German Gref stood out from the other participants in yesterday's “Economic Competitiveness and Modernization” conference.
Photo: Valery Melnikov
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German Gref is Unrivaled
// The Concept of Doubling GDP Gets an Original Interpretation
An Uproar
Yesterday, key figures responsible for the economy in the Kremlin and the White House gathered at the scientific conference “Economic Competitiveness and Modernization”. Speakers included Deputy Prime Minister Aleksandr Zhukov, Minister of Finance Aleksei Kudrin, Minister of Education and Science Andrei Fursenko, presidential advisor Andrei Illarionov, and Minister of Economic Development and Trade German Gref. This event would have been just another routine discussion of the president's objective of doubling GDP if Mr. Gref had not caused an uproar by saying he did not support the government's administrative shakeup.
German Gref was one of the first of the expected high-ranking speakers to appear at the scientific conference organized annually by Evgeny Yasin, director of research at the Higher School of Economics. The minister's Audi with federal license number 007 arrived at the International Trade Center at 9:40. However, the Minister of Economic Development and Trade was not the first to speak. Mr. Yasin arranged the speakers by seniority, so that Aleksandr Zhukov was the first to take the floor. German Gref waited for his turn at the podium.
Aleksandr Zhukov talked about the government's three-year economic plan. He said the government's objective was to ensure 7% annual economic growth, a 40% increase in real incomes of the population in three years, and a reduction in inflation of 2% per year in order to hold it at 4% in 2007. In addition, Mr. Zhukov announced that the government had set itself the task of moving the economy away from dependence on oil prices. Then he moved on to German Gref's favorite topicadministrative reformand stated that, “its ultimate aim is to make the government more compact and effective.” Mr. Zhukov made passing references to the government's well-known plans to complete tax reform by lowering the base rate of the unified social tax (ESN) from 35.6 to 26% and pension reform. Mr. Zhukov talked generally about what German Gref and Aleksei Kudrin were responsible for in the previous government and would continue to be responsible for in the present one.
Mr. Gref was clearly displeased with this. He went to the podium right after Mr. Zhukov and decided to clear things up in public. “This is a momentous morning for me. I realized why the government has only one deputy prime minister,” he began and then fell silent for a long time. Aleksandr Zhukov stiffened in his chair and fixed his eyes on the minister. German Gref opened a bottle of water and drank two glasses before continuing. “He has told us everything, so the ministers might as well throw away their reports,” Mr. Gref began again, indicating Aleksandr Zhukov. “ I'm not about to throw away anything! Of course, some people think that a minister can't possibly have good ideas,” he said, continuing his attack and again falling silent for a long time. Aleksandr Zhukov turned pale but restrained himself; he started examining the pattern of the green cloth in front of him and thus passed the time until the end of German Gref's presentation.
After some time German Gref started to speak again, but the audience found it tough going, because the minister spoke exclusively in economic terms and then switched to aphorisms. The minister's first thesis was, “Russia's mission is above all to become not the brawn but the brains of the world economy.” But then he backtracked by saying, “We can't accomplish this in either ten years or five years, but we have to move consistently in that direction.” Then Mr. Gref named two possible approaches to economic development. In the first, “citizens will receive low wages and will be able to compete in this indicator with countries on the level of Ethiopia, and rent from monopolies will go into hidden subsidies to uncompetitive industries.” The second approach, which German Gref seemed to prefer, was “not only a fight for markets, but also the creation of new markets.” “We can no longer allow unprincipled entrepreneurs and managers to monopolize the management process and parasitize people by paying them very low wages, while simultaneously doing nothing except lining their pockets with financial flows,” he declared and then made a strange conclusion: “I might argue that in 200–250 years, the industrial sector will no longer be needed, just as the agricultural sector is declining around the world.” Then the minister began talking about natural monopolies.
At that moment, Aleksei Kudrin mounted the platform and sat down beside presidential advisor Igor Shuvalov. German Gref had just paused again and, looking around the room, spotted Mr. Kudrin, but he wasn't the one he was looking for: “Mr. Illarionov, the government's perpetual opponent, doesn't recognize the term natural monopoly' at all.” But Andrei Illarionov had still not arrived, so there was no one to argue with. Then Mr. Gref proceeded to a specific example: “ Do you think there's nothing going on at Gazprom? If Aleksandr Dmitrievich doesn't mind, I'll tell you a secret.” Aleksandr Zhukov kept looking at the cloth. “When Aleksei Miller came to Gazprom, he acted like a Soviet secret agent. He did all the right things and didn't advertise them,” said Mr. Gref, glancing at Mr. Zhukov. He went on to tell the story of his relations with Gazprom during Rem Vyakhirev's time: “They only had a quarterly estimate of expenses and no business plan. I asked what would happen if they didn't have enough income. They answered that they would issue bills.” Meanwhile, Aleksei Kudrin was leaning towards Igor Shuvalov and whispering something to him. “Aleksei Leonidovich, leave Shuvalov alone; the administration will reform you anyway and won't add any deputies, so you'll find the term to issue bills' more useful,” Mr. Gref broke in, interrupting the conversation between Mr. Kudrin and Mr. Shuvalov. The two men abruptly moved away from one another.
Then German Gref informed his audience that the government would be examining reform of Gazprom in June, and the “double share market will be eliminated” this year. In an odd sort of way he also brought up the subject of the legal system and law enforcement agencies. First, he announced that, “the corporate solidarity between the legal system and law enforcement agencies will be eliminated.” Then he suddenly added, “I hope to God that the author of this outrage Kozak will speak independently.” Dmitry Kozak, head of the government staff, had in fact promised to present a report on legal and administrative reform at the conference, but he never arrived. German Gref ended his train of thought by saying, “The law enforcement agencies exist independently; there are examples where they've set inexplicable precedents.” At that point, Andrei Illarionov came up to the platform and sat near the podium from which German Gref was speaking. The speaker was obviously glad to see Illarionov, and leaning towards him, he patted the lapel of Illarionov's jacket and said, “Andrei Nikolaevich, I finally mentioned you a few times!” He informed the audience he would not talk about administrative reform, since “Zhukov stole my topic and told you everything.”
German Gref concluded his speech with an explanation of what a macroeconomic forecast was: “The economy is like the joke about women: its mood is constantly changing. Therefore, we're trying not to make an overly optimistic forecast.” As for doubling GDP, this problem would be solved “if there are reforms and if we're lucky with oil prices.” “If something doesn't happen, the problem won't be solved,” he said, and gave up. Andrei Kudrin, who took his place, said irritably, “German Gref hasn't stolen my topic but my time.”
German Gref's speech created a furore. Aleksandr Zhukov had to explain the situation created in the government as a result of administrative reform in the lobby. His comments on his subordinate's opinions were, “It's OK. I generally tried to touch on topics that the ministers were supposed to expand on.”
Petr Netreba
All the Article in Russian as of Apr. 07, 2004
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