Translated from Eugine Super’s project Time – Forward!
This week the main intrigue of 2019 was, finally, resolved – the government has decided to open the “piggy-bank” of The Russian National Wealth Fund and to allocate funds for domestic projects despite the IMF insistent ‘recommendations’ to invest only abroad. At the end of this issue, I will explain its meaning, but for now, let us summarize the main results of November.
Industry and infrastructure
In November, Russia opened 25 major objects of infrastructure and industries and completed several multi-billion dollar modernization programs for large enterprises. The progress in construction of the Amur gas processing plant exceeded 51%.
All of these led to the industrial production grows continuously since January, which looks particularly excellent against the backdrop of production decrease in the USA, Germany, India, a sharp reductions in Japan and other countries.
Of the major completed projects, besides the completion of Power of Siberia pipeline, the output of the ESPO Eastern Siberia Pacific Ocean oil pipeline that exports crude oil from Russia to the Asian Pacific markets of Japan, China and Korea has reached its maximum capacity.
It was supposed to happen in 2030, but it happens 11 years earlier than planned. Without exaggeration this is one of the most important infrastructural projects of Russia, which was planned back in the 1970s. The pipeline of over 4500 km over extremely difficult terrain of 900 bodies of water, wetlands, marshes, and swamps, and mountains across vast uninhabited regions with no infrastructure and underwater pipeline under the Ankara River now allows us to supply oil to the Asia-Pacific region, where they buy more than our Western partners and don’t dictate to us any political conditions.
At the same time in Blagoveshchensk on the Amur river the construction of the first and still the only bridge from Russia to China has been completed.
This November was rich in export news.
To Egypt, we began selling cars “AVTOVAZ” assembled locally.
In Serbia, the Russian company “Power machines” completed the overhaul of Djerdap 1 HPP and plans.
In Iran, Russia began construction of the second phase of the Bushehr nuclear power plant.
Malaysia opened a Russian company’s factory production of synthetic rubber.
Cuba – signature Avtotsentr KAMAZ trucks.
To Guinea – equipment for thermal power plants.
To Bangladesh – equipment for the construction of a nuclear power plant “Ruppur”.
To India – equipment for the construction of a nuclear power plant “Kudankulam”.
To Kazakhstan – equipment for the transmission system.
To the USA – equipment for food industry.
To China – unique Russian wheelchairs-all-terrain vehicles.
To Belarus – the SU-30CM.
To Mongolia – the MiG-29.
To Iraq – tanks T-90S.
To Turkey – air missile system s-400.
To Venezuela – a comprehensive simulator of the SU-30MK2.
To China two passenger hovercraft.
The United Arab Emirates have taken up the service of ATVs “Shaman”.
As the key technology news of the month can be considered the creation of an international giant in the field of development and production of systems for unmanned transportation. The company Cognitive Pilot is 100% Russian and is owned by the companies “Cognitive technologies” and Sberbank. Given already existing competence and successful products by the “Cognitive technologies” and their open access to investment from Sberbank, there is no doubt that the new company is able to achieve world leadership in its field, and we will hear about them soon.
At this time, the Sberbank introduced the most powerful supercomputer in Russia, which will be used to develop artificial intelligence.
The Novovoronezh nuclear power plant commissioned a new unit with the latest first-of-the kind VVER-1200 reactor, which will increase the station’s capacity by 1.5 times.
The specialists of TVEL has created unmatched by anyone in the world contact wire for high-speed rail lines, providing acceleration to 450 km/h which is as strong as steel but have the conductivity as pure copper.
The construction of the largest and most powerful in the world icebreaker “Arktika” held the physical launch of its nuclear reactor, and in December the icebreaker will go on for its sea trials.
The Kalashnikov company unveiled a prototype electric motorcycle. It is capable of speeds up to 100 km/h and travel 100 km on a single battery charge.
“AvtoVAZ” has started sales of updated Lada Vesta-C with a new engine and automatic transmission.
Time of victories
In November we cheered Russian young people. The Russian students team took first place in the team competition at the world robotics competitions in Hungary.
