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Putin: Traditional Approaches Don’t Work; Russia Needs New Leadership for the Real Economy
17 September 2011
Russian Prime Minister Vladimir Putin today delivered a major speech on the global economic crisis and his perspective for transforming the Russian economy, during the opening of the 10th International Investment Forum - Sochi-2011, held on the Russian Black Sea coast. He emphasized that "traditional approaches" are not working, either internationally or within Russia, and insisted on Russia’s commitment—no matter what happens internationally—to creating a new generation of leaders, committed to the growth of the real economy. He called on Russians who share this view to run for the State Duma in December’s elections, on the United Russia party slate. Citing the U.S. credit downgrade, the 10% drop of European stock indexes in two weeks of August, and the ongoing sovereign debt crisis, Putin said that "the global economy is still feeling the shock waves of the economic crisis that hit in 2008." Putin, who during the summer referred to the U.S. Federal Reserve’s "quantitative easing" money-production as a form of "hooliganism," emphasized that what people thought worked, doesn’t work: "The sovereign debt crisis in developed countries is requiring politicians, economists and investors to rethink their traditional approaches. Last Summer’s global economic shocks were yet further proof that development models relying on growing debt are no longer working. It’s clear that those who were leaders not long ago, are now yielding their positions and cannot serve as an example of the carefully worked-out macroeconomic policies, in which they were instructing us so recently." As for a recovery, Putin warned that there simply might not be one, under current policy: "The debt crisis in Europe and the United States is compounded by the fact that their economies are teetering on the brink of recession. Unfortunately, it is still unclear when they will recover, if at all, and this goes for Russia as well." The Russian Prime Minister said that the centers of global growth have shifted to "emerging economies." While ticking off a number of conventional monetary maneuvers that Russia itself employs, praising the Russian Finance Ministry’s interventions this Summer to support banking system liquidity, rebuild the country’s gold and foreign currency reserves, curb the federal deficit, and prevent another state or corporate foreign debt build-up, the main emphasis in Putin’s speech was on discovering how to go forward in a more substantial way. He said that the national objective must be not only "growth" in conventional terms, but "improving the efficiency of our economy through developing real output and promoting innovation." Addressing an audience that included representatives of major London-based investment funds, Putin said bluntly: "I would like to state that our overall objective is not to become a safe haven for speculative capital, where it can wait out crises in comfort. Russia needs to create conditions for smart investment, both in production, and in high-tech development, so we have to expand the range of freedom for honest businesses, and help people who propose sensible, useful initiatives, aimed not at immediate profit-taking, but at changing the quality of life of whole cities and other settled areas, and entire regions, while, of course, profiting from their economic engagement." Putin reported that it was for this purpose that he personally initiated the new Agency for Strategic Initiatives (ASI), whose head, A.S. Nikitin, was another keynote speaker in Sochi. Commissioned just last month, the ASI is separate from the much ballyhooed Skolkovo project, launched by President Dmitri Medvedev’s Kremlin staff to emulate Silicon Valley. Putin listed Skolkovo as merely one of a larger network of economic development centers and zones. For the ASI, Putin said, "We had a national competition to select talented young people who have started their own businesses from scratch; and those who have done significant social projects and are willing to continue in that area. Now they are assigned to propose solutions for our systemic problems, and the administrative and other barriers that fuel corruption and impede business." Continuing this theme, and sounding distinctly like someone who intends to be involved in national policy-making beyond the Duma elections and next year’s Presidential election—in which he himself may return as a candidate, though he has not announced—Putin stated: "Today one of our key objectives is to bring new personnel into Russian officialdom and change the philosophy of state service. We intend to bring new people into government, the economy, politics, and the social sector, people who have already demonstrated that they can pursue constructive transformations and are willing to work for the welfare of the citizens and the entire country." He said that the recently instituted process of party primaries, currently being held to form electoral slates for the Duma, was designed to find such people and get them to run for the State Duma. He touched on many other economic policy areas, from utilities rates to the need for government involvement in projects or industries which are too large for private entrepreneurs to handle. Following his speech, Putin had an extended discussion with participants, highlighted by his politely rejecting a British investment fund manager’s recommendation that Russian should snap up toxic assets which the European banks try to unload. |