On December 21, an extended meeting of the Committee of the Russian Union of Industrialists and Entrepreneurs (RSPP) on industrial policy, regulation of natural monopolies and tariffs was held on the topic: “Problems of the development of industrial engineering.”
The main report was made by the General Director of the Atompromresursy Group of Companies, Doctor of Economic Sciences, Andrey Cherkasenko. In his speech, he noted that an engineering company should be perceived not as an intermediary, but as an “engine of innovative development.” “We have come a long way from complex supply and production of specific products to pre-design preparation, design, industrial production and commissioning of an industrial facility,” said Andrey Cherkasenko. “However, in relation to engineering companies, we often hear the word ‘middleman’, which has a negative connotation.”
According to Cherkasenko, the development of the nuclear industry and energy is the area where engineering services are most in demand. In his opinion, a striking example is the Australian company WorlyParsons, which over the past few years has been involved in work in preparation for the construction of new nuclear power plants in Bulgaria, Egypt, Jordan, and is collaborating with Russian companies on the Baltic NPP construction project.
Moisey Furshchik, head of the Expert Council under the RSPP Committee on Industrial Policy, Regulation of Natural Monopolies and Tariffs, managing partner of the FOK Company (Financial and Organizational Consulting), invited the meeting participants to familiarize themselves with the results of a study of the Russian market of engineering services. The study was conducted by the Committee's Expert Council with the participation of the FOC Company. The report identified the main problems of the Russian engineering market and proposed ways to solve them. According to the authors of the study, among the main problems are the informational secrecy of Russian engineering companies and the lack of a clear positioning strategy. The managing partner of the FOC sees the development of this market in stimulating competition, increasing transparency when ordering the services in question by state companies and increasing the information openness of Russian engineering companies themselves.
The result of the meeting of the RSPP Committee on Industrial Policy, Regulation of Natural Monopolies and Tariffs was the decision to organize a subcommittee under the RSPP on industrial engineering, headed by Andrey Cherkasenko. “This will be a platform for discussing a range of problems related to the development of engineering activities,” summed up Vladimir Rudashevsky, Deputy Chairman of the Committee on Industrial Policy and Regulation of Natural Monopolies. “We must contact the government with specific proposals on measures to support and develop engineering services as the missing link in the process of innovative modernization of the Russian economy.”
Information about the company:
FOC (Financial and Organizational Consulting) is an actively developing company operating in the field of management, organizational and investment consulting since 2002. Key areas of activity: research and development (R&D), public-private partnership (PPP) and corporate consulting.
Today, FOC's portfolio includes more than 100 completed projects. Clients include companies such as Gazprom, RAO UES of Russia, Rosneft, AFK Sistema, Russian Railways, federal and regional government bodies.
The geography of FOC company projects is most of the constituent entities of the Russian Federation. At the moment, the FOK company has over 100 employees, of which 80 are consultants.
The FOC company is a member of the RF Chamber of Commerce and Industry, the Russian Union of Industrialists and Entrepreneurs, the Russian Society of Appraisers, the Moscow Association of Entrepreneurs, the Russian Society of Appraisers, the National Environmental Audit Chamber, an official partner of the Kremlin Suppliers Guild, and “Supplier of the Year” by the Ministry of Economic Development and Trade of the Russian Federation in the category “Research Work and Services.”
FOC company (Financial and organizational consulting)
Irina Maltseva, Director of the Public Relations Department of the FOC company
7 495 781 75 00, ext. 126
The website of the limited liability company FOC (Financial and Organizational Consulting) proudly announces: ...The company’s client portfolio includes more than 200 companies and government agencies, including Gazprom, RUSNANO, Russian Railways, NK Rosneft, etc. All these whales of the domestic economies turned to FOC and its head Moisey Furshchik for management, strategic and investment consulting. The site forgot to report that consulting sometimes results in lawsuits.
Now the Department of Internal Affairs of the Western District of the capital has a statement from the International Environmental Fund "Clean Seas", who was hard pressed to contact the company Moisey Furshchik And Vitaly Derbedeneva. At the same time, the Ninth Arbitration Court of Appeal of Moscow is considering the fund’s claim against LLC "Financial and Organizational Consulting"(FOK). In our opinion, the essence of the story is as simple as a rake - “Clean Seas” did the work within the framework of the State contract No. 0098k/03 to carry out research work to finalize the Strategy for the socio-economic development of the Astrakhan region until 2020, but the FOC did not pay for their work. But behind the usual story of our days, there is a whole detective story with mysterious meetings in the subway and forged signatures.
