Dr. Sergei Glazyev, a leading Russian economist who is now a Commissioner in the Eurasian Economic Union as well as an Academician of the Russian Academy of Science (RAS), delivered an in-depth presentation to the RAS on Oct. 29 on his “Strategy for Advanced Development Under Conditions of Structural Changes in the Globe.” Coming after the conclusion of the Oct. 22-24 Kazan BRICS summit, and in the context of Russia’s Central Bank raising the key interest rate to 21%—the highest it’s been since its introduction in 2013—Glazyev’s proposal calls for urgently shifting the domestic Russian economy decisively onto a trajectory of “technological leapfrogging”; replacing the Central Bank’s currency convertibility policy, which permits capital flight, with a dirigist approach; and restates Glazyev’s long-standing proposal for the BRICS to establish a productive credit-generating institution based on “a new international digital settlement currency issued against baskets of national currencies and exchange-traded goods produced and consumed in these countries.” Excerpts follow (by machine translation):
“The window of opportunity for technological leapfrogging of lagging countries is closing, without which they will remain on the periphery of the new world economic order.… Russia is being drawn into the trap of catch-up development, condemning it to chronic technological backwardness and unequal foreign economic exchange.
“In order to break out of this trap, it is necessary to implement … concentration of resources in the key industries of the new technological mode, whose growth is, on average, 35% per year; dynamic catching up of the technological gap in industries with high scientific and technological potential, providing for an increase in the output of knowledge-intensive products at a rate of 10 to 50% per year; extending the processing of raw materials, to ensure greater value-added growth; catch-up development by importing technologies in non-competitive industries; and full stimulation of innovation activity.…
“Within the framework of the current macroeconomic policy it is impossible to realize the strategy of advanced development. Strictly adhering to the recommendations of Washington financial organizations, the Bank of Russia is driving the economy into a vicious cycle of degradation: an increase in the key interest rate leads to a reduction in investment lending, which results in technological lag and a decline in the competitiveness of the economy, which is compensated by periodic devaluations of the ruble, causing inflation spikes. This unending cycle condemns Russia to chronic stagflation and increasingly falling behind other countries, large-scale capital export and brain drain, and destruction of scientific and technological potential….
“1. The Central Bank should deploy low-interest special refinancing instruments for commercial banks and development institutions for investment projects implementing national projects and state programs;
“2. Stop attracting funds of commercial banks to purchase bonds of the Central Bank;
“3. Link state-controlled banks to the implementation of national projects and state programs…
“4. Stabilize the ruble exchange rate by introducing a permit-based system for capital export and restoring the mandatory sale of foreign exchange earnings by raw material exporters on the Moscow Exchange;
