Tag Archives: Alexey Kudrin

«Endeavor to change regime in Russia – nearly official explanation for sanctions»

Dmitry Evstafyev, born 1966, graduated from College of Asian and African Studies of Moscow state University and pre-doctorate courses Institute of USA and Canada Studies of Russian Academy of Sciences. Since 1992 – engaged in political and security studies. Since 2001 – actively worked in business PR, risk assessment, and strategic consulting business. Worked with and in major Russian industrial corporations. Since 2013 – Professor of Chair of Integrated communications of National Research University – Higher School of Economics.

Romanian-flag– Mr. Evstafyev, you said in one of your recent article that between Putin’s speech at the Yalta and Sochi (Valdai) are notable differences. But I think it’s normal, also the target audience was different. Am I wrong ? Give our readers some details about you opinion.

Evstafyev– You are both right and wrong. You are right from the point of view of immediate audience. It is definitely foreign politicians and political scientists. You are wrong from the point of view of the major audience. That is Russian “ruling class” and its associates. Everybody in Russia for some time was waiting for “signals” from President. Signals came and they were quite strong. They reflected the new – more difficult – political situation and integrity of the “inner circle”. These are predominantly “internal” messages. They also reflect absence of radical foreign policy plans. But that is also an important “internal” message.
In general one should understand that for current Russian leadership at this point of their political life “domestic” (in a wide meaning of the term) is much more important that “foreign”. That is why the “Valdai” speech was so widely covered in Russia. Much wider than “Yalta” speech.

– You say that Russia should take advantage of the current window of opportunity and initiate a systemic reform of the government and political stage. Do you think that we will witnesses to significant changes in the two plans in the next few months?

– I would draw you attention to my other article – “Chances for development”/ ”Шансы на развитие”  (published in gazeta.ru, November 3, 2014). Some important points were outlined there. If we will not witness a drastic change including reshuffle of the upper echelons, the political crisis in late 2015 – early 2016 is inevitable. The “Valdai” speech shows that Kremlin at least sees that threat. To what extent Kremlin is able and ready to act – that is a big question to which no one knows the answer. But the pressure for “less liberal” and more “industrial” (we call that “anti-Kudrin”) economic agenda grows. The problem is that the worse the economic situation is and the more pressure the West puts on Russia the smaller the chance for liberals in the government to survive.

the-cold-war-era

– In April, Frankfurter Allgemeine Zeitung has published an article entitled “Putin should prepare for a long Ice Age period”. Now, the same journal released a column signed by John Kerry, that seems an invitation to calm down the tensions between US and Russia. Course, sanctions go on, but what do you think ? Will have a new Cold War or is time to back the business as usual ?

– There would probably be not a Cold War in a traditional sense since there is little (but some and that is important ideological content) and no global bipolarity. But the confrontation has already started. The West in general does not conceal that its target is to change a regime in Russia with – let’s say – trans-constitutional means. That was an explicit – nearly official – explanation for sanctions. That definitely “means war” (like in Buggs Bunny cartoons). That could be called “hybrid Cold War” but in general the Western idea that it could try to remove regime in Moscow simultaneously trying to cooperate with it where the West wants (jihadists, Iran, non-proliferation) looks ingenuously stupid. War means war. And for Russian economy and policy the “long ice” period (10 years I think) would be not good. It would be great.

– The presence of President Putin at APEC and G20 Summit changed something regarding bilateral relations between Russia and the West countries ?

– No. The mid-term political line is determined and no one seems to be ready to pull back. The earliest time for changes – early spring. I do not think that any chances for dialogue would emerge in spring but who knows…… The starting point is clear – West should unequivocally recognize that the Crimea belongs to Russia, but I do not think that it is ready yet. We can wait…..

– Oil and gas market has been “pretty turbulent” in recent months. Chart.ashxYou also work on the business consulting field. Give me an advice, please: if I am a Chinese businessman, should I buy shares to Rosneft?

