Speaking Tuesday at the EurAsEC State Council's 11th session in Moscow, PM Fradkov called on the governments of the member countries to create conditions for mutual promotion of merchandise and services on their domestic markets.
"By promoting reciprocal capital inflows, the EurAsEC member states will improve the investment climate; only then will the notions 'expansion' and 'capital flight,' of which many governments are afraid, will be transformed into the process of mutual capital flow," the Russian Premier said.
In order to attract capital, the EurAsEC member nations should display flexibility and make mutual concessions, Mr Fradkov said. The orientation of the EurAsEC economies toward natural resources primary industries seems inappropriate, given their high industrial, scientific and intellectual potential. "without transition to innovative development and post-industrial transformation of society, our countries will have no chance of full-fledged involvement in the world economy," the Russian MP warned. Only harmonized and comprehensive policies in capital attraction will make it possible for the EurAsEC countries to solve their problems.
The search for new forms of cooperation at the subregional level will make it possible for the EurAsEC member countries to solve their problems by increasing industrial output, getting new jobs, and receiving large investment, Mr Fradkov said.
He proposed making the Russian rouble the principal EurAsEC currency. "There is a need to speed up the creation of a common payment system within the EurAsEC, using the Russian rouble as the main currency," he said. "It is necessary to stabilize the exchange rates of the national currencies within the EurAsEC framework, fixing the top and the bottom fluctuation limits."
Trade turnover between Russia and its EurAsEC partners in January through July 2004 increased by 37.2 percent, to 13.7 billion dollars. Russia's exports grew by 37.6 percent while its imports went up 36.6 percent.
"Our main goals within the EurAsEC have been and remain the formation of customs unions, joint development of the power industry, the creation of a transportation union, and interaction in social and humanitarian affairs as well as in migration," the Russian Premier pointed out.
The attainment of these goals is expected to lead to the creation of a common economic zone, Mr Fradkov said. He believes that EurAsEC is no challenger to the idea of Common Economic Zone. "This isn't about competition or conflict-this is just an additional opportunity for former Soviet republics to cooperate with one another," he explained.
The Russian PM cited basic macroeconomic indices for the Russian economy, referring to the Economy Ministry's statistics. In January-August 2004, Russia's Gross Domestic Product grew by 7.3 percent. "In recent years, economic growth rates have bene relying not only on fuel and energy sectors, but also on factors of internal growth-that is, higher wages, investment, and productivity," Mr Fradkov said.
According to him, the first half of 2004 saw retail trade increase by 11.4 percent and foreign trade turnover go up by 24.8 percent, to $129.8 billion.
"Exports increased by 22.5 percent; imports, by 30.4 percent; and the balance of trade came to $50.1 billion," the PM reported. According to him, inflation rose at a rate of 7.6 percent in January through August 2004. In the same period of last year, it grew 8.3 percent.
In September, the overall value of Russia's gold and currency reserves reached a record-high $90 billion, Mr Fradkov said. He then went on to point out growth in the country's agricultural sector. "The agricultural industry's output grew by 3.7 percent in the past eight months; and in the past four years, it has gone up 12-13 percent," reported the Premier. "We note a change in the industry's quality, which has prompted the inflow of loans and investment into rural areas. In addition, the quality of management has improved appreciably," he said.
Investment in the Russian economy grew by 12.2 percent in the January-to-August period, Mr Fradkov reported.
