Ex-Finance Minister: New crisis at the gate
"The fuze is already burning," says Russia's former Finance Minister Aleksey Kudrin. He says the global economy is balancing on the brink of another recession and the second financial crisis is already upon us.
Talking at the International Sberbank Business Breakfast on Saturday, Kudrin took a pessimistic view of the future for the global economy. "The world has a chance to settle the crisis, but it is very slim," he said. Kudrin insists that the "battle for Greece has been lost", and the focus should shift on bigger debtors such as Spain, Ireland and Portugal. They will require another massive injection of around 3 trillion euro to keep them afloat. He advises European countries to join efforts. "The establishment of the United States of Europe would be a positive decision and would signal an absolutely new level of consolidation" which might help, Kudrin specified. Talking about Russia Aleksey Kudrin sounded more positive, saying the country is currently better prepared for more turmoil, than most developed countries, as the state debt is low, at 12% of GDP, and considerable gold and foreign currency reserves in Russia form a safety net. However Kudrin warned Russia may face budget problems at some point, as it was unlikely to enjoy sky high oil prices in the next 3 to 10 years, barely beyond some $100 bbl. "And the plans to increase military spending by 3% of GDP in the coming years are not secured by anything," as it's planned to come at a cost of reduced financing for other sectors, as well as keeping Russian budget with a deficit, ex-Finance Minister said. Kudrin's 11 year management of Russia's finances earned him a prudent reputation, praised for saving oil revenues in the Stabilization fund which helped the country get through 2008 crisis. He was sacked in September after a row with President Dmitry Medvedev when he publicly voiced his disagreements with budgeting policies.