– If you are Chinese and you are a businessman – yes, buy. If you are US or EU and you are an “investor” (you are engaged in speculative transactions at the fund market) – sell. If you are real US businessman – buy. If you are real businessman from EU – sell to Chinese or Indian. There will be very little space (if any) for EU-based business in fuel and energy sphere in Russia if the current political trend continues. There will be, though, space for others.

I ask you about because actually, we notice that “Gazprom”,“Rosneft” and “Lukoil” are considering re-placement of their shares on the Stock Exchange of Hong Kong in Asian currencies. As the “Interfax” said, the topic was discussed last week at a meeting of Russian Ministry of Economic Development with its counterpart in Hong Kong as part of the APEC summit in Beijing. Do you think it’s a move with medium and longterm impact on oil and gas market?

– In a mid-term perspective – yes. In a sort term – no. At this time too little of operational and financial infrastructure in the Far East exists for these companies despite the fact that the recommendations to develop it were put on the table in early 2000s. It would take 2-3 years under current circumstances to develop it. After that the impact could and would start to grow.

– Finally, but not least important thing: how is perceived from Moscow the recent result of Romanian presidential election ?

Hardly noticeable. Interesting. Absolutely opposite situation here. At the local Moscow elections all who used “I-ph”, Facebook, Vkontakte as well as administrative resource lost. Heavily. Grass-roots. Interesting result. Much more attention to Moldova election. Moscow is not enthusiastic about Moldova division. In my understanding Moscow would prefers to maintain status-quo. But considering other issues – one more Moldova, one less Moldova – no big deal. People in Europe do not understand that they pushed Russians (most of them, excluding not very many selected personalities) beyond the “threshold of pain”. People think that the crisis and confrontation would be anyway. Than why we should be “nice”?

interview made by Gabriela Ionita

“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.

Dimitrovgrad Apocalypse – Kudrin resigned

Monday should be a new Apocalypse? Well, was one… to Dimitrovgrad (Volga).

After the replacing of Mikhail Prokhorov in composition of the Commission for Modernization, Innovation and Technological Development of Russia’s Economy (the presidential decree was published Sunday on the website of the Russian Presidency), new week began under the auspices of not very peaceful. Within the framework of the 26th meeting of the Presidential Commission mentioned above, President Medvedev – in an access of recovery dignity (lost Saturday at the Congress of United Russia party) and that would have deserved a better

Meeting of the Commission for Modernization and Technological Development of Russia’s Economy

cause – sharply warned Vice-premier and Finance Minister Alexei Kudrin and ordered him to resign if he continued to disagree over economic policy. In reply, Alexei Kudrin, disciplined this time :), a few hours later resigned… After all, according Putin’s spokesman Dmitry Peskov, Kudrin will remain in Putin’s team … team that in May 2012 will move  to the Kremlin and will supervise activity of Prime Minister Medvedev’s government. Government that will have to take many unpopular measures that are needed, but normally will be postponed until after elections. Medvedev’s approach was a non-constructive, useless and more likely to turn against him.

So a brief recap: After Saturday’s announce about Putin – Medvedev rocade, Mr Kudrin (in the United States at the G20 meeting works) said in a press statement that “he could not serve in a new government next year if, as expected, Prime Minister Vladimir Putin and Mr Medvedev switch roles and he could not serve under Mr Medvedev if he becomes prime minister because of differences over budgetary policy” – said AP. Monday, president Medvedev not hidden their disapproval and pointed with his finger to Mr. Kudrin: “If, Alexei Leonidovich [Kudrin], you disagree with the course of the president, there is only one course of action and you know it: to resign. This is the proposal I make to you. You need to decide quickly what to do and give me an answer today” Mr Medvedev said. Mr Kudrin said he would consult with Prime Minister Putin. Later, he offered his resignation and it was quickly accepted.

Medvedev’s televised speech can be watch here.

