Russian economists do not believe the world is real.

When the Russian economy was in decline, they never believed that some day an upswing would come. Even when manufacturing expanded dramatically in early 1999, these masochists kept ruminating about the catastrophic consequences of the default. It seemed like something from a joke. Even Primakov, who was dismissed from his post in part due to economic failure, didn’t know that the country’s economy was looking up. When it finally became impossible to deny the existence of the economic upturn, economists began to warn that it wouldn’t last, that there were no objective reasons for economic growth, that the second oil prices fall everything else would, too, and so on. However, economic growth has proven so lasting and stable that president Putin announced this spring that it was absolutely necessary for Russia to double its GDP in the next ten years. “No!” the economists cried, wringing their hands, “It can’t be done!” This, despite the fact that the economy is about to reach the requisite growth rate of seven percent a year…what a bunch of crybabies!
At one time, people in Russian at least believed foreigners. However, now they won’t even believe them. Russian and foreign visions of the future of the Russian economy differ radically.
Let’s take, for instance, last week’s news. Goldman Sachs released a report stating that Russia, India, China, and Brazil would become the most attractive countries for investors in the near future. The report also forecasts that in the next 30-50 years, Russia will surpass the European nations, including Germany, in economic power.
Another Western company, consultants A. T. Kearney, recently put together its regular rating of countries’ attractiveness for investors and Russia took eighth place. In the previous ratings, we came in seventeenth. Countries like France and Italy fell out of the top ten.
But what do our economists say? Some took the opportunity to express their opinion at the World Economic Forum in Moscow (the “field Davos”). Almost all of them rejected rapid economic growth. For example, Deputy Minister Arkadi Dvorkovich called doubling the GDP a “bad goal.” Evgeni Yasin resisted growth and structural reforms, insisting that they don’t mix. Presidential advisor Andrei Illarionov, on the other hand, thinks fast growth is possible. Moreover, he demonstrated that Kazakhstan’s growth rate was two times faster than Russia’s. What does he believe is the reason behind such fast Kazakh growth? He gives the same reason as always: a low exchange rate for the national currency. The Kazakhs, it seems, have pursued the correct economic policy and lowered the tenge’s exchange rate. Russian authorities, on the other hand, have no clue and have strengthened the ruble. Lord almighty, when will someone finally explain to the presidential advisor that an economy is more complicated than a septic tank?
We are regretfully forced to admit that many Russian economists, and with them the part of the government responsible for the economy, do not understand the economic life of the country or the world adequately. They are stuck in the nineties, in the era of tough economic restructuring, hyperinflation, budget deficits, and currency crises. The time for their ideology, the ideology of stabilization, has passed. Russia has a different economy, one that is developing and growing rapidly, and the world has new challenges and opportunities that no one would have dreamed of just a few years ago. We can no longer manage the Russia economy, remaining blind to these two facts.
Who would have imagined that Russia’s natural resources, which only lazy liberal economists didn’t call a disadvantage (dependence on world prices, the “Dutch syndrome,” and so on), would become a competitive advantage? A new natural resource era has dawned according to many serious analysts. In the coming five to ten years, the prices for raw materials will increase worldwide for two reasons. The demand from the huge economies of China and India and the emphasis of developing countries on development will make sure the globalization score is settled. The situation is an unexpected one for Russia, but pleasantly so.
Obviously, we will need a strategy for developing the energy and agricultural sectors under these new conditions. In agriculture, we have a fighting chance of becoming one of the leading grain exporters, if only the government would seriously support the expansion of agribusiness. The government can afford this support, as the dividends are almost guaranteed.
But are these issues on the Economic Ministry’s agenda? No, they are talking about reforming Gazprom, using various liberal ideas as a template, when they should be breaking up the rigid Soviet-style system. This reform doesn’t take global strategic changes into account and doesn’t take advantage of them, which means it won’t allow Russia to increase its economic might.

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