Russia “lucky” to live in an era of changes says Gref

February 3, 2012


Herman Gref, CEO and Chairman of the Management Board of Sberbank of Russia opened the plenary session of Troika Dialog’s Russia Forum 2012 “Russia’s Economic Policy in a Time of Global Change” by recalling an ancient Chinese proverb: “God forbid that you should live in an era of change”, and then went on to say that Russia was “lucky” to be living in an era of global changes. The participants of the discussion talked about the most significant of these changes.

In his speech, Prime Minister of the Russia Federation Vladimir Putin remarked that economic instability has acquired a long-term nature: “Not one of the reasons for the current financial shocks has been addressed yet. The 2008 crisis is moving into a new phase and is exposing new deep-rooted problems.” Particular concern is caused by the debt crisis, imbalance of the swollen financial sector, and the speculative character of economies and their detachment from reality. “The world is not the same anymore. To elaborate, I mean that five centuries of domination enjoyed by western states has come to an end”, warned the Prime Minister. The centre is switching from the West to the Asia-Pacific region, new centres of economic growth are arising and Russia must be among them.

At the moment the Russian Federation is currently the sixth-largest economy in the world and has a very good chance of becoming number five. “On the whole, last year’s economic performance was good – growth exceeded 4%, which was the best figure among all the major European economies”, noted Prime Minister Putin. The level of inflation fell to 6%, its lowest point for the last 20 years. The Prime Minister did not rule out that in the next few years this figure could drop to 4%. According to 2011 results, the Russian budget finished the year on a 1% surplus, public debt equalled 10.4% and foreign debt stood at 2.5% of GDP. However, the country still faces unresolved tasks. Russia occupies 120th place in terms of investment climate favourability. “We must move one hundred steps forward, from 120th to 20th place in terms of our business environment”, the Prime Minister emphasised.

In the opinion of Michael Milken, Chairman of the Milken Institute, Russia has every chance of becoming a global leader and possesses all the necessary human and natural resources needed to do this.

Commenting on the current situation of the global economy, Princeton University professor Paul Krugman stated that what is currently taking place in the world in no less dangerous than the crisis of 2008, when the level of borrowed funds reached its limit. In the Russian Prime Minister’s opinion, the deep-rooted reasons for the global crisis are not due to debt, but instead are down to overproduction and purchasing power. On the other hand, Chicago University Booth School of Business professor, Raghuram Rajan, considers that the current economic problems are connected with social inequality, a theory confirmed by protest movements such as “Occupy Wall Street”.

The discussion panellists agreed that in the current situation, many countries are experiencing an acute lack of narrowly specialised professionals. “Biology, chemistry, and innovative sciences determine our future”, noted Michael Milken. Furthermore, the human factor is exactly what is capable of pulling the world out of recession. “In order to achieve financial prosperity, we must create favourable conditions for providing education, maintaining human health, improving quality and extending life expectancy”, concluded the financier.