Foreword by the Saker: Vladimir Pozer is the Moscow equivalent of the notorious Savik Shuster in Kiev: one of the worst of the worst “liberal” “democratic” (in the Russian meaning of these words) journalists out there. You will see that most of his questions are ‘loaded’ – he operates by innuendos, suggestion, by appealing to emotions and associations. If Shuster is a dumb scumbag, then Pozner is a clever, one (neither one could be called smart or intelligent). So make no mistake, Glaziev is in very hostile territory here. And yet superbly deflects every inanity and every attempt by Pozner to make him say something he does not believe. When a clever man confronts a truly intelligent one, the latter always wins hand down, and that is what we have today: a master easily refuting a mediocre, but arrogant, student. It makes for a very interesting interview with the man who wants to do for the Russian economy what Putin did for the Russian state: free it from external control and make it truly sovereign. This is also the nightmare of all the ‘Atlantic Sovereignists’: to see the Russian Central Bank nationalised and Glaziev appointed has it’s director.
A big THANKS!! Eugenia for her superb translation!
Translated by Eugenia
POZNER : This is the program “POZNER”. The guest of the program is Sergey Glazyev. I am not introducing him, not naming his awards and such – there are too many. You are a very well known person, Sergey Yurievich. Thank you for coming.
Wikipedia said the following about you:
Profession – economist. Activity – politician.
Do you agree with that description?
GLAZYEV : If we remember that, as the classic once said, the politics is the concentrated economics, then partially yes. If we take the common meaning of the word that politics is the public activity to exercise power, then no, at least, for today.
POZNER : OK. Your mentor Academician Lvov said the following about you: “As a scientist, Sergey Glazyev is one of the most prominent economists in Russian from 1970s. It is a pity that he moved to politics”. But it was said a long time ago, in 2003. Your involvement in politics – do you regret that?
GLAZYEV : I regret that I was unable to realize the ideas and projects that we were developing in the Academy of Sciences and proposed them many a time to the government. I assure you, the situation in the country today would have been much better, and we all would have lived better if the economic reforms and the economic policy had been following the scientific recommendations.
POZNER: You do not consider that time of your political activity wasted?
GLAZYEV: I do not think so, because science is, after all, the experiment. Considering that we live in such complex transitional times, as scientists participating in the development of those ideas and projects, even if 90% of our proposals are rejected, we still obtain a huge experimental field. There is the Russian experience, Chinese, that of our Eastern European neighbors, and to be a scientist in the thick of these processes is extremely interesting. The combination of science and practice, although it is not always possible in economics, always leads to mutual enrichment.
POZNER: In spite of what you have just said, I still want to introduce you to our viewers as two-faced: Glazyev-economist and Glazyev-politician – because in both areas you have left and are leaving a very distinctive trace. I will start from this. Egor Gaidar, in whose government you worked, called you “dirigist”, that is a proponent of the active regulatory role of the state in the economy. Was he mistaken?
GLAZYEV: “Dirigism” is a very common understanding of how the state should regulate the economic development. The term is derived from the French word ( diriger – to manage, to run – translator’s note ). Not only in the Soviet Union, but also in Europe and America, and all the more so in China, Japan, Korea, other countries, the state is very actively involved in economic processes. Because if the state does not regulate the market, then the market is occupied by monopolies, speculators, and God knows whom. The role of the state is to create the most advantageous conditions for the increase in the investment and economic activity.
POZNER: So, you are in favor of such approach?
GLAZYEV: I think that people saying that the state should stay out of the economy are working in the interests of those who want to control the market. The economy is not chaos; in the economy someone always rules.
POZNER: Sergey Yurievich, I asked you a simple question – yes or know.
GLAZYEV: Largely yes.
POZNER: Good. In 2003, speaking about you proposed program of the development of Russia – and you did propose a program at that time – the journal “Profile” wrote the it was about several simple and non-original slogans: take away the profit of the oil sector, introduce the state monopoly of the sale of vodka, transfer the profit of the Central Bank to the state budget, increase the import duty in order to use the money to support what was left of the Soviet high-tech industries. That was 2003, I repeat.
These measures imply a direct interference of the state, do they not?
GLAZYEV: Vladimir Vladimirovich, these are just fragments, and misquoted at that.
POZNER: No, they are not.
GLAZYEV: Yes they are misquoted, substantially. An economic program must be systemic, incorporating monetary, credit, tax, budget policies, as well as the property relationships, relationship between the capital and labor, etc. That program proposed by my colleagues and myself was the program of the economic growth and increase of the living standards. It included the mechanism of strategic planning, the mechanisms of the state regulation of the economy in the interests of increasing the investments, and creating conditions so that our entire economic potential could work. What “Profile” was talking about were just small fragments and, I would like to note, they are correct that there is nothing new in them. The excess profit is expropriated, as they put it, in America, Australia, Norway. The tax rate in the oil sector is much higher than in other sectors and could reach 80% of the profit. In England, it is called the tax on excess income; in Australia, it is called the rent tax, the special tax they introduced when oil fields were discovered; in Norway, the oil industry is completely controlled by the state.