It all started very festively. The Clean Seas Foundation is well known and, most importantly, respected in the Astrakhan region. Helping orphanages, celebrating International Caspian Sea Day in 2015, cleaning the banks of the Volga, all this was done by environmentalists in the region at their own expense, without attracting budget money. Therefore, it is not surprising that when it became known about the tender to finalize the Strategy for Socio-Economic Development, the FOC turned to the Fund for help. The very participation of Clean Seas in the program served as a sign of quality for the potential customer in the implementation of the government contract. Company Furshchik I won the competition and received a government contract.
But somehow it didn’t work out with its implementation. The first version of the work left the regional administration in a state of shock. The only section to which the region had no complaints was environmental. It’s not hard to guess what the Clean Seas specialists prepared for him.
“An alarming signal for us sounded when the FOC received an advance from the government of the Astrakhan region and hid this fact, says Deputy General Director of the Clean Seas Foundation Anna Subbotina .- According to our agreement, they had to transfer a million rubles for the completion of the first stage of work and an advance payment of 720 thousand rubles. The Fund never saw the money. Repeated telephone conversations with Furshchik and his partner Derbedenev led nowhere. At first, they referred to the fact that the money received by FOC from the Astrakhan region was used to pay for another lawsuit. Then they stopped answering calls altogether.”.
This is where the lawyers got worried. The check showed that FOK has a lot of arbitration claims! In addition to “Clean Seas,” there are also district and city administrations, the Research and Design Institute of the Moscow General Plan, and others who suffered from “consulting” in different regions of the country.
“On April 11, 2016, we turned to FOC with a claim for the fulfillment of obligations under the Agreement,- continues Subbotina, -and in response we received a counterclaim to collect from us (!) 3,877,200 rubles... for late delivery of the work we completed!”.
Good relations with the region helped. The fund's employees managed to receive the documents submitted following the execution of the government contract. It was then that it became clear that the signatures of fund employees in the report could simply be forged. For some reason, the certificate of acceptance of completed work was handed over to an employee of Clean Seas in a hurry, at a metro station. Now Financial and Organizational Consulting claims in court that it did not sign such an act. Although the conclusion of a specialist from the “Center for Forensic Expertise” testifies: “The signature on behalf of Vitaly Alekseevich Derbenev, the image of which is located in the column “From the Customer” in the electrophotographic copy of the Acceptance Certificate for the completed work... was made by Vitaly Alekseevich Derbedenev himself”.
All these “oddities” forced “Clean Seas” to contact law enforcement agencies.
In the meantime, on the FOK website there is a readiness to do everything. Its experts seem to be capable of solving the problems of single-industry towns, environmental design, transport development and geographic information technologies. It is not clear where the Nobel Committee or law enforcement agencies are looking. Why are people with such diverse talents still not Nobel laureates, or maybe we should ask the question: why are they still at large?
Interview. Managing partner of the company “Financial and Organizational Consulting” Moisey Furshchik believes that investors will be interested in single-industry towns, and the resettlement of their residents is a last resort.
Moses Aleksandrovich, in recent years the state has been paying a lot of attention to the problems of cities with single-industry production. Even the term “monotown” was coined. Are these really depressed cities in need of government support and business attention?
– The term “monotown” itself is quite ambiguous. Due to the historical formation of such settlements around large city-forming enterprises, or a chain of them, very different cities in terms of issues, economic and social development fall under this category. This topic is now extremely popular, but the government runs the risk of getting too carried away with single-industry towns and forgetting about other problematic settlements and even regions. According to formal criteria, most oil towns can be classified as single-industry towns, which are doing well even during a crisis. For example, the Khanty-Mansiysk Autonomous Okrug ranks second in Russia in terms of the number of single-industry towns - about 80% of the population of Khanty-Mansi Autonomous Okrug lives in single-industry towns. And compare its economy and social environment with the Republic of Dagestan, which does not have a single single-industry town. Similar examples are the Kamchatka Territory and the Pskov Region. Of course, it is necessary to deal with single-industry towns, but will it happen that we will forget other more problematic territories?
What is the distribution of single-industry towns by industry?
