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Kudrin again argues with Medvedev and threatens an economic crisis may come

November 14, 2011, 16:40 UTC+3
According to Kudrin, the “battle for Greece” is lost, now the struggle continues for bigger European economies
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MOSCOW, November 14 (Itar-Tass) — Russia’s former minister of finance Alexei Kudrin continues to publically oppose President Dmitry Medvedev’s budgetary policy. At a business lunch on Saturday, Kudrin warned of two threats, i.e. on a necessity to revise, in the next two years, unbacked military spending and about a new global economic crisis that would grow from the current financial crisis.

When signing a week ago a decree increasing 2.5 to three-fold wages and retirement allowances to the military, President Medvedev looked contempt to say that those who had opposed this decision no longer work in the government, the Moskovsky Komsomolets writes. He did not say Kudrin’s name, but everybody had no doubts who he meant. But the burden of carrots for the military is to rest with the civic population. Thus, federal budgetary spending on national defence will go up by 100 percent in the period from 2012 to 2014. It explains why Kudrin resigned so loudly – when his arms were twisted he had to draft a deficit budget, but later he must have realized that it will be himself who would be a whipping boy rather than Medvedev. No wonder he continues to warn that Russia would not tolerate such defence spending.

According to Kudrin, the “battle for Greece” is lost, now the struggle continues for bigger European economies, the Novye Izvestia newspaper writes. According to Kudrin, the crisis is bound to reduce the number of Eurozone countries. “The world still has a chance to settle the crisis but it is too big,” the former minister said. “The crisis is most like to spread to other regions, and to the United States.” Russia, in his words, is in a somewhat more advantageous position than other developed states thanks to insignificant public debt and big gold and currency reserves but it will also suffer from low oil prices in the next ten years.

According to the Komsomolskaya Pravda, Kudrin preferred not to dwell on the degree of gravity of the crisis but warned Russia against resting on “a golden safety bag.” It faces similar challenges as Europe and the United States, he believes. More to it, it has an Achilles heel of its own – its dependence on raw materials, and oil prices are not going to be stably high, especially in the next five to ten years. So far, in his words, it is possible to avoid a global recession, but the chances are tiny and the crisis is very much likely to spread to other countries, including the United States. In the foreseeable future, he said, the world is going to balance on the verge of unstable economic growth or, worse, it will plunge into a new recession.

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