So, they say “take away”, but in reality a reasonable economic regulation should create conditions for the people, so they would work most effectively using their creative potential to produce something new. Whereas the natural rent is something given by God and it belongs to everyone. So, if we allow to privatize the natural rent, then why would people work?
POZNER : I somehow doubt that is true.
GLAZYEV: Anyway, in all countries, the state tries to take away the natural rent, because this part of the profit is not due to the work effort, and classic term for such action of the state is “tax on the excess profit”. We actually introduced that back in 1992: simultaneously with the transition to the market the export tax had been introduced that provided one third of the state budget. I was then responsible for that area of the regulations and can say that neither IMF, nor other experts that arrived to Russia from abroad objected to that. That is because the goal was to move away from the administrative distribution switching to the indirect, through taxes, withdrawal of the excessive profit from the export of natural resources. We financed one third of the budget from that export tax. Importantly, the default of 1998 happened precisely when the state abolished that export tax under the pressure form the WTO and IMF. The Primakov government reintroduced it; the income began to come in again. Currently, it is in place, and in our program we did not propose anything other than that.
The second point. The profit of the Central Bank or, rather, the excessive profit of the Central Bank, coming from the right to emit money, also in all countries is transferred to the state budget. In the US, practically all money emission by the FR goes to finance …
POZNER: Are you saying that we are practically do not differ from them in anything?
GLAZYEV: Simply put, there is reasonable economic policy, and we proposed it, and there is twisted one serving special interests. When people say there is no need to tax the natural rent, it means they express the interest of those profiting from that rent, most likely.
POZNER: So, your proposal of 2003 included those measures you mentioned, and then in 2008 you prepared a new proposal – I remember very well: there were 10 proposed points – I will not for the lack of time discuss details. According to the press, you recently prepared a new report that you were supposed to present to the Inter-Departmental commission of the Security Council, I think, on 15 th of September. Have you done that?
GLAZYEV: Yes, of course. There was a meeting.
POZNER: So you did. You will correct me, if I am wrong, but the aims stated in that report are quite attractive: 5% growth of GDP, increase of the industrial output by 30-35%, increase of the social spending from the today’s 6.5% to 40%, and all of this just in 5 years. I only named a few elements but they are quite impressive. For some reason, I, and I am not alone in this, recall Stalin’s “5-year plans”. Five years – and we have a powerful economic “burst”. But I also recall that Stalin’s “5-year plans” involved the use, as you, perhaps, remember, of a large number of prisoners as workforce. I am not saying that you are proposing the creation of the Gulag (the system of the prison camps in the Soviet Union, 1930-1960, – translator’s note ) but do you really think that in 5 years it is possible to achieve all this given the current conditions in Russia, the size of the workforce, etc?
GLAZYEV : Let us start with the current conditions, then. The growth you mentioned – 5% a year – the growth potential theoretically exists but it naturally cannot be achieved in a year. The use of our industrial potential today is on average 60%. So, we could have increased the industrial output with the existing base funds by 40%. In high-technology sectors such as high-tech manufacturing, aviation, shipbuilding, the use of production capacity is ever lower, 30-35%. Therefore, there are base funds. The workforce you mentioned. Although we officially have only 5% unemployment, but any manager in the industry will tell you that he could increase the output with the existing base funds and workforce provided there is additional demand. Many studies report that hidden unemployment in the industry reaches 20%. So it is possible to expand by 20%.
POZNER: But how?
GLAZYEV: If the use of the industry resources 60% . . .
POZNER: But why only 60%? Why not more? What is thwarting that?
GLAZYEV: Many factors. The key one is the demonetization of our economy.
POZNER: What does that mean in Russian?
GLAZYEV: Insufficient amount of money for the normal reproduction of capital.
POZNER: Money is needed to do what?
GLAZYEV: Money is like the blood in the body, it is needed for everything to work. Loans are needed. The capital is subdivided into the fixed assets and operating capital. The operating capital is the capital you need every day to run the business. For example, the proportion of loans in the operating capital in the industry is about 50%. It means that when the Central Bank raises the interest rates the loans become more expensive and, taking into account that profitability is only 5-6%, if the interest rate is higher than that, there is no sense in taking the loan.
That is why when the interest rates get too high, it leads to the situation when the enterprises have to either pay off the loans or refrain from taking on loans, i.e. reduce the operational capital and, consequently, the industrial output. Or raise prices, if they can. For this reason, when the economy has insufficient volume of loans available, it always impacts the dynamics of the industrial output – in shrinks. This is a strict relationship observed in all countries and at all times.
