CURRENTTIME — broadcast
20260807 140000 UTC
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[00:00:21] We constantly hear talk that we need to mobilize
[00:00:25] the entire economy for war
[00:00:29] and so on.
[00:00:48] But Russia has caught the Dutch disease of wartime, Bloomberg writes. War drains resources from the civilian
[00:00:51] sector. Vladimir Putin signed a law on the disclosure of
[00:00:55] tax secrets to control prices. Will this
[00:00:58] stop price increases?
[00:01:10] For food, says Radio Free Europe, the TV channel Current Time shows, the program Face to the Event is on air, hello, dear viewers, well, for fairness, the already famous
[00:01:14] quote of Moscow Mayor Sergey Sobyanin was a little taken out of
[00:01:17] context, this is what the General Director of Tass Andrey
[00:01:21] Kondrashov asked him. You've probably heard
[00:01:23] such a thing, why in our time
[00:01:27] decorate bridges so beautifully with flowers? and
[00:01:30] initiate so many new infrastructure projects, although
[00:01:34] maybe it would be possible, on the contrary, to direct all these funds to help
[00:01:38] the army and slow down the development of
[00:01:41] the city, how to correctly prioritize, if
[00:01:44] you remember, before the New Year, memes about a beautiful Moscow reached
[00:01:48] a new level, like Moscow is such a Capitol with aperols on
[00:01:51] Patriks, whose residents have everything good and stable, despite
[00:01:55] everything, and the regions are barely surviving districts
[00:01:59] and... Sobyanin, credit where credit is due, skillfully shifted the conversation to the macro level, saying that it's not necessary to
[00:02:02] spend everything on war, otherwise the economy will die, flowers and jam
[00:02:06] festivals are also important, and there is something to add here:
[00:02:10] maintaining the illusion in Russia that in their lives, for
[00:02:13] Russian residents, nothing has changed, is becoming more expensive for the Russian authorities,
[00:02:17] is it any wonder that the federal budget deficit went into the red. But
[00:02:21] problems arise due to certain economic regularities. Bloomberg
[00:02:24] writes: Russia has caught the Dutch disease
[00:02:27] of wartime due to the redirection
[00:02:31] of most resources to the military sector. The Dutch disease, or
[00:02:34] Groningen syndrome, as it is also called, is a reference to the
[00:02:37] economic situation in the Netherlands in the mid-second
[00:02:40] half of the last century. In the 1950s, a large
[00:02:44] natural gas field (Groningen) was discovered there. Billions flowed into the country due to gas
[00:02:47] exports. The country became rich, but at the same time,
[00:02:51] factories began to close, production of goods decreased,
[00:02:54] unemployment and inflation rose. This is a paradox:
[00:02:57] it got worse, and then it got better. But, if you even think about it
[00:03:01] purely logically, why would you sew clothes, bake bread, kolobok,
[00:03:04] if employees and investors are fleeing to one specific sector of the economy,
[00:03:08] flee after them too, that's first, and second, the national currency
[00:03:11] is strengthening, your bread or cotton t-shirts
[00:03:15] are becoming more expensive abroad, no longer able to compete in
[00:03:18] exports. So, it sounds nice, the average salary
[00:03:22] in Russia, taking into account prices, exceeded salaries in Greece, Slovakia and Hungary
[00:03:26] in the center of the European Union. This publication of the agency just emphasizes it.
[00:03:47] They have to pay more, although labor productivity has not increased. Salaries are rising, yes, but at some point there will simply be no one to pay them, except for the Ministry of Defense, until they run out of money there. And according to a recent survey by the Russian Union of Industrialists and
[00:03:51] Entrepreneurs, 40% of large companies are ready for mass
[00:03:54] layoffs. My colleague Anton will tell you more.
