City Hall's Rising Star Plans on Economic Growth

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Youd have to have been asleep to have missed Deputy Mayor Valery Shantsevs unprecedented rise at City Hall. Occasionally, there are even rumors that Shantsev is on the verge of replacing Yury Luzhkov as mayor of Moscow. Shantsev, however, insists his interests lie in the citys economics alone. He is responsible for the capitals financial workings, which he insists hold no unpleasant surprises. He says industry continues to grow confidently, municipal securities bring their owners generous and stable returns, and in the near future Muscovites will be able to buy ecologically sound Mongolian beef.

There are difficulties, Shantsev says, but not the ones political rivals would like to see. There is little anti-Moscow sentiment: The mayors office has managed to create a stable working environment with the federal administration.

Q:
People speak of you as they might about the second-in-command in the complex hierarchy at City Hall. It has been written that you quietly took over Oleg Tolkachevs property and land committee, and then got hold of a large number of Vladimir Resins construction companies. You have inherited all the major committees. Surely this is no coincidence?
A:
This is essentially an accurate observation. My progress has been decided by external factors for the most part, but this is not because I have received some kind of gray cardinal role rather because my role within the Moscow team has changed. Previously, I managed the social sphere where issues were generally cut and dry. Meanwhile, no one in the economic policy section was actually working on economic policy. Luzhkov initiated the creation of a separate economic policy section for the city that was set up in December last year and he entrusted its work to me. Industry is developing in all areas construction, the municipal economy and the trade and consumer market.

Q:
Prime Minister Mikhail Kasyanov has signed a resolution for City Hall under which AZLK automakers [makers of Moskvich] would receive super-benefits.
A:
These are two absolutely independent projects with the only connection being that we set up the Renault [French car manufactures] project to help AZLK out of its difficult situation. For example, AZLK has no resources to build a modern painting workshop. And if it produces badly painted Moskvich cars, then they wont sell. Thats why we set up the Renault project, whereby Renault will produce 110,000 Renault cars in Moscow, in an area of AZLKs premises freed up for this purpose. AZLK was designed a while ago to produce 240,000 cars per year. It is clear that now this level of production is excessive, since the demand for Moskvich cars has fallen. If we organize production well using quality technologies, we would be able to achieve the maximum level of 100,000 Moskvich cars per year. By setting up a Renault production we will be able to construct a modern painting workshop where 110,000 Renault cars will be painted every year as well as 100,000 Moskvich cars. The Moskvich factory will naturally pay for the use of the Renault facilities. At the same time, the Renault project will use the AZLK facilities stamping workshop, forge and pressing shop which are virtually unused at present to produce basic components for 110,000 Renault cars. Renaults production is a joint project and, in accordance with our laws, at least 30 percent of its components must be locally produced. We believe Moskvich is even going to make a profit on this, because it would not be possible to go 50:50 here since stamping, forging and pressing shops are more expensive to maintain than the painting shop. The additional benefit is that 3,000 extra jobs will be created in producing the [Renault] cars. All incentives provided to the Renault project are stipulated by Russian legislation. The incentives include the creation of free customs storage, the reduction of tax rates, etc. Investment totals $470 million, so we have to create conditions that are attractive to investors. Look at China investors there receive a five-year exemption from taxes and customs duties, and the country is filled with investors.

Q:
You are frequently accused in the press of lobbying the interests of major real estate players DSK-1 and MCM-5 on the capitals market.
A:
It depends on what you call lobbying. Lets take DSK-1. Where is the need to lobby for them? After all, they have technical facilities for making 1.3 million square meters of living space. Who else could make this kind of housing in Moscow? No one. So why lobby for them? They should be given plots of land in order to build this housing. But people come to us and say, "Why are you letting DSK-1 use their own parts to build? Why dont they sell them to us so we can build?" I tell them I wont lobby for them. They should go to DSK-1 and sign an agreement with them, buy the materials and get building. Theres no lobbying involved. This is a case of the city developing normally. Using the citys potential. If you are talking about lobbying our regional interests in the State Duma then yes but how do we do it? We dont buy anyone we approach deputies and explain our point of view. If anyone suspects that we buy out deputies then let them prove it. But we dont do that kind of thing.

Q:
May I ask you a question as a member of the committee investigating the explosion on Pushkin Square? Underpasses have two owners the metro and Gormost. They lease out retail space to three major commercial structures: the metro trading house, Shevale Co. and Terrabuildingengineering. These companies build walk-in kiosks for sublease. The media reported that the explosion was due to scores being settled between these three organizations.
A:
Of course, the whole situation can be exaggerated to the point of the absurd. But if this had been a settlement between [Moscow metro head Dmitry] Gayev and someone else, then Gayev would have been the one to suffer, while here innocent people were harmed. The official version, which no one has refuted, is that this was an act of terrorism. The idea of blowing up some shoe kiosk in order to frighten Gayev is, excuse me, simply ridiculous. Gayev does not own any kiosks. He gives permission to set up the premises.

Q:
But investigative representatives have said in the media that a firm like Terrabuildingengineering takes cash from its walk-in kiosks as well as official payments. As a result, it receives about $3.5 million in cash, which it takes in suitcases to the firms office at 2nd Brestskaya Ulitsa. About $1.5 million goes toward bribing Moscow officials.
A:
People can come up with anything they like. Maybe these firms did take some money on the side. But there are investigators for cases like these and they shouldnt be sensationalizing information like this. They should be catching those people and taking them to court. When they say businessmen are collecting money in order to bribe some official, it is simply another example of passing the blame onto someone else. They should say outright who did what and how much money they took. Let the investigator name names. And until they do then all these tales will remain the stuff of fantasy. I believe that all of todays publications have a political leaning. Theyd be better off being discussed in court. Legislative practice has been established in Russia. It has its normative acts, as does Moscow, and we adhere to them. But if the law is violated in any country, those responsible should be made to answer. We shouldnt create unusual conditions for honest people. The majority of our trade companies are honest.

Q:
Valery Pavlinovich, you have recently returned from Mongolia. What was the purpose of your visit?
A:
Every capital, whether of a major state or a smaller one, has connections with the capitals of other countries. We organized an extremely full schedule of Moscow events in Ulan Bator. A large group of Moscow performers put on five concerts. We also took a delegation of free-style wrestlers who beat the Mongolians 7:4 at their national sport. In Mongolia there are something like 35 million heads of cattle to 2.5 million people. Fifteen heads of cattle per person a ratio we cant even dream of here in Russia. Meat consumption in Moscow has halved. Mongolian meat is ecologically clean as the cattle are allowed to graze freely and neither biological nor growth enhancing chemicals are used. True, it wont solve all our problems in one fell swoop as Mongolia could only provide 10 percent of our annual demand. But you understand, the lower the price and the better the quality, the more demand there will be with our low wages. It means that we will help all Muscovites to live and develop normally.