Interview with RBC Daily

Yesterday a number of experts gathered at the Institute of Contemporary Development (INSOR) to discuss the modernization of Russia. Modernization has been a recurrent theme for the Russian government of late. Discussions on this subject were initiated by President Medvedev, who first mentioned it in his strategic article “Go, Russia!” Soon after that nearly everyone – from businessmen to politicians – started to speak on the vital importance of modernization. On Monday this subject was mentioned by Vyacheslav Surkov, First Deputy Head of the Presidential Administration; somewhat earlier – by Mikhail Khodorkovsky. When will the economy finally be modernized? Which sectors should be the first to be restructured and how much will the state pay for modernization? RBC Daily correspondent Elena Zibrova discussed all these issues with Igor Yurgens, Chairman of INSOR and Vice President the Russian Union of Industrialists and Entrepreneurs.

What should modernization start with?

At first it is necessary to work out a modernization strategy. It is impossible to modernize all economy sectors at once. The first step is to identify breakthrough sectors and the areas demanding serious attention and efforts. After this, we need to develop tools and methods enabling implementation of changes. President Medvedev has already revealed his view on the subject and has identified the key areas in need of modernization: energy efficiency and energy saving, nuclear and space technologies, medical and information technologies. The president was too kind in his assessment, but in reality this list is far from being complete. Meetings and discussions with the business community will help us outline and specify exact issues and sectors we are to address.

Which sectors do you mean?

We can process ten of thousands of times more raw materials than are processing now. For example, instead of dealing with raw materials, we can deliver end products in the oil and gas sectors, in the timber and metals industries. We should identify products in the highest demand in the global markets and achieve results. While devoting much attention to the trendy nanotechnologies or biotechnologies, we should not ignore our traditional industries, since much can be achieved there too.

How much does modernization cost? Can we afford such expenses?

That is why I believe it crucial to identify several industries in order to offer them tax incentives and favorable conditions for amortization, payment of import duties, export operations and other traditional methods of assistance to potentially breakthrough sectors.

For example?

These sectors are identified as a result of market competition. I think we should conduct a large-scale analysis in cooperation with the Russian Union of Industrialists and Entrepreneurs, the Chamber of Commerce and Industry, [All-Russia Public Organization] Delovaya Rossia and other structures. The market will quite quickly identify these industries, of course if the state does not pour money into them, such as with AvtoVAZ.

How long will modernization of the economy take? Or at least, modernization of several sectors?

Since the crisis outburst we have managed to stabilize our economy. There are no riots, which means that the population is still patient enough to put up with the situation. This means that we are not to hurry the modernization process – it is better to take some time and work out a balanced approach. Our government would deserve great praise if we manage to complete the process within ten years.