Over the past year, changes in the world have begun to occur much faster than before. States are switching to settlements in national currencies, the global dollar domination has weakened, and the world is becoming multipolar, says Stanislav Prokofiev, Rector of the Financial University under the Government of the Russian Federation, Doctor of Economics, Professor, Honored Economist of Russia. Considering the economy, education is also changing: the popularity of secondary vocational education is growing, regions are ordering personnel to universities, and students themselves are learning Chinese and Arabic, he said in an interview with RG.
The purpose of the sanctions is to oust Russia from the international economy. It has not been possible to do this yet, but is it impossible? With each package, the sanctions are getting tougher.
I would not argue that anti-Russian sanctions are getting tougher every day. Obviously, more numerous. But their number is growing precisely because Russia is finding new opportunities for normal existence and development under sanctions pressure.
Generally, there are two types of sanctions, sectoral and personal. As a rule, sanctions pressure always begins with sectoral ones and often ends with them. As usual, this also started with us: the first sanctions affected the financial and fuel and energy sectors as key ones. But the way the sanctions pressure is increasing today has no precedent. Never in the world have more than 14,000 different types of sanctions been imposed on one country at the same time.
At first, the attack was made on the economic sectors, then to the key persons who lead them. After it became clear that they did not work, personal sanctions against individuals and legal entities were used. And the very third stage became sanctions against counterparties that help sub-sanctioned entities circumvent restrictions. The emergence of secondary sanctions is an indirect recognition that the primary sanctions did not achieve the planned effect.
Why do you think things are going this way?
Even theoretically, it is impossible to organize global sanctions against us. About 40 states out of 195 are directly involved in the sanctions pressure on Russia, the rest of the countries either ignore them or partially consider sanctions in certain areas, for example, in finance, and where possible, bypass them. In addition, Western countries have largely lost control of global industry: China and Hong Kong now account for about a third of the world’s high-tech exports, Germany accounts for about 7 percent, and the United States - less than 5 percent. So the West cannot impose its will on the world, especially sanctions in production. Western countries control most of the world’s finances, but this is clearly not enough to oust Russia economically.
They are trying to drag the whole world into anti-Russian sanctions pressure. But there are problems here too: for example, post-Soviet countries, Turkey, India depend too much on Russia and simply cannot break economic ties with us. In addition, the introduction of secondary sanctions against them will lead to a deterioration of interstate relations, which the Western countries are reluctant to allow. Therefore, attempts to introduce secondary sanctions are stalling and meeting global resistance.
Does our economy manage to transit to an innovative resource development model? We talk a lot about achieving technological sovereignty, but there is still a gap between our necessities and the present state.
For the transition of the economy to a model focused on problem-solving in ensuring technological sovereignty, mainly due to the high-tech sector, it is necessary to increase the volume of investments and change the distribution structure. Now the total volume of investments in the Russian economy is about 17 percent of GDP, while the development of mechanical engineering accounts for only 2.4 percent of investments. In the civil sector of the aviation industry, only 20 aircraft are produced per year, and, according to our estimates, at least 100 are needed. It is planned to reach this level by 2030, but to ensure breakthrough technological development, this should be done no later than in four years.
The country now has a huge need for highly skilled workers and mid-level specialists. As the experience of Southeast Asian countries shows, for breakthrough technological development, it is necessary that the volume of investments in the manufacturing industry be at least 40 percent of the value added produced in it.
Of course, investments in human capital, including in the education and science sectors, should be seriously reviewed, because only at the expense of them breakthroughs are provided. And, of course, to increase the prestige of innovation professions-drivers. The government has already changed the admission figures for state-funded basis in favor of engineering universities. But the long-term decline in the prestige of engineering professions has led to the fact that many students taking the Unified State Exam, which allows them to enter engineering universities, is not growing significantly yet, although the number of budget places is increasing.
Which industries and directions should the state focus on primarily?
Our weak points are where Russia was most integrated into the international labor division and did not have full-fledged national production chains. For example, in the automotive, aviation industry, machine tool construction, electronics manufacturing. Where dependence on the West was greatest, and the main sanctions’ attack was directed. It was there that emergency measures had to be taken to preserve and develop critical industries. However, over the past year, a lot has been done in shaping the policy of technological sovereignty, so I am sure that the situation in these industries will only improve.