In our country even more so. There is a strong relationship between the dynamics of the money volume and the industrial dynamics. When the industrial output increases, this increase is always accompanied by the growth of the money mass. When the money mass is reduced, this always results in the reduction of the industrial output. This is observed during many decades. Thus, the today’s underuse of the industrial capacity is linked first to the high cost of the credit. Furthermore, due to the scarcity of money many enterprises are unable to obtain credit because of the tough conditions, such as requirement for collaterals, evaluations of the collaterals, sometimes the value of the collaterals is insufficient, etc.
So, one way or the other, current decline in the industrial output that we have is connected with the increased cost of the money. All countries in the world in order to stimulate the economy out of the crisis, which was global in 2008, chose the path of low interest rates and unlimited credit. In America, Europe, China, Japan there is no problem today to obtain credit practically with zero interest rate, i.e. even below the inflation level. All that matters is that you have an idea, the production capacity and resources.
POZNER: But we do not do that because?
GLAZYEV: We do not do that, because according to the recommendation of the IMF we, as the A+ students in the political economy of socialism class in our freshman year in the University, do as we are told. The IMF recommended us to reduce the money volume in order to curb the inflation, and we, with the stubbornness that could be better used elsewhere, keep making the same mistake. We are trying to fight inflation by raising the interest rates, reducing the amount of money in the economy, but as a result getting a drop in investments.
POZNER: They give us advice that they do not give the others?
GLAZYEV: By the way, recently IMF recommended the Americans not to raise the interest rates, because it could exacerbate the structural problems in the economy.
POZNER: But they advise us to raise them?
GLAZYEV: Yes, they advise us to raise them.
POZNER: And we obey?
GLAZYEV: Unfortunately, we do obey. As you know, Einstein once said that if the experimenter tries to do the same experiment for the third or fourth time with the same conditions but hoping to get a different result, he has his logic upside down.
POZNER: You think this is some sort of sabotage on the part of the IMF?
GLAZYEV: The IMF gives the same advise to everyone.
POZNER: Including those that obey them?
GLAZYEV: Those that do obey find themselves as a rule in a difficult position, as we do. This is because the goal of IMF as it is described in its Article 8 of its Charter: Provide conditions for the free flow of the capital. That is, all IMF cares about, that there is free flow of capital, that the countries do not protect themselves from the movement of capital, but whether these countries experience economic growth or how their population is doing – the IMF could not care less. The IMF has no objective to achieve the economic growth in any country. The goal of the IMF, as follows from the name – Monetary Fund – is that the money emitted today for the world by the US and EU . . .
POZNER: It is still unclear why we are the only victims.
GLAZYEV: We are not the only ones. Ukraine is the other one.
POZNER: Let leave Ukraine out of it. Ukraine is a different story.
GLAZYEV: The South-East Asia was the victim in previous years. There the picture was exactly the same: the countries that followed the recommendations of the IMF suffered crisis, those that did not follow did not.
POZNER: Why are we following these recommendations, out of stupidity? There should be some reason, don’t you think?
GLAZYEV: The reason is the special interests. We started out conversation by talking about the relations between economics and politics. Unfortunately, economics, i.e. the economic policy, is heavily influenced by the interests. This is the science that, in its vulgar form, serves special interests. That is why the practical application of the real economics is often rejected, because the practical policy serves somebody’s economic interests. The interests served by the IMF, as we see by the conditions of our currency market, are the interests of the currency and financial speculators. We let the ruble to be free floating, the Central Bank removed itself from the currency market – thus, the entire currency market now is in the hands of the speculators.
POZNER: Our speculators?
GLAZYEV: Well, 75% of the money on our market belongs to non-residents – they live abroad. Therefore, our financial market as far as the financial circulation is concerned is dominated from abroad. This is primarily American money, although ours participate, too.
POZNER: The Central Bank is promoting this?
GLAZYEV: It is conniving in this by not taking any steps to protect our financial market from the speculators’ attacks. What does the speculator need? He needs to have the conditions of no currency restrictions and nobody on the market. Then the currency speculators in agreement with each other manipulate the currency market at our expense. Because then they push the ruble down, people like you and I lose income, but they receive excessive profit. Why is the speculator bad? Because he, in contrast with the normal trader or investor that come in for a long term, obtains his excessive profit by destabilizing the market at the expense of all other participants. That is why this is evil, and all countries with no exceptions fight against it. But an idea was forced upon us that the market will by itself regulate everything just fine, even though 95% of operations . . .
POZNER: Forced by whom?
GLAZYEV: By that same IMF.
POZNER: And we are such, oh, well. Or are there economic interests in our country that fit well with the idea forced on us?
