Where are we to find solutions to economic and energy challenges?

17 january 2014

Chief Adviser to Director General of the Analytical Center Leonid Grigoriev participated in the Gaidar forum, one of the major international scientific events in the field of economics held in Russia annually.

On the 15th of January Leonid Grigoriev took part in an expert discussion entitled “Institutional opportunities and barriers for energy market development” during which he spoke about challenges inside the existing energy system. In his opinion, three trends are to be taken into account when institutional architecture of the energy sector is being reformed, namely: the growing role of new consumers (China and India in particular), the growing role of state “players” as well as the struggle against climate change. Mr. Grigoriev indicated the following risks among those of the existing energy system: macroeconomic destabilization (that is the crisis and high petrol prices), lack of investment and increasing competition for energy resources involving developing countries.

“Humanity cannot find easy solutions to energy challenges as such solutions purely and simply do not exist,” – believes Mr. Grigoriev. According to him, The IEA forecasting may well be a good source of information for executives but it is by no means a corpus of ready-made general solutions. “It has nothing to do with coordination, whereas it is exactly coordination that we will need to reduce massive expenditures and fulfill our priorities,” – he thinks. Among the challenges of the energy sector Mr. Grigoriev also indicated political disputes and uncertainty both of which lead to excessive investing into some projects and insufficient investing into a multitude of others. Besides, investments amounting to a mere 1,5% of the global GDP throughout several decades are simply not enough to solve a whole range of global energy issues.

Leonid Grigoriev shared his impressions from the participation in the forum in the “RBK-TV” studio where experts discussed, among others, possibilities of pursuing Gaidar’s economic policy. According to Grigoriev, it is technically impossible to continue Gaidar’s liberal policy “due to absence of any appropriate conditions”. Mr. Grigoriev believes that Russia had great trouble getting out of the 1998 financial crisis and since 2003 favourable situation at the oil market has boosted consumption. “From the 2000s until the outbreak of the crisis our economy received huge amounts of money that were then successfully squandered away. This is how our country was recuperating after a tough transition”, - believes Mr. Grigoriev.

During this time not a single development institute was created in Russia, which is exactly what landed the country into the crisis, according to Mr. Grigoriev. “Now we are getting out of that recession little by little”, - the expert believes. For instance, Russia’s GDP is roughly 10% more than it was in 1989 and personal consumption is superior to the one we had in Soviet times. As for the investments, we are lagging behind the Soviet era despite certain improvement. According to Mr. Grigoriev, over the last two years flat dynamics of public spending development can be traced. “While personal consumption is increasing, its development is mostly explained by import growth and rent income. In other words, net export is going down,” - Mr. Grigoriev concluded.

The Gaidar forum has been held since 2010. In 2014 it was dedicated to the issue of sustainable development. The forum’s participants discussed such issues as: economic growth in the context of global changes, its potential and possibilities of efficient management, risks related to innovative enterprenership, new industrialization, contradictions of resource-based economies and ambiguous modernization consequences for the society’s economic and socio-political development.