Russia: could go either way in '99

  • 1999-02-25
  • Kairi Kurm
TALLINN - If Russia will make reasonable economic choices, the situation there could stabilize this year and growth could resume in 2000. If not, it may get even worse.

This is the conclusion to which Russian economists and Estonian businessmen arrived at their meeting in Tallinn Feb. 17.

This was the first meeting of its kind held between the two countries, but both parties decided to make it a tradition and meet in Russia next year.

"Businessmen have had tight contacts before, but for the economists, it was the first time they came together and learned the general situation of Estonia and Russia. The idea of the round table was to make the economists and businessmen discuss the future of economy," said Erik Terk, director at the Estonian Institute for Futures Studies.

Jaak Saarniit, director at the Estonian Business Association, said there are many potential products in Russia, but their production needs financing.

"These products, filters for example, are cheaper and of a better quality than Western standards. Russian companies need financing and marketing experience. They contacted Estonian companies and banks for this reason," said Terk.

Russian delegation also introduced its foreign policy, general macroeconomics situation and financing and also made predictions on the exchange rate and inflation in Russia.

"Though everybody currently seems to be very eager to stress that the economic situation in Russia is extremely difficult, this rhetoric has unfortunately not been matched by political will to face the critical situation and look for real solutions," reported the specialists of the Russian European Center for Economic Policy.

One of the unrealistic assumptions according to center is inflation, which is officially assumed to be 30 percent in 1999. The center predicts that if current policy is continued, inflation should be somewhere above 130 percent, the exact figure depending on the amount of money printed and exchange rate devaluation during 1999.

The Russian experts also say the demand for locally produced Russian goods had sharply risen as imports had become not affordable for a large part of the population.

"This occasion for Russian production should not be spoiled by driving functioning businesses and companies out of the market by taxing and regulating them to death," noted the experts.

The center's experts are also against state investments in special industries, as they believe it will be very counterproductive due to corruption and connections.

"Russia is in a difficult, but potentially hopeful situation," the specialists said.