Caterpillar CEO Says Russia Needs New Economic Policies

Russia needs new policies to halt the deterioration of its economy, according to one major U.S. corporation that invests in the country.

“In order for the Russian economy to stabilize and grow, there needs to be a change in that country’s current economic policies,” Caterpillar Inc. Chairman and Chief Executive Officer Doug Oberhelman said Wednesday. “A stable and healthy Russian economy is central to a vibrant global economy.”

His comments came in a statement clarifying remarks made earlier in the day at the Detroit Economic Club.

“What’s going to need to happen there is some kind of a regime change,” Oberhelman said at the club. “I don’t see how that plays out over time, but it will happen.”

Sanctions imposed by the U.S. and the European Union have helped push the Russian economy toward recession after they accused the government in Moscow of backing the rebels fighting in Ukraine. Russia denies the allegation.

Caterpillar, the world’s largest maker of construction and mining equipment, has relatively small operations in Russia that employ about 1,000 people, Oberhelman said. Those operations, which supply machines for the local market, have largely halted since the U.S. government imposed sanctions.

“Things will stabilize in Russia,” he said. “It’s probably going to be a while.”

Russian gross domestic product is expected to contract 4 percent in 2015, according to the median estimate of analysts and economists surveyed by Bloomberg.

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