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Former Russian Policymaker Puzzled by Trend Toward State Control

A forum Wednesday at Washington's American Enterprise Institute addressed concerns state control might be returning to the Russian economy and President Vladimir Putin's possible role in the shift. A former Russian government official told the forum he is unsure whether this portends a longer-term move away from a free market orientation.

Yegor Gaidar, an architect of controversial Russian reforms 13 years ago, says he does not understand what is behind the yearlong shift in Russian economic policy.

Currently heading a Moscow based economic think tank, Mr. Gaidar gives President Putin high marks for his economic stewardship from 2000 until 2003. Then, says Mr. Gaidar, with presidential and parliamentary elections approaching, Mr. Putin shifted course and since then has been trying to reassert state control over the powerful businessmen who have dominated the Russian economy. Mr. Gaidar describes the president's recent actions as clumsy, ineffective and extremely costly.

"I can not find in economic history anything comparable. And I can tell you that even putting away [Mikhail] Khodorkovsky personally, the way in which the Yukos affair was organized, it is, to be put in the most polite way, strange," he said.

Mr. Gaidar says that the imprisonment of Mr. Khodorkovsky has undermined the rule of law and business confidence and scared off foreign investors. He is at a loss to explain why this fundamental change of policy occurred and mentions a computer game popular with Russian young people as a fanciful explanation.

"The name of the game is ‘Give us Back our Putin.’ And the scenario of the game is that someone has stolen the real Putin and put in place one of his clones instead of him. And the task is to find the real Putin and help him regain power," he explained.

Russia's oil- and gas-dependent economy has been riding the crest of higher energy prices and continues to expand at an impressive seven-percent annual rate. However, Ann Krueger, the number two person at the International Monetary Fund, worries about Russia's future.

"There is plenty of work to do out there [in Russia]. And as Dr. Gaidar says, it does not all have to be done at once. But the fact is that structural reforms have stalled," she added.

Ms. Krueger is concerned that inflation in Russia will rise from the current high 13 percent annual rate. Both she and Mr. Gaidar agree that the high oil price has created immense political pressure for an increase in government spending.