Interview with Alexei Kudrin on potential return to government, euro’s future

Subscribe
International
India
Former Deputy Prime Minister Alexei Kudrin, who served as Russia’s Minister of Finance for over a decade, explains why he had asked Vladimir Putin to replace former Prime Minister Mikhail Kasyanov, the conditions under which he would consider returning to the government, his thoughts on the acting finance minister and his forecast on the situation with the euro in an interview with RIA Novosti.

Former Deputy Prime Minister Alexei Kudrin, who served as Russia’s Minister of Finance for over a decade, explains why he had asked Vladimir Putin to replace former Prime Minister Mikhail Kasyanov, the conditions under which he would consider returning to the government, his thoughts on the acting finance minister and his forecast on the situation with the euro in an interview with RIA Novosti.

Mr. Kudrin, Prime Minister Vladimir Putin said during Thursday’s televised Q&A session that you had been pushing for the resignation of then Prime Minister Mikhail Kasyanov. What were your reasons for this?

- I can say that I did, on occasion, take issue with Kasyanov’s approach to implementing particular reforms. I criticized his work as prime minister in the course of my duties. My attitude toward Kasyanov was clear to everybody, and I often publicly expressed disagreement with some of his policies. This happened once at an Economic Development Ministry board meeting, and the entire country followed that conflict. I insisted that we were introducing changes too slowly and thought we could be doing much more. That was my reason for criticizing Kasyanov during my meetings with [then] President Putin. I never came out with any suspicions of fraud. It was all about business and my criticism of his work.

- Putin effectively suggested, on live TV, that you work with the government. What do you think of this, and what post do you see yourself taking, if any?

 - I am grateful to the prime minister for his appreciation of my work over the past ten years. I listened to his statement with interest, but I have not received any specific job offer. Another problem lies in my own disagreement with some of the policies approved by the president and the government. Unless these decisions are revised, I doubt I will be able to return to the government soon.

- Taking up a potential offer to work with government, would you have particular views that must be followed on how the economy should develop?

- A list of immediate reforms should be discussed and approved (I believe reforms have started to die off recently), such as those aimed at balancing the budget system over the next few years, including the pension system. These are the principle issues that will come under scrutiny if I am offered a government job. Unless the earlier decisions are revised, it is highly unlikely that I will return.

- Do you mean that a government position itself is less important to you?

- It is important, of course, but it makes more sense to start discussing details if and when I am actually offered a job. I would say that the principles I described are just as important as the post.

- What if you are offered the position as head of the Central Bank in 2013? Would you be interested? I know this seems like a remote possibility at the moment.

- It certainly is and it would be premature to discuss it.

- About the acting prime minister, when do you think Anton Siluanov – or another candidate – will be appointed permanently? Who do you think this person could be?

- I don’t know about the president’s preferences, so I can’t say whether Siluanov will be offered this post permanently. All I can say about him is that he is a professional who has a firm grasp on all the levers and mechanisms required for this work, along with extensive experience. This makes him fit for the position.

- You are famous for making very accurate forecasts. Could you make a prediction about the future of the euro for us? Russia keeps 40% of its international reserves in euros, and many people in Russia are concerned about that currency.

- The eurozone is faced with certain risks and it is likely to change both in terms of its boundaries and the structure of its currency system. But a euro reform does not have to lead to its disappearance – it may be replaced by some other currency. The economy of the eurozone will survive and retain its current capacity. They will probably adopt a different unit, whether they call it the “euro” or not. Or some European countries could begin using different currencies and establish certain exchange rules. The point is, it won’t disappear altogether. On the other hand, that currency’s rate against the dollar will fluctuate both before and after the reform, so I wouldn’t be seriously concerned. It might be advisable to reduce the share of investment portfolios that are in the euro for those who have them. But I have always supported diversifying investments into three currencies – euros, dollars and rubles. This advice still holds.

- Do you mean that if a person has one-third of his investments in euros, he does not need to cut this share while increasing investments in dollars and rubles?

 - I think that the high volatility of all the currencies makes it virtually impossible to predict whether you will gain or lose on conversion. The euro will not disappear, it will be exchanged for other money or other euros, or perhaps the eurozone will alter its current 27-member structure. If worse comes to worst, they will simply return to their deutschmark and franc, so we shouldn’t be concerned. It is difficult to predict further development of the market now.

- Might it be safer to keep one's savings in rubles?

- Rubles have their risks just like any other currency, so it’s best to diversify – dollars, euros and rubles.

- You said in a recent interview that the second wave of the crisis is already here. What will Russia be like once it's over?

- Russia is entering this crisis in a more weakened state. Though more experienced in dealing with crises, Russia’s international reserves have shrunk since last time, while its dependence on oil exports has grown. This could make things more difficult for Russia when the downturn unfolds. But I hope that the plunge will not be as deep this time. I am certain that Russian will be able to address most of the problems successfully. I would only suggest a proactive effort to reduce our oil dependency, although this will require a revision of defense spending along with some other decisions, such as raising the retirement age. This will give Russia more confidence in the face of an uncertain future. All countries are doing this now and Russia is no exception. The high oil prices and the small reserves, which can only last us a year maybe, are a thin cushion for a slump like the one in 2008. We also need to think about the future, the post-crisis years. It isn’t good to cut costs during a downturn because this always makes the decline steeper. If Russia becomes better prepared, cost cutting will not be necessary, which will certainly benefit the general business situation. The government should never cut costs in times of crisis because this policy aggravates problems and makes them snowball. The government increased spending during the last crisis. At the moment, it appears that we have increased spending in the lead up to a new crisis, and we will probably be unable to keep them at the same level during a new crisis. This is where the problem is rooted. If we do not take proactive measures, Russia will be hit harder and will emerge from the new crisis weaker than last time.

Newsfeed
0
To participate in the discussion
log in or register
loader
Chats
Заголовок открываемого материала