Tuesday, 23 August 2016

Putin Greenlights Economic Nationalists Who Oppose Current Liberal Globalist Policies


After more than two years of worsening economic growth and an economy struggling with 10.5% central bank interest rates that make new credit to spur growth virtually impossible, Russian President Vladimir Putin has finally broken an internal factional standoff.

On July 25 he mandated that an economic group called the Stolypin Club prepare their proposals to spur growth revival to be presented to the government by the Fourth Quarter of this year. In doing so, Putin has rejected two influential liberal or neo-liberal economic factions that had brought Russia into a politically and economically dangerous recession with their liberal Western free market ideology.

This is a major development, one I had been expecting since I had the possibility to exchange views this June in St. Petersburg at the annual St. Petersburg International Economic Forum.

With very little fanfare, Russian press a few days ago carried a note that could have a most profound positive significance for the future of the Russian domestic economy. The online Russian blog, Katheon, carried the following short notice: “Russian President Vladimir Putin instructed (the Stolypin economist group–w.e.) to finalize the report of the Stolypin Club and on its basis to prepare a new program of economic development, alternative to Kudrin’s economic plan. The program itself should be given to the Bureau of Economic Council in the IV quarter of 2016.”

In their comment, Katheon notes the major significance of the decision to drop the clearly destructive neo-liberal or free market approach of former Finance Minister Alexei Kudrin: “The Stolypin club report advises to increase the investment, pumping up the economy with money from the state budget and by the issue of the Bank of Russia. In turn, the concept of the Center for Strategic Research (Alexei Kudrin) suggested that investments should be private and the state is to ensure macroeconomic stability, low inflation, reduced budget deficit.”

Kudrin failed

In the current situation of severe Western economic and financial sanctions against Russia the flows of such private investment into the economy as the Kudrin camp advocates are rare, to put it gently. Cutting what is a very minimal budget deficit only increases unemployment and worsens the situation. President Putin has clearly realized that that neo-liberal “experiment” has failed. More likely, is that he was forced to let economic reality unfold under the domination of the liberals to the point it was clear to all internal factions that another road was urgently needed. Russia, like every country, has opposing vested interests and now clearly the neo-liberal bested interests are sufficiently discredited by the poor performance of the Kudrin group that the President is able to move decisively. In either case, the development around the Stolypin Group is very positive for Russia.

In convening the new meeting of the Economic Council Presidium on May 25, after a hiatus of two years, President Putin, noting that the group deliberately consisted of opposing views, at that time stated, “I propose today that we start with the growth sources for Russia’s economy over the next decade…The current dynamic shows us that the reserves and resources that served as driving forces for our economy at the start of the 2000’s no longer produce the effects they used to. I have said in the past, and want to stress this point again now, economic growth does not get underway again all on its own. If we do not find new growth sources, we will see GDP growth of around zero, and then our possibilities in the social sector, national defense and security, and in other areas, will be considerably lower than what is needed for us to really develop the country and make progress. “
http://russia-insider.com/en/politics/putin-nyet-neo-liberals-da-national-development/ri16051

Make sure to visit the link and read the entire article.

[Posted at the SpookyWeather blog, August 23rd, 2016.]

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