GLAZYEV: Of course. The biggest center of profit today is the Moscow Exchange. Because the economy dropped by almost
19% now (NOTE BY THE SAKER: this is a mistake of the translator. What Glaziev actually said is “almost 10%“), but the Exchange grew two-fold. On the Exchange, the profit margin is 80-90% on the money invested. Everything is shrinking, whereas the Exchange is swelling. With such jumps in the ruble exchange rate, all free money streams to the Exchange. The business is getting engaged in speculations instead of in developing the production. A very important question is where the money comes from.
POZNER: Does the President understand that?
GLAZYEV: The President counts on the people behaving decently.
GLAZYEV: Because he, apparently, believes in the patriotism of our business. When he said that we needed to stabilize the market, then out large corporations responded and put some money out on the market.
POZNER: So, our President is very naïve?
GLAZYEV: No, he just keeps his word. He said that we would not introduce any currency restrictions counting that all parties on the market would behave decently. And he is not introducing any.
POZNER: Among the measure that you are proposing and, apparently, proposed in your report, there are such things as “people’s enterprises”, something that reminds me personally, the emission of 20 trillion rubles, for specific aims, also words like “stopping the speculation hurricane” on the currency market, obligatory sale of the currency revenues, justification of export of capital based on the advantages for Russia, restriction of the margin between the production cost and retail price by 25%, and temporary freezing of retail prices on the common goods.
Again, these things are not new. However, I would like to draw your attention to the article in “Pravda” (it still exists, which you may or may not know, but it is still published) that praised you proposals: “Many analysts consider the proposal of the Adviser to the President of the Russian Federation Academician Glazyev a program of return to the Soviet economic system. Indeed, there are certain similarities up to the creation of Gosplan”.
Is “Pravda” (truth – translator’s note ) saying the truth?
GLAZYEV: Vladimir Vladimirovich, where have you read about my program, if this is not a secret?
POZNER: In the newspapers.
GLAZYEV: Please, do not read “Kommersant” I beg you.
POZNER: But this is Pravda, not Kommersant.
GLAZYEV: But Pravda likely reprinted that from Kommersant.
GLAZIEV: I have not sent my program to Pravda. And I must add, it has not been published yet. So, what is written in Kommersant, or Pravda – let us say, in the press – as the classic put it: “Do not read the Soviet newspapers in the morning” (a famous sentence from the novel by M. Bulgakov “The dog’s heart” – translator’s note ). Although they are not Soviet anymore, not all of them, but nevertheless they presented a mush from different elements taken out of context and misquoted.
Talking about the measures you mentioned: some of them are not in the program. There is nothing in it about 25% or freezing of the prices – I will send you the text, so you could verify for yourself. The program says that we need a system to regulate the prices, so we would understand precisely the rule governing the pricing in our market. If we have chaos in our market instead, we could just as well expect the state to freeze the prices if push comes to shove. That happened before. That is why we need the system of the price control that would ensure fair competition and prevent the misuse of the monopoly position. Note that in Germany where no one is talking about building socialism the state has the right . . .
POZNER: So, you are saying that what Pravda’s statement that there are elements resembling the Soviet system is not true? There are no such elements?
GLAZYEV : Wait, such elements are present in the regulations of the EU, the US, and I am not even talking about China.
POZNER: Of course, China is something entirely different.
GLAZYEV: So, what we are saying should not be painted in ideological colors. This works in the market economy, and we today live in the market economy, and that is what we start from, by no means proposing to abolish the market mechanisms. We are saying that the laws of the market economy could be used in a way to benefit all and maximize the production.
The key question is the amount of money that we lack. You mentioned the number 20 trillion rubles, which is a gross exaggeration. What is proposed in the program is the creation of the mechanism of the goal-oriented credit emission aimed at solving specific problems with the use of the funds for specific purposes.
POZNER: What is the sum?
GLAZYEV: It depends – different through different channels.
POZNER: Is the sum stated?
GLAZIEV: Yes, of course it is. The money mass does not exceed what the Central Bank has already put into the economy. The central Bank issued and gave for refinancing to the commercial banks 8 trillion rubles. The banks used these 8 trillion rubles mostly for currency speculations, which is evident from examination of the dynamics of the banks’ assets. So, they took our loans from the Central Bank and increased their assets in foreign currencies. This is wrong. We should not emit money to allow the speculators to rock the ruble. That is what happened in reality. That is why if we want to give the economy the necessary amount of money, we have to guarantee that the money will be used for the industrial development and investments. Depending whether this is the military industry, import replacement, small business, or mortgage, the interest rate should range from 0 to 2% at the Central Bank, with the bank margin of 2%. When the commercial bank receives cheap credit, it should not unduly profit from it. It should change money for its services including the control over the intended use of the money. Hence 2% margin, because if it is not restricted, then . . .
POZNER: I do not know what margin we have but we have a commercial break now. But before we go on the break, I must tell you that the press responded, without, as I understand, the access to the document, but responded nevertheless in a very defined manner.