As a priority for investment, I think the following key areas should be highlighted: high-tech and manufacturing sectors close to them, as well as export-oriented industries; production of consumer goods and service development for the population. Additionally, industries, most important for national security, information and telecommunication technologies and infrastructure.
It is important to provide priority support to areas where dependence on imported components is especially noticeable: shipbuilding, aircraft construction, chemical industry, radio electronics, transport engineering, automotive industry.
The budget started the year with a significant deficit, do you regard this as a problem?
Based on the preliminary assessment of the Ministry of Finance of the Russian Federation, the federal budget deficit for the first four months of 2023 amounted to 3.4 trillion rubles, with a planned deficit for the year of 2.9 trillion. At the same time, the volume of federal budget revenues for the first four months of 2023 amounted to about 7.8 trillion rubles, which is 22 percent lower than the volume of revenues for the same period in 2022, and the volume of federal budget expenditures amounted to 11.2 trillion rubles (+26 percent).
Such a gap occurred largely due to the state contracts’ conclusion in the first quarter of the fiscal year (earlier in the second-third), the advance of large infrastructure and investment projects. This led to an increase in federal budget expenditures at the beginning of the year, but this is the foundation for ensuring sustainable growth rates of the national economy for 2023.
Did the drop in export revenues matter?
We see that oil and gas continue to be the most important export goods for Russia, and a decrease in their exports leads to a reduction in federal budget revenues. The problems with foreign trade dynamics are obvious. The Ministry of Economic Development predicts a decline in exports of goods this year to 465.9 billion dollars from 588.3 billion in 2022. But not everything is so pessimistic. The volume of exports from our country, with the exception of oil and gas, has not suffered much due to the sanctions imposed. The state has adopted a set of measures to support participants in foreign economic activity, including the extension of the parallel import program, simplification of customs clearance, preferential loans for importers and others.
According to FinU experts, this year we are to achieve about 1.5 percent economic growth.
It is very good that the Russian Government has created timely mechanisms to reduce the dependence of the Russian budget on oil and gas prices. There was a period when almost half of the federal budget revenues were revenues from hydrocarbon exports. If sanctions were imposed then, this would be a true challenge for the country.
Now the situation is different. According to FinU experts, this year we are to achieve about 1.5 percent economic growth. At the same time, half of the National Welfare Fund has been preserved, this volume approximately corresponds to the semi-annual volume of planned federal budget revenues. It will allow to dampen temporary cash gaps, the "deferred income" will go to the federal budget in the second half of the year. The situation is not easy, but the economy continues to develop, and this is the main thing that is needed for the normal allocation of the federal budget and the implementation of social programs.
How should the government support the disadvantaged population segments?
It should provide socially such groups of citizens with an adequate standard of living and create opportunities for their human potential disclosure in the future. Sufficiency in our country is determined by the minimum wage, which by 2025 should be 42.5 percent of the median per capita income in the region.
In my opinion, the system of social support should develop due to more effective population coverage with social support services and products, considering the need, the development of the non-state social security sector and increasing the measure targeting to support the population.
It is very important to use the opportunities that digitalization gives. This was well demonstrated by the pandemic when additional payments were introduced to middle and lower-level medical workers for work in covid hospitals. And technologies allowed not only to transfer this money in real time, but also to see exactly that a specific doctor or nurse received it, and not a medical institution. Another successful example is an electronic certificate, according to which disabled people receive technical means of rehabilitation. People choose where and what exactly they need to buy, pay for the purchase with points and that's it: no unnecessary actions. Technical innovations are changing the landscape and creating new services to help people.
How do you assess the monetary policy of the Bank of Russia?
If we evaluate the monetary policy of the Bank of Russia for 2022 and the first half of 2023, the main macroeconomic indicators of Russia (inflation rate, GDP growth rate, the level of real incomes of the population) confirm its correctness both in terms of targeting inflation as the goal of the unified state monetary policy, and in terms of its formation and implementation principles. According to the May 2023 estimate, core inflation, cleared of volatile components, remains below 4 percent in annual terms, while the current growth rate of the general consumer price index in annual terms has been at the level of 4 percent for several months, which is lower than the global average.
Maybe it is worth introducing easing in the regulation of credit institutions and financial markets?
Since February 2022, the Bank of Russia has introduced a whole range of measures aimed at liberalizing the banks’ activities. However, today the regulator notes an increase in banks’ interest for risk, including in the retail market. Now there is no reason to introduce further easing of regulation. It is necessary to return to the normal process of risk-based regulation. But this does not mean that it should be sharply tightened.
