‘Day three of the forum, nobody has been arrested yet, already good!’

A lot of novices and few old hands

Sberbank’s traditional business breakfast chaired by Herman Gref took place at the Saint Petersburg International Economic Forum (SPIEF) on 5 June. This time, he decided to talk with representatives of Mikhail Mishustin’s new government about how the country’s modernisation strategy would be reset.

There were a lot of new faces at the breakfast. Mishustin’s government attended not only the Petersburg forum for the first time, which was not held last year because of the pandemic, but also Sberbank’s business breakfast. As a result, among previous breakfast guests, one could see only Anton Siluanov who remained on his post as finance minister, deputy Andrey Makarov who is responsible for the budget in the State Duma and Gref himself. Of course, they could not do without the Russian president’s Press Secretary Dmitry Peskov. However, he didn’t utter a word during the breakfast and responded to some attacks on the Russian authorities with different types of smiles.

“We’d like to learn modernisation plans first-hand”

In Gref’s opinion, after the pandemic, it is time the new government dealt with it should have started to do 1,5 years ago if not coronavirus. Moreover, deal with it considering both the predecessors’ mistakes and lessons of the pandemic.

These are the key questions the head of Sberbank (and ex-minister of economic development) asked the guests: how to orientate the system of public administration to the needs of a citizen and what social and economic tasks should become central in the government’s new strategy? According to him, though many felt like there was a pause in economic transformation due to the pandemic, the work done to prepare a plan for resetting was “huge and unprecedented”.

“I would like to learn your modernisation plans first-hand. What’s the difference from other strategies of previous governments?” Gref wondered. And it became clear why “Mishustin’s guard” was invited to Sberbank’s business breakfast first of all, only then public activists, governors and businesspeople.

To start with, Herman Gref metaphorically poured ice water over the attendees: he made the results of surveys of the population and businesses about the state of the country and its economy now and before the pandemic public. Both note low incomes and their fall during the pandemic, no stability, not transparent conditions for an investor, problems in medicine and education, insufficient qualification of staff that’s closely linked with the latter, distrust in the authorities. In general, it is a standard bunch of problems and deficiencies Gref and other moderators report on to functionaries every year. The breakfast (and SPIEF in general) is unique in itself: the pandemic took the population’s income to a red zone, businesses suffered a big shock, while the authorities don’t have the most experienced government.

Herman Gref: “Though many felt like there was a pause in economic transformation due to the pandemic, the work done to prepare a plan for resetting was ‘huge and unprecedented’”

What does Russia fear?

The statistics provided by Gref show that real incomes dropped to an “unprecedented low level”. Though, to be fair, there is some rebound: the average salary rose by 11% during the first quarter of 2021. For Russians, according to the surveys, precisely income and health are among the most important and key things. As a consequence, the polls illustrate that the people’s biggest fear is the growth of injustice and inequality — 70% of our compatriots are afraid of it. Also, they are terrified of a further fall in real incomes and the unavailability of goods due to their high price.

The fear that people will be denied free health care can also be cited in line with falling incomes and social injustice. While many are afraid of the poor quality of this care. Coronavirus worsened the situation: 56% of Russian couldn’t buy medicine at least once a year — they couldn’t afford it. Education leaves a lot to be desired too: the majority of citizens of the country aren’t satisfied with the fact that the quality of school education boils down only to the Unified State Exam.

Businesses traditionally complain about corruption, a low level of their compatriot’s well-being (demand for products depends on this), market monopolisation and, which is illustrative, “the political situation and sanctions”. However, Russia continues falling behind both Western countries and even developing countries in many key indicators. Gref enumerated both infrastructure and technology (we invest 1% of GDP in them, while tiny Israel does, for instance, 5%). In the e-government index, despite all the talks about “digitalisation”, Russia ranks just 36^th around the world. From a perspective of public administration, it is 88^th.

Vladimir Mau: “Our country has been anthropocentric for 1,000 years, knowing what mankind needs: ‘If you don’t want to be happy, we will make you feel happy.’ Client centricity envisages dialogue”

“Our country has been anthropocentric for 1,000 years”

“How can a business make long-term investments today when the state’s priorities are constantly changing?” famous economist Vladimir Mau, a panel member of the Russian presidential economic council, commented on the surveys. “There is one message in the morning, in the evening, it is different! In the morning, you are said to be socially irresponsible, in the evening, you are asked for help!”