Several titles as examples.
– “The Putin’s advisor proposed to restrict the purchase of foreign currency and freeze prices” RBK
– “Sergey Glasyev presents the mobilization economy” Financial Gazeta
– and even “How to s-Glaz-it Russia” (“How to put an evil eye on Russia” (sglazit – to put the evil eye on; Glazyev – derived from glaz , or the eye – translator’s note ).
If you were the Editor-in-Chief of a newspaper, what title would you give to you proposal?
GLAZYEV: First of all, I would not have relied on rumors but presented the real text. All you described happened, because people did not read the text, took things out of context that they wanted to use as horror pieces.
POZNER: But why? Why such, I would say, unanimous opinions? A choir? Are they against you personally, or how could you explain that?
GLAZYEV: First of all, the choir is not unanimous at all. The Moscow Economic Forum practically unanimously supported the program. The Scientific Council of the Security Council did, too.
POZNER: But the press?
GLAZYEV: The press is not working for free. Somebody ordered these articles.
POZNER: That is what it is!
GLAZYEV: You want to find an independent journalist in our country?
POZNER: I can tell you what I am paid for my work but they do not buy me. I will not be sitting any more from the press, since you have dismissed all of it, because it is either bought and paid for (this is a very serious accusation, by the way) or simply does not understand what it is saying.
I want so refer to some people instead. Not everyone was fascinated. In particular, the Head of the Advisory Council of the Institute of Demography, Migration and Regional Development Yuri Krupnov said to you: “If you, Sergey Yurievich, is appointed the Head of the Central Bank, then in a year’s time there will be either a catastrophe or you will be doing exactly the same as the Central Bank is doing today”.
The Deputy Minister of Finance Storchyak: “From the point of view of the economic freedom, I am not in agreement with the Sergey’s proposals. I lived in the Socialist economy, and I have had enough. If somebody wants to return, do it without me”.
And, finally, the Press Secretary of the President Dmitrii Peskov: “Glazyev is an economist and sometimes relies on his academic background when expressing his expert opinion on one subject or another. But this opinion does not always reflect the official position of the President or the President administration”.
Are you not troubled by such opinions?
GLAZYEV: I personally know all these people. First, no one, I assure you, has read the text (of the proposal).
POZNER: How is that possible? They express opinions without having read the text?
GLAZYEV: Invite them here, and, perhaps, I could supply them with the text.
POZNER: But you have presented your proposals?
GLAZYEV: Yes, but with all due respect, none of the persons you mentioned has been present at the meeting of the Scientific Council of the Security Council or Inter-Department Commission; nobody was sent the text. They rely, as you have done just now, on the “Kommersant” report, at that time, and some, perhaps, on “Pravda”. Nevertheless, none of these commenters understand what this is all about. Peskov said exactly that: he is not commenting on the Program itself. Everybody is entitled to his opinion.
I can only say that what I am presenting is not just my personal opinion, but the result of scientific research. This is the reflection of the objective knowledge of the behavior of the economy. The problem is that the economic policy is always the sum of interests, and these interests always have ideological as well as quasi-scientific justification. Who dislikes my program and why do they dislike it? I will explain it. Everybody needs cheap money. But for us to inject cheap money into the economy . . .
POZNER: Wait a minute. How can you program be liked or disliked it has not been read?
GLAZYEV: Right now we are talking about the fragments they have been commented upon.
POZNER: Do they reproduce you program faithfully? You said that they were misquoted.
GLAZYEV: Some are misquoted, but I will be talking about the true ones. Yes, we are proposing the flow of cheap money to develop the economy. Who is against it? The industry if all for it; the agriculture is crying out: ”Give us the money!”; small business is dying out because of the lack of credit; mortgage system is stalling – everybody needs cheap long money as in America, Europe, Japan, or China. Everybody wants to work, just like everywhere in the world. High interest rates make our economy noncompetitive. All are moaning, so everybody is in support . . .
POZNER: When who is against? Storchak? (Deputy Minister of Finance – translator’s note )
GLAZYEV: I will tell you. For us to give cheap money for the economy, we need to make sure that this money does not end up on the currency market, because, as I said, we printed 8 trillion, and all of it ended up precisely there. The same happened in 2007: we printed 2 trillion rubles, 1.5 trillion of which wound up on the currency market.
POZNER: So, the bankers are against, as I understand?
GLAZYEV: The bankers do not want to be responsible for the intended use of the money. If they receive the money they think they have the right to use it as they please. So, the large banks, particularly state-owned, are not thrilled with the program, because they get the money from the Central Bank either way. Then we tell them: “Forgive me but you have to control the intended use of the money; you have to guarantee that the money” . . .
