RUSSIA CAN AVOID CRISIS, EMERGE STRONGER: MEDVEDEV
By Oleg Shchedrov
U.S. Daily
10/23/08
CA
Russian President Dmitry Medvedev attends a wreath laying ceremony at
the Tsitsernakaberd memorial in Yerevan October 21, 2008. Russia said
on Tuesday it hoped to bring together leaders of Armenia and Azerbaijan
to discuss their dispute over breakaway Nagorno-Karabakh, as Moscow
vies with the West for influence in the Caucasus region. REUTERS/RIA
Novosti/Pool
MOSCOW (Reuters) – Russia may avoid a full-scale crisis despite global
financial turmoil and can emerge from it with a more effective economy,
President Dmitry Medvedev said on Thursday.
"We have a chance to avoid banking, forex or debt crisis and go
through today’s difficulties without losing the potential we have
created," Medvedev said in a video blog posted on his official website
Russian markets have plunged more than 70 percent since their peak
in May amid capital flight and liquidity problems, fuelling fears of
a financial crunch spreading into sectors of the wider economy.
The rouble collapsed during a 1998 economic crisis but a devaluation
coupled with high international oil prices helped the economy recover.
The government says Russia, which has piled hundreds of billions
of dollars in reserves during eight years of economic boom and has
healthy fundamentals, can weather the storm.
The cabinet has come out with a rescue package topping $200 billion
in credits for banks and companies and in tax benefits.
But avoiding panic and maintaining trust in the government remains a
top priority in the country, where the 1998 crisis triggered public
discontent and led to a political crisis.
Medvedev, dressed in a suit and white shirt but tieless, was calm and
confident in a 6-minute address telling Russians that the financial
squeezes would not affect the real economy and their jobs.
"Russia has not yet got into this difficult situation. It has chances
to avoid this. It must avoid this," he said.
Medvedev said the government would support the banking sector and
six key sectors of the economy — retail, agriculture, construction,
machine-building, the defense industry and small businesses.
NEW CHANCE
Critics say the global crisis accompanied by a fall in energy and
commodity prices will bring an end to Russia’s prosperity, which
has revived Moscow’s ambitions of becoming one of the leading global
economies and a key global political player.
On the contrary, Medvedev said the global crisis gave Russia an chance
to modernize its economy and have a stronger international role.
He said the consolidation of assets of Russian companies would make
them more competitive and promised a government support and funds to
support that process.
He said the crisis would make financial organizations more effective
and attractive for investors.
Medvedev said Russian companies would also have to improve their
production and management structures "so their effectiveness and
productivity will rise to the level which will allow them to compete
with most successful foreign companies."
Medvedev said the crisis, which had shown the ineffectiveness of the
global economic infrastructure, would allow Russia to have a stronger
say in shaping a new order.
"We must actively take part in working out the new rules of the game,"
Medvedev said.
He confirmed he was planning to attend the summit of the Group of 20
industrialized and developing nations in Washington on November 15.
In a separate gesture intended to show that the Kremlin sees the
current economic turmoil as a hurdle rather than a fatal threat,
Medvedev’s press secretary said the crisis would not top his state
of the nation address.
"The issue of overcoming the consequences of the global financial
crisis will not be the main theme of the presidential address,"
Natalya Timakova said. "It will traditionally touch upon basic issues
of domestic and foreign policy."
Timakova said Medvedev, who took office in May, would deliver his
first address to parliament soon but did not specify when.
(Writing by Oleg Shchedrov; Editing by Richard Williams)
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