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|23 jun 2017|
Anti-Crisis Program of Putin - Medvedev: Third Phase - Devaluation of Rouble
Аndrey Lebedev 03.02.2010
Alexey Kudrin's persevering appeals to devaluation and as a whole analysis of his statements from the beginning of crisis breaks thesis that the government of the Russian Federation has no anti-recessionary program, that strategy of the Russian management - "to wait till the end of crisis doing nothing while countries-consumers of our export overcome crisis and everything will be settled in itself". That is the way which could be followed by pure state officials, without business interests. Business cannot sit and wait, observing, resources thaw, it rushes to rescue them applying all possible means. Relations between the prime minister and the president of Russia, Vladimir Putin and Dmitry Medvedev, their inconsistent statements hinting at a certain latent conflict can reflect business interests, contradictions of business structures standing behind them. Or more exactly: contradictions appeared at the third phase of anti-recessionary actions of the government.
The majority of subjects of the Russian business met crisis with debts, thus some of them - in rouble, others - in foreign currency. Interest of the first consisted in rouble devaluation, actually it partially happened in the end of 2008. That was the end of the first phase.
Interest of the second consisted in conversion of currency debts into rouble ones that demanded strengthening of rouble and reduction of prices of rouble credits (reduction of discount rates of Central Bank). We observed it in 2009. All 2009 the Russian business obtained credits through the State Banks (often unsecured), cheap dollars were sold for expensive roubles and shares of the leading Russian enterprises and companies were redeemed from the Western creditors.
The largest Russian companies are in the list of the debtors: "All in all the state spent 1,4 trillion roubles. $11,3 billion were given out by VEB as credits to the Russian companies on repayment of debts before foreign creditors, 267,4 billion roubles - also by VEB as subordinated credits. Almost 300 billion roubles were spent by Deposit Insurance Agency for loans to banks and companies which took part in sanitation of problem credit organisations. Directly from the budget as grants and investments were given out 466,5 billion roubles".
By the end of 2009 the majority of businesses close to Putin (to the chairman of the Supervisory Council of Directors of VEB and the prime minister who controls financing "directly from the budget" through Deposit Insurance Agency and through other channels) converted foreign currency debts into rouble ones.
Now we should wait for the third phase - for one more rouble devaluation which will allow the Russian large business to compensate completely losses from crisis. That's why Kudrin started talking - with one year delay - about advantage of devaluation: in 2008 he was against rouble weakening. He was against not because of some macroeconomic theories - simply business close to the government had mainly foreign currency debts. Now debt load - is rouble one as in 1998, therefore devaluation became inevitable.
To compensate crisis losses to businee, rouble falling in 2010 should exceed at least the rate under credits in 2009 (that is approximately 20%). 10% of devaluation declared by the Minister of Finance are, probably, result of the compromise with Central Bank. It is supposed that at such rouble falling investors can desist from running to the banks to take roubles away ... If 10% is minimum, maximum, obviously, is 100% - political maximum, that Russia will not be compared to Venezuela. Between reasonable minimum and desire not only to compensate losses but also to earn on crisis - wide sphere for activity. It's real, anti-recessionary program executed before our very eyes. The program is very simple, routine for any competent in the slightest degree businessman, at a level of reflexes.
The aim of this reflective program of actions - conversion by means of the state of expensive (and critical for property owners) debts in actually free of charge (devaluation in 2010 "will eat" percent on credits). There are of course conversations about advantages of devaluation for domestic industry, about import-substitution but they exist only for decency. Gross national product in 2009 fell despite of devaluation already spent in the end of 2008. In reality the majority of businessmen is anxious not with import-substitution but with rescue of actives - not with enrichment but with preservation of earned by back-breaking toil (bacl-breaking without inverted commas since level of "feasible work" is not generally accepted standard - for different workers, experts it's different).
All is good, but ... If close to Putin businesses have already rescued actives, they are ready and thirst for devaluation (Kudrin reflects it, speaking about termination of anti-recessionary rouble injections in economy and advantage of devaluation), less "equidistant" hadn't had time to jump on a footboard of a train leaving under the schedule. Besides - they hope that the train will stay a little more, while the rates under rouble credits will fall more. They are guided in their hopes by Medvedev, Central Bank - not because of some political-ideological reasons, simply as by the force capable to edit "anti-recessionary plan" in the third phase. Lawful question: whether directions of "modernisation" proclaimed by Medvedev reflect branch orientation of this part of business, or it's in a greater degree propaganda cover of desired rouble resources?
In any case the conflict of interests (for/against rouble strengthening) draws lobbyists, experts, economic observers and naturally flows into political opposition between Putin and Medvedev - to the degree when financial resource can form base of political heft and influence today and in the future. One more entertaining question: if anti-recessionary measures in other countries are the same way reflective (primitive) as the Russian? Something similar can be found out and in phase strengthening of other currencies in relation to dollar with the subsequent falling (euro, for example).
It is interesting that in the USA similar anti-recessionary reflexion is impossible (there's no other new reserve currency in relation to which the dollar could fall) and the Americans should struggle with crisis more substantially hoping for bankruptcies and new proprietors, instead of rescuing businesses close to officials. Dollar will be simply compelled to serve as constraining reference point for the countries-participants of "race of devaluations" (if to admit reality of such race), that is to be devaluated less willingly, with backlog on rates from other currencies.
By the way, the case when the default in Dubai coincided with Thanksgiving Day in the USA and led to panic market bust - vivid example of race without brakes (more precisely, without any brake). One want to hope that after devaluation the Russian business at last will pass from problems of a selective survival to questions of creation of viable economy but two years are already lost.
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