POZNER: What you are saying sounds like the program is aimed at a sharp improvement of the situation in the country, of the standard of living, of everything. And you are saying that these people are against it. So, they are thinking exclusively about their personal interest, and let the country go to Hell. That is what it sounds like.
GLAZYEV: Vladimir Vladimirovich, let us analyze what is actually happening here. Simply, we need to drastically change the entire system of the money management, because at this moment we have the economy where two thirds of the money mass is formed by the foreign loans. Why do you think we suffer so much from the sanctions? Because the external credit stopped, but three fourth of the money is based on foreign credit. That is why when 150 billion went away last year, and the Central Bank did not substitute the money with the internal credit, the money base began to shrink.
POZNER: By the way, you are proposing to give the right not to pay back the loans to the countries that imposed sanctions on Russia in some cases, do you not?
GLAZYEV: I believe we must defend ourselves.
POZNER: But you do understand what you could lead to afterwards? Court proceedings and all? As we say, the debt is made beautiful by the payback. Our own assets abroad could be frozen, and all that.
GLAZYEV: But this is precisely the response in case they arrest the assets. The sanctions include the possibility of arresting the assets. Some of our banks lost their foreign assets. For what reason? So, this was proposed as a retaliatory measure in case when the assets of Russian companies and people are arrested for political reasons. This is a very serious problem for our system, by the way, because more than half of our investments come through offshores. Money slips ways from Russia to offshores, half of it disperses but the other half returns. 75% of investments and imported capital what we have returns from offshores of what was taken away before. Therefore, if all of this gets frozen there, and we will have to struggle for years through courts to get our money back, then I think our companies in case of such financial aggression should have a way to defend themselves by not paying back the money if they assets are frozen.
The second point in my system is de-offshorization. If we want to have the internal sources of credit, have long cheap money, we should not let the money be used for currency speculations or let the money flow away to offshore but instead be used as the internal source of credit.
POZNER: And we could achieve that how?
GLAZYEV: Through regulations.
POZNER: This is not a pretty word – regulations. This word means tough, sometime even harsh police measures, apparently.
GLAZYEV: Police measures are needed against stealing. All countries punish stealing. If somebody manipulates the market of, say, the ruble, this is also punishable. In the US, this is punishable by the lifetime imprisonment, you know that, for manipulations of the currency market. So, here again I am not reinventing the wheel.
One of the measures – a tax on the export of capital. It is used already in some European countries, France, for example. The EU has been discussing this subject for a long time, like the Tobin tax. Tobin, by the ways, is considered the founder of the entire theory of the money circulation and who always argued that the role of the Central Bank is to create the most advantageous conditions for rise of investments. In order to raise investments, we need to protect our money system from the attacks by speculators. If it is open for such attacks, then we will never stabilize the ruble exchange rate.
POZNER: About the ruble exchange rate. You once said that the drop in the ruble exchange rate is the result of the incompetent policy of the Central Bank and the money authorities in general. The leadership of the Central Bank does not have the objective of stabilizing the national currency. You said that last year – you words from “Kultur”.
At the meeting with the head of the Central Bank Nabiullina the President said: “The Central Bank is doing much to support the national currency, at least, to make feel stable, and to make our entire financial system feel just as stable”. It appears that the President Adviser and the President himself evaluate the Central Bank differently.
GLAZYEV: The central Bank is doing a lot within the system of rules that it created by itself for itself. These rules posit that the Central Bank is not on the market, it makes no attempts to stabilize the ruble exchange rate within the certain range, and is now trying somehow to influence the market via “manual” manipulations. The problem is that the Russian financial market is only a small segment of the world financial market, so we are opposed by the speculator that have the resources to destabilize out market just by a clapping their hands.
POZNER: How you are explaining this now – I would not have any questions. However, you are saying that this is “incompetent policy of the Central Bank and the money authorities in general. The leadership of the Central Bank does not have at this time the objective of stabilizing the national currency”. This is a very straightforward and harsh statement. The President Putin is saying that the Central bank is doing much to support the national currency at least, to make it feel stable, and to make our entire financial system feel just as stable. These are two different opinions, do not you agree?
GLAZYEV: I will try to explain. These words of mine were said 3 years ago
POZNER: In 2014.
GLAZYEV: I said exactly the same in 2013 when I warned that targeting the inflation would lead to chaos on the financial market, a fall in the ruble exchange rate, high inflation, and decrease of the industrial output. All of it came true. I said it 3 years ago – you can read my special opinion. All predictions I have given over many, many years have come true, unfortunately. They come true, because I base my judgment not on the IMF dogma but on the empiricalal economic law that have theoretic explanations.
