Vladimir Putin’s speech in Davos: analysis and comments.

Vladimir Putin’s speech at the World Economic Forum in Davos would have been admirable had it been delivered by the leader of any country but Russia. As if all economic problems affected the international community alone and had nothing to do with Russia.

This is how Putin formulated one of the causes of the global crisis. “Stock index and capitalization race gained dominance over productivity of labor and real efficiency,” he said. Let us consider Gazprom’s performance then. Its operating expenses tripled between 2004 and 2008, debts quadrupled, capitalization increased tenfold, but annual increase of production amounted to only 1.35%.

Wasn’t it Putin the president who kept talking of the necessity to up capitalization of Russian companies?

The opportunity that presented itself was too good to miss and Putin just couldn’t help mentioning the United States. “Excessive dependance on what constitutes essentially the only key currency is dangerous for global economy,” he said. As a matter of fact, the USD had stopped being the only key currency approximately a decade ago, both throughout the world and in Russia itself.

Talking of the Russian economy, Putin passed a verdict on the prosperity based on raw-material export Russia owed to his own recent presidency. “The crisis uncovered the problems we are facing. Export is too much raw-material oriented, and so is economy in general,” he said. Shall we take a look at Putin’s message to the Federal Assembly dated July 8, 2000? “Domestic economy is raw-material oriented, so that revenues of the budget depend to a considerable extent on prices in the foreign energy markets,” he had said then. In other words, nothing changed in Russia.

Evaluating social consequences of the period of stability that became “high expectations” all of a sudden, Putin was self-critical. “Comfortable living conditions, education, and medicine remain out of reach for a substantial part of mankind, and the global surge of the last several years failed to remedy this situation,” he said. To all intents and purposes, the Russians belong to precisely this part of mankind.

What did the premier suggest by way of minimization of the effect of the crisis? Opening the forum and answering questions afterwards, Putin mostly spoke of support for oligarchs.

For starters, Putin said it was necessary to chalk off hopeless debts and bad assets. In other words, concentrate on salvation of whoever had borrowed colossal sums over the period of prosperity to find themselves unable to pay debts when the crisis struck. Use of oligarchs’ personal fortunes was not even considered.

There was another suggestion in Putin’s speech, another means of helping these unfortunates. “If need be, we will help them (we’ve been already helping them, actually) with debt restructuring and refunding of debts to foreign creditors,” he said. It is only fair to add that the finances Russia is free to use in this noble undertaking will run out in the middle of the next year. Russia’s international reserves are estimated at $386.5 billion. Sovereign funds account for $225.1 billion of the sum, and this is the money to be used to cover budget deficit and social commitments. Of the $161.4 billion left, at least $40 billions will have to be subtracted because Foreign Minister Aleksei Kudrin promised this sum to the banking system. In the meantime, Russian companies and banks are expected to return sum total of $171.7 billion to Western creditors over the next eighteen months. Russia’s international reserves will be completely depleted in 2910.

Small and medium businesses with the agricultural sector are therefore left to their own devices.

“Development of mutual trust is the number one task we all should concentrate on,” Putin said. A pity he was addressing foreign states and not the population of Russia. Mutual trust domestically was never even mentioned…

Stanislav Belkovsky, National Strategy Institute President: Putin positioned himself as a classic businessman whose interests are focused on primary industry. It was not the president of Russia or ideologist of global crisis regulation talking. It was a representative of raw-material corporation talking about what primary industry needed to weather the storm. First, lower taxation. Second, legalization of Russian raw-material businesses’ assets in the West through exchange of certain assets in West Europe and North America. Third, forget state regulation as damaging and counterproductive from the standpoint o primary industry. And fourth, maintenance of the myth that shortage of energy resources remains a threat to the international community.

Putin did not say anything that was beyond the horizon for primary industry, anything primary industry was disinterested in. His speech in Davos was but a manifesto of primary industry and its key interests, not an account of ways and means of dealing with the crisis under way.

Yevgeny Fyodorov, Duma Committee for Economic Policy and Free Enterprise Chairman: We are witnessing commencement of establishment of the new architecture of post-crisis global economy. At the very least, the World Economic Forum pointed in the direction of those guilty of the crisis in the first place even though these parties were not identified by names. First and foremost, the blame rests with economic monopolism that produces a monopolar world order and monopolar economy. Ergo: post-crisis economy must be competitive and multipolar. It was a representative of Russia that opened the forum which I think is important. The way I see it, it was a show of appreciation because Russia had always protested against the monopolar world order.