Kudrin is Gone


The right-wing politicians fancy lower taxes and minimal state spending. Those in the left seek higher taxes and larger disbursements. Alexey Kudrin, Russia’s Finance Minister and Deputy Prime Minister, is neither the right nor the left. He likes to tighten both fiscal policy and government expenditures. Yesterday, he got fired.

At some point, Kudrin’s contractionary policy was useful. It helped tamping down inflation and getting ready to the economic turmoil. He insisted on fast repayment of debt, leaving the country with one of the lowest foreign debts among major economies, and creation of the $150 billion Stabilization Fund – the magic wand which helped Russia to come through the global crisis better than many.

Today he is seen as a retrograde who hits the brakes while the economy needs grease for growth. Russians want spend more. It is hoped that state injections will revitalize the economy. They also want greater expenditures on army. Yesterday Dmitry Medvedev announced that during the next 10 years the country will spend $700 billion on defence because Russia ‘is not a banana republic’.

Kudrin, on the other hand, believes that Russia is a banana republic in a sense that it is deeply dependant on oil prices. A monetary stimulus, similar to what Barack Obama has tried to do in the US, is worthless. Russia has to wait, quietly, until the world economy starts kicking in.

Kudrin’s point, therefore, is not financial but political. He sees Russia the way Russians don’t like and offers them future they don’t want.



Kudrin sees Russia the way Russians don’t like and offers them future they don’t want.