Mau noted that nowadays the state should reduce the uncertainty and not be “the last creditor” but “the last investor”: the social sphere, transport and digitalisation” should become a priority for investment. The state should become “client-centric”, not “anthropocentric”, the economist thinks:

“Our country has been anthropocentric for 1,000 years, knowing what mankind needs: ‘If you don’t want to be happy, we will make you feel happy.’ Client centricity envisages dialogue. Today there is a task of targeted loans, not high taxes. Regions should be lent money for new projects, not budget gaps!”

It is noteworthy that according to mobile voting Gref organised for functionaries, there is even no question, “Is the state for people or are people for the state? (like in China). Over 80% of them voted for a liberal concept of “the state for people”. Another question is how honestly people vote at such events. At the same time, Gref noted, we live in different times when countries will raise wealth taxes on rich people, budgets will grow, while authorities around the world will redistribute incomes. To comply with the popular concept of “the state for people”, it should become client-centric and set up a “digital platform” at the same time.

Andrey Makarov: “We killed the main thing in business — it stopped considering entrepreneurship as their business at their own peril, it prefers doing business only at the country’s expense”

“Day three of the forum, nobody has been arrested yet, already good”

Andrey Makarov, Gref’s eternal opponent at such events, was unexpectedly sceptical, though he traditionally defended the new Russian ministers. It was a surprise because Makarov, who is a member of United Russia, chairman of the State Duma’s Committee for Budget and Taxes, one of the co-authors of the Russian Tax Code, almost attacked security workers who, in his opinion, severely damaged the “business climate” in Russia with their arrests.

“The government made a breakthrough, state investments began, an investment cycle was launched. But they, state investments, cannot be constant. If there aren’t private investments, everything will be put paid, as it has happened in our history repeatedly... While there won’t be private investments without an [good] investment climate. It is day three of the forum, nobody has been arrested yet, it is already good,” Makarov quipped. “For instance, Michael Calvey hasn’t arrived in the forum. Not because he didn’t want to, perhaps, he simply couldn’t.”

Makarov cited the case of the famous international investor who was scandalously arrested in February 2019, which, as many think, quite seriously harmed the “business climate” of Russia for potential investors. Ironically, on 25 December 2020, Moscow’s Meshchansky Court extended the sentence of the renowned international investor as a ban on certain actions until 4 June 2021. Some think the case was trumped up.

The regular of Sberbank and SPIEF’s business breakfasts, “minister without portfolio” Mikhail Abyzov was arrested as early as 2019. Another ex-speaker of Gref’s events, former Minister of Economic Development Alexey Ulyukayev is now having breakfast in a high-security prison. In a word, some are far distant, some are dead...

About greed again

“I am not sure that the discussion about who ‘cheated’ whom facilitates the creation of an investment climate in the country as much as possible,” Makarov continued criticising, this time he meant the vice premier who recently claimed that “metallurgists ‘cheated’ the state out of 100 billion rubles and had to return them”. This resembles the squabbles in the 1990s! We killed the main thing in business — it stopped considering entrepreneurship as their business at their own peril, it prefers doing business only at the country’s expense.”

Andrey Makarov: “The government made a breakthrough, state investments began, an investment cycle was launched. But they, state investments, cannot be constant. If there aren’t private investments, everything will be put paid, as it has happened in our history repeatedly... While there won’t be private investments without an [good] investment climate”

Makarov is a surprisingly paradoxical guest of Gref: attacking security workers and some members of the Cabinet for “digs” on businesses, he simultaneously criticised businesses themselves. It should be reminded that after he learnt about the phenomenon of very expensive medicines to treat COVID-19 last year, he asked the head of the company that manufactured the medicine about this. The businessman risked to reply in the talk with Makarov: “It saves lives, they will buy it if they want!”

