Putin Touts Russian Economic Power
2011-10-07 10:31:55
Prime Minister Vladimir Putin said Russia is better-prepared to weather global economic turmoil than it was during the 2008 crisis, striking an investor-friendly tone as he prepares for a return to the Kremlin.
In his first major economic-policy speech since announcing last month that he plans to return to the presidency next year, Mr. Putin pledged to stick to tight fiscal policies and seek foreign investment for a "new industrialization."
He also hinted that Alexei Kudrin, the budget hawk and investor darling who was removed as finance minister last month after a showdown with President Dmitry Medvedev, could return to government in the future. Mr. Kudrin "remains a member of our team and we will work with him," Mr. Putin said, noting that they have been close friends since the early 1990s.
"I will say straight away that Russia is better-prepared than it was in 2008 for different scenarios," Mr. Putin told an investment conference sponsored by state-controlled bank VTB.
Russia's oil-dependent economy was hit hard by the crisis in 2008, recording one of the sharpest contractions of any major country. Thanks to billions in Kremlin bailout funds, it has bounced back quickly, although investors have been slow to return.
In the past few months, Russian stock prices and the ruble have been battered again as global markets have swooned. Officials are ratcheting down growth forecasts. Adding to the problems, political uncertainty and the often-hostile business environment have fueled rising capital flight, which is expected to reach at least $50 billion this year.
"If your elite is not reinvesting in Russia, why should we invest here?" said Nadia Wells of Capital Group, the global fund giant, noting that Russian assets trade at a discount of as much as 40% to other emerging markets.
Since he took over the presidency in 2008, Mr. Medvedev had called for improving the investment climate and diversifying the oil-dependent economy. But progress has been limited.
"President Medvedev made repeated comments, including to me, about increasing transparency, better courts and all that, but the perception is that none of this has happened," David Bonderman, cofounder of private-equity group TPG, told the conference before Mr. Putin arrived.
Shortly afterward, Mr. Putin pledged to continue many of the investor-friendly policies Mr. Medvedev endorsed, but he barely mentioned the president in more than an hour of comments. Mr. Putin said progress in reducing corruption and cutting the state's role in the economy—areas that had been key priorities of Mr. Medvedev—would be "gradual." He was also tepid about the benefits for Russia of joining the World Trade Organization, another Medvedev focus.
Mr. Putin vowed to continue the tight budget policies that had made Mr. Kudrin, the former finance minister, a hero among foreign investors. At the same time, he alsovowed to push ahead with the 20-trillion-ruble ($612 billion) defense buildup Mr. Kudrin had publicly criticized as too expensive for the budget to bear.
It was that comment, combined with his statement that he wouldn't work in the new government when Mr. Medvedev takes over the prime minister's post next year, that caused the public showdown that led to Mr. Kudrin's removal last month by Mr. Medvedev.
On Thursday, Mr. Putin seemed to play down the conflict, which he called "emotional," and praised Mr. Kudrin as "a person who's useful and necessary to us."
Those comments fueled the sense among many observers that the ultimate loser from the conflict could be Mr. Medvedev, who appeared petulant and desperate to demonstrate his authority.
Indeed, Mr. Kudrin's departure hasn't been as complete as the Kremlin initially portrayed it. Although he lost his government post, Mr. Kudrin remains on official advisory panels and was slated to meet investors as part of the conference Friday.