In Romania, our students won 15 medals in International Astronomy Olympiad and became the first in the teams competition.
In South Korea students from Russia won the international competition virtual projects.
The prestigious World Travel Awards 2019 or as it is called “The Tourist “Oscar” just showered us with awards. The Aeroflot airline has again won in the major categories, Moscow is recognized as the best city for tourism in the world, and the best hotel in the world award, which is especially nice, went to the Crimean hotel in Yalta Mriya Resort.
…It’s only a small part of what has been done in Russia in November, for the rest of the news looking at our past November editions. But we are not able to cover it all!
“Often in the comments we are asked: “Why all those plants, new factories, production lines, as we discuss every week, don’t make a significant contribution to the growth of the economy, to the welfare of our citizens? And does this mean that there is no point in opening all those factories for the country?”
The answer is no, it does not. Because, if these factories won’t be opening every week, there will be no economic growth at all, we wouldn’t see any improvements, at all. Another thing is that we need more of these factories, manufacturers and plants, much more in order to get the economy growing more intense, and that is already beginning to impact directly our pockets. If not everyone, then almost every citizen of our country benefits from the economic growth.
There are lots of reasons, why it has been taking so much time, but let’s distinguish the main fundamental reason. It’s the fact that for a long time there was a ban on investing our own money in our own economy. We told you about this fact in past editions. The reserves from The Russian National Wealth Fund, which we have accumulated by selling oil and gas abroad didn’t work for our economy, and was used to buy foreign securities. Why do I say this ban existed for a long time? Because it doesn’t exist anymore. This week, perhaps, the main intrigue of this year was finally resolved. The government finally confirmed that it is prepared to withdraw part of the funds from the National Wealth Fund and invest them, it is very important, in the domestic projects.
I want to remind you that this story began earlier this year when for the first time the government said that our reserves have accumulated enough that it would have a good idea of some of this funds to be returned back to Russia and invested in new factories, new factories, new roads, railways, ports and so on.
As soon as this was suggested, a very rigid reaction of disagreement followed from the International Monetary Fund. This spring, Russia was explicitly ‘recommended’ that investing in Russia’s own economy was absolutely something that the country couldn’t do. The IMF told to Russia’s government that if they really itching to do so, and wanted to invest some of the money from our reserves into real projects, Russia has the right to invest its own money only in foreign projects, that is, with our own money to build these factories, ports and roads abroad, but not in our country.
I was very excited, frankly, to see the outcome of this story. Because if our government this time has gone to the IMF and agreed to its demands, I wouldn’t be able to deceive you and to say that it was good. Because it wouldn’t be good, and nothing positive would come from this. But, fortunately, the issue was resolved positively to our benefit.
You, also, need to understand that this event is of great importance not only for our domestic economic life. This is a truly geopolitical event because this event means that we took the IMF noose of our neck. The IMF is a very serious international structure that holds in its chokehold necks of very many states of the world. And, this organization was holding us by the neck for a very long time, because we were indebted to the IMF all the 90s. And even after in 2000s we closed all these loans, we were still very strongly influenced by this structure and, generally, carried out their so-called recommendations, which are in fact requirements. Now we had stopped doing this, and that means the return of a substantial part of economic and financial sovereignty of our country.
Now, what would this do for us?
Of course, 1 trillion rubles is not such a big amount to radically improve our lives. However, there is one important clarification. The government says it is ready to invest from reserves but no more than 20% of the amount of investment in any project. This means that if we assume, Russia has built a company worth 1 billion rubles, the government is ready to allocate 200 million rubles for this process. And the rest of the money must come from private investors. Because of this rule, the 1 trillion government spending from the reserves will be converted into 5 trillion in total investments. And this is a much better number. Naturally, this in itself does not make our life a fairy tale, but at least we will have new opportunities for growth. And in combination with the spending planned for national projects, everything starts to look much more fun in the next five years.
Of course, many questions remain about what businesses will be investing their own money in these projects, what kind of projects, what benefits they will bring to the country? But the fact is that we are witnessing exactly the main political event this year. The ice is finally broken. We’re a little stronger and more independent.
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