– Without taking into account single-industry settlements, the number of Russian cities with single-industry production is about 200. Of these, approximately 50 cities are in the oil and gas industry, another 50 are formed by metallurgical enterprises, 30 are in the coal industry, 20 are in the electric power industry. And in reality, most of these cities cannot be called problematic. A truly depressed city or region is a subject experiencing persistent problems with its own economy over a long period - from 5 years or more. The majority of supposedly problematic single-industry towns faced a temporary recession of one or two years, experiencing temporary difficulties due to the decline in world market conditions in their industry profile.
It turns out that in the listed industries there are few truly depressed cities?
- This is basically true. The exception is a small number of single-industry towns, where the city-forming enterprises are coal enterprises with depleted deposits. Most of them are located in the Rostov region, some are in the Komi Republic. But, say, for a number of Siberian cities with relatively new deposits, such a problem does not arise at all. It all depends on the degree of production and the cost of the deposits. But the truly problematic cities are formed by uncompetitive engineering enterprises and specific chemistry. For example, the city of Asbest in the Sverdlovsk region with the chemical industry of the same name, which is now becoming unclaimed, and in some foreign markets even prohibited. A particularly difficult situation is observed in depressed cities with poor ecology. Such a city is not interesting either for living or for investment; it is doomed to gradual extinction. Of the two hundred single-industry towns, only three to four dozen are truly depressed. A typical example is Chapaevsk in the Samara region, Baikalsk, formed by a pulp and paper mill, and a number of cities in the Far East, for example Dalnegorsk.
And all the residents of these cities need to be urgently resettled?
– In single-industry towns, we see a more important task to diversify the economy than to resort to mass relocation. Relocation is a very last resort, and sometimes dubious. In the case of diversification, it is important for the government to create conditions for investors by developing the infrastructure of a single-industry town and the space adjacent to it, for example, creating conditions for the development of agricultural processing industries. We must be aware that in order to truly diversify single-industry towns, the state needs to develop new sites for industrial development, since in most cases it is impossible to use old premises and production facilities to create new large enterprises. Most investors will prefer construction in an open field rather than reconstructing dilapidated production areas. And it is important that this is not a spot industrial development, but a large organized site designed for several new enterprises at once. It is desirable that this territory be given the status of a special economic zone at least at the regional level.
How many single-industry towns are the government currently identifying as problematic?
– At the moment, a list of 27 most problematic single-industry cities has been announced. Perhaps it will be reduced to 15–20, but for now this is the list. These single-industry towns are scattered throughout the country. The principles of selection are not entirely obvious. It was declared that serious research was carried out, but their methodology and criteria were not clearly announced to the general public. If you carefully study this list, it contains not only depressed cities in the classical sense. This also includes, for example, Nizhny Tagil (Sverdlovsk region) or Kovdor (Murmansk region), where the decline in production at the largest enterprises is only short-term. In general, about a third of the list, it seems to me, reflects not so much the scale of urban problems as the lobbying level of regional leaders who were able to support their cities at the stage of forming this list. The approach to regions where the number of single-industry towns is large is also obvious. Such federal subjects were given the opportunity to participate by several single-industry towns at once. A striking example is the Sverdlovsk region.
This area is even considered a mono-area.
– Despite the clear predominance of metallurgy and mechanical engineering in the Sverdlovsk region, this is a controversial formulation. The region's economy is relatively strong and diversified, although it has suffered significantly from the crisis. But even taking into account the crisis phenomena, the region remains at a level above the Russian average. And in general, cities with a metallurgical profile, in my opinion, are not the first candidates on the list for support. Yes, there really were massive layoffs and some panic arose, but this is a temporary phenomenon. Already, the situation on the metallurgical market is improving, the position of city-forming enterprises is leveling out, and their shares are rising. In such cities, local budgets are relatively large, so most problems here can be solved independently. And some metallurgical cities began to lay the foundation for diversification even before the crisis. For example, Cherepovets with the Sheksna industrial zone project.
Single-industry towns with what type of industry, in your opinion, really need support?
– First of all, mechanical engineering, including military-industrial complex enterprises. Also wood processing industry. This industry worldwide operates on low margins and has high economic risks. Mandatory candidates for support are coal cities with falling production. If city-forming enterprises belong to these industries, then such single-industry towns should be first on the list. Metallurgy, which is represented in abundance on this list, and the chemical industry, with the exception of unpromising industries, are still the second priority.
Chemical enterprises with unpromising production – what are they?