Thus, I am arguing that the policy of targeting inflation, which is understood as requiring the Central Bank’s to renounce the stable ruble exchange rate and all instruments of the currency regulations or restrictions and to use just one financial regulatory instrument – the key interest rate. I am arguing that if we renounce all these measures and use only the key rate, we will not win over the inflation, will not stabilize the exchange rate or achieve nothing in the economy, because our market will become chaotic. That condition looks approximately like this. Let us say, you sailing on a yacht. You have sales and the engine. The storm begins. You should take down the sales and use the engine. Instead, you shut down the engine and leave your yacht in the power of the waves. We could try and use the sales to stabilize the boat and will not succeed if your engine is off.
Yes, the Central Bank is doing a lot to stabilize the ruble exchange rate after having refused to use the most important instruments of such stabilization. When the Central bank states that we will defeat inflation by manipulating the key interest rate and will not pursue the stable ruble exchange rate – this is utopia, because half of the prices on our market depend on the exchange rate. If the exchange rate drops, it immediately leads to the rise in inflation. So, as a result we come to a different port. The objective was set to reduce inflation to 4% from 8%. . .
POZNER: I am not talking about this. I am talking about the difference in the evaluations (of the Central Bank) expressed by you and by the President. These opinions are quite different, I think.
GLAZYEV: The decision has been made regarding the policy of targeting inflation, against the scientific recommendations, but it has been made. I can affirm that within that policy whatever the Central Bank does, no matter how great are the people there, they will not be able to accomplish anything until we introduce currency restrictions, because 90% of currency speculations in our country are done with the foreign money, at peak times. The situation when the volume of our financial market is only 0.5 percent from the world financial market, to keep the market completely open is suicide.
POZNER: I understand. I am going to switch to the politics now, because I would like to say at least a few words on the subject. Once you wrote a book titles “Genocide”. Remember? Do you remember that book? There you argued that the democrats were deliberately exterminating the population.
GLAZYEV: This is too strong a statement. There is no such thing in the book.
POZNER: Yes, there is.
GLAZYEV: It is exactly the opposite, Vladimir Vladimirovich. I argued that 1993 the democracy in the country was finished. After the execution of the Supreme Soviet there is no more democracy in the country.
POZNER: But those you call democrats? Democrats and democracy are different things.
GLAZYEV: “Democrats” in quotation marks, I would say. In 1993, the Supreme Soviet was fired at, that was a coup . . .
POZNER: Genocide – who did that?
GLAZYEV: Oligarchs. Together with their collaborators in the power structures.
POZNER: So, they need to go to prison?
GLAZYEV: Only the court could decide that.
POZNER: If this is genocide, well . . . OK. A little less than a year ago you published a new book :”Ukrainian catastrophe: From the American aggression to the world war?” A quote from that book: “Going along their standard path, the Americans are sponsoring the Ukrainian Nazis and establishing in Ukraine the anti-Russian terrorist regime”.
GLAZYEV: This is the medical fact.
POZNER: This is “Pravda” at its worst.
GLAZYEV: This is the medical fact.
POZNER: How is that the Americans are forming the Nazis?
GLAZYEV: Then where did they come from? I have lived in Ukraine my entire childhood, and we have never had a single Nazi.
POZNER: What about Germany, who formed them there?
GLAZYEV: The Americans invested 2 trillion dollars in the prices of that time into the German industry.
POZNER: Thus, “the goal is to use the Ukrainian Nazis as a battering ram against the Russian state, to organize a series of “Orange revolutions” on our territory, to split and establish control over Russia and Central Asia. The American oligarchy desperately needs a war, and in order to preserve their world dominance the oligarchy is using their typical methods of provoking a war in Europe. That is what my book is about. It demonstrates objective forces, mechanisms and motives behind the Ukrainian “catastrophe”. Are you entirely serious, writing all this? The Americans want to split Russia? Really?
GLAZYEV: They don’t even hide it.
POZNER: Who does not hide it?
GLAZIEV: Have conversations with the American Congressmen.
POZNER: I do communicate with them, and I know just one who would likely say: Yes, we would like that. Just one. There are more than 400 Congressmen, even more than 500 if we count both chambers. Such a statement simply paints the America as the enemy. You are saying: The Americans want this.
GLAZYEV: Let us talk about facts.
POZNER: What facts?
GLAZYEV: The Ukrainian Nazis were brought up by the Americans.
POZNER: I mean the breaking up of Russia.
GLAZYEV: Recall the Chechen war. Who sponsored it?
POZNER: Chechens had nothing to do with it?
GLAZYEV: Recall what was going on in the Caucasus before Vladimir Vladimirovich (Putin). What was going on the Volga republics? What was doing the American AAD?
POZNER: So you are saying that the events in those regions were the result of the American influence, American sponsorship, American money?
GLAZYEV: In Ukraine – 100%.
POZNER: I mean in Russia. But even in Ukraine, when people came out to Maidan that was the American who brought them out there?
