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Putin's Economic Advisers: Time for Big Change in Russia

Economists urge a radical change in funding priorities
Putin must embark on “energetic measures”
Putin must embark on “energetic measures”Photograph by Rainer Unkel/REA/Redux

On April 22, in the resort city of Sochi, Russian President Vladimir Putin convened an emergency meeting of economic advisers, government officials, bankers, and others to discuss alarming signals of a slowdown and to hear proposals on how to rev up growth. At least some of the 18 allies in attendance told Putin his policies need an overhaul.

From 2000 to 2008, Russians enjoyed what former Finance Minister Alexei Kudrin, a meeting attendee, has called “the fat years.” Robust exports of gas, oil, and minerals helped fill the government’s coffers and fostered the growth of a middle class. The economy contracted in 2009, then recovered. In the run-up to the March 2012 presidential election, the government ramped up stimulus spending, which is still increasing. Russia’s $2 trillion economy probably grew only 1 percent or so in the first quarter, Economy Minister Andrei Belousov said on April 7. Europe, mired in recession or stagnation, is not buying as much natural gas and oil from Russia as it once did. Inflation has edged up above 7 percent. The prospect of a long period of soft energy prices puts pressure on Russia, which relies heavily on its giant oil and gas companies.