#12 - JRL 7207
June 3, 2003
"JACKALS ARE TEARING RUSSIAN ECONOMY APART"
Andrei Illarionov believes that some structural reforms will be only harmful
Author: Natalia Melikova
[from WPS Monitoring Agency, www.wps.ru/e_index.html]
AN INTERVIEW WITH PRESIDENTIAL ADVISOR ANDREI ILLARIONOV.
President of Russian set a new super task for the political establishment in his address to the Federal Assembly. National GDP has to be doubled by 2010. What will be required? Presidential Advisor Andrei Illarionov who is known as the author of the whole double-GDP idea answers this and other questions in this exclusive interview.
Question: Andrei Nikolayevich, what growth should the national economy show every year to meet the requirements specified by the president by 2010?
Andrei Illarionov: According to the presidential address, the national GDP should be doubled within a decade. That's item one. Item two: the GDP should be doubled by 2010. The average growth rate depends on the reference point, 2000 or 2001. If it is 2000, our economy grew by approximately 26% in four years (2000, 2001, 2002, and 2003). If it is 2001, then it grew by about 15% . It follows that we need an 8% annual growth if 2000 is the reference point, and 9% if 2001 is.
Question: Is that possible in Russia?
Andrei Illarionov: It is. In the last 50 years 71 country in the world managed to double its GDP in different periods.
Question: And what is necessary for that?
Andrei Illarionov: Key factors are well known. the list includes reduction of state expenses, lower taxes, better budget policy, a stabilization trust, reduction of the sector of monopolies, and deregulation of economy.
Question: The structural reforms you keep mentioning will have their effect several years from now...
Andrei Illarionov: There is a myth on structural reforms. In the first place, not all structural reforms are needed in the form they are being implemented now. Some will harm the country, believe me. Here is example. Should we proceed with reforms in the energy- production sphere as they have been implemented until now, we can forget about doubling the national GDP. As a matter of fact, even any stable development of national economy will become impossible.
In the second place, all reforms require a reasonable everyday policy. Even reforms are not always necessary - sufficient not to make mistakes.
Question: Competitive capacity of the country is one of the priorities specified by the president. It will be impossible without winning back the previous markets. Do you think it possible?
Andrei Illarionov: Back in the middle of the 1980's the Soviet Union occupied approximately 13 - 14% of the world oil market. It fell to about 7% by 1998, but rose against 10% in the last four and half years. This is an example of how we win back hat we used to control but lost. We are not back to where we were once, but we are on our way there. Some companies are even settling in the markets we have never been in until now. Russian aluminium companies will work bauxite deposits in Guinea and Guiana. That was beyond the wildest dreams back in the Soviet Union.
Question: Some economists and political scientists say that once a country loses its economic potential, it will never regain it. Not in the foreseeable future at least. What do you think of this point of view?
Andrei Illarionov: Society does not develop evenly. Who could predict back in 1973 that OPEC countries in 2002 would have a per capita GDP 30% than then?
(Translated by A. Ignatkin)