[00:03:58] Russian authorities continue
[00:04:01] to report on production growth and high salaries, but behind
[00:04:05] the beautiful numbers lie expensive loans, people are cutting
[00:04:08] expenses, business revenues are falling, regional and
[00:04:12] federal budgets are facing a growing deficit, and some
[00:04:16] officials have even called for the final
[00:04:19] transfer of the economy to a military footing. Here, we must already
[00:04:22] switch to a military footing, deliver more powerful
[00:04:26] blows, strengthen. the entire economy for war
[00:05:00] and so on, but the modern economy is built
[00:05:04] differently, if there is no economy itself, no peaceful
[00:05:08] life, there will be no taxes, there will be no...
[00:05:11] construction continues here,
[00:05:43] new productions are opening, however,
[00:05:45] analysts call what is happening a variation of the Dutch disease
[00:05:49] in its military manifestation, writes Bloomberg. The civilian sector cannot
[00:05:53] work in such a mode indefinitely, when salaries grow
[00:05:56] faster than labor productivity, profits inevitably decrease,
[00:06:00] this is what we are seeing now. The state
[00:06:03] directs huge resources to the defense industry. The defense
[00:06:07] industry receives orders, hires people, raises salaries, but... At the same time,
[00:06:11] they pull workers from civilian industries, inflate
[00:06:14] labor costs without increasing productivity and constantly make civilian
[00:06:18] businesses less competitive. Increased
[00:06:21] payments for military contracts will force civilian employers
[00:06:24] to again raise salaries, which will again reduce the gap between military and
[00:06:28] civilian incomes. This strengthens the economic arguments for
[00:06:32] a new wave of mandatory mobilization. Meanwhile, large
[00:06:35] Russian businesses are cutting personnel costs. In July,
[00:06:39] 40% of companies surveyed by the
[00:06:42] Russian Union of Industrialists and Entrepreneurs announced such
[00:06:46] plans. In a quarter, their share almost doubled.
[00:06:49] 28% of them are considering staff reductions, and
[00:06:53] one in five are considering salary or benefits reductions.
[00:06:56] Reductions are already underway at Russian Railways, at OTB, VTB, Sberbank, and
[00:07:00] large industrial companies. Other enterprises are transferring
[00:07:03] employees to part-time work and sending them on unpaid
[00:07:06] leave. One should not underestimate this withdrawal
[00:07:10] of labor resources from the Russian economy. well, it's enormous: every year, the entire
[00:07:14] Sberbank, for example, with all its employees, from cleaners
[00:07:17] to the central office, is sent to Ukraine. From
[00:07:21] January to May, the economy grew by only 3%, and company
[00:07:25] profits, taking into account inflation, decreased by seven.
[00:07:28] The business activity index of the Russian Union of Industrialists and
[00:07:31] Entrepreneurs fell in July to its lowest level since 2022.
[00:07:35] And here a problem arises for the head of the Central Bank, Elvira
[00:07:38] Nabiullina. The Central Bank is not in a hurry to sharply reduce the key rate,
[00:07:42] as business demands for development, the department insists that if loans are made
[00:07:45] cheap too quickly, inflation could accelerate again. According to
[00:07:49] Bloomberg, Vladimir Putin is putting pressure on the Central Bank, demanding
[00:07:53] an accelerated rate cut. It is impossible to completely rule out
[00:07:56] the possibility of a rate hike.
[00:07:59] And we, we always say that we will pursue the
[00:08:03] policy that is necessary to return to
[00:08:06] low inflation, if suddenly circumstances change
[00:08:10] and... Well, first of all, it's even technically, I think,
[00:08:43] impossible, the people who say that understand nothing about economics,
[00:08:47] behind this is, I would even say, not some group
[00:08:51] of economists, yes, who understand something about how the
[00:08:54] economy works, behind this are some insane politicians,
[00:08:58] the author of the idea is, by the way, Mr. Patrushev, he even
[00:09:02] three years ago made a tour, you know, of the regions of Russia,
[00:09:06] gathered governors and local party assets, as they used to
[00:09:09] say. and said that it was necessary to develop plans for transferring the economy to
[00:09:13] mobilization rails, no one understands what that is, what is hidden
[00:09:17] behind it, and what it's even about, it sounds nice, oh, we'll
[00:09:20] mobilize, win and win and win, but what is it,
[00:09:24] to transfer a civilian industry enterprise to military equipment production
[00:09:28] is absolutely impossible, this is not the time of the Second World War, the Great
[00:09:32] Patriotic War, back then military equipment was much simpler,
[00:09:35] there were lathes everywhere, you could re-learn what to turn,
[00:09:39] now it's standing with... I don't know, mandatory military
[00:10:12] service, so, introduce a state minimum
[00:10:15] wage, so that no one protests and the state spends as little as possible
[00:10:19] on civilian life, well, it will actually do that, but this is, in general,
[00:10:22] of course, like... to return to requisitioning, to
[00:10:55] war communism, to destroy the country completely, that is, these are
[00:10:58] the worst enemies of Russia that one could ever imagine.
