ROAR: “Big business lacks ideas for modernization”

Russian businessmen are not fully prepared to work with the president on abandoning the raw materials-based model, observers believe.

President Dmitry Medvedev discussed with business leaders on October 21 the strategy to pull the economy out of the crisis. Medvedev also said he wanted to know businessmen’s opinions on a wide range of economic issues to use them while preparing the president’s address to the parliament.

It was the first meeting of the president and big business since the crisis began, Vedomosti daily noted. Among those present at the meeting were members of the bureau of the Russian Union of Industrialists and Entrepreneurs (RSPP), and business associations Delovaya Rossiya [Business Russia] and Opora Rossii [an association of small and medium-sized enterprises].

They discussed the state’s role in the economy, taxes and imperfect laws. The business leaders also complained of corruption in the courts and unfair antimonopoly laws.

Medvedev reminded business leaders of the financial support the state had given to the economy and companies, which is “unprecedented in our history.” On the other hand, he urged businessmen to invest “capital formed in our country” at home.

One of the main topics at the meeting was the fate of state corporations. “I think we at some point lost control over the creation of state corporations,” Medvedev said. He added that they could be transformed into joint stock companies. Only corporations operating in non-competitive fields may remain, the president stressed.

Analysts say that several state corporations could be actually reorganized. But at the first stage they will be probably turned into joint-stock companies belonging to the state, Aleksey Makarkin of the Center for Political Technologies told Gazeta.ru website. Others will be privatized, the analyst said.
The crisis revealed the economy’s weak points, and “if we do not make the needed changes, a new crisis would simply spell the end of many of the companies present here today,” Medvedev said.

One of the most important common tasks for business and the authorities is “to diversify our economy and move away from the raw materials-based model,” the president stressed. “If we want to ensure our future, we need to develop higher value-added production,” he added.

Boris Titov, head of the Delovaya Rossiya business association, agrees with Medvedev that “there is no alternative to abandoning the model based on raw materials and diversifying the economy.”

At the same time, “there is no understanding as to how to do it,” Titov told Rosbalt news agency. “We did not see any strategic program on the diversification of the Russian economy,” Titov commented on the meeting.

It is the authorities first of all “who should have such understanding,” he said. But the meeting with the president showed that the government “does not have any concrete program,” Titov added. As for the strategic task, it “has been determined rightly,” he added.

However, many analysts criticize business leaders themselves for the lack of ideas on the modernization of the economy.

The president urged those present at the meeting to “think globally,” Vremya Novostey daily said. However, businessmen were more inclined to solve their private problems, the paper added.

“As a result, instead of discussing the president’s address to the parliament, businessmen spoke about the problems of industries they were interested in and complained of the laws,” Gazeta daily said on the issue.

The president met with “representatives of different organizations and business structures with opposite interests,” Dmitry Abzalov of the Center for Political Conjuncture explained.

The business leaders “have traditionally failed to present a united position,” the analyst said. The main “conflict line” is the disagreement between banks and companies borrowing money, the added.

President of the Russian Union of Industrialists and Entrepreneurs Aleksandr Shokhin believes that “the main thing was the very fact of the meeting of the president with business.”

Medvedev “genuinely” wanted to listen to representatives of big business, expecting “proposals for launching the scenario of the modernization of the economy as a basis for the post-crisis period,” Shokhin said.

“The president is continuing the formation of a coalition for modernization,” Pavel Salin of the Center for Political Conjuncture said. The analyst noted “a discord in the horizons of the president’s plans and ones of big business.” If Medvedev was considering “the post-crisis Russia in the perspective of decades, then business mentioned the next year,” he said.

Moreover, the head of state stressed the need for business to invest in modernization, while businessmen “traditionally” relied on the state’s financial assistance, Salin said.

Thus, the assumption that private business will be Medvedev’s base in the modernization project seems to be “too simplistic,” the analyst said. The same is true about the middle-sized and small businesses, which probably have even more concrete demands, he added.

“The president and his team will have to work hard with businessmen (as well as with other social and professional groups) to select forces of modernization,” the analyst said.

Addressing the Public Chamber on October 21, the Kremlin’s chief strategist Vladislav Surkov said that “every person should concentrate on modernizing his or her own personality, rather than awaiting constant assistance from the state.” He added that the crucial point in the achievement of the goal of modernization was “the evolutionary approach.”

Sergey Borisov, RT