Corrupt bureaucrat behind bars over illegal warplane sales
The former Federal Agency for State Reserves official who sold four fighter planes for just 612 rubles ($21.1) has been sentenced to 11 years behind bars by Nizhny Novgorod Regional Court.
Andrei Silyakov was found guilty of stealing four Mikoyan-Gurevich MiG-31 Foxhound fighters-interceptors, as well as over 35,000 metric tons of fuel oil. The MiG-31s and the fuel were worth over 1 billion rubles ($34.5 million) and 300,000 rubles ($10,344), respectively.
Found guilty of grand larceny, Silyakov will serve his 11-year sentence in a medium-security prison and will have to pay a one million ruble ($34,500) fine. Silyakov, who has been placed under house arrest, did not attend the sentencing. His lawyers were present in the courtroom instead. Silyakov’s mother handed the court his plea for his absence not to be construed as an attempted escape.
Silyakov fraudulently purchased the planes, which were warehoused at the Sokol aircraft factory, in 2007. Taking advantage of the fact that, officially, the fighters were classed as aircraft components, he won the tender: paying a paltry 153 rubles ($5.2) for each of the planes.
Investigators believe Silyakov bought and sold the planes through several intermediary companies, and that he pocketed the three million ruble ($103,400) difference between the 153-ruble ($5.2) purchase price he paid and their final selling price. In 2008, Silyakov stole fuel oil from Nizhny Novgorod’s state reserves under a similar scheme.
The court proceedings were closed to the press, because some aspects of the case are classified state secrets.
Monopolies and bureaucracy are the bane of Russia
Noted Russian economist Ruslan Grinberg discusses the future of the Russian economy in an interview with Moskovsky Komsomolets.
MK: We have been hearing more and more often of late that Russia has no post-crisis development program and no resources for innovation. Are the economists to blame or does the cause lie elsewhere?
Ruslan Grinberg: As a rule, doctors are not to blame for the fact that people fall ill but there are different treatment options. It’s the same with the economy: it falls ill from time to time and there can be many remedies for it. In Russia, it so happens that the most dangerous ailments affecting the economy – bureaucracy and monopolies – have become key factors in economic and political decisions on the country’s development strategy. There has been no alternative to the mainstream economic vision for more than 20 years.
The result of this policy is there for all to see: de-modernization of the economy, society and culture. Over the years the nation has lost its sense of national unity.
MK: What do you mean specifically?
Ruslan Grinberg: Russia is a country of extremes. Instead of the previous utopian slogan “put your country before yourself” we have adopted the principle “everyone for themselves.” Some believe the Soviet heritage is one big Potemkin village and the sooner it is gone, the better. A typical example is Skolkovo as an attempt to turn over a new leaf. But this is unproductive. There are dozens of world-class science centers in Russia and given the right management and resources we could use them to revitalize science and develop the modern innovative potential in industry and services. All the successes scored in the past 20 years have been achieved through the dismantling of the archaic Soviet economic system in the late 1980s and early 1990s and a happy combination of circumstances in the energy market in the 2000s. Yet, our country still has one of the highest inflation rates in the world.
MK: What model would you propose?
Ruslan Grinberg: What we need to do is make a scrupulous and honest inventory of our remaining scientific and technological potential. We cannot maintain the full range of industries we had in the Soviet Union. We should break them down into three categories. First, the plants and manufacturers that can still be competitive on the world market. They should get financial backing from the state, with every benefit offered to private investment. Second, we must decide which industrial facilities we cannot afford to keep afloat. And third, we must determine which industries are necessary to maintain national security. Finally, we must create coordination mechanisms – financial, monetary and economic – something Russia completely lacks, unlike the United States and Europe.
We need an old-fashioned industrial policy. This is clear even to its staunchest of our opponents.
High inflation kills wage increases
Real incomes in Russia fell 5.5% in January and are likely to remain flat throughout the year, Russia’s State Statistics Committee said. Analysts believe this rules out economic growth.
Current levels of price-related anxiety (as measured by the VTsIOM public opinion center in February) suggest Russians anticipate another crisis. As many as 80% of 1,600 respondents in 138 cities and towns across Russia said they considered the recent price rises as high.
“The number of respondents who said prices were rising ‘very fast’ increased from around 65% in November 2010 to 70% in December, 75% in January and 80% in February,” the report said. Russians have been hardest hit by recent rises in their housing and utilities bills and food and gas prices.
According to official figures, inflation accelerated to 2.4% in January. After Prime Minister Vladimir Putin forced oil producers to cut gas and diesel fuel prices, the Economic Development Ministry downgraded its February inflation estimates to 1%-1.3%. However, analysts believe that the annual inflation rates may exceed 10% this month.
Real disposable monetary incomes fell 5.5% in January. Real wages (incomes excluding pensions) rose 0.6% year-on-year, while nominal wages, unadjusted for inflation, grew 10.2%. The figures for real incomes may improve in February if pensions are indexed, but salaries will not.
Real wages cannot be regulated by government interference. With the 10% increase in nominal wages just balancing out the 10% inflation rate, real wages are likely to stagnate, causing a steep decline in domestic demand. Experts agree that without this domestic demand there can be no steady economic growth.
Olga Naidenova, senior analyst at Otkritie Financial Corporation, does not believe salaries will grow faster so long as unemployment levels remain higher than before the economic crisis, and employers have to pay high social insurance premiums.
“Real incomes can only grow along with increasing labor productivity,” said Dmitry Trofimov from MEF Audit. “Although a number of investment projects have been announced, production is not due to begin until 2013-2020. There are no economic reasons for incomes to start growing sooner than that.”
Roman Stroilov from Penny Lane Realty said incomes will not grow in 2011 because the statistical impact of rebounding from the lowest point of the crisis has been exhausted.
Salaries in private companies are unlikely to grow in 2011, Sergei Shandybin from Razvitie group said.
Similarly, those working in the public sector have little cause for optimism. In 2010, nominal wages of personnel employed in healthcare and education rose by 8.5% and 7.5%, respectively. With inflation at 8.8%, teachers and doctors have seen their real incomes decrease.
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