[00:11:02] And how do you generally view these rather unobvious, perhaps even
[00:11:05] consequences of the Dutch disease, about which Bloomberg writes?
[00:11:09] Well, it really is happening, the essence is that you mentioned the Groningen disease,
[00:11:12] this is a story about how, in general, a sector appeared where it is profitable
[00:11:16] to invest, all other sectors turn out to be
[00:11:20] not so profitable, money flows
[00:11:23] into the gas industry. All banks focus on the profitability of the gas
[00:11:27] industry and other projects turn out to be of no interest to anyone, in
[00:11:31] general, as a result, an economy emerges consisting of the gas industry
[00:11:34] and degraded other industries, well, this is approximately what
[00:11:38] is happening now in Russia, because money is flowing from the budget into
[00:11:41] the military industry, the civilian industry does not receive
[00:11:44] money, well, it receives less than it had
[00:11:48] before, look, before, foreign companies came to Russia,
[00:11:51] built factories, investors came and invested money,
[00:13:55] simply because the equipment is very old and exploded from old age, this
[00:13:58] will also happen, that is, in this sense, Russia has a very
[00:14:01] unpleasant prospect, not because I want to scare someone and somehow
[00:14:04] escalate the situation, but when you have old equipment, you cannot
[00:14:08] repair it, because there is no money for it, then this
[00:14:11] equipment does not work until it explodes or breaks down completely, this
[00:14:15] is what is happening in Russia now, that is, Russia is now, well, how can I say, eating up
[00:14:19] the remnants of the pre-war economy, while these remnants...
[00:14:23] are still there, it will somehow keep going, then they will run out, nothing new will
[00:14:27] appear, and the economy will start to shrink, you know, so that you
[00:14:30] understand what I'm talking about, I'll quote
[00:14:33] employees of the Central Bank of Russia, they wrote a very good report in
[00:14:37] 2022, then they still somehow, well, in general, they allowed themselves some
[00:14:40] liberties, they said that the future of Russia is reverse
[00:14:44] industrialization, what is reverse industrialization - it is
[00:14:47] a situation when the economy from 21st century technology and products
[00:14:51] returns to technologies. equipment, products of the 20th century,
[00:14:55] that is, to put it simply, technical regression,
[00:14:58] but the Central Bank wrote this because they understand that without cooperation with
[00:15:02] the world, without investments from the world, without new
[00:15:05] technological solutions, equipment coming from abroad, Russia is doomed
[00:15:09] to remain a very backward country that cannot create new
[00:15:13] equipment, cannot create new technologies, practically cannot create
[00:15:16] new products and can chew on the remnants of what was once
[00:15:20] created, what it somehow knows how to do, this is...
[00:15:24] not only the federal budget, but also
[00:16:37] a separate deficit for regional budgets, these are separate sums
[00:16:41] that need to be added up, these regional budgets, to somehow close
[00:16:44] the hole and somehow finance life in the territories, they
[00:16:48] start taking loans from banks, so lowering
[00:16:51] the key rate is a certain way for regional
[00:16:54] budgets to reduce costs, so the head of Yakutia came to ask
[00:16:57] President Putin for protection from the high interest rate on
[00:17:01] commercial bank loans, he said that it would be good if the Central Bank lowered the rate, then it would be
[00:17:05] cheaper to borrow from commercial banks to close
[00:17:08] holes, and the holes are big, look, such an unpleasant
[00:17:12] story is happening in Russia, people in the regions are being paid at the level of
[00:17:15] the minimum wage, yes, the
[00:17:18] minimum allowed wage rates, so
[00:17:21] failures are beginning in the provision of utility services,
[00:17:25] stories are already appearing where they stop taking out garbage from cities, yes,
[00:17:29] they start reducing city lighting at night and so on, but regional
[00:17:32] budgets have no money, and to borrow money at such rates, at
[00:17:36] which they give...
