Sunday, July 13, 2008

Lets look at Russia gruppling with Inflation.

Remember Gorbachev? The leader who decided to play the western tune on democracy and transparency decades ago and soon saw his massive country weakened, crumbled and broken down into bits and pieces. Lets not compare with Abdullah. But Abdullah too lost 5 states recently. Transparency is like a diseases, very contagious. Tianamen Square is the court to settle the score on democracy, through the eyes of Chinese. But China is never worse off, infact theirs is getting so big ready to absorb anything thats in their way.

Here is an article for reference on Putin, Russia and all the rest that come with inflation.


Medvedev Seen As Likely Loser in Economic Policy "Clash" With Putin

By: iStockAnalyst Friday, July 11, 2008 6:55 AM

Text of article by Nikolay Vardul: "New centre of Russian power" by Russian newspaper Gazeta, owned by metals magnate Vladimir Lisin, on 1 July

Until recently - more precisely while Vladimir Putin was still president - everything in the structure of Russian power was transparent. Like the Eiffel Tower. The structure was known as the vertical axis of power, and everything was built around the Kremlin. There are now signs that the structure is becoming more complex.

Do you remember a premier standing up against the president? Well yes, it has happened. For example, when Vladimir Putin set the task of doubling GDP and Mikhail Kasyanov (the then premier) and virtually his entire cabinet staged a quiet revolt. Or when people from Vladimir Putin's inner circle got carried away with forming state corporations tailored to their own needs - corporations that are intent on controlling entire sectors and not intent, by virtue of their legal status (not the status that you were thinking of) of being fully accountable to be state, which had generously endowed them with assets - and next premier Mikhail Fradkov suddenly allowed himself to be somewhat critical of this zeal. But, first, all these critical statements were argued, as a rule, in technical rather than political terms. And, second, the critics did not remain at the political zenith.

What is now happening is something fundamentally new. The state of the economy has confronted the Russian authorities with a dilemma. Either to initiate a resolute and comprehensive struggle against inflation or to hope that economic growth will deal with inflation in the long term. The economic policy arsenal changes depending on which is chosen. In the former case, in particular, it is necessary to slow the growth of state expenditure, whereas in the latter, by contrast, it is necessary to utilize state investments to stimulate growth. It is clear that in both cases we are talking not about an instantaneous squeeze on the money supply or the dumping of all state reserves on the market but about some kind of smooth trend that the government should pursue. So, judging by his budget message, the president has made a choice in favour of combating inflation. Whereas the premier, judging by his Lesnyye Dali speech to United Russia members, regards combating inflation, which would call into question the immediate prospects for increasing economic growth, to be the wrong priority. A clash is in evidence.

I wish to stress that this is not simply a clash between the most popular Russian politician and his successor in the post of president. It is not Putin's government that is becoming a new centre of power - Medvedev has all the powers to eventually impose the order that he needs in the White House. The new centre of power is the United Russia party controlled by Putin personally.

There has not been this kind of of a vertical axis of power in post-Soviet Russia. If Putin sets about strengthening it in earnest, it could be the thing that puts him back in the presidency. How this would happen, he has just demonstrated by proclaiming much more populist slogans than the choice made by the president.

I can hear the worldly-wise reader signing sceptically: There is no real clash, they are talking about the same thing, only from different angles. The curious thing, however, is that if this is an agreed division of labour, it is by no means Medvedev who is coming out on top. So the precedent of the emergence in Russia of a nonpresidential vertical axis of power has been created.

[Description of Source: Moscow Gazeta in Russian - Informative, small-circulation daily paper owned by metals magnate Lisin; not affiliated with the website]

Originally published by Gazeta, Moscow, in Russian 1 Jul 08.