“There is the greed of both manufacturers and chain stores. What he said isn’t the market but looting, which is already the next stage of development of our business...” the deputy was indignant. “But the government acted amazingly in the anti-crisis situation. Today decisions are made within days, not years. But nothing will work without solving basic problems (most importantly, it is independent court).”

“I have been hearing you say what an ‘amazing government’ we have for 10 years — Medvedev, Putin, Medvedev, Mishustin...”

Makarov recommended inviting Chairman of the Investigative Committee Alexander Bastrykin who “from a perspective of economic growth” is a more important factor, as Makarov thinks, than Chairman of the Supreme Court Vyacheslav Lebedev whom Herman Gref himself offered to invite with irony next time for breakfast. Dmitry Peskov listened to Makarov’s speech with a thin smile and went pale a bit at the end. But he said nothing anyway.

Then founder of Echo of Moscow Alexey Venediktov (seemingly the only person at the business breakfast can be called opposition to the current authorities, though with difficulty). He wasn’t against Bastrykin at breakfast but felt irony, if not jealousy, to the unexpected position of Makarov:

“Makarov has been sitting in the budget committee and has been one of the leaders of the ruling party for 10 years! I have been hearing you say what an ‘amazing government’ we have for 10 years — Medvedev, Putin, Medvedev, Mishustin... But what will the client [the state’s client orientation] say to this? Me as a client?” Venediktov rhetorically asked.

“You simply don’t hear me!” Makarov snarled.

“I hear you at breakfast every year!”

“But you have a chance to attend the breakfast, others don’t,” the deputy noted ambiguously, and it remained unknown if he meant Calvey, Abyzov and Ulyukayev here.

Alexey Venediktov: “I have been hearing you say what an ‘amazing government’ we have for 10 years — Medvedev, Putin, Medvedev, Mishustin... But what will the client [the state’s client orientation] say to this? Me as a client?”

Laconic Khusnullin

Russian Vice Premier who comes from Tatarstan Marat Khusnillin, responsible for the construction and infrastructure development in the next years, was laconic, however, as usual. He said clearly how he and his team would become client-centric and digital:

“We want to deliver a billion square metres of housing so that one in fifth square metres in the country becomes new and this improves living conditions in the end. Secondly, we want to put housing and utilities in order, people are dissatisfied with its quality and price. How to do this? To engage businesses, it is a key driver of the process. What are we going to do for this? We are going to reduce the investment construction cycle by 30%. We are going to reduce the number of agreements in the construction sector from 135 to 50 by the end of the year. The construction market is evaluated at more than 100 trillion rubles in the next years. It is a huge market, and it will certainly lead to better living conditions. Ultimately, it is necessary to put 85% of roads in a proper state and create the mobility of the population so that people will spend less time in traffic jams. We will do this all on a digital platform. If we don’t create it, we will achieve nothing.”

How two technocrats will solve problems of client centricity

Khusnullin’s conciseness was especially noticeable in the light of other speeches, particularly, that of representatives of Mishustin’s team he took from the Federal Tax Service to the Russian government. The tax workers who spent almost all their life in the Federal Tax Service counting digits don’t yet know how to beautifully talk in front of the public.

Gref who is always silver-tongued concluded after a speech of Vice Premier Dmitry Grigorenko who came with dry graphics and schemes showering half of the guests with management models: “By the sixth point, guests usually fall asleep because nobody believes in their realisation... “ While what Grigorenko wanted to say was to formulate the concept of the state’s client centricity. It needs to know its clients, a universal platform isn’t a panacea, the problem of “intergovernmental wells” need to be solved by creating agencies around a person as a client. While for this purpose, it is necessary to change the culture of functionaries, who are, in fact, adults, this is why this won’t be easy to do. At the same time, Grigorenko is sure that despite stereotypes about them, the majority of “functionaries are honest people who want to do good for the country”.

