16.01.09

The basically prohibitive import duties on motor vehicles from abroad came into force recently (January 11). Their introduction indicates that the government is not giving much thought to the need to maintain a considered regional economic policy, and that is leading to the economic disintegration of Russia.

The fiercest protests against the increase in duties were in Maritime Kray and the Far East, where they even sent in the Moscow region OMON (special-purpose police detachment) to suppress dissatisfaction among the local population. This localization of protests is no accident; whereas the residents of the European part of the country are simply being invited either to pay over the odds for a quality foreign car or switch to a car assembled in Russia, many people in the Far East are, in addition, being deprived of the means to exist and of their historically established place in the Russian market. This step gives the local population the impression that Moscow has decided to sacrifice the interests of people in the Far East for the benefit of car manufacturing regions in the European part of the country.

The increase in duties is being attributed to the crisis, which has led to a reduction in demand for cars and disrupted the production plans of motor vehicle plants concentrated in the European part of the Russian Federation. In order to resolve or at least alleviate their problems the authorities decided to reduce imports of foreign cars. Here the greatest losses will be suffered by enterprises in small and medium-sized business specializing in the importation, maintenance, presale preparation, and actual sale of secondhand foreign cars. The greater part of these are concentrated in border regions of the country, among them Maritime Kray. They have no powerful lobbying resources in the organs of power like those of the big Russian motor vehicle manufacturers or the foreign concerns that have set up assembly facilities in Russia.

Yet the business of importing secondhand foreign cars, according to independent estimates, feeds about 100,000 people in Maritime Kray. Now, for the benefit of the interests of companies and citizens working in European Russia, they will have to wind up their business and look for new market niches. And that is particularly difficult in the conditions of the crisis and job cuts.

During the years of economic prosperity Moscow did not bother to establish motor vehicle manufacturing or the mass production of high-tech products in general in Siberia and the Far East by granting some kind of concessions to potential investors. Without such concessions it is not profitable to invest in any high-tech production facilities there -- two-thirds of the population and the consumer demand are concentrated in the European part of the Russian Federation and it does not make sense to transport a car there from Vladivostok and incur additional costs if you can manufacture it on the spot. The contribution of a significant section of the population of the remote regions to the total Russian market consisted largely in supplying the country with second hand foreign cars.

We should point out that hitherto the regional section of Moscow's economic policy has largely been based on the redistribution of income from exports of Siberia's natural resources among all regions of the country. Apart from the resource-extracting regions, those who ultimately received the biggest dividends from this were in Central Russia, and first and foremost Moscow and the Moscow region, where the population's living standards are significantly higher than the Russia-wide level. Now, because of the fall in world prices for the country's main export commodities, this pattern has failed. The government is trying to find an alternative to it, but the decision on duties on foreign cars creates the impression that they are trying to maintain living standards in the Center at the expense of the population of the outlying areas. With regard to the Far East, this is shortsighted. The region's already declining population, who can see how modern megalopolises have grown up on the Chinese bank of the Amur River in the past two decades, have long doubted that our country is following the correct economic path. And now they are also being given reason to think that Moscow is openly discriminating against this region. The growth in such sentiments combined with punitive operations by the Moscow region OMON could lead to the emergence of centrifugal trends. At any rate, in the polemics on the Nezavisimaya Gazeta forum about the duties, there are commentaries from certain Far Easterners harking back to the days of the independent Far Eastern Republic.

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Source: Nezavisimaya Gazeta