[00:17:48] under external management, who will be the external manager for Russian regions? Difficult
[00:17:51] question, the state budget, the state government, but it has
[00:17:55] no money to save the regions, so, well, this is a
[00:17:58] terrible topic, that's why the head of Yakutia came to ask the president
[00:18:02] for protection from the central bank, and the central bank, what is it doing? It is just trying
[00:18:06] to somehow suppress inflation.
[00:18:37] they issue new, sell new bonds, take the money they
[00:18:41] received from the bonds, pay off old obligations, this is what
[00:18:44] is called financial government, finances are very similar to a financial
[00:18:47] pyramid, strictly speaking, but it's very difficult for the regions, they have
[00:18:51] a very small tax base, it's very difficult for them to get money, they have
[00:18:55] no chance of ever paying off these loans, a situation will arise when
[00:18:58] they will either have to, in general, tell the banks: we won't pay you
[00:19:02] anything, then the banks will already be in trouble, or
[00:19:05] they simply won't be able to get any new...
[00:19:37] but expresses some concerns, although at the official level the indicators
[00:19:41] are quite modest, the desired indicators of 4% per year
[00:19:44] even less, and allegedly the economic bloc of
[00:19:47] the government is quite successful, at least that's what's declared, in moving towards
[00:19:51] them, and Vladimir Putin, at the same time, has signed a law that introduces
[00:19:55] a system for monitoring prices for food products along
[00:19:59] the entire chain of their movement, that is, from the producer to
[00:20:01] the store, to the final consumer, to the shelf, as it were, in
[00:20:05] supermarkets, last year in...
[00:20:16] starting from 2027, food prices in Russia will be monitored
[00:20:20] along the entire supply chain. This week,
[00:20:23] the corresponding law was signed by Vladimir Putin. The authors of the document
[00:20:27] hope that this will potentially allow them to identify
[00:20:30] sharp price increases, analyze their causes, and suppress collusion
[00:20:34] among sellers. Will the law fundamentally solve the problem?
[00:20:50] for certain products, this can be expected only if the authorities
[00:20:53] establish that there are no real grounds for inflationary
[00:20:56] expectations, to apply sanctions to manufacturers or sellers of
[00:21:00] relevant goods. The law does not directly regulate food
[00:21:03] prices, however, now the federal tax service will be able to transfer
[00:21:07] data on sellers, suppliers, transactions
[00:21:11] and prices to other agencies. Tax secrecy does not become public, but the exchange of
[00:21:14] sensitive information and increased state intervention in the trade
[00:21:18] sector causes concern among businesses.
[00:21:22] A year ago, officials from the Ministry of Industry and Trade and the Ministry of Agriculture argued whether
[00:21:26] to establish a fixed price range or to force
[00:21:29] retailers to sell almost all specific products under
[00:21:32] long-term contracts with fixed prices, and although
[00:21:35] the new law is far from last year's radical proposals, it
[00:21:39] creates a basis for possible development of more active regulatory
[00:21:42] measures in the future. Disputes over prices for many products and
[00:21:46] their exceeding the official inflation rate intensified
[00:21:50] during the full-scale war against Ukraine. Russian
[00:21:53] officials publicly try to avoid talking about all the reasons for
[00:21:57] price increases, mostly shifting the blame to
[00:22:00] manufacturers. Over the past 4 years, Russians have
[00:22:03] faced a sharp increase in the price of eggs, potatoes, butter
[00:22:07] and cucumbers. Over the past week, according to Rosstat, chicken
[00:22:11] and buckwheat have sharply increased in price. In total, prices for them
[00:22:14] have already risen by 10.7%
[00:22:17] respectively since the beginning of the year, outpacing official inflation. Analysts
[00:22:20] from the consulting agency MMA, cited by the Moscow
[00:22:23] Times, call the situation alarming, along with
[00:22:27] sugar, which has risen by 1.2% in
[00:22:30] a week, by 21.2%
[00:22:34] since the beginning of the year. Well, you remember these two ideas, a year
[00:22:38] ago from the Ministry of Industry and Trade and the Ministry of Agriculture, business rated them as bad,
[00:22:41] very bad, I think in a comment to Forbes on condition of anonymity, this
[00:22:44] happened. We will continue the topic with economist Igor Lipsits. Igor, what
[00:22:48] in practice can this mean? The new law on controlling all links in the supply
[00:22:52] chain, and how do you think this can work in principle?
