“Europe lacks political will to solve the crisis” says former Russian finance minister Alexey Kudrin

Romanian version here.

Participating at the works of the International Economic Forum in St. Petersburg, the former finance minister of Russia, Alexei Kudrin, said for nasdaq.com online platform that a serious  revival of economic crisis in Europe will take place probably within a year or less.

Kudrin (appreciated as the most effective finance minister of Russia in the last 20 years, despite the differences with Dmitry Medvedev that led to his resignation) noted that a possible way to avoid the dark clouds that are looming on the horizon of the EU economy “may be a partial write-off of the Spain’s and Italy’s debt, but it will not happen because Europe lacks political will to make fast and adequate decisions”. Declaring himself as a pessimist about the chances to solution economic crisis, the Russian financier added that in his view “we are beginning a full crisis. Greece will be unable to fulfill its obligations. Greece’s problem was not solved and most likely will not be. Greece output from the Euro Zone for me is almost inevitable. A serious financial and economic crisis will hit Europe next year… and the next victim will be Spain and, possibly, Italy” said Kudrin. He said 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.

No on Russia the things are not entirely happy. Alexei Kudrin says that Russia will face in the next year, with the second wave of economic crisis, noting that experts believe that Russian authorities are not prepared to face this new crisis. Kudrin believes that the crisis may be deeper and last longer. He suggested that Russia should increase its safety net in the face of the coming crisis and oil prices drop. “We should borrow now, while we can” Kudrin 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.

His view is confirmed by other voices. “The second wave of crisis will mean a real decline in external demand, which will be accompanied by a reduction of prices of products exported by Russia, in special price of oil. We expect a fall in production of Europe and of Russian exports, a slowdown of growth in China and India. Therefore Russia should rely on stimulating domestic demand” said director of strategic analysis of Audit company  FKB, Igor Nikolaev.

Update: Today, ratings agency Moody’s has cut the ratings of 28 Spanish banks following a June 13 downgrade of Spain’s sovereign rating by three notches. The banks’ long-term debt and deposit ratings have been downgraded by one to four notches. The rating of Bankia, one the country’s largest banks, has been cut to junk status. Spanish banking problems have become the major problem for the euro zone after the collapse of the Spanish housing sector in 2008 created a huge number of bad debts. The Spanish government has formally requested European aid of up to €100 billion for its troubled banking sector.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s