– Specific industry with its own production, for example, Uralasbest in the Sverdlovsk region or the mining and chemical company Bor in the Primorsky Territory. It is difficult for such enterprises to rebuild, since they are built on specific deposits, and the demand for their products is objectively declining.
So what to do with such cities? Thinking about relocating?
– Much depends on the location of the single-industry town. If it is unpromising, but is located near a large neighbor, then it may well become a satellite city. Here, for example, entertainment infrastructure can be developed. It is also reasonable to carry out re-profiling of industry in tandem with a large neighbor.
A more complex situation is when the problematic single-industry town is located far from large centers. There is a temptation to resettle its inhabitants, but we must not forget that such a municipality acts, in turn, as a center for the entire adjacent rural area. The population could be washed out from a wide area, not just from this city. In addition, it will not be possible to forcibly relocate anyone. Only the most active part of the population will leave, and the problem will only get worse. The state has already made a big deal out of this. The migrants were given housing certificates, enterprising citizens cashed them in and returned to their homes. For example, a significant part of the population of Koryakia, having received housing in the center of Russia, returned back, and subsidies are again required for them. The number of vacant jobs in megacities, where residents of single-industry towns are going to be reoriented, is often overestimated. For example, during informal communication with residents of Samara, it turns out that the local population is already very negative about the idea that a significant part of the population will travel to work from Tolyatti or even move there. Samara residents, according to them, are already experiencing a shortage of jobs. Therefore, in most cases, the problem of creating new vacancies is best solved locally. We found confirmation of this in many of our own consulting projects: the estimated cost of relocation is comparable to the cost of creating a new job. It is better to solve the problem of single-industry towns by improving conditions for investors locally. Because if the same amount of money is spent on housing for resettlement, the problem of creating jobs in a large city will remain open.
It turns out that it is better to rehabilitate the economy of a single-industry town so as not to lose both the city itself and the surrounding territory, and at the same time not to shift social problems to large centers?
– Of course, diversifying the economy of a single-industry town also implies the development of the surrounding territory. In a belt of 15–20 kilometers from many single-industry towns, tourism can be developed by creating special recreational zones. Agriculture in a wide range: agro-processing, fish farming and more, planned depending on climatic zones. This is an excellent recipe for the recovery of many depressed single-industry towns, especially not very large ones.
But if it comes to resettlement, maybe use the once-promoted megaprojects?
– Many of them became rather PR projects of designers and developers. In megaprojects near Moscow, the cost of housing for displaced people is too high. For example, in the famous “A101” we estimated the cost per square meter at 60 thousand rubles. In Yekaterinburg, similar real estate will cost one and a half to two times less. It is obvious that relocating anyone from depressed single-industry towns to megaprojects near Moscow is unprofitable. As for other regions, for example, in the Kemerovo or Sverdlovsk regions, relocation is economically possible, especially if the state supports citizens with housing certificates. And people don’t have that far to travel.
Surely there is also a psychological aspect? A person does not understand where he is going from his home, where he will work, what funds will he use to get a mortgage, even on preferential terms, where will his children study?
“In this regard, we have been exploring intermediate options with semi-relocation to hostels or apartment buildings built with government support in megacities. Although this is only possible for relatively close cities in a zone of up to 150 kilometers. The employee can return to his family on weekends, which does not need to be transported. A hostel requires less square meters per person and does not require social infrastructure. Such a project is approximately 85% cheaper compared to multi-family housing. Temporary relocation is less painful - you can take a good look around the new place and look for a promising job. Subsequently, you can think about purchasing your own home and moving your family. If the situation in your native single-industry town improves, there is an opportunity to return back, solving temporary difficulties with work. The only thing that should not be allowed is that people stay in such hostels for many years, as was the case in Soviet times. It is necessary to set some kind of horizon, for example, a year.
Apartment buildings are still not popular in Russia; business is not interested in building such housing...
– This is a generally accepted topic in civilized countries. But in Russia, apartment buildings have not yet been developed due to too low profitability. According to world standards, the cost of housing in our country is on average overpriced, while rents, on the contrary, are low. As a result, for projects to create rental housing, we get a yield of about 5-10% per year in rubles. Of course, this is a very low figure for Russian business. Moreover, the calculations were made based on current commercial rental rates, but even with such prices, residents of single-industry towns are in no hurry to move into rental housing offered on the market in large cities. This means that it is necessary to further reduce rental rates, and this in turn will reduce the profitability of such apartment buildings to 3-4% per annum. Only the state can tolerate such low returns. For example, for these purposes, it is able to buy problematic housing from developers almost at cost, solving two problems at once - creating apartment buildings for immigrants from single-industry towns and supporting the construction industry. For comparison, the government now plans to give preferential loans to regions for the development of single-industry towns at a rate of 3-4% per annum in rubles.
