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2 Feb, 2012 12:07

View from above: Putin's take on straightening finances

“In order to see further, one needs to sit higher,” is the Chinese saying Russia’s PM Vladimir Putin used to open his speech at the Russia Forum. At the moment the picture he sees from his position is gloomy.

However he talked about his vision of making the future brighter."We have to move one hundred steps ahead from 120th to 20th place in terms of conditions for doing business," trumpets Prime Minister Putin."Poor realisation of rich potential – that is Russia's historical problem,” Putin concluded.Russia ranks among the world’s top 5 countries with the greatest potential to raise foreign direct investment.  However, "as the investment climate now stands, we, unfortunately, are shamefully 120th in the world, that's sad."GDP growth of more than 4% last year, lowering inflation, standing at a 20 – year low of 6% in 2011, the world's  3rd biggest gold value reserves, as well high saving rate makes the country a candidate for a new world economic centre, Putin specified.As for the changes to have an immediate affect on Russia’s businessmen, the Prime Minister said the position of a “business ombudsman” is to be created to help both Russian and foreign business. “He will have a special procedural status and, consequently, the right to defend the interests of business people in courts, to consider complaints and to submit proposals to government agencies," Putin said. He also announced a number of changes to the legal system that are supposed to help business withstand corruption and protect their interests in courts.Speaking of the situation globally, Putin raised several concerns.“Risks of another global recession are increasing,” Putin warned. Government debts are now sky – high, with EU debt comprising 90% of its GDP and the US Government owing about $15.3trl.Among major global concerns is the growth of “bubble economies,” Putin said. Operations with derivatives – financial instruments that don’t basically have any real background – are pushing out real production. That has created a huge world financial bubble, that’s currently 10 times bigger than the volume of the real global economy. Today real assets across the world are estimated at $60trl, while the cost of derivatives stands at $600trl, Putin said.One of the issues blocking the recovery in economies around the world is political unrest, which basically “rides the countries away from leading positions in the world economy,” Putin said. “People are marched out onto the streets, and they start to break windows,” – this is instead of addressing the most obvious economic problems. We need to think of the system that won’t be bringing the economy to a dead end, the Prime Minister said.Another big part of the problem in his view is that governments “don’t take the steps that may be painful but necessary” because politicians are afraid of unpopular actions.Overall, Putin described the coming decade as a time of great challenges, when new leaders will take up the world reins, and Russia has every chance to become one of those, the Prime Minister concluded.