Russia’s former finance chief sees full-blown crisis in Europe
2012-06-22 10:58:45
A full-blown economic and financial crisis in the euro zone is inevitable and will develop within a year, Alexei Kudrin, Russia’s former finance minister, said Thursday, adding that a possible way out may be a partial write-off of Spain’s and Italy’s debt, but the political will for that is lacking.
“Greece will not be able to fulfill its obligations (towards lenders),” Mr. Kudrin, who described himself as a pessimist, said at a conference.
“A serious financial and economic crisis will hit Europe within a year … with Spain being its next victim, and then possibly Italy,” he added. “The time (for avoiding it) has already past.”
Mr. Kudrin, known for his penchant for conservative financial policy, said European governments lack the political will to make fast and adequate decisions.
The disaster may be postponed or delayed if a partial default and restructuring of Italian and Spanish debts is accepted, with the governments to agree on recapitalizing the banks, he added.
Mr. Kudrin said that companies are already preparing for that, cutting inventories and borrowing. In the face of the coming crisis and a drop in oil prices, Russia should increase its safety net, he said.
“We should borrow now while we can,” he said, adding that one shouldn’t hope for a large budget income from privatization as the time has already passed for the state stakes sale to garner high prices.
Mr. Kudrin has referred to Russia’s President Vladimir Putin as his friend and served for more than a decade as finance minister, much of that time under Mr. Putin as the country’s prime minister. He was dismissed from the cabinet in September amid a disagreement with the country’s president at the time, Dmitry Medvedev.