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. Last Updated: 07/27/2016

'Nash Dom' Could Truly Be Gazprom

The head of Gazprom, Rem Vakhirev, has never publicly claimed to be a originator of economic conceptions or a savior of the Russian economy. Recently, however, he has shown himself to be something of both.


Vakhirev and his gas-works colleague from St. Petersburg, Fuel and Energy Minister Pyotr Rodionov, have recently drawn up proposals with a title that suggests they intend to address the government's entire economic program: "On immediate measures to stabilize the economy." These proposals were sent to Prime Minister Viktor Chernomyrdin in the first half of August, shortly before Rodionov was nominated to his post.


What do two such influential men as the director of the country's largest company and the new head of the ministry that makes up the main part of the federal budget want from the government?


Naturally, the proposals maintain that tax policies toward the fuel and energy complex are excessively strict. These policies, the authors of the proposals argue, have exhausted the fuel and energy complex of its financial resources and contradict the interests of the government on the whole.


The fuel and energy sector, they say, should be the main instrument for healing the economy.


They would like to bring the exchange rate up to 6000 rubles to the dollar by January 1997 and maintain it at that level for the next four years. They also propose to lower and fix the price of natural gas for industries during this time.


There are also proposals to freeze the prices for electricity and railroad tariffs for industry. This, in their opinion, would raise the competitiveness of Russian industries on the foreign market.


The proposals concerning the problems of mutual nonpayment of debts among industries have particularly wide implications.


The fuel and energy complex and especially Gazprom are unwilling creditors to industries that do not pay their bills. Gazprom alone has given "credits" to the Russian economy amounting to the equivalent of $10 billion. In this connection, there are proposals to allow Gazprom's debtors that have some liquid capital to issue long-term promissory notes (of up to five years), which Gazprom would be able to trade. In fact, it is a question of selling the liquid property of the debtors to Gazprom.


The authors thus propose that the government take a 30 trillion ruble ($5.6 billion) credit from Gazprom in the form of "energy veksels," or promissory notes. The veksels could then be used to finance the Defense Ministry and other departments that depend on the budget. They should be accepted by all sectors of the economy. But only Gazprom would have the right to use them to pay federal taxes. According to these Gazprom men, energy veksels could lower the mutual indebtedness of industries by 150 trillion rubles in one year.


But in practice, assert government experts, such a large quantity of surrogate money thrown into the economy would in no way resolve the problem of nonpayment of debts and would only be a powerful source of inflation.


The authors are so convinced of the worth of their proposals that they have also sent Chernomyrdin a draft of a presidential decree on putting their ideas to practice. Just in case.





Mikhail Berger is economics editor for Izvestia.