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Russian tycoon does not believe in model of import substitution, urges to focus on export

Oleg Deripaska called import substitution a model of the 19th century
Rusal CEO Oleg Deripaska Sergey Savostyanov/TASS
Rusal CEO Oleg Deripaska
© Sergey Savostyanov/TASS

KRASNOYARSK, February 19. /TASS/.  President and principal owner of the world's largest aluminium producer Rusal Oleg Deripaska does not believe in the import substitution model, and urges to focus on exports, he said Friday at the Krasnoyarsk Economic Forum.

"We need to build a decentralized model based on the private property, less prone to the influence of external factors," he said.

According to Deripaska, "the first objective - is to try to revive the internal market, based on domestic demand, i.e. to stabilize the economic situation in order to stop the fall. I do not believe in import substitution as a mantra. Import substitution - is a model of the 19th century. We need to develop exports, there are not a lot of resources, but we have them," Deripaska said.

The tycoon also noted he does not exclude that the price of oil could fall to $18 per barrel and the ruble exchange rate could fall to 100 rubles per dollar.

"It is impossible to pray and wait - despite current prices it is not going to get better. We need to understand that the structural overproduction is here for the long run. We can see oil prices of $18 per barrel and survive it, 100 rubles per dollar - and survive that too. We need to move forward, understanding that it is going to happen," he said.

Deripaska also spoke about the reasons that have a negative impact on the Russian economy. "The main problem is that our economy was very dependent on external factors. If we take GDP of 2014 in the US dollars it is about 2.3 trillion, while GDP expected for this year (depending on the level of devaluation) is less than a trillion," he said.

Other vulnerable moments, affecting the business climate in the country, according to Deripaska, are the problems in the Russian judicial system, corruption, the lack of quality domestic debt market in Russia and monetary policies of the Russian Central Bank.

Russia should not step back from Europe

The official also pointed out that Russia should not step back from Europe but at the same time it needs to rely on demand in Asia when pursuing its economic policy.

"We should not retreat from Europe. At the same time, we need to rely on China, on demand in Asia, attract them as partners and create conditions," Deripaska said.

Resting upon China’s demand, new infrastructure needs to be developed along with raw materials processing for economically feasible export, the businessman said.

"Production of raw materials and their export are not feasible now. One needs to understand Siberia faces very hard times and the priority is to create the debt market, provide Siberian companies with access to resources and create processing facilities," Deripaska said.