Russia is already well-guarded against a financial crisis, Anatoly Chubais, ex-CEO of RAO UES and the head of the Russian Nanotechnology Corporation, said in an interview with South Korea’s newspaper Chungang Ilbo.
Chubais pointed out the difference between current economic problems and the disastrous 1998 default: Russia’s foreign debt stood at $150 billion ten years ago, while today it is only $50 billion; the international reserves were worth $3 billion in 1998, while today they exceed $550 billion; the price of oil was $8 per barrel in 1998, and it is slightly below $100 a barrel now.
“Russia has been through a very difficult transition period, when the market economy was being created. All this resulted in very high GDP growth rates of 7-8 percent a year, a massive build-up of foreign currency reserves, a budget surplus and a trade surplus. Now that these macroeconomic indicators have reached positive levels, Russia should begin to determine the guidelines for further developments within these positive growth rates,” Chubais said.
The US is not the only nation that determines the face of global economy, he maintained, citing a number of other dynamically developing countries, such as China, Russia, Korea, Brazil, and India. “Global financial and economic systems require a revision,” Chubais emphasized.
At the same time, he admits that the current financial crisis could have serious implications. “Obviously, the crisis is not yet over. There will be more drama on global markets, with many large financial institutions heading for bankruptcy. The real sector of the economy will be hit pretty hard as well,” Chubais warns.
He expects global economic growth to decline further, dragging some European economies, and possibly the United States, to recession. “I think we have not yet reached the bottom. As for specific reasons, it is clear that the economic crisis originated in the US,” he said.
In fundamental terms, the foundations of global financial and economic systems need an update, according to Chubais. “The foundations were laid after the Second World War, when the US and Europe actually ruled global economy and could use their potential. It was then that the Bretton Woods global financial system was created with its institutions, also controlled by the US and Western Europe,” he said, noting that such a system was in place at that time.
The US made the wrong conclusion, however, deciding that “it victored over its main enemy and thus became the strongest nation.” It is obvious that a single nation cannot rule global economy, and not a single global problem can be solved by a single country. As testament to that fact, in the mid-1940s, the US generated up to 50 percent of global GDP, while now it accounts for only slightly over 25 percent, according to Chubais. |