Another thing is that the Bank of Russia as a mega-regulator, when forming regulatory principles, traditionally focused on international norms, primarily on the norms of the Basel Committee on Banking Supervision. As a result, our restrictions have been and remain among the toughest in Europe in terms of regulating the activities of credit institutions. I think that it is worth at least discussing with representatives of the market and the expert community the basic things related to the Basel Committee recommendations with a view to the necessity and possibility of their certain adjustment.
A year ago, you predicted that the current situation could lead to a complete world reformatting. Is it right to say, considering the reorientation to national currencies in calculations, the restructuring of global trade chains, that this has already happened?
The global dollar’s domination has indeed weakened, but so far the share of the dollar in the calculations passing through the SWIFT system is a significant part of 41 percent. The circulation zone of alternative currencies is growing, but the dollar is still the main world currency for both settlements and investments. The safety margin of the United States and the Western countries may be enough for another decade.
However, changes in the world began to occur much faster than before, including due to the events around Ukraine. Western sanctions have shown all developing countries that the dollar is becoming an unreliable instrument for investment, some states are switching to settlements in national currencies, which narrows the dollar’s circulation zone and the influence of the United States.
The American financial authorities have tried to use the dollar both as a tool for making money and as an economic weapon, but at the same time it does not work. In addition, the United States is losing economic and export potential, revenue does not keep pace with the growth of budget commitments, which is why they have to urgently increase the budget deficit. The debt of the US government has exceeded $ 31 trillion (about 130 percent of GDP), so the importance weakening of the US currency is already an irreversible process. It is obvious that the United States is weaker today than 15 years ago, so the power reserves of the American economy are shrinking, and the moment of the global American domination disappearance is getting closer. The transition to a multipolar world will take a lot of time, but there is already much evidence that this process is obvious.
Bachelor’s degree and specialty are replaced by basic higher education for a period of 4-6 years. Will everyone be able to finish their studies according to the programs they entered?
Higher education in Russia will be divided into three stages - basic (bachelor’s degree and specialty), specialized (master’s degree, residency, assistant internship) and postgraduate studies. But we will see it no earlier than 2025.
The transition to the new system has been postponed for now. According to the decree of the President of Russia, only six universities will conduct an experiment aimed at testing the proposed model. We are waiting for the results of the pilot project and are preparing relevant proposals without losing the most important thing - the education quality and the high level of training of our alumni.
2 thousand foreign students from more than 90 countries of the world are now studying at the Financial University under the Government of the Russian Federation.
It will be necessary to develop a new procedure for admission to universities, which will consider the new structure of the education system. In addition, it may be possible to develop a new unified information system for admission to universities that is convenient for applicants with an end-to-end system of priorities for various education levels. This will significantly facilitate and make more transparent the process of admission to universities throughout the country.
How will the admission campaign be held this year?
The admission procedure has been simplified. The priority system within the university allows you to be admitted in one of the priorities specified when applying automatically. The number of training areas in which it is possible to simultaneously participate in the competition for bachelor’s degree and specialty has decreased from 10 to 5.
Also, when applying for admission to study, the applicant must indicate his admission priorities for various admission conditions if he or she participates in several competitions (for different forms of study, educational programs, state-funded basis, and tuition-fee basis). Admission will be conducted in accordance with the specified priorities, according to the competition lists. It is important that now, no later than the deadline date and time, the applicant provides the selected university with the original document of education (school certificate). But it is no longer required to submit a separate application for consent to admission.
Special attention this year is paid to applicants from new Russian and border regions with Ukraine, for which the possibility of admission is provided with the passing of entrance tests conducted by universities independently. The concept of a separate quota of at least 10 percent of the admission control figures has also been introduced.
Who is given priority in the allocation of budget places?
Financial University hopes to continue its Olympic March in 2023. This year we want to attract more than 500 winners and prize-winners of the All-Russian Olympiad of school students and list Olympiads to study under bachelor’s and specialty programs. To do this, we have expanded the list of educational programs, so, for example, the double-degree diploma programs that will be indicated in the diplomas deserve special attention. We have prepared six pairs of similar qualifications for admission this year. New areas of study “Mathematics and Computer Science”, “Software Engineering” have been opened.
