Expert: crisis measures hamper modernization of economy

The government has confirmed its intention to spend 9,9 trillion RUB in counter-crisis measures. That sum includes support to banks and companies, as well as tax cuts, newspaper Vedomosti reports.

However, far from all parts of the economy will get the state money. A total of 295 carefully chosen companies have been found worthy of the government’s crisis support. The state crisis spending now spurs criticism from several experts.

Igor Nikolayev from the FBK consultancy company says to Vedomosti that the state support goes to inefficient companies and will thus only hamper the modernization of the economy and create dependency-relations between state and industry. Meanwhile, the efficient companies are told to save themselves, he says.

Mr. Nikolayev argues that all parts of the economy should benefit from the support money.

He is supported by journalist Yulia Latynina who in the Novaya Gazeta argues that the state support will make the recipient companies loaded with debts resulting in a further nationalization of the economy. She also maintains that the state companies are badly managed companies, and that their revenues end up in private persons’ pockets. That is the way “Putonomics” works, she argues, referring to the rule of Prime Minister Vladimir Putin.

Meanwhile, the consequences of the financial crisis is now about to be felt all over Russia. In November 2008, unemployment increased with 376,000 people to a total of 5 million, which is 6,6 percent of the work force. That will not be the last month of crisis, Vedomosti writes. In 2009, incomes will shrink and unemployment and prices increase, the newspaper maintains.