Is the problem of housing in single-industry towns also related to the high wear and tear of old buildings?
– In most of them, housing was built using a factory method, and construction was carried out back in the 30-60s of the last century. During a similar period, the infrastructure of these settlements also developed. In modern times, this housing is not attractive for living and has significantly depreciated in value. Often, as in Pikalevo, the housing stock is also located in an environmentally unfavorable industrial zone. And we, in particular, gave recommendations that in such areas old housing should be demolished and new buildings built in an environmentally friendly location.
Is it relevant for single-industry towns to develop and implement affordable housing programs at the federal, regional or municipal level?
– In our opinion, real activity in terms of housing construction is taking place in single-industry towns located near large centers. Low-rise buildings are really developing here. Moreover, these are not necessarily cottages or townhouses, but also apartment buildings up to three floors. And such territories really arouse interest. A number of administrations instruct consulting companies to study not only residential development, but also the entire infrastructure of towns and cities.
If we talk about more remote problem single-industry towns, practice shows that their performance in providing the local population with square meters is not so bad. In problem cities, there is a natural outflow of population, and, theoretically, more meters go to the remaining residents. The provision of square meters to the population here may even be higher than the Russian average. In the same Pikalyov, per person in 2008 there was an average of 25 square meters, and in Russia this figure was 22 square meters. Another thing is that this housing is often of poor quality, and the majority of the population has low incomes. People are not ready to take out a mortgage to improve their own living conditions in order to move into modern, comfortable housing. The problem with the purchase and, accordingly, with the construction of new housing is especially acute in remote cities - there is an extremely low demand for real estate. Therefore, here it is necessary to first solve the problem of increasing the income of the population, and then seriously deal with the topic of improving the housing situation.
Surely, when moving from an old dilapidated home, even to an inexpensive low-rise new building, it will be difficult for residents of remote cities to sell their previous home in order to take out a mortgage only for the difference, rather than buy a home from scratch?
– Yes, for remote single-industry towns there is indeed a low liquidity of housing. And this has been especially noticeable in the Far East in recent years. People left there, leaving their previous housing for themselves, since it was a pity to sell it for next to nothing, and there was no way to rent it out to anyone - there was no demand.
Shouldn't the state buy out this problematic housing or exchange it for certificates?
– It is now more important for the state to spend resources on creating jobs in single-industry towns, providing its residents with more economic stability and, as a result, stimulating social development. Thus, the authorities first of all strive to effectively solve at least this problem.
And the problem of dilapidated housing in single-industry towns is still open?
- Absolutely right. But it is reasonable to first solve the economic problems of the region and increase the incomes of the population, and then develop the housing and social environment.
But I want to live well now. Are there exceptions to this rule?
– We recently developed a scheme for the territorial development of the Boksitogorsk district, which includes the famous Pikalevo. And now our program provides for the demolition of dilapidated housing in unfavorable industrial areas and the removal of development to more environmentally attractive areas. But for such manipulations, the subject must be sufficiently wealthy with liquid land, such as, for example, the Leningrad region. I would like to add that although the issue with Pikalevo has become noisy, it is far from a hopeless monotown. And land there is valuable, unless it is located very close to industrial enterprises.
Has something already been done to repurpose single-industry towns, or maybe there is some kind of implemented model?
– The repurposing of single-industry towns is similar to the processes that took place in a number of science cities near Moscow, which were initially focused on the military-industrial complex. Example - Fryazino - an “electronic” science city near Moscow, 25 kilometers from the Moscow Ring Road. About a third of the population of this city, which has not finally moved to Moscow, still works in the capital. Here, without much participation from the local administration, a natural diversification of production occurred, although in general it became less technologically advanced. Due to its proximity to Moscow, a large number of new residential developments have appeared in Fryazin in recent years. The influx of new population compensated for the outflow of local residents to Moscow. Although the total number of jobs in the city has decreased markedly, the population has remained the same. Whether all these processes can be considered a successful repurposing of the city is a controversial issue. But this is an example, albeit spontaneous, but real diversification of the economy of a single municipality. This can happen in many single-industry towns located near large cities. However, it is desirable to make such processes more systematic and manageable so as not to lose the valuable specificity of single-industry towns for the sake of diversification.