So, that might be even more important move then Saturday’s Putin’s decision to run for the third term. Alexei Kudrin has been Finance Minister of Russia in the last 11 years, during the mandate of Putin and Medvedev presidency. It is considered a professional, with excellent relations both among bankers on Wall Street and the world of European finance. Although excellent relations with Prime Minister Putin, his relations with Mr Medvedev had been strained for some time. Recent he criticised the president’s plans to increase military spending. In my opinion should not be a specialist to notice that in times of crisis such a priority does not sound good. But politics has other reasons sometimes less visible.

Russia Finance chief resigned generated a lot of conflicting opinions. Mass media, social networking, renowned experts and politicians have said opinions. Of course, not without speculation. It spoke that public conflict between President Dmitry Medvedev and Minister Kudrin in fact has exposed deep cracks in unity over Vladimir Putin’s plan to return to the Kremlin. Most government and Kremlin officials kept a low profile on Monday. None rushed to side with Kudrin. But the presidential aide Arkady Dvorkovich wrote on Twitter: “Kudrin did much good for Russia, was one of my teachers. In the current situation, a decision was not, the reasons the President called”. There were some who argued that Kudrin’s departure is good news and it will escape Russia to the domination of  Wall Street′s bankers. I am not specialist in finance and economics … but I cannot believe that a fool can remain in office minister 11 years, even if talk of Russia. “Mr Kudrin’s resignation will worry foreign investors, who have praised his handling of Russia’s economy” says the BBC’s Steve Rosenberg in Moscow. “Putin seems to have decided that Kudrin’s head was a price to be paid to ensure his smooth succession back to the presidency,” said Timothy Ash, emerging markets economist at Royal Bank of Scotland. “The market will now fear that relative fiscal prudence, for which Kudrin was seen as a linchpin, will go out of the window.” Julia Tsepliaeva, Chief Economist Russia and CIS for BNP Paribas, said Kudrin’s departure could lead to populist government spending and quickly run down the rainy-day fund. “In addition, the dismissal of the strongest representative of the liberal economic wing of the government may result in the strengthening of the ‘siloviki’ (security forces) influence” she said. “It is difficult to see how Mr. Kudrin’s resignation can be anything but market-negative” said Neil Shearing, chief emerging markets economist at Capital Economics Ltd in London. “With oil prices starting to slide and financial markets still jittery, now is not a good time for the government to lose its arch fiscal hawk.”

Of course, there are many questions. In some of them will find answers, others may not. It said that Kudrin, a close Putin ally who appeared to be frustrated at not being offered the premiership under the succession plan, was left with little option but to resign. Ok. Moscow policy even can to offer surprises of double or triple the agreements. But Kudrin is not a child, is not a neophyte (like Prokhorov, par example). How did such an emotional reaction? (Update – 29 September 2011:In his first statement after resignation, former Russian finance minister Alexei Kudrin said that his decision was not an emotional reaction. “In connection with the numerous commentaries about my resignation, I would like to clarify the following. My statement about how I do not see myself in the Cabinet of 2012 (after the elections) was well-thought out and considered. First, over the course of several months, despite my numerous objections, including public ones, decisions were made in budget policy that without doubt raise the risks to the budget.  And risks to the budget linked most of all to inflated appropriations for defense and the social sector would inevitably spread to the entire national economy.” Full statement can be read here.)

Agreed that the president Medvedev was surprised and humiliated after Kudrin’s statement in Washington. But the change a minister with 11 years of experience when the capital markets are crazy, the statements of key political and financial players are more worrying and any day could collapse the world financial markets ?! …What is the most important for Russia President? Pride or wisdom?

Such policy disputes are rarely seen and spoken aloud in public in Russia, where political life is usually orchestrated at the highest level, the agreements are made behind the closed doors and open dissent over policy is unusual. But there are already two such scandals in just two weeks: Prokhorov vs Surkov, Medvedev vs Kudrin. What is the price of Russia’s future stability? And who pays in the end?…

and, finally, why smiling relaxed Mr. Surkov during the Kudrin’s «verbal execution» by President Medvedev ?? 😀