[00:22:56] Well, the thing is, if you are interested in the tax code of the Russian
[00:22:59] Federation, you know that there is, in principle, a method of calculating
[00:23:02] prices, which is called method number one, cost-based, and you can
[00:23:06] calculate prices that can be considered correct from the point of view that
[00:23:10] it relies on costs and includes a certain usual profit margin for
[00:23:14] a given area, that is, in fact, everything you are talking about, everything that has been adopted
[00:23:17] by the government and the State Duma, is some...
[00:23:40] so that no one overcharges, so that everyone sells at the minimum profit margin, then let them survive as they wish, but this will naturally end in
[00:23:44] business bankruptcy, this is practically the complete destruction
[00:23:47] of the market mechanism, because the market mechanism...
[00:23:53] as indicators of the correctness and profitability of actions, if the price is profitable, then I produce,
[00:23:57] if the price is low and there is no profit, I do nothing, if all this is
[00:24:00] destroyed, which the government of Russia and the State Duma are trying to do, then the entire
[00:24:04] market economy of Russia must die, Russia must return to
[00:24:07] the Soviet Union with a planned-command economy, state production
[00:24:11] plans and state coordination, after which total deficit will come,
[00:24:15] queues for everything, this is approximately the future of Russia,
[00:24:18] well, this is not me... and this is created by the government and the State Duma, but are there any
[00:24:22] alternatives for agricultural producers? They also have a fuel
[00:24:25] crisis in addition to that, but at the same time,
[00:24:28] exports, something else like that, they have a very big, now the biggest
[00:24:32] problem that is coming in Russia, this is, by the way, the crisis of agriculture,
[00:24:35] in this, this is a very long conversation, but this year there is a very big
[00:24:39] problem, if they still squeeze prices, then there is a lot
[00:24:43] of things, by the way, the Russian government terribly unsuccessfully regulates agriculture,
[00:24:46] very actively robs agriculture, farmers.
[00:24:50] producers, they complain about it, but the state is so
[00:24:53] eager to take money from anyone it can, that it drives agriculture
[00:24:57] into trouble, you can't even predict, all this
[00:25:00] will happen, simply food shortages will arise in Russia, because
[00:25:03] this year we are already seeing such an unpleasant situation due to the war, which will be
[00:25:07] fraught with a reduction in sown areas, bankruptcy of many
[00:25:11] companies, and then there is also state regulation of food prices under
[00:25:14] the pretext of protecting the interests of workers, but you will protect workers
[00:25:17] in the city, farmers will die out. They will leave the village,
[00:25:21] close farms, sell land, no one else will produce,
[00:25:24] this is what the Russian government doesn't even want to think about, but this
[00:25:28] is a reality that today hangs like a black cloud on Russia's
[00:25:31] horizon, do I understand correctly that it is precisely because
[00:25:35] of the heaviest blow that has fallen on agricultural producers
[00:25:37] right now, for this reason prices for certain
[00:25:41] products are growing very much faster than official
[00:25:44] inflation indicates, yes chicken is growing precisely
[00:25:48] because costs are growing.