However, it is impossible to do without the participation of local authorities. At least to resolve land issues for new housing construction.
– Yes, in most of these cities there are not enough land banks for the construction of industrial zones or areas of mass development. In Fryazin, for example, there are only 8 hectares of land planned for manufacturing enterprises, but it is impossible to create a serious industrial zone on such an area. There is also not enough space for large-scale residential development. In such cities, it is necessary to change the boundaries, adding new territories at the expense of adjacent agricultural lands. This issue is even more complicated for closed administrative-territorial entities (CLATEs), the boundaries of which are almost impossible to change. Here we recommend using the “small agglomeration” mechanism – involving neighboring territories in a complex project without changing the official boundaries of municipalities. But in any case, transparency in the land allocation process is important both for investors planning large-scale development and for individual construction.
Can the development of small and medium-sized businesses solve the problem of single-industry towns?
– As for small and medium-sized businesses, in my opinion, their role is now somewhat exaggerated. If a single-industry town is truly problematic, then it will not be possible to overcome it only through the activity of small businesses. Of course, in the West, 50-70% of the population is employed in this segment. However, upon closer examination, it turns out that about half of small enterprises mainly fulfill orders from nearby large industries. If a city-forming enterprise in a single-industry town is on its last legs, then it cannot act as a center for business clustering. In addition, in Western countries, a significant proportion of small and medium-sized enterprises work for agriculture, rather than for cities. If we talk about Russia, then on average only 16% of the population is employed in small business, and not 50-70%. Why will this share be radically higher in a single-industry town? Thus, to solve the problem of single-industry towns, it is impossible to rely only on small businesses. In my opinion, it is unrealistic to expect to attract at least half of the city’s working population to this sector. An adequate task can be considered, for example, to provide jobs in small and medium-sized businesses to an additional tenth of the population, but it is unlikely to be significantly more. And under no circumstances should this be done in opposition to large-scale production. As in the West, small businesses and large enterprises must work in tandem.
Do administrations of single-industry towns help small businesses?
– There is a lot of talk about this, but little is actually done. Also invisible is federal assistance to small businesses, for which billions of rubles are allocated. I don’t know almost a single representative of an independent small business who was able to take advantage of such financial support.
A more effective mechanism for supporting small businesses should not be the mysterious distribution of money among entrepreneurs, but the construction of business incubators and technology parks. Moreover, it is precisely for them that buildings of old production facilities can be used, which, according to modern criteria, are not suitable for new large industrial facilities. Such objects have a low value due to wear and tear and low liquidity. It would be possible to bring small businesses here at very favorable rental rates, creating a synergistic effect.
An interesting example is the idea of creating an IT technology park in Togliatti, which is currently being actively discussed. There are ideas for technology parks in many other large cities. But in general, a business incubator does not have to be technological in profile; regional authorities can decide for themselves what kind of business they want to stimulate, and whether, in principle, some kind of specialization is needed in their particular case.
Will money from the Investment Fund of Russia be attracted to single-industry towns, for example, for the construction of housing or infrastructure facilities?
– The government announced that it is ready to allocate 5-10 billion rubles from the Investment Fund for projects in single-industry towns. But this mainly applies to the creation of infrastructure for industrial facilities. Stimulating housing construction through this mechanism is not currently considered a priority. A number of officials believe that there are enough funds for new residential development from specialized government programs, for example, the Housing program. Although, according to formal requirements, nothing prevents the creation of infrastructure for housing construction at the expense of the Investment Fund, but with the only caveat - these must be large projects from 500 million rubles.
However, among the projects that were approved for financing from the Investment Fund last year, there are six that are to one degree or another related to housing construction, although not in single-industry towns. However, now the policy regarding the use of the Investment Fund for housing construction has become even stricter. If such political problems are removed, then the Investment Fund may turn out to be a good tool, both for mass development on the outskirts of large cities, and for projects for the comprehensive reconstruction of their central part. Theoretically, this money could well be used for development purposes for relocation from single-industry towns to regional capitals.
What are officials of single-industry towns and regions doing to solve the problem and attract investment?
