Izvestia
Kazakh key to avoiding Dutch disease
When the global financial crisis was at its worst, many commodity-exporting countries stopped to pause and consider new development models.
One of the main issues was how successfully they were able to use the rapid pre-crisis revenue growth, which is looking like picking up again.
Critics are fond of citing “Dutch disease,” by which they mean a rapid rise in export earnings, followed by inflation, unemployment and a drop in revenues in processing industries. Mexico and Nigeria have both experienced just such problems in the 20th century. But a comparison with them is not entirely justified: There are too many differences between the middle of the 20th century and the current situation. Several decades ago the rules of the game in the global economy were different and no experience was yet available on managing economic growth.
Russia’s southern neighbor, Kazakhstan, is a more fitting example for comparison. As a major oil exporter, it depends heavily on raw materials exports. The state also plays a key role in its economic modernization.
There are many good examples of economic modernization, says Kairat Kelimbetov, board chairman of Kazakhstan’s National Welfare Fund Samruk-Kazyna. These include South Korea, Singapore, Malaysia and Norway. By improving the quality of state management, these countries’ economies entered a new phase: one of high-tech production and diversified raw materials exports. These steps have resulted in greater prosperity, increased employment and political stability.
Kazakhstan closely followed the practice of the new Asian economies, Kelimbetov said. In its 20 years of independence, it has carried out a series of liberal economic reforms, which, unlike in other former Soviet republics, did not lead to any drop in incomes or increased social inequality. Kazakhstan, for example, has the lowest taxes in its geographical area: VAT is 12%; income tax 10%; and social tax 11%. At the same time, small- and medium-sized businesses enjoy major benefits.
This helps the economy diversify and to involve different sections of society in business, Kelimbetov said. Experts view Kazakhstan’s social policy as an example of efficient revenue distribution. Kazakhstan’s expenditure budget, for example, is $33 billion with a 16 million population.
Kazakhstan was the first country in the region to emerge from the crisis and the fastest to restore the pre-crisis rates of economic growth. This shows that a wide raft of political and economic reforms in raw materials countries can be efficient.
Moskovsky Komsomolets
Russians ready to pay more to smoke
A survey has shown that only 9% of Russians oppose an increase in tobacco excise tax. There will be no “tobacco riots” due to rising cigarette prices, according to data from the New Economic School (NES). The authorities can go ahead and increase tobacco excise tax with confidence, as a massive 70% of respondents supported a price increase on tobacco. Only 9% said they would be very unhappy if the minimum price of a pack rose to 95 rubles, roughly the price increase that the Finance Ministry confirmed would follow a three-fold increase in tobacco excise taxes.
At the State Duma’s “government hour,” Finance Minister Alexei Kudrin acknowledged the need to raise the excise rates on tobacco products 11-fold by 2015 – up to 3,000 rubles per 1,000 cigarettes. This will be a phased increase, first rising to 1,500-2,000 rubles per 1,000 cigarettes in 2014. This is far from being Kudrin's personal fantasy – gradual tobacco tax hikes bringing the level in Russia up to the European average are spelled out in the government's anti-tobacco consumption policy document through 2015.
Excise tax is currently seven rubles per pack, and by 2015 the minimum excise rate will rise to 60 rubles, said Nina Nechiporchuk, deputy head of indirect taxation at the Finance Ministry’s Tax and Customs Tariff Policy Department. Tobacco companies estimate that the minimum per-pack price in four years’ time will be 95 rubles with mid-range cigarettes (25% of total consumption) costing 120 rubles. At the same time, the ministry has not considered how much this surge in prices would affect or even increase counterfeit and surrogate tobacco production. Black-market cigarettes now occupy about 1 percent of the entire market. The tobacco industry estimates that they would dramatically expand their market share, perhaps even coming to dominate the market, if this price hike goes through.
Nikolai Ostarkov, executive vice president of the business Association Delovaya Rossiya (Business Russia) denied there was any danger of this happening, adding that there would be no significant decrease in profitability. Ostarkov cited Ukraine as an example. It hiked tobacco excise taxes eight-fold last year, and smuggling rose only by 1%-2%.
Dmitry Yanin, head of the International Confederation of Consumer Societies, agrees: the black market would not exceed 10%. Yanin calculated that increased excise tax would mean 600 billion rubles in budget revenue instead of today’s 100 billion.
A joint NES/ ROMIR poll showed that only 28% of Russians are in any way dissatisfied with the inevitable sharp rise in tobacco prices.
Nevertheless, one of those dissatisfied with the increase is Prime Minister Vladimir Putin, who said that the state cannot strip the burden from business and foist it onto the shoulders of citizens (i.e., reduce the payments to insurance funds, while sharply increasing excise tax). This is, however, inevitable – Mr Putin himself signed off on the anti-smoking policy document less than a year ago.
Moskovskiye Novosti
Moscow police unmask ‘autonomous terrorists’
Moscow police chief Vladimir Kolokoltsev has publically unmasked a violent terrorist group, as eight suspected vandals await trial.
Moskovskiye Novosti has learned the details of a police crackdown on an “autonomous terrorist fighter group,” ABTO, which posted videos of its attacks on the Internet.
Kirill Krasavchikov, 18, a college student, was arrested on February 27, 2010, for setting fire to a street kiosk by throwing Molotov-cocktails at it. In his written confession he said that he and his friends had committed seven arson attacks in Moscow suburbs. Bogdan Golonkov and Alexander Bokarev were caught committing acts of vandalism a few days later. All these attacks were filmed and posted online as ABTO acts.
The three men were charged with deliberate damage to property. According to Krasavchikov, his hatred of non-Russians and vandalism are not “the same as terrorism.” He said he had bought himself a pair of army boots “because they looked cool.” Later he met some people wearing similar boots who told him about skinhead ideology. He then shared these ideas with his two friends, and together the three of them set up the ABTO, inspired by videos of famous neo-Nazi Artyom Borovikov who was killed in 2006.
The three young men never made any public declarations or gave out leaflets. They only set fire to kiosks operated by “people from the North Caucasus.” In fact they said they attacked the last kiosk for “selling them rotten beer.”
The ABTO case was handed over to investigation authorities, but the investigation stalled. In August 2010, they were charged with vandalism, a graver crime according to the Criminal code. Oleg Filippov, Krasavchikov’s lawyer, is convinced that it was because they could not be held in custody for over six months for damage to property.
However, by February 2011, the investigation had still not been completed. So they had to be charged with terrorism, because suspect terrorists can be detained for 18 months before trial.
As time went by, more suspects were arrested. Like Krasavchikov and his friends, they were initially charged with vandalism after blowing up a Lexus IS 25. The explosion barely damaged the car. In a face-to-face interrogation, the new suspects denied ever meeting Krasavchikov or the others, or having heard about the kiosk attacks. Krasavchikov corroborated their story, saying he had never met them either.
However, these separate acts of vandalism have been pulled together into this ABTO case, enabling the police to announce a successful crackdown on a terrorist group.
The defendants’ lawyers are confident that the case against them has been fabricated by the police.
“Terrorism involves setting off bombs and committing arson with the purpose of influencing political decisions,” Filippov said. “My client and his friends have obviously had nothing like that in mind. They have pleaded guilty to vandalism. But with several others, who seem to have committed similar acts of vandalism, the police reshuffled the evidence and fabricated a terrorism case.”
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