GLAZYEV: The Americans provoked and helped to do that. The armed and trained the Nazis. Even before people came out to Maidan, as your colleagues have discovered, they put the cameras on Maidan to film how the police would disperse the unfortunate students. Among those students, there were hundreds of specially trained militants that created a provocation making the police use the force, then they ran away leaving only unwitting students – classic manipulation that is not that difficult to do. Invite Azarov (former Premier Minister of Ukraine under President Yanukovich – translator’s note ) to your program, and he will tell you all about it.
GLAZYEV: Azarov, Nikolai Yanovich Azarov.
POZNER: You know I did an interview with him – that was after Maidan had started but before the other events. You know, to blame the Americans is very easy.
GLAZYEV: It is not about blaming but about plain facts.
POZNER: Forgive me but these are not facts but your interpretation of them.
GLAZYEV: Too bad you have not read the book.
POZNER: No, I have not read the book. I am only using the quotations.
GLAZYEV: I will give it to you. There are many facts in that book.
POZNER: Thank you. I know more people that would be happy to read it as well. So, you – I just want to understand for myself . . .
GLAZYEV: I will explain why the Americans do this. They are not doing this because they hate us so much, although there are people there that do. They do these things, because the America objectively is losing the competition to China. My field in science is the long cycles of the economic development, technical as well as institutional. The US now has a huge disproportion that prevents it from preserving their world leadership. The influential circles in America do not want to lose that leadership.
POZNER: Naturally. Similarly as we do not want to lose the leadership but we lost that already. But China wants to have that leadership.
GLAZYEV: China will have that leadership.
POZNER: And then it will do what it wants.
GLAZYEV: Unfortunately, when the World War I was initiated in Europe, and the World Was II, The British and the Germans did not understand that the Americans would be the beneficiaries of those wars. The US became the superpower as the result of the war.
POZNER: The Germans believed they would win.
GLAZYEV: Similarly, today the Americans attack us, occupy Ukraine, organize a coup. . .
POZNER: Yes, but there is no war, or only what you call “hybrid war”.
GLAZYEV: This is not my term, obviously. So, today the Americans are trying via aggressive actions way beyond the boundaries of the international law, for the support of the Nazi criminal regime in Ukraine is beyond the boundaries of the international law, to increase their control over Europe, weaken us, possibly, even restore their control over us, as it was in 1990s, as well as the control over the Central Asia, all with the goal of restricting the potential of China. They intend to impede our Eurasian integration, to prevent the creation of the unified economic space from Lisbon to Vladivostok that Putin talked about.
Why did the Europeans reject that program? The unified economic space from Lisbon to Vladivostok, our President promoted absolutely sincerely and consistently long before the Ukrainian conflict started. And after that he keeps saying the same thing: the problem of Ukraine and that of economic relations could only be solved by the three-way negotiations between Eurasian Union, Ukraine and the EU. All three have to come to an agreement. That Eurasian integration, I tell you, is such a pain in the neck for the American hawks.
POZNER : There are American hawks, there are Russian hawks, but when you allow yourself to write “the Americans” in general, and I am quoting you, this is exactly the anti-Americanism that today infects our society.
GLAZYEV: We are talking, naturally, about the American political and power elite.
POZNER: It would have been good to point that out somehow. Unfortunately, I do not have time to continue this discussion, although I would be glad to. I want to mention this – I was somewhat amused. On November 29 of 2013, an announcement appeared on you site: “Sergey Glazyev was awarded the national award “The person of the Year 2013”. Then it continued: “On November 27, in the Cathedral of Christ the Savior an award ceremony “The person of the Year 2013” has taken place where Sergey Glazyev has received an award for his effort in bringing Ukraine into the common economic sphere with Russia”. You do not feel like the award was premature?
GLAZYEV: Who could have though that a coup would take place in Ukraine, and the Europeans would support it? When the Europeans supported the Ukrainian Nazis, for me that was a tragedy.
POZNER: Marcel Proust has a few questions for you. Try to answer succinctly.
Which quality in yourself do you dislike the most?
GLAZYEV: I am not always decisive. Indecisiveness.
POZNER: Which quality do you dislike the most in others?
POZNER: Which quality do you appreciate the most in a man?
POZNER: And in a woman?
POZNER: Which talent you absolutely do not possess?
POZNER: It is a talent?
GLAZYEV: Oh yes, definitely.
POZNER: What do you consider your biggest mistake?
GLAZYEV: Perhaps, what my mentor Academician Lvov said – that I entered politics.
POZNER: What do you consider you biggest achievement?
GLAZYEV: The scientific theory of the technological cycles in the economy.
POZNER: What is your major character trait?
GLAZYEV: The drive to get to the bottom of it.
POZNER: How would you like to die?
GLAZYEV : In my sleep.
POZNER: When you are facing God, what would you tell him?
GLAZYEV: Please, save our Fatherland.
POZNER: That was Sergey Glazyev. Thank you very much.