Dmitry Grigorenko: “The majority of functionaries are honest people who want to do good for the country”

Today’s Minister of Labour and Social Protection Anton Kotyakov is another dry technocrat, from Siluanov’s ministry, who is such a functionary, as Grigorenko thinks, who cares about the country. His speech was also dry and point by point. He claimed that his team would solve problems with poverty by “providing employment and state policy to support those who need social help”. He says that they set a new KPI goal for employment centres — the number of employed people. It turns out that the efficiency of employment and labour centres used to be evaluated according to the registration and benefits. The Ministry of Labour is creating an interregional labour market to help a jobless person to move to a neighbouring region just in case. However, there is a “little” problem: 60% of people on the roster don’t have the necessary skills, they haven’t studied in university, at times, they have never studied in college. This is why qualification upgrade programmes that will be available online are created. To solve the problem of support for the needy, the Ministry of Labour promised to seriously reduce the bureaucratic document exchange, and State Services website and an application will be enough.

“When we hear debates about entrepreneurs’ greed, it is strange”

“This is unconvincing at the moment,” Alexey Venediktov doubted. “I will explain why, about client centricity and technology. You treat a client as an object, not a subject. There is no interaction! We are football balls for you, not players. It isn’t enough for a person to be simply a client, he needs to be a partner. On the one hand, you service me like in the laundry, but at the same time, nothing depends on me!”

“What I hear sounds impressive, right,” noted Severstal’s head Alexey Mordashov (by the way, he became Russia’s richest man with $30 billion in February). “To make it really work... It is necessary to understand fundamental things. When we hear debates about entrepreneurs’ greed, it is strange. Entrepreneurs must be greedy. If they want to get more legally, it is strange to accuse them of this!”

Mordashov also criticised the uncertainty of the Russian authorities citing his own experience: he is invited to a government meeting to “balance prices”, which hits his business, he said. On the same day, he has another meeting on how to increase investment attractiveness. “Both things are done sincerely, the same people do it at times! Should we all have more active dialogue? We are all a part of one society.”

Alexey Mordashov: “When we hear debates about entrepreneurs’ greed, it is strange. Entrepreneurs must be greedy. If they want to get more legally, it is strange to accuse them of this!”

How Mishustin created an analytic centre during the pandemic and “the world’s best administration”

Dmitry Chernyshenko, vice premier who is responsible for Digital Economy national project in the government, a former IT and media specialist who recently chaired Gazprom-Media Holding, and Echo of Moscow is its part, by the way, concluded the discussion. He demonstrated the necessity of digitalisation putting an example of the creation of an analytic coordination centre in the government during the pandemic where functionaries and businesspeople, particularly Gref who then confirmed it with amazement, could receive information and feedback almost every morning via 13 channels. He said that the centre accumulated search requests, informed “what citizens write”, summarised all the direct reaction of the government’s actions in the fight with the pandemic.

“It is a new approach of public administration. The government where Mishustin’s team migrated from the Federal Tax Service has today the world’s best data-based administration. The state starts to gain consciousness and receive data in the morning, all indicators and deviations. This has never happened. There appear data to make decisions every day, not once a year on the basis of data of the Russian Federal Statistics Service,” Chernyshenko claimed.

This led to an instantaneous breakdown of “agencies’ wells”: functionaries quickly obtained results thanks to brief sessions in a system of quick changes, in the absence of the hierarchy “you’re the boss, I am the stupid”. The vice premier says that united platforms are created today.

“There is a huge amount of information from all over the country, an accident response system, a group chat,” Gref was as happy as a schoolboy.

“It is necessary to automate everything we can automate, the state should become invisible. The number of functionaries will suddenly shrink at the automation stage,” the vice premier promised.

Dmitry Chernyshenko: “The government where Mishustin’s team migrated from the Federal Tax Service has today the world’s best data-based administration. The state starts to gain consciousness and receive data in the morning, all indicators and deviations. This has never happened”

“I am optimistic about the future of my country. Today we have a unique situation. The Russian president said about client and anthropocentricity, “turn to people”. Secondly, there is a government that has experience in transforming the Federal Tax Service. Thirdly, the president’s administration that became very technological in this respect,” Herman Gref concluded the business breakfast.

We have to say that the “evil and powerful” administration of the president was mentioned only once during the discussion, and only by the end. The topic wasn’t developed properly, and we, sadly, didn’t learn what its “technology” meant. While Dmitry Peskov, the vice head of the presidential administration, mysteriously smiled.