– In reality, everything very much depends on the financial capabilities of the subjects themselves. And if in Nizhny Tagil there are significant regional and municipal budgets, then here they really work with investors - they give them benefits, promise investments in infrastructure, and other preferences. There are projects prepared at the regional level with private investors, for example, in the Amur region. The region is ready to co-finance them, but will actually be able to do this only if it receives support from the federal center, which is now uncertain. The struggle for large investors and competition between regions is high, and investors cannot be lured only by benefits or promises to reduce administrative barriers. It is important to provide sites that are already provided with infrastructure, without which large private funds will not be invested. How will a secured platform appear? If this entire burden is placed on local budgets, then only the wealthiest municipalities and regions will be able to bear it. Another option is if it becomes possible to receive federal money for this. So far, such a process has not been launched for single-industry towns, although it is very relevant.
What about the competition system for single-industry towns?
– Now there is a lot of talk about such a distribution of funds for single-industry towns, in which regions will compete with their projects. All this should encourage local officials to develop their own projects, look for investors, and only then enter the competition using a system close to the Investment Fund mechanism. In this case, federal money can be actively fought for according to pre-announced rules, and not just wait for lists of priorities for support to appear after some research. Such conditions would force everyone to become more active, especially problem regions. It is worth noting that such competitive mechanisms would be good to include a wider range of municipalities, and not just single-industry towns. Otherwise, for example, the regions with the highest unemployment rates in Russia – Ingushetia and Dagestan – practically fall out of the process. Our experience of working with the latter on Investment Fund issues shows that it is participation in competitive mechanisms that allows us to show good results even in such problem regions. In general, the term “monotowns” turned out to be too public and redundant. By getting carried away with them, you can lose focus on other problem areas. A reasonable balance needs to be struck here.
How can the tool of special economic zones help solve the problem of single-industry towns?
– Now we can give the only example of an operating SEZ in a single-industry town - this is Lipetsk, where a successful industrial and production special economic zone operates. But the fact that Lipetsk was considered a single-industry town is rather a classification error caused by the large scale of production of the Novolipetsk Metallurgical Plant. There are no other real examples of SEZs near problematic single-industry towns; only plans are being considered. The most striking examples are Togliatti and Verkhnaya Salda (Sverdlovsk region), whose administrations are promoting the idea of creating a special economic zone at the federal government level. Perhaps the crisis will help resolve this issue. On the other hand, it is not at all necessary to expect mercy from the state. In practice, it is possible to create such a territory at its own regional level. Moreover, most of the tax benefits provided for SEZs or issues of reducing administrative barriers are decisions that can be made at the regional level. And the region can try to get federal money for the infrastructure of the SEZ from the same Investment Fund of the Russian Federation.
It turns out that it is more important for the municipalities themselves to create transparent administrative relations, tax breaks, and sort out land use for new construction? Will these actions be simpler and more effective than creating a SEZ?
– Indeed, there is no point in passively waiting for decisions at the federal level. For example, the region can resolve land use issues independently. No one is stopping anyone from giving benefits at the regional level by creating an economically favored zone. And then we need to actively attract investors and try to get funds from the Investment Fund for planned, and not abstract projects. In this sense, there is even the example of the single-industry town Kamskie Polyany (Republic of Tatarstan), which last year received approval to use funds from the Investment Fund to create an industrial park. Another example, albeit not in a single-industry town, where resources from this fund were attracted for the development of an industrial zone is Ulyanovsk. Billions of rubles of private investors are already working here. The largest of them are SABMiller and Mars, which would not have implemented their projects without budget investments in infrastructure. And it makes sense for many to apply the experience of Ulyanovsk in single-industry towns.
How applicable is the experience of the Moscow region for satellite single-industry towns, when factories, warehouses, logistics centers, business parks move into the region from Moscow, and people from nearby towns serve them? Are there similar examples outside the Moscow region?
– In the Moscow region, the success of such diversification is exaggerated. Moscow has not brought many production facilities to the region. There were rather two processes going on here: some enterprises in Moscow itself were dying. At the same time, new industries were created in the region, especially in the food industry. There were simply no large warehouses in Moscow; they were initially built in the region. And if the task was to diversify production in the Moscow region, then it would make sense to create some kind of technology parks and stimulate the creation of high-tech industries, which actually was not done. There is only the appearance that everything was well planned. The processes occurred naturally, facilitated by the geographical location and the presence of a large regional budget. A somewhat similar situation is developing in oil single-industry towns, where the situation is developing favorably even without much effort from municipal and regional authorities. The leadership of the Sverdlovsk region outlined an active and very reasonable position on the withdrawal of industrial enterprises from Yekaterinburg two or three years ago, but their real results are still quite modest.
Did a crisis intervene or is the process slow?
– The crisis may even stimulate this process if the regional authorities do not give up. For example, there are now more chances to attract federal money. And in the Samara region, where our company recently completed the development of a spatial development concept, we proposed concentrating on high-tech production in the regional capital, and moving a significant part of large industry outside Samara. But in general, this is a long process, and many large cities are just starting to do it, since right now they are beginning to experience problems with free space within the city. If the federal government helps implement these processes, then many of the withdrawn industries will be able to move into single-industry towns, solving the problem of creating new jobs.
Reconstruction of the housing stock in single-industry towns of the Boksitogorsk district of the Leningrad region
It is very likely that in the medium term Europe will significantly diversify gas supplies by increasing the share of imports from the United States. However, American gas is unlikely to dominate Europe. Candidate of Economic Sciences Moisei Furshchik spoke about this in an exclusive interview with Regions Online.
Let us note that the day before it became known about a bill prepared by the Danish government, which allows the country’s Ministry of Foreign Affairs to ban the construction of a new pipeline in its territorial waters, based on “foreign policy interests and national security issues.” The Danish newspaper Politiken wrote about this.
Moreover, the Danish Foreign Minister Anders Samuelsen expects the new law to be adopted in early 2018. Simultaneously with this news, information appeared that Russia may reconsider the gas pipeline financing scheme due to the imposed sanctions. We discussed the exciting topic of the gas revolution with a candidate of economic sciences Moses Furshchik.
How correct is it to assume that new American sanctions are an attempt to force Europeans to buy expensive American gas?
— Initially, American sanctions were not planned in connection with the task of selling American gas to Europe. They were purely political in nature. However Trump, maintaining the psychology of a businessman and not being able to significantly influence the sanctions package, tried to extract at least economic benefit from it. And here the topic of selling American gas turned out to be the most obvious.
What other facts support your version?
— In support of the version about the secondary nature of the “gas issue,” one can cite the fact that gas production accounts for less than 1% of US GDP. That is, the industry lobby was unlikely to be able to initiate and carry out such a large-scale decision. Moreover, this industry in the United States is not very consolidated - the largest company has only 5% of the total gas production in the country.
What are the main disadvantages of Europeans switching to American gas?
— So far, the main problems are the relatively high price and lack of infrastructure for receiving liquefied gas. However, these issues can largely be resolved within 3-5 years. Therefore, it is highly likely that in the medium term Europe will significantly diversify gas supplies by increasing the share of imports from the United States. However, American gas is unlikely to occupy a dominant position in the EU, although it will become a very serious player in this market. After all, the United States is already the largest gas producer in the world (more than 21%) and has significant potential to increase production.
What response measures is the European Union preparing in relation to sanctions?
— It is unlikely that the European Union will use special retaliatory measures. After all, American sanctions were imposed not against Europe, but against Russia. Therefore, it is more likely that the European Union will simply try to negotiate with the United States on a softer application of sanctions against European companies.
What can you say about Nord Stream 1 and Nord Stream 2? What are their differences?
— “Nord Stream 1” is a technologically complete project and does not have the ability to increase capacity. Therefore, its expansion was developed in the format of constructing a new gas pipeline passing near the already built one. At the same time, Nord Stream 2 was structured into a separate project due to different shareholders and differences in the resource base. In addition, Nord Stream 1 and Nord Stream 2 have different entry points into the underwater part from Russia (Vyborg and Ust-Luga).
What is the main difficulty of Nord Stream 2 now?
— Now the main difficulty in implementing the Nord Stream 2 project is resolving the issue of financing. It is slowed down, first of all, by sanctions risks. In addition, a number of Eastern European countries continue to try to block the project through the structures of the European Union. From time to time, discussions also arise on the resource base of the gas pipeline, but this issue is not fundamental if Ukrainian transit is simply switched to Nord Stream 2. At the same time, the ambiguous economic efficiency of the project for Gazprom was never considered as a serious problem.
Thank you for your time.
Interviewed by Ksenia Shiryaeva
