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Investment in North Caucasus: $ 1 hundred million as a problem

03.12.2012  |  16:06

Investment in North Caucasus: $ 1 hundred million as a problem. 28782.jpeg

Costs of the program for the North Caucasus Federal District development till 2025 will be reduced to eight times compared to the original plans of the Ministry of Regional Development of Russia. In the summer of 2011, 2.6 trillion rubles were planned to be allocated for this purpose; however December 1, the government was required to allocate 316.4 billion rubles, despite the fact that a month ago the Cabinet discussed about 584.9 billion rubles.

This reduction in costs was mentioned in the documents prepared for the meeting of the Regional Development Ministry, chaired by Khloponin in mid-November, the Izvestia reported. "For the whole period of implementation of the state program the non-budget sources will provide 3.037 trillion rubles", said in a draft program. The edition also announces the investment plans of some state-owned companies: Vnesheconombank intends to invest 70 billion rubles, Sberbank - 20 billion rubles, Agricultural Bank - 10 billion rubles. JSC "Holding IDGC", "Gazprom", FGC and Russian Railways also have shown interest in projects in North Caucasus Federal District. However, even given this it does not seem too optimistic to rely on private investment. The Big Caucasus spoke to the the experts about the possibility to draw that amount from extra-budgetary sources.

"Obviously, Khloponin stakes on state-owned companies", Michael Alexandrov, the head of the Caucasus department of the CIS Institute believes. "In addition, we have private companies, such as "Lukoil", which are faithfully fulfilling the tasks of the political leadership of the country. Under the pressure from the center, they have to invest in the region. However, in my opinion, it's too early to forecast such an amount".

At the same time, the expert welcomes the government's policy aimed at reducing the funding for the program from the budget: "It's time to move to a more even distribution of subsidies among different regions in order to provide roughly the same amount per capita, as well as to remove the huge difference, like between the North Caucasus and central regions".

"Of course, after the war Chechnya was destroyed, and, of course, we were to restore the republic", Alexandrov adds. "But the process has been going on for 10 years. I think this time is sufficient. The Soviet Union restored in eight years after World War II. I believe we have overcome the problem of restoration of Chechnya and it is time to move to a more equitable system of subsidies distribution from the center".

The head of the Department of the Institute of Social and Economic Research of the Dagestan Scientific Center of Russian Academy of Sciences Sergei Dokholyan also doubts the government's plans. "In theory, of course, anything is possible, but in practice I do not see any prerequisites which can make business structures invest three trillion invested in the North Caucasus", the professor says. "For example, three years ago Americans offered us a $ 100 million project. This was their last sum. This issue was discussed at a meeting of the Economic Council under the President, and it turned out that we simply have nothing to develop for such a large sum. If we again get 100 million, what should we develop? I assure you it will be a serious problem! Economic level of the North Caucasus republics is very low. We are undergoing a decline. Industry has collapsed, agriculture is also in poor condition. Construction and service industries are developing somehow. We have lack of production".

Dokholyan notes that the main condition for attractive investment climate is security. In addition, in his opinion, the government should provide more independence to Caucasian businessmen. "Money loves silence - this is an old axiom. No one will invest in the region, where shooting, theft rule, where you cannot make a profit. So the number one problem is ti ensure the safety of local residents, investors and their capital. The second important point is that the state should not interfere with business. Dagestanis are very enterprising people. There the entrepreneurs know where to invest money. Look at how many Dagestani businessmen have become successful abroad Dagestan - Suleiman Kerimov, Magomedov brothers ... One can list a long time. But you cannot call any Dagestani who has succeeded in the territory of the republic, except for the corrupt officials. Business thrives in favorable investment climate. If the region establishes conditions our businessmen come and raise Dagestan. Only when Dagestani businessmen start investing, the entrepreneurs from other regions of Russia, as well as foreign investors pull up. No one would risk until then", the analyst says.


Badma Byurchiev


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