[00:26:02] acknowledges that the price increase is justified, then the price will increase, this
[00:26:06] practically creates an excellent basis for obtaining a large amount
[00:26:09] of bribes for approving correct prices in various trade and food
[00:26:13] industries. Well, speaking of the misfortunes of
[00:26:16] agricultural producers, the fuss around the fuel crisis has somehow died down, well, it's clear
[00:26:20] that at first there was shock, many videos on social networks with queues at gas stations and so
[00:26:23] on, but how do you assess its scale in Russia now and its main
[00:26:27] consequences, again, Russia is big, to Moscow
[00:26:31] and St. Petersburg they drove fuel trucks,
[00:26:34] yes, fuel trucks that brought gasoline, in the
[00:26:37] regions the situation is not so beautiful, and as soon as another
[00:26:41] drone arrives, rationing, reserving, and
[00:26:43] limiting of fuel immediately occurs again, and this will continue, because who told
[00:26:47] you that new drones will not arrive, the war is not over, Putin is not ending
[00:26:51] the war, which means, accordingly, who told you that attacks on oil refineries will stop, that is, it's
[00:26:55] a temporary respite, but it's not a fundamental solution to problems,
[00:26:58] well, I assume that if there is no money even for the restoration of already
[00:27:01] damaged infrastructure, then there is even less money
[00:27:05] for creating means of combat, since the authorities have partially
[00:27:08] delegated this to the companies themselves, to those who can afford it, at least,
[00:27:12] well, you mentioned that they at least hinted that in principle, state control of prices, as
[00:27:16] in the old days, is not excluded in the future, how far do you think we are from this point,
[00:27:19] well, let's not talk about the timeline, not about time, but rather
[00:27:23] to avoid such direct predictions, but about
[00:27:27] feelings, what other events can happen before we
[00:27:30] reach exactly this point with... actual state control, well,
[00:27:34] this will again largely depend on what will happen
[00:27:37] in agriculture now, now there will be a very unpleasant
[00:27:41] story, it will be two-stage, now there will be some kind of
[00:27:44] attempt by agricultural producers to lower
[00:27:47] prices, to sell something at least, because don't forget that
[00:27:50] Russia also has very seriously hampered exports of
[00:27:53] agricultural products, so there is nowhere to put them, there is an oversupply
[00:27:56] of products, an oversupply of products leads to falling prices, well, and
[00:28:00] we rejoice, but...
[00:28:02] prices for products are falling, how great, only the next step will follow:
[00:28:06] bankruptcy of agricultural companies, reduction of
[00:28:09] sown areas, liquidation of farms and reduction of supply,
[00:28:13] then the question arises, if agricultural products are not allowed to be sold, what
[00:28:17] to do? then they must be imported, then everything is expensive, then we introduce
[00:28:21] state regulation of prices, a situation of food
[00:28:24] shortages arises, rationing, food rations,
[00:28:28] cards arise, queues for food arise, and this
[00:28:31] is not very far away, it depends on what happens this autumn
[00:28:34] with agriculture, so already by spring there may be very
[00:28:38] unpleasant stories, precisely in the field of food supply in
[00:28:41] Russia. Igor, thank you very much for this conversation, for the detailed
[00:28:44] analysis of all the latest news. Economist Igor Lipsits was with us live
[00:28:48] today. Well, in fact, we talked about the consequences of the war for the Russian
[00:28:52] economy, taking into account all the latest
[00:28:55] events influencing what is happening in Russia right now. We will tell you about new events
[00:28:59] on Monday at the same time. Goodbye and be with you.
[00:29:40] is written in the Constitution of the Russian Federation, and how the Russian authorities
[00:29:44] comply with the basic law of the country, what else this week in
[00:29:47] Russia human rights activists, lawyers and civil
[00:29:50] activists are discussing. We will tell you in the program "Man has
[00:30:43] a month and a half, and it's hard to say how much
[00:30:47] the city has changed during this time, firstly, these dragon's teeth have appeared
[00:30:51] almost everywhere on the streets, and secondly,
[00:30:55] in many places this jagaza has appeared here, it's
[00:30:59] just intertwined.