional volumes of short money.

Ulyukayev reiterated that the net capital outflow indicator calculated by the Bank of Russia was made up of non-uniform components (direct investments, portfolio investments, cash flows into the money market), with various degrees of economic importance.

“Net capital outflow is a complex indicator, and we shouldn’t be using it to draw conclusions about regulation of economic policies. The only thing that matters is FDI flows and movements of ‘dubious investments,’” Ulyukaev said.

First published in Russian in RIA Novosti.

The prime minister believes that the time has come to speak about a new direction for Russia’s integration into the global economy — creation of a favorable environment for engagement of Russian companies in international value chains. “These include transfer of technologies, know-how and management practices,” said Medvedev. He added that the new approach called for a new vision of economic policy objectives, problems of the customs regime, tariff regulation, tax administration, infrastructure development and other processes.

Some Russian companies have already been incorporated into international production chains and are pursuing joint projects in association with foreign partners. These include Sukhoi, AvtoVAZ, VSMPO-AVISMA, and Vertolety Rossii.

First published in Russian in RIA Novosti.