We also plan to maintain and even increase our average Unified State Exam score. In 2022, it was 91 points for admission to state-funded basis. We expect, as always, high demand for the areas of “Management”, “Finance”, “State and Municipal Administration”, “Economics”, “Applied Informatics”, “Business Informatics”, “Law”, “Advertising and PR”, “Linguistics”, “Customs”.
Do foreigners still have an interest in our education?
Russia is now among the top 10 countries in the export of education. FinU actively admits foreign citizens, both within the quota of the Russian Federation and according to the general competition for state-funded basis. FinU is one of five universities that have the right to self-selection for state-funded basis within the quota of the Russian Federation. The competition among foreign applicants increases annually. In 2023, more than 2,000 foreign applicants from 40 countries took part in our International Olympiad for Foreign Citizens (Belarus, Kazakhstan, Abkhazia, China, Moldova, Uzbekistan, Mongolia, Vietnam - active countries), (Zambia, Mexico, Morocco, Indonesia, Greece - other countries). According to the results of the Olympiad, 350 people took prizes. Thus, the competition for state-funded basis as part of independent selection amounted to 5.7 people per place.
How is the educational and scientific turn to the East? What new specialties are being formed?
FinU is actively developing international cooperation. New international programs are being developed, joint research and development is being conducted with scientific and educational organizations in Asia, the Middle East, Africa, Latin America and the CIS. Cooperation agreements are being successfully implemented with the Jawaharlal Nehru University and the Mahatma Gandhi University.
Another promising and actively developing area, of course, is China. With more than 15 leading universities in China, we are implementing joint educational programs, student and faculty exchange programs, and the newly created joint scientific laboratory of digital financial assets and digital currencies is gaining momentum.
For a full-fledged “turn to the East”, highly qualified specialists familiar with the macroregional peculiarities are needed. Already last year, FinU successfully recruited the first students for the bachelor’s degree program “Global Economics and International Trade” with an in-depth study of Chinese economics and the Chinese language. This year, a new program is ready to launch – “Economics and Business of the Eastern Countries”, with alumni taking senior positions in companies related to the trade and economic cooperation development between Russia and the Middle East, Turkey and India.
The development of the higher education export remains an important strategic task. Today, more than 2,000 international students from more than 90 countries study at the FinU. We pay a lot of attention to the adaptation and cultural integration of foreign students.
What can you say about the applicants’ interest in secondary vocational education?
Every fourth of our students is a student of secondary vocational education programs. The country now has a huge need for highly qualified workers and mid-level specialists. Employment of alumni of our fourteen colleges who have not continued full-time education is almost 100 percent. For comparison, 90 percent of the university alumni, and according to this indicator we are in the top 10 in all rankings of Russian universities. Now, in terms of demand, the secondary vocational education even exceeds higher education, and this is also not clear. People want to get to the workplace faster and start working and earning, and then think further, study or stop at this level of education.
That is quite clear, but are the regions motivated?
Of course, only in the 2022-2023 academic year, five more branches received a license to implement new in-demand secondary vocational education programs (Barnaul, Kaluga, Kursk, Lipetsk, Chelyabinsk). Branch directors are tasked with creating partnership programs with large regional employers. There are already such in Ufa, Blagoveshchensk, Buzuluk, Makhachkala, Perm, Surgut and other cities.
The regions themselves set tasks for us. For example, Perm needs mid-level specialists in logistics. New logistics chains are being formed, the need for personnel is growing, and educational institutions in the region are not preparing them. And we have an excellent laboratory of transport and warehouse logistics with modern software, we are ready and will bring this experience to the regions.
Recently, the presence of the FinU in the media space has increased dramatically. Is this a new strategy to increase brand awareness?
Expanding the presence of the FinU in the media space is one of the priorities of the FinU development strategy until 2030. But this is a means rather than a target. Our population and the business community today have a very high demand for high-quality forecasts and explanations of the economic policy pursued by the country’s administration. I guess that the media focus should not be only on the Rector’s personality, the University should also be represented by experts - faculty and researchers. We provide significant support to young teachers and researchers so that they can speak on behalf of the FinU expert community. Thanks to this, in the leading business media in 2020-2022, the number of speeches of our speakers has almost doubled, and the university is consistently among the top 5 universities of the media ranking “Medialogy”